On August 22 and 23, 1993, Saudi Arabia’s finances received rare front-page coverage in the New York Times, inaugurating a period of hand wringing inside the Beltway and among the academy’s consulting class over the kingdom’s future. This is a tradition going back decades, to the 1940s, when the Saudi treasury was managed by a decrepit alcoholic and the Americans created the Saudi Arabian Monetary Authority to replace him. Nostalgia was probably unavoidable among the ranks of Saudi watchers “present at the creation,” like Herman Eilts, then a young US embassy official, or Phebe Marr, an ambitious analyst in what the American ambassador called Aramco’s private intelligence service.
A representative of the Al Sa‘ud was invited to experience the old days in October 1993 at the Council on Foreign Relations, which has served for the past 40 years as the unofficial redoubt of the Gulf Caucus (multinational oil, banking and retired diplomats) of foreign policy insiders. The meeting was called to lend some weight to the regime’s cross-continental defense against the Times. Saudi embassies in other Western capitals took to the offensive. Institutions beholden in one way or another to Saudi patrons, such as Mideast Monitor and Middle East International, simply reprinted for the economy minister’s rebuttal. Use of the Council for roughly the same purpose required a more subtle touch.
Flanked by the vice chairman of the board of Morgan Guaranty, the bank that organized the financing of the kingdom’s bills for the Gulf war, and Richard Murphy, a candid defender of what he calls America’s “outside dominance” of the Gulf, a Saudi embassy official and protege of Ambassador-Prince Bandar bin Sultan was invited to address an off-the-record seminar. By the session’s end, there was genuine consensus in the room on only two points: First, the “tone” of the Times reports was unwarrantedly alarmist; second, any claim about “objective” Saudi defense needs or American strategic requirements playing the main role in the recent spate of arms sales to the kingdom would have to be made tongue firmly in cheek.
Bandar’s spokesperson gamely defended the regime against criticism from around the conference table. One participant began by attacking the current version of America’s “one-pillar policy,” recalling the collapse of the Pahlavi dynasty. Others filled in the picture. “Corruption” was a running theme, both from those who could credibly claim to speak from experience inside the kingdom as well as from the stray Manhattan real estate tycoon whose seat at the seminar came courtesy of his hefty donations to the Council’s coffers. Oil industry specialists focused on a history of financial mismanagement. One Council donor complained that the Saudis were not donating enough to the Israeli-PLO accord! Others nobly pressed the envoy to face the issue of accountability between the ruling family and its subjects, particularly those likely to be squeezed by promised economic reforms.
The irony in much of the collective criticism of the kingdom’s policies was not fully appreciated by the private consultants, business press writers, foreign policy analysts and other functionaries of the internationalist coalition gathered inside the Council’s chambers. The model of rule that underpins the “looming instability” scenario is one of governance through the distribution of oil rents to favored constituents and regions. Debt financing of Prince Bandar’s arms purchases, in combination with the already burdened treasury, is seen as threatening to a fragile social pact. “They’ve tilted the wrong way,” said former Nixon and Carter White House official William Quandt in the second Times story. “All the billions they’ve spent on arms haven’t been very useful to them.”
If the billions have not been useful to the Saudis, they were a gold mine for Congresspersons compelled to cast pro-Saudi votes, along with cabinet officials and party leaders worried about the economy of key states and electoral districts. To the extent that the regime faces politically destabilizing cutbacks in social spending, a proximate cause is the strong bipartisan push for arms exports to the Gulf as a means to bolster the sagging fortunes of key constituents and regions — the “gun belt” — that represents the domestic face of internationalism. Although the Defense Department and military spending are obviously central forces in the US foreign policy process, they remain generally peripheral to academic and policy-oriented writing on US Middle East policy. Prince Bandar, and other Saudi elites, avoided this error.
