Special Report: Peak Oil

The Myth of Saudi-US Mutual Dependence

The bottom line is short and bitter, like the Great Lake carved out of the Suez canal: there was never any real mutual Saudi-US dependence.

By Andrew McKillop
Published March 25, 2011

As the very influential but discreet Saudi-US Relations Information Service (SUSRIS) announced on February 14, 2011:

Today marks the 66th anniversary of a landmark meeting between King Abdulaziz of Saudi Arabia and U.S. President Franklin D. Roosevelt onboard the U.S. Navy cruiser Quincy in the Great Bitter Lake segment of the Suez Canal. The February 14, 1945 meeting was the first face-to-face contact between top American and Saudi leaders. It served as the foundation for the longstanding relationship between Washington and Riyadh. ... Today we are pleased to reprint a book excerpt from Thomas Lippman's Inside the Mirage: America's Fragile Partnership with Saudi Arabia.

The Fragile Mirage

The book title says everything. We can start probing this enduring puzzle starting from that 1945 encounter in the Great Bitter Lake, which produced no conclusive, definite, sure and certain minutes of the meeting.

On both sides, but in different ways, over 66 years and sometimes with intense bitterness and acrimony, the storyline is: "the meeting was secret and private". Or private and secret.

This central fact is, however, itself sometimes denied, but in no way prevents anyone from imagining what might or could have been really said, and possibly agreed.

Starting with this mirage, things however very surely moved forward in the world of oil: America at the time was like Saudi Arabia - an oil exporter - except that late 1940s USA was a massive exporter, and Saudi Arabia was a small but fast growing producer and exporter. We have however to backtrack another 29 years from 1945, to the 1916 signing of the Sykes-Picot agreement to obtain an inkling of what Roosevelt was probably applying, from 1945.

The Sykes-Picot agreement carved up the ex-Turkish Ottoman Empire among the World War 1 winning Red-White-Blue team of the USA, France and Great Britain, not forgetting the allies and co-signatories to Sykes-Picot which are usually forgotten: Italy and Russia.

Oil was certainly a part of the war booty being carved up, but a complex and changing set of other issues and objectives were also in play - and notably the geopolitical zones of influence that would later and in fact further deepen and trouble the nearly opaque world of Middle Eastern oil politics.

The Sykes-Picot agreement was the UK-France part of the Allied carve up. It left a huge gray hole on the map, all of central Arabia and most of the southern Arabian peninsula, which was the USA's home patch and zone of undisputed influence.

Almost exactly 16 years after Sykes-Picot, in 1932, a very large part of this gray hole became Saudi Arabia. The oil reserves already discovered in 1916 had been extended with further exploration - and very simply, the world's largest-ever reserves had been found.

Conflict And Emnity

Chronologically we can see things like this: 1916 Sykes-Picot, 1932 Saudi Arabia, 1945 the Great Bitter Lake meeting.

Most importantly all of these events were either hatched in secret, or in conflict, or both. The last event in the sequence, the ibn Saud-Roosevelt meeting - with all necessary plausible denial because the meeting was "secret and private" - laid the basis for future oil import dependence of the USA.

Both sides can deny that, or qualify it, and have done so ever since, and on the US side this interpretation is often given almost instant, knee-jerk denial.

The rationale can, however, appear highly credible: we helped create and set up your Kingdom, you will provide friendship oil anytime we need it, but key to this nice statement from a meeting in 1945 is that the USA of 1945, or even the USA of 1960 did not need any imported oil.

US oil import dependence only started from an extremely small base, about 16 years later after the meeting, in 1961. Import dependence only grew fast and continually from the early 1970s.

Another reason the Roosevelt meeting with Abdul Aziz, the son of Saud (Abdul Aziz ibn Saud), was secret and stayed that way is almost certainly nothing to do with oil, and a lot to do with regional conflict and emnity.

Right across the Middle Eastern Arab world, in all areas that had been a part of the Turkish Ottoman Empire, there was a deep and long tradition of dispute, jealousy and infighting as to who gets what whenever the game changes, the cards are reshuffled and the dice are rolled anew.

As just one example, the Jordan Hashemite royal family regarded the Saud family, who created Saudi Arabia, as upstarts and thieves, in large part because of dispute and jealousy over revenues from what today we would call the religious tourist industry, visiting Mecca.

Even the creation of Israel could not completely unite warring Arab power blocs for very long, due to the complexity of dispute and conflict between royal families, major clans and theocratic powers.

If the Roosevelt-ibn Saud talks had been published, one or more power group within the Arabian power system would have been enraged or goaded into aggressive action, almost surely and certainly.

Across the region, the Sykes-Picot agreement and the creation of Saudi Arabia, Yemen, Israel, Syria, Iraq, Jordan, Lebanon, the non-creation of Palestine, the de-recognition (in 1923) of Kurdistan, and other geopolitical stress due to a host of new borders and new, fragile nations could only end in one thing: dispute.

The Blame Game

Later on, but not much later, the Saudi nation that was created in 1932 from different tribes and clans with a long history of infighting started using the blame game on the USA and its Red-White-Blue partners, essentially to get wriggle room, both with its lookalike instant new nations of the region, and with its internal and cantankerous power groupings.

Pushing Saudi frontiers further, of course with the lure of additional oil reserves but above all to reinforce national identity was an early cause of Saudi emnity with the Allied powers. To this day, the US side tends to explain this bad blood with the code word fragility, while defending the reality of the US-Saudi secret pact or relationship, sealed in 1945.

To be sure there was friendship, at first, but that was long ago. The key role of the Great Bitter Lake meeting being secret and private will continually haunt all historians and historicists. It will always be interpreted any which way.

If, however, we only take oil, and on both sides, with certain repeat denials, we can be rather sure there is no total and binding commitment from the Saud family, to the US government, of being the USA's oil supplier of last resort. Saudi Arabia supplies a lot more oil to importers like Japan, South Korea, increasingly China, and to European importers than it does to the USA, even today.

While the longtime practice of the Saudi-US Aramco (Arab American Oil Corp), now called Saudi Aramco, was to provide US oil corporations and consumers with cheap oil, below market price oil, this had no real meaning before 1973: the world oil price was 1 US dollar and 50 cents a barrel.

The 1973 oil boycott and 400 percent price hike by Arab producers including Saudi Arabia was almost instantly interpreted by Nixon and Kissinger as bad faith. Now declassified documents show that both were in favour of invading Saudi Arabia - Iraq style - but instead they set up the International Energy Agency.

The IEA's original mandate was simple: use divide and rule commercial contracts and plenty of disinformation on oil needs and import volumes to break down Arab solidarity, and force the price down towards what was fondly imagined was the right: about 1 dollar and 50 cents a barrel.

As we know, and everybody knows, Arab solidarity is more than somewhat mirage-like, and as we are finding today with the Arab youth cellphone-wielding Flash Mob revolution, the outer side of the pie is nothing like the inside: the outer Russian dolls look, think and talk differently from the inner ones.

Completing this present day and confused real world context, oil importer countries depending on Saudi oil - that is the entire world's major importers - are very far from sharing the same views and ideas on what they want out of Saudi Arabia or any other nation in the Arab world - except oil.

The Mirage Thins

The bottom line is short and bitter, like the Great Lake carved out of the Suez canal: there was never any real mutual Saudi-US dependence. The proof, however, is complex, because it is negative.

When this supposed mutual dependence was needed, for oil after the US became the world's largest importer in the early 1980s and stayed that way, other major importers now including China and India, and all major EU27 countries, as well as Japan, South Korea and Taiwan played divide and rule.

They play it among themselves, and they play it inside and among the Arab oil producer supplying countries. All of these countries trade oil for food, with 5-only Arab states being responsible for over 45 percent of world total wheat export demand, and they trade oil for weapons and every other industrial good and commercial service that exists.

Oil can easily be called their Achilles heel, causing critical and persistent economic under-development, almost certainly hardening Arab world attitudes towards providing friendship oil to any importer.

The mirage is today even thinner that it was in the past. Almost a myth, it may continue to quietly or sometimes loudly throb in the background, but its relation to real Arab world issues - since January 2011 - is now very surely rather low.

Andrew McKillop is a writer and consultant on oil and energy economics. Since 1975 he has worked in energy, economic and scientific organizations in Europe, Asia, the Middle East, and North America. These include the Canada Science Council, the ILO, European Commission, Organization of Arab Petroleum Exporting Countries, the UN Economic and Social Commission for Asia and South Pacific, and the World Bank. He is a founding member of the Asian chapter of the International Association of Energy Economics. He is also the editor, with Sheila Newman, of The Final Energy Crisis (Pluto Press, 2005).

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By Undustrial (registered) - website | Posted March 25, 2011 at 12:25:39

America's alliance with Saudi Arabia represents everything which makes the world cynical about it's role as "the world's policeman". The nation is a legendarily corrupt monarchy with a serious streak of religious extremism. It's an affront to the people of both America and Arabia, as well as the Middle East in general.

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