Order Code IB93113
CRS Issue Brief for Congress
Received through the CRS Web
Saudi Arabia: Current Issues
and U.S. Relations
Updated November 8, 2004
Alfred B. Prados
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Current Issues
September 11 Terrorist Attacks and Aftermath
Allegations
Saudi Responses
Joint Congressional Report
Joint Task Force
9/11 Commission Report
Major Terrorist Attacks
Riyadh, May 2003
Riyadh, November 2003
Riyadh, April 2004
Yanbu, May 2004
Khobar, May 2004
Assassinations and Murders, Post-May 2004
Evolution of Saudi Efforts
Saudi Stance on Iraq
Operation Iraqi Freedom
Post-War Iraq: Withdrawal of U.S. Troops from Saudi Arabia
Infiltrators?
Islamic Force?
Iraqi Debt
Arab-Israeli Conflict
Crown Prince Abdullah’s Peace Plan
Saudi-Palestinian Relations
Hamas
Arms Transfers to Saudi Arabia
U.S. Arms Sales
Saudi-Pakistani Contacts
Contacts with China
Trade Relationships
Oil Production
Foreign Investment
Human Rights, Democracy, and Other Issues
Background to U.S.-Saudi Relations
Political Development
Saudi Leadership
Royal Succession
U.S. Aid, Defense, and Security
Congressional Interest in Saudi Arabia

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Saudi Arabia: Current Issues and U.S. Relations
SUMMARY
Saudi Arabia, a monarchy ruled by the
Saudi population. Since the attacks on the
Saud dynasty, enjoys special importance in
United States September 11, 2001, some
much of the international community because
commentators have maintained that Saudi
of its unique association with the Islamic
domestic and foreign policies have created a
religion and its oil wealth. Since the estab-
climate that may have contributed to terrorist
lishment of the modern Saudi kingdom in
acts by Islamic radicals. U.S. officials have
1932, it has benefitted from a stable political
generally cited Saudi support in the aftermath
system based on a smooth process of succes-
of the attacks, including increased intelligence
sion to the throne and a prosperous economy
sharing, law enforcement activities, and track-
dominated by the oil sector. Some commenta-
ing of terrorist financing.
tors have suggested that growing internal
pressures and regional tensions may have
In its final report, released on July 23,
weakened the Saudi regime in recent years;
2004, the U.S. National Commission on
others point to an apparent consensus behind
Terrorist Attacks upon the United States (the
Saudi institutions over much of the last cen-
9/11 Commission) described Saudi Arabia as
tury as evidence of long-term stability.
having been “a problematic ally in combating
Islamic extremism,” while noting that Saudi
The United States and Saudi Arabia have
cooperation has improved, especially since
long-standing economic and defense ties. A
further terrorist attacks in Saudi Arabia begin-
series of informal agreements, statements by
ning in May 2003. In its recommendations,
successive U.S. administrations, and military
the Commission states that “The United States
deployments have demonstrated a strong U.S.
and Saudi Arabia must determine if they can
security commitment to Saudi Arabia. Saudi
build a relationship that political leaders on
Arabia was a key member of the allied coali-
both sides are prepared to publicly defend —
tion that expelled Iraqi forces from Kuwait in
a relationship about more than oil.” Both the
1991. Saudi Arabia subsequently hosted U.S.
House and Senate-passed versions of S. 2845,
aircraft enforcing the no-fly zone over south-
the 9/11 Recommendations Implementation
ern Iraq. Saudi officials expressed opposition
Act, would require the President to submit to
to the U.S.-led military campaign launched
Congress a strategy for U.S.-Saudi collabora-
against Iraq in March 2003 (Operation Iraqi
tion.
Freedom), although Saudi Arabia reportedly
permitted certain support operations by U.S.
Other principal issues of bilateral interest
and British military forces, in addition to
include security in the post-war Gulf region,
making some facilities available to them. By
the Saudi position on the Arab-Israeli conflict,
mutual agreement, the United States withdrew
arms transfers to Saudi Arabia, Saudi external
virtually all its forces from Saudi Arabia at the
aid programs, bilateral trade relationships, and
end of August 2003.
Saudi policies involving human rights and
democracy. An amendment adopted as Sec-
Bombing attacks against several U.S. and
tion 582 in the House version of H.R. 4818,
foreign operated installations in Saudi Arabia
the Foreign Operations Appropriations bill for
have raised some concerns about security of
FY2005, prohibits U.S. assistance to Saudi
U.S. personnel and what appears to be grow-
Arabia. The Senate version does not contain
ing anti-Americanism in some segments of the
this ban.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
In its final report, released on July 23, 2004, the U.S. National Commission on Terrorist
Attacks Upon the United States (the 9/11 Commission) contains a recommendation that the
“United States and Saudi Arabia must determine if they can build a relationship that political
leaders on both sides are prepared to publicly defend — a relationship about more than oil.”
Section 4081(b) of the House passed version of S. 2845, the 9/11 Recommendations
Implementation Act, would require the President to submit to designated congressional
committees a strategy for U.S.-Saudi collaboration, with special reference to combating
terrorist financing. Section 1017(b)(4) of the Senate passed version also contains a reporting
requirement on U.S.-Saudi collaboration. The two versions were passed by the House and
Senate on October 16 and October 6, respectively.
In August and September 2004, the Saudi government announced that municipal
elections will be held for the first time since 1963, in a three-stage process beginning in
February 2005.
BACKGROUND AND ANALYSIS
Current Issues
Oil and national security concerns have combined to produce a close and cooperative
relationship between the United States and Saudi Arabia for much of the past century. Since
the award of the first Saudi oil concession to a U.S. company in 1933, both states have had
an increasing interest, respectively, in the marketing and acquisition of Saudi petroleum
supplies. As regional threats multiplied in the latter half of the century, mutual concerns over
the stability of Saudi Arabia and other moderate regimes in the Arabian Peninsula
engendered a significant degree of defense cooperation. Saudi Arabia was a key member of
the allied coalition that expelled Iraqi forces from Kuwait in 1991, and for the next 12 years
it hosted more than 5,000 U.S. military personnel, most of them from U.S. Air Force units
that enforced a no-fly zone over southern Iraq (Operation Southern Watch). The U.S.
military presence, however, aroused resentment among many Saudis, particularly those
inclined toward Islamic fundamentalism, and engendered both domestic and regional
criticism of the Saudi leadership for allowing non-Muslim soldiers to be stationed in Saudi
Arabia, inasmuch as the country is home to the two holiest places in the Islamic religion (the
cities of Mecca and Medina) In August 2003, by mutual U.S.-Saudi agreement, almost all
U.S. military personnel were withdrawn from Saudi Arabia, but the two countries will
continue to conduct joint training activities and military exercises. (See below, Future U.S.
Military Presence.)
September 11 Terrorist Attacks and Aftermath
Allegations. The September 11, 2001 attacks kindled criticisms within the United
States of alleged Saudi involvement in terrorism or of Saudi laxity in acting against terrorist
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groups. Commentators have pointed to the high percentage of Saudi nationals among the
hijackers (15 out of 19). Some critics go so far as to accuse Saudi government officials of
responsibility for the September 11, 2001, attacks through design or negligence and for the
continuing threat posed by the perpetrators or by like-minded terrorist groups. Others
maintain that Saudi domestic and foreign policies have created a climate that may have
contributed to terrorist acts by Islamic radicals. For example, some believe that the Saudi
regime has fostered international terrorism by funding religious schools (madrasas) that
propagate extreme forms of Islam and advocate violence. (For more information on these
schools, see CRS Report RS21654, Islamic Religious Schools, Madrasas: Background, by
Febe Armanios.) Critics of Saudi policies have also cited a multiplicity of reports that the
Saudi government has permitted or encouraged fund raising in Saudi Arabia by charitable
Islamic groups and foundations linked to Osama bin Laden’s Al Qaeda organization, which
the U.S. government has identified as clearly responsible for the hijacks. The exiled bin
Laden was formerly a Saudi national, but Saudi authorities revoked his citizenship in 1994.
(For more information on the question of Saudi fundraising, see CRS Report RL32499,
Saudi Arabia: Terrorist Financing Issues, July 28, 2004.)
Saudi Arabia in Brief

Population (July 2004):
25,795,938 (includes 5,576,076 foreign residents)
Growth rate: 2.44%
Area:
1,960,582 sq.km. (756,985 sq.mi.); just over one fifth the size of the
United States
Ethnic Groups:
(native Saudis only) Arab 90%; Afro-Asian 10%
Religion:
(native Saudis only) Muslim 100% (Sunni 85-95%, Shi’ite 5-15%)
Literacy (2003):
78.8% (male 84.7%, female 70.8%)
GDP (2003):
$211.6 billion; growth rate: 6.4%*
External Public Debt (2003): $39.1 billion
Inflation (2003):
1.0%
Unemployment (2003):
25%
*Unusually high figure, largely owing to surge in oil production.
Sources: IMF; U.S. Dept. of Commerce; CIA World Factbook; Economist Intelligence Unit (London)
Saudi Responses. Saudi officials maintain that they are working closely with the
United States to combat terrorism, which they say is aimed as much at the Saudi regime as
it is at the United States. In October 2001, the Saudi government announced that it would
implement U.N. Security Council Resolution 1373, which called among other things for
freezing terrorist related funds. The Saudi government later invited the G-7 Financial Action
Task Force (FATF) on Money Laundering into the kingdom to conduct a “mutual
evaluation,” established a Financial Intelligence Unit (FIU) to collect intelligence on
financial activity, and passed new banking regulations.1 On February 24, 2004, Saudi Arabia
and 12 other Middle East or Asian countries attended a conference organized by the 29-
1 Matthew Levitt, “Saudi Financial Counterterrorism Measures (Part II): Smokescreen or
Substance?” Policywatch No. 687, Washington Institute for Near East Policy, Dec. 10, 2002, p. 1.
A U.S. Treasury Department official confirmed on May 6, 2004, that the FIU had been established.
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member FATF, where attendees focused on terrorist use of charitable organizations to
finance terrorist operations.
Saudi officials say they have arrested suspected terrorists including persons believed to
be affiliated with Al Qaeda and sought to dampen religious extremism in the Kingdom. In
a speech to an Islamic conference on August 30, 2003, for example, Saudi King Fahd bin
Abd al-Aziz condemned terrorism and exhorted Muslim clerics to emphasize peace, security,
cooperation, justice, and tolerance in their sermons. Press reports indicate that Saudi security
forces had arrested 600 suspects as of November 10, 2003. On several occasions, most
recently in September 2003, the Saudi Embassy issued a comprehensive white paper
detailing initiatives undertaken by Saudi Arabia in the war against terrorism since the
September 11, 2001 attacks, with particular emphasis on apprehension of suspected
terrorists, establishment of joint task forces with the United States (see below), intelligence
cooperation, and various steps against terrorism financing.
U.S. government statements have generally complimented Saudi cooperation with the
U.S. campaign against terrorism, while sometimes suggesting that the Saudi government
could do more. In its most recent annual report entitled Patterns of Global Terrorism, 2003
(published April 29, 2004), the State Department noted that the Saudi government adopted
a new law in August 2003 criminalizing money laundering and terrorist financing, and also
established new financial controls to regulate charitable contributions. In this connection,
according to the U.S. Treasury Department, the United States and Saudi Arabia have worked
together in jointly designating several entities as supporters of terrorism. For example, on
June 2, 2004, a spokesman of the Saudi Embassy in Washington, D.C. announced that a large
Saudi-based charitable organization (the al-Haramayn Islamic Foundation), which has been
linked to terrorist activity, would be dissolved and that its assets, along with the assets of
other Saudi charitable organizations, would be merged into a new organization to be called
the Saudi National Commission for Relief and Charity Work Abroad, in an effort “to ensure
that the charity of our citizens goes to those who need it.” During the same period, the
United States and Saudi Arabia reportedly asked the U.N. Sanctions Committee to add five
other overseas branches of al-Haramayn to its list of foreign terrorist organizations.

Joint Congressional Report. On July 24, 2003, the House and Senate Intelligence
Committees released part of a 900-page report entitled Joint Inquiry into Intelligence
Community Actions before and after the Terrorist Attacks of September 11, 2001 (S.Rept.
107-351; H.Rept. 107-792). The Bush Administration refused to allow the release of an
approximately 28-page section of the report. According to press articles, persons who claim
to have read the still-classified section of the report say it covers Saudi links with individuals
involved in the September 11 attacks; specifically, the classified section reportedly states that
senior Saudi officials channeled hundreds of millions of dollars to charitable groups that may
have helped fund the attacks.2 Saudi officials, including the Saudi Ambassador to the United
States, have denounced the report, maintaining that “Al Qaeda is a cult seeking to destroy
Saudi Arabia as well as the United States. By what logic would we support a cult that is
trying to kill us?”3 On July 29, in response to an urgent request from Saudi Arabia, President
2 “Classified Section of Sept. 11 Report Faults Saudi Rulers,” New York Times, July 26, 2003.
3 “Saudis Slam Congressional Report Accusing Kingdom of Poor Cooperation in Terror War,”
(continued...)
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Bush met with Saudi Foreign Minister Saud al-Faysal, who called for the release of the still-
classified section of the report to enable Saudi Arabia to rebut the allegations contained
therein. President Bush refused to do so on the grounds that disclosure could reveal
intelligence sources and methods to enemies of the United States and might compromise the
on-going investigation of the September 11, 2001, attacks.4
Joint Task Force. In August 2003, the United States and Saudi Arabia reached an
agreement for the establishment in Saudi Arabia of a joint U.S.-Saudi task force to monitor
terrorist financing. The task force, composed of representatives from the U.S. Treasury
Department, the FBI, and other U.S. agencies, will screen bank accounts, computer records,
and other financial data in an effort to track the flow of money to terrorist organizations and
shut it off. U.S. officials left for the Saudi capital of Riyadh on August 26, to work out
details regarding the task force. News articles have noted that this is the first time Saudi
authorities have allowed U.S. government agencies to maintain an extended presence in
Saudi Arabia or provided them with access to Saudi documents and investigations. Some
speculate that the May 2003 bombings of three residential compounds in Riyadh (see below)
in which 34 people died, including eight Americans and seven Saudis, may have impelled
Saudi authorities to expand cooperation with the United States in fighting terrorism (“U.S.-
Saudi Anti-Terror Operation Planned,” Washington Post, August 26, 2003).
9/11 Commission Report. In its final report, released on July 23, 2004, the U.S.
National Commission on Terrorist Attacks upon the United States (the 9/11 Commission)
described Saudi Arabia as having been “a problematic ally in combating Islamic extremism.”
The report takes note of long-standing cooperative relations between the U.S. and Saudi
governments, growing misunderstandings at the popular level in recent years, and U.S.
criticisms in the aftermath of the 9/11 attacks that Saudi officials could do more to fight
terrorism. The report acknowledges increased efforts in that regard since mid-2003 when
terrorists began hitting targets in Saudi Arabia itself with more frequency; today, according
to the report, “The Kingdom of Saudi Arabia is now locked in mortal combat with al Qaeda.”
One of the key recommendations in the 9/11 report addresses the U.S.-Saudi relationship:
The problems in the U.S.-Saudi relationship must be confronted, openly. The United
States and Saudi Arabia must determine if they can build a relationship that political
leaders on both sides are prepared to publicly defend — a relationship about more than
oil. It should include a shared commitment to political and economic reform, as Saudis
make common cause with the outside world. It should include a shared interest in greater
tolerance and cultural respect, translating into a commitment to fight the violent
extremists who foment hatred.
Major Terrorist Attacks
The mid-1990s saw two forerunners of more recent attacks by terrorists against U.S. and
other targets starting in 2003. The first attack, which occurred on November 13, 1995, at the
headquarters of a U.S. training program for the Saudi National Guard in the capital of
3 (...continued)
Associated Press News Wire, July 26, 2003.
4 “Bush Refuses to Declassify Saudi Section of Report,” New York Times, July 30, 2003.
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Riyadh, killed seven persons (including five U.S. citizens). Several months later, Saudi
authorities executed four Saudis, who reportedly confessed to having been influenced by
Islamic fundamentalist exiles. The second and more lethal explosion occurred in June 1996
at Khobar Towers, a housing facility for U.S. Air Force personnel near Dhahran Air Base,
killing 19 U.S. Air Force personnel and wounding many others. Saudi Interior Minister
Prince Nayif told reporters on May 22, 1998, that the bombings “were carried out by Saudis
with the support of others.” On June 21, 2001, U.S. Attorney General John Ashcroft
announced that a federal grand jury had indicted 14 individuals in connection with the
explosion, which killed 19 U.S. servicemen and wounded 372 others. According to the U.S.
Justice Department, the suspects belonged to the Saudi and Lebanese branches of the militant
Shi’ite Muslim organization Hizballah, which is supported by Iran. The 1996 Khobar
bombing remains unresolved, but seven years passed before another incident of this nature
took place.
Riyadh, May 2003. Three near-simultaneous suicide bombings at about 11:20 p.m.
on May 12, 2003, destroyed three housing compounds in Riyadh, Saudi Arabia, inhabited
by U.S. military personnel and other foreign residents in Riyadh. According to reports, as
many as 34 people were killed, including eight Americans, seven Saudis, two Jordanians,
two Filipinos, one Lebanese, one Swiss and nine unidentified persons (possibly including the
perpetrators), while many more were wounded. A fourth explosion occurred the following
morning at the headquarters of a U.S.-Saudi joint venture, but there were no reported
injuries. U.S. and Saudi officials said the attacks had many of the earmarks of previous Al
Qaeda operations in their coordinated timing and in their techniques, in that the assailants
attacked guards at the compound gates and then drove their trucks into the compounds.
President Bush condemned the attack, which he linked to Al Qaeda.5 Top Saudi leaders,
including Crown Prince Abdullah and Defense Minister Prince Sultan, also condemned the
attacks, and some commentators expressed the view that the attacks were targeted against
the Saudi government as well. On May 13, a U.S. interagency team including six FBI
representatives left for Saudi Arabia to assist in investigating the attack. A joint U.S.-Saudi
task force was established several months later, as discussed above.
Riyadh, November 2003. On November 9, a car bomb exploded in the Saudi capital
of Riyadh at a residential compound inhabited mainly by foreign residents from other Arab
countries, killing at least 17 and wounding over 120, including four Americans. According
to a statement by the Saudi Cabinet, King Fahd promised to “strike with an iron fist” at
anyone seeking to threaten security and stability in the country; Interior Minister Prince Nayif
said there would be no dialog with the perpetrators “other than with the rifle and the sword”;
and the Minister of Islamic Affairs described the attack as “flagrant aggression” against
Islam. U.S. and Saudi officials blamed Al Qaeda for the attack; visiting U.S. Deputy
Secretary of State Richard Armitage said “this attack bears their hallmark.” Noting that
virtually all U.S. military personnel have departed the kingdom, some commentators
suggested that the perpetrators were primarily seeking to destabilize the Saudi government.
Riyadh, April 2004. On April 21, 2004, a suicide bomber detonated a Chevrolet
Blazer packed with explosives in front of the Saudi General Security building in the capital
of Riyadh, killing at least four persons (two Saudi police officers, one civilian, and one
5 “Bush Vows ‘American Justice’ For Bombers in Saudi Arabia,” Washington Post, May 14, 2003.
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Syrian girl) and wounding 148. Al-Haramayn Brigades, a group allegedly connected to Al
Qaeda, claimed responsibility for the attack, which was the first suicide bombing of a major
Saudi government building. Saudi officials said the perpetrators “are not what they claim
to be: people of Islam” but “criminals.”
Yanbu, May 2004. During a shooting spree on May 2, 2004, four gunmen killed two
U.S., one Australian, and two British citizens employed by the Swiss-Swedish based
engineering company ABB Lummus, which was engaged in upgrading operations at a
petrochemical plant in the Saudi Red Sea port city of Yanbu. The plant is jointly owned by
U.S. Exxon Mobil and a Saudi industrial firm. The gunmen dragged the body of one U.S.
victim from the back of a car and fired at a nearby McDonald’s and a Holiday Inn before
being shot by members of the Saudi Arabian National Guard. Two Saudi security officers
were killed while trying to apprehend the gunmen. No group has claimed responsibility, but
Saudi Interior Minister Prince Nayif blamed Al Qaeda for being behind the shooting, and a
statement of undetermined authenticity by Abdul Aziz al-Muqrin, the leader of an apparent
Al-Qaeda affiliate known as “Al-Qaeda in the Arabian Peninsula,” on May 5 praised “the
four heros” who carried out the attack. Meanwhile, Foreign Minister Prince Saud al-Faysal
accused a London-based dissident group, the Movement for Islamic Reform in Arabia. In
addition, Crown Prince Abdullah and Prince Saud suggested that “Zionists” had manipulated
some of the terrorists but gave no evidence to support this claim.
Khobar, May 2004. On May 29, 2004, at least four gunmen attacked a residential
compound housing oil company employees and dependents in Khobar, Saudi Arabia, seizing
approximately 50 hostages. Twenty-two of the hostages, including one U.S. citizen, were
killed and approximately 25 wounded before the hostage-takers fled during a rescue
operation mounted by Saudi commandos on May 30. Three gunmen either escaped or were
allowed to leave by Saudi authorities in return for releasing the hostages; a fourth, described
as a ringleader, was wounded and captured. In a taped statement, Al Qaeda operative Abd
al-Aziz al-Muqrin (see above) claimed responsibility for the attack and promised that the
year 2004 would be “bloody and miserable for infidels.”
Assassinations and Murders, Post-May 2004. Since 2004, terrorist groups in
Saudi Arabia have targeted several western expatriates, including three U.S. contractors
working on military-related projects. This shift by terrorists from bombs to targeted
assassinations has been described by some observers as an attempt by the perpetrators to
deflect mounting criticism of Saudi militants for previous indiscriminate bombings that cause
injury and death to increasing numbers of Saudis and other Muslims.6 On June 8 and 12,
respectively, two U.S. contractors were shot and killed near their residences. On June 12,
another U.S. contractor, Lockheed Martin employee Paul M. Johnson, was kidnaped by
Muqrin’s group, which subsequently gave Saudi authorities a three-day deadline to release
detained members of a militant Islamist cell. On June 18, Muqrin’s “Al-Qaeda in the
Arabian Peninsula” posted photos in which they claimed to have beheaded Johnson after
Saudi authorities did not meet the three-day deadline. Meanwhile, an estimated 15,000
members of Saudi security forces mounted a massive hunt to find Johnson and his captors,
and on June 19, Saudi officials announced that they had killed Muqrin and three of his
6 See Craig Whitlock and Renae Merle, “Saudi Victims Had Military Link,” Washington Post, June
14, 2004.
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confederates in a shootout in the capital of Riyadh. In a CNN interview on June 21, a senior
Saudi foreign policy advisor described the elimination of Muqrin as a major blow to his
group but added that others might seek to reconstitute the group’s capability. Subsequently,
conflicting press reports indicated that Muqrin’s replacement, Saleh Al-Oufi, was killed by
Saudi security forces and replaced by Saud Al-Otaibi, but a Saudi Ministry of Interior
officials denied this report.
Evolution of Saudi Efforts. In the past, U.S. officials have criticized Saudi
counterparts for insufficient sharing of information that Saudi officials have gained from
their investigations of terrorist acts that have killed or injured U.S. citizens. Press reports
indicate that U.S.-Saudi cooperation in the investigation of terrorist incidents has improved
since mid-2003. Both U.S. and Saudi officials said the impetus for closer cooperation came
from the May attacks, which one knowledgeable observer described as “the inevitable wake
up call” for Saudi leaders increasingly concerned over apparent attempts by terrorists to
target the Saudi regime. The November bombing, which occurred after virtually all U.S.
forces had left the country, may have reinforced Saudi concerns over their vulnerability to
such attacks by Al Qaeda and like-minded groups,7 and Saudi willingness to share
information with U.S. officials. According to the 9/11 Commission’s report, “[a]s in
Pakistan, Yemen, and other countries, [Saudi] attitudes changed when the terrorism came
home.” In another vein, on June 23, 2004, Saudi Crown Prince Abdullah offered a limited
amnesty to members of a “misguided group” who turn themselves in to Saudi authorities
within one month. According to press reports, only six responded to the offer, one of whom
was on the kingdom’s 26-member most-wanted list. Meanwhile, in early June, Saudi
Ambassador to the United States Prince Bandar bin Sultan promised to conduct war against
the insurgents, whom he described as “deviants” and “traitors to their faith” and added: “War
means war. It is not Boy Scout camp.”8
Saudi Stance on Iraq
Operation Iraqi Freedom. Between the Gulf War of 1991 and Operation Iraqi
Freedom in 2003, Saudi Arabia hosted U.S. Air Force units that conducted overflights to
enforce a no-fly zone over southern Iraq (Operation Southern Watch). Although they did not
usually object to small scale U.S. responses to Iraqi aircraft or air defense units challenging
allied aircraft conducting these overflights, Saudi authorities were opposed to large-scale
allied military action against Iraqi targets. Saudi Arabia opposed the U.S.-led Operation Iraqi
Freedom, and on March 19, 2003 (the day President Bush initiated the campaign), a
communique by King Fahd stated that Saudi Arabia “will not participate in any way” in the
war. A number of news reports, however, indicated that Saudi Arabia informally agreed to
provide logistical support to U.S.-led forces: permission to conduct refueling,
reconnaissance, surveillance, and transport missions from bases in Saudi Arabia; landing and
overflight clearances; and use of a U.S.-built facility in Saudi Arabia known as the Combat
7 “U.S.-Saudi Anti-Terror Operation Planned,” Washington Post, Aug. 26, 2003; “A Campaign to
Rattle a Long-Ruling Dynasty,” New York Times, Nov. 10, 2003.
8 “Turning Back the Tide,” Middle East Economic Digest, July 23-29, 2004, p. 23.
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Air Operations Center (CAOC) to coordinate military operations in the region.9 Also, on
March 8, 2003, Saudi Defense Minister Prince Sultan bin Abd al-Aziz said his government
was allowing U.S. troops to use two airports in northern Saudi Arabia for “help in a technical
matter.” A later report in the Philadelphia Inquirer on April 26, 2004, quoting unnamed
U.S. and Saudi officials, alleged that Saudi Arabia had a wider role in the war than had been
publicized at the time. In addition to support noted above, the officials said the Saudi royal
family permitted the staging of special forces operations from inside Saudi Arabia, allowed
some 250-300 mainly transport and surveillance planes to fly missions from Saudi Arabia,
and provided tens of millions of dollars in discounted oil, gas, and fuel for U.S. forces.
Meanwhile, on March 5, 2003, Saudi Arabia dispatched over 1,000 troops to Kuwait,
where they formed part of a joint umbrella force from several Gulf countries to help protect
Kuwait but did not have an offensive role against Iraq. According to the Saudi Embassy in
Washington, Saudi Arabia contributed a total of 6,000 troops to the allied force in Kuwait
(known as Peninsula Shield).
Post-War Iraq: Withdrawal of U.S. Troops from Saudi Arabia. Following the
collapse of the Saddam Hussein regime, the New York Times reported on April 30, 2003, that
the United States planned to withdraw almost all of its 5,000 troops in Saudi Arabia and
move its Combat Air Operations Center to neighboring Qatar. The U.S. Air Force unit to
which most U.S. military personnel in Saudi Arabia had been assigned was formally de-
activated on August 27, 2003. On September 22, 2003, the New York Times reported that
the last American combat troops had left Saudi Arabia earlier in the month. Approximately
220 U.S. military and contract advisors, most of them working with the Saudi National
Guard, remain in country. Both U.S. and Saudi officials hoped the departure of U.S. troops
would remove some of the pressure on the Saudi government from militant anti-U.S. groups;
but some terrorist attacks against residential compounds have continued, as noted above.
Infiltrators? In late August 2003, a senior State Department official commented that
pro-Saddam Arab volunteer fighters have been infiltrating into Iraq through Iran, Syria, and
Saudi Arabia to mount attacks against U.S.-led coalition forces in Iraq. In remarks published
on August 26, a senior Saudi foreign policy advisor responded that “we have no evidence of
Saudis crossing into Iraq and we have received no evidence from the U.S. government.”10
A press article on November 19, 2003, quoted local U.S. military commanders as saying that
their soldiers had encountered relatively few foreign fighters crossing into Iraq from
neighboring countries, including Saudi Arabia.11 According to a New York Times report of
April 23, 2004, quoting Saudi officials, the Saudi government has installed heat sensors to
detect movement on the Saudi-Iraqi border in an effort to seal it.
Islamic Force? In a conversation with U.S. Secretary of State Colin Powell on July
28, 2004, Saudi Crown Prince Abdullah proposed the creation of an Islamic force to help
stabilize Iraq. A Saudi official suggested Pakistan, Malaysia, Algeria, Bangladesh, and
Morocco as possible candidates for the force, which would not include countries contiguous
9 See for example “U.S. And Saudis Agree On Cooperation,” Washington Post, Feb. 26, 2003.
10 “Saudis Challenge U.S. Over Iraq Fighters,” Washington Post, Aug. 26, 2003.
11 “U.S. Officers in Iraq Find Few Signs of Infiltration by Foreign Fighters,” New York Times, Nov.
19, 2003.
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to Iraq. Secretary Powell said the proposal “has to be studied in depth.” Press reports
indicate U.S. concern over command and control of such a force and whether it would
supplement U.S.-led allied coalition troops in Iraq or whether it would replace a comparable
number of coalition troops.12
Iraqi Debt. As of January 2004, Iraq reportedly owed the Saudi government $9 billion
in debts incurred during the Saddam Hussein regime, while private Saudi firms and banks
hold about $19 billion in Iraqi debt.13
Arab-Israeli Conflict
Saudi Arabia supports Palestinian aspirations for a state and strongly endorses Muslim
claims in the old city of Jerusalem. At the same time, it has supported U.S. policy by
endorsing Israeli-Palestinian peace agreements, and joined with neighboring Gulf states in
1994 in terminating enforcement of the so-called secondary and tertiary (indirect) boycotts
of Israel while retaining the primary (direct) boycott. Saudi leaders have been increasingly
critical of Israel’s measures against Palestinians in the Israeli-occupied West Bank and Gaza
territories since the Palestinian uprising began in September 2000. On April 16, 2004, a
Saudi government communique criticized the U.S. Administration’s endorsement of a
unilateral plan by Israeli Prime Minister Ariel Sharon to withdraw from Gaza and some
Israeli settlements in the West Bank while retaining other Israeli settlements there.
Crown Prince Abdullah’s Peace Plan. In February 2002, Crown Prince Abdullah
informally floated a peace proposal calling for full Israeli withdrawal from Israeli-occupied
territories in return for full normalization of relations between Arab states and Israel. An
expanded version of his proposal was adopted at an Arab League summit conference held
on March 27-28, 2002. It called among other things for Israeli withdrawal from territories
it had occupied since 1967, a “just solution to the problem of Palestinian refugees,” and
establishment of normal relations between Arab states and Israel. Over a year later, on June
3, 2003, President Bush, Crown Prince Abdullah, and four other Arab leaders met at Sharm
al-Shaykh, Egypt, where the attendees endorsed the Road Map — a plan for Palestinian-
Israeli peace promulgated by the United States, the United Nations, Russia, and the European
Union (the “Quartet”).
Saudi-Palestinian Relations. Saudi Arabia, like other Arab states, recognizes the
Palestine Liberation Organization (PLO) as the legitimate representative of the Palestinian
people. Saudi officials say that their support to Palestinians (estimated at $80 million to
$100 million per year) is provided exclusively to the Palestinian Authority (PA), which was
established under the Israeli-Palestinian agreement of September 13, 1993, known as the first
Oslo Accord.14 Saudi Arabia has provided aid (variously estimated at $33 million and $59
million) to families of Palestinians killed or injured in the three-year-old Palestinian
uprising; in addition, Saudis raised additional funds (over $100 million according to one
12 “Islamic Troop Plan Prompts Skepticism,” The Washington Post, Aug. 1, 2004.
13 Tom Everett-Heath, “Opposing Views of the Kingdom to Come,” Middle East Economic Digest,
Jan. 23-29, 2004, p. 1.
14 “Flow of Saudi Cash to Hamas Is Under Scrutiny by U.S.,” New York Times, Sept. 17, 2003.
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report) for this purpose at a telethon sponsored by King Fahd on April 11, 2002. Saudi
officials told U.S. counterparts in late April 2002 that proceeds of the telethon are funneled
through non-governmental organizations to provide some humanitarian support to needy
Palestinian families; the Saudis drew a distinction between their fund raising activities and
those of Iraq under Saddam Hussein, which paid families who would sacrifice their children
as suicide bombers. (For more information on Saudi payments to families of Palestinians
killed in the Palestinian uprising or imprisoned by Israeli authorities, see CRS Report
RL32499, Saudi Arabia: Terrorist Financing Issues.)
Hamas. There have been unsubstantiated reports of Saudi assistance to the PLO’s
principal rival organization, the fundamentalist Hamas organization, which the U.S.
government has designated as a foreign terrorist organization. In its annual report on
terrorism for the year 2001 (Patterns of Global Terrorism, 2001, published May 21, 2002),
the State Department noted that Hamas receives funding from “private benefactors in Saudi
Arabia and other moderate Arab states.” In its most recent issue (Patterns of Global
Terrorism, 2003, published April 29, 2004), the State Department does not specifically
mention Saudi Arabia; rather, it states that Hamas “[r]eceives some funding from Iran but
primarily relies on donations from Palestinian expatriates around the world and private
benefactors, particularly in Western Europe, North America, and the Persian Gulf region.”
The State Department reports do not estimate amounts involved. According to one press
report, people in Saudi Arabia contribute approximately $5 million to Hamas per year, or
approximately half of its annual operating budget.15 Some reports indicate that Saudi
authorities tolerate fund raising for Hamas. For example, in May 2002, Israeli officials,
citing captured Palestinian documents, said the Saudi government had given money to 13
charities, seven of which provide support to Hamas. Saudi spokesman Adel al-Jubeir, an
advisor to Crown Prince Abdullah, maintains that “no Saudi government money goes to
Hamas, directly or indirectly.”16 (See also CRS Report RL32499, cited above.)
Arms Transfers to Saudi Arabia
U.S. Arms Sales. The United States is currently Saudi Arabia’s leading arms
supplier. Total value of arms agreements with Saudi Arabia from 1950 through March 31,
1997, was $93.8 billion, while arms agreements with Saudi Arabia from 1994 through 2001
amounted to $4.6 billion. The upsurge in Saudi arms purchases from the United States after
1990 was due in large measure to the Persian Gulf crisis and its aftermath. The largest recent
sale was a $9 billion contract for 72 F-15S advanced fighter aircraft, signed in May 1993.
As Table 1 shows, approximately 21% of the value of U.S.-Saudi arms contracts from 1950
to 1997 were for lethal equipment (i.e., weapons, ammunition, and combat vehicles, aircraft,
and ships); the largest portion (32%) went for support services (repair, rehabilitation, supply
operations, and training). Another major component of the Saudi program has been
construction of military bases and facilities, accounting for 19%, although most military
infrastructure projects were completed by 1990. A downward trend has marked Saudi arms
15 Don Van Natta, Jr., with Timothy L. O’Brien, “Flow of Saudis’ Cash to Hamas Is Scrutinized,”
The New York Times, Sept. 17, 2003. The report cites American law enforcement officials,
American diplomats in the Middle East, and Israeli officials.
16 Don Van Natta, Jr. with Timothy L. O’Brien, “Flow of Saudis’ Cash to Hamas Is Scrutinized,” The
New York Times, Sept. 17, 2003.
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procurement since the mid-1990s as Saudi Arabia completed many of its post-Gulf War
purchases and the country faced straitened finances.
Saudi-Pakistani Contacts. According to press reports in 1999, U.S. officials were
concerned over a visit by the Saudi Defense Minister to nuclear and missile facilities in
Pakistan, but had received assurances from Saudi officials that Saudi Arabia was not seeking
nuclear weapons or other weapons of mass destruction. Four years later, a Washington Times
article of October 22, 2003, citing “a ranking Pakistani insider,” reported that Saudi Arabia
and Pakistan have concluded a secret agreement on nuclear cooperation, under which
Pakistan would provide Saudi Arabia with nuclear technology in return for oil at reduced
prices. On the same day, a U.S. State Department spokesman said the U.S. Administration
had seen these reports but added that “[w]e have not seen, however, any information to
substantiate what would seem to us to be rather bald assertions.” The spokesman went on
to note that Pakistan understands U.S. concerns over nuclear proliferation and that Saudi
Arabia is a party to the Nuclear Non-Proliferation Treaty. The Saudi Ambassador to the
United States denied that Saudi Arabia and Pakistan had concluded a nuclear agreement and
repeated previous Saudi calls for a nuclear-free zone in the Middle East.
Contacts with China. In 1988, shortly before the end of the cold war, Saudi Arabia
concluded a controversial purchase of approximately 30 intermediate range CSS-2 missiles
from China, in its first and only major arms purchase from a communist (or formerly
communist) state. A Reuters news wire report of February 15, 2004, quoted unnamed U.S.
officials as voicing concern over continued alleged cooperation between China and Saudi
Arabia on missiles; the report did not provide details. On the following day, the Saudi Press
Agency said a responsible source at the Saudi Defense Ministry denied the report, which a
defense spokesman described as “fabricated and baseless.”
Table 1. U.S. Arms Transfers to Saudi Arabia, 1950-1997
Orders
Deliveries
Category
$ in
% of Total
% of Total
$ in Billions
Billions
Orders
Deliveries
Weapons & Ammunition
19.893
21.2
9.092
15.6
Support Equipment
16.614
17.7
9.815
16.8
Spare Parts & Modifications
9.778
10.4
5.259
9.0
Supply, Repair, Training
29.615
31.6
17.804
30.6
Construction
17.924
19.1
16.197
27.8
TOTALS
93.824
—
58.167
—
Source: DOD. All figures are current through March 31, 1997, which is latest detailed data available.
U.S. arms ordered by Saudi Arabia from 1998 through 2001 amounted to $600 million (considerably
lower than in previous years), while U.S. arms delivered to Saudi Arabia during the same period
amounted to $12.8 billion, reflecting earlier orders.
Trade Relationships
Saudi Arabia was the largest U.S. trading partner in the Middle East in 2003. For that
year, Saudi exports to the United States were estimated at $17.7 billion (a marked increase
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from the previous year’s 12.2 billion) and imports from the United States at $4.3 billion.
Comparable figures for Israel, the second largest U.S. trading partner in the Middle East in
2003, were $12.8 billion in exports and $4.6 billion in imports . To a considerable extent,
this high volume of trade is a result of U.S. oil imports from Saudi Arabia and U.S. arms
exports to that country. The Saudis buy significant amounts of U.S. commercial equipment,
such as machinery, vehicles, and electronic items as well. Saudi Arabia has applied to join
the 128-member World Trade Organization (WTO), and U.S. officials including President
Bush have expressed support for its application.
Oil Production. With the world’s largest proven oil reserves (estimated at 261.7
billion barrels in January 2001), Saudi Arabia produced an average of 8.8 million barrels per
day (bpd) of crude oil as of May 2003. Approximately 14.5% of U.S. oil imports and 8.8%
of total U.S. oil consumption came from Saudi Arabia during 2002. Formerly the largest
foreign supplier of oil to the United States, Saudi Arabia has been exceeded in this role by
Venezuela and/or Canada during recent years (see Table 2).
In recent years, Saudi Arabia has alternately supported cuts and increases in production
as oil prices on the international market have fluctuated. Under a “gentlemen’s agreement”
reached in June 2000, members of the Organization of Petroleum Exporting Countries
(OPEC) established a mechanism to adjust the supply of oil by 500,000 bpd if the 20-day
average price of oil moved outside a $22 to $28 price band. Members disagree, however, as
to whether this mechanism is automatic or requires separate action by OPEC to implement,
and Saudi Arabia has spoken of a target price of $25 rather than a price band. Prices have
risen markedly in recent years as regional conflict and terrorism have fueled concern over oil
supply, bringing prices to a peak of nearly $50 per barrel on August 20, 2004, before
receding to $45 on September 2. Saudi Arabia, the only OPEC state with spare production
capacity, raised production from 9.25 million barrels per day to 9.5 million barrels per day
in August 2004 and may pump in subsequent months.
Table 2. Oil Consumption and Imports
(in millions of barrels per day)
Category
2000
2001
2002
2003
Total U.S. Consumption
19.701
19.649
19.761
20.044
Total U.S. Imports
11.459
11.871
11.530
12.254
Imports from Saudi Arabia
1.572
1.662
1.552
1.772
Imports from Venezuela
1.546
1.553
1.398
1.385
Imports from Canada
1.807
1.828
1.971
2.068
Source: DOE.
Foreign Investment. Saudi leaders have shown increasing interest in attracting
foreign investment in their energy sector, although projects in upstream oil apparently remain
off limits. On April 10, 2000, King Fahd approved a new foreign investment law that allows
international investors to have full ownership of projects and related property in Saudi
Arabia, reduces taxes from 45% to 30% on corporate profits, and restructures (but apparently
does not abolish) requirements for foreign businessmen to have a Saudi sponsor. On
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February 11, 2001, the Saudi Supreme Economic Council issued a so-called “negative list”
of those investment activities that remain off limits to foreign investment. In general, the list
covers oil exploration and production, some manufacturing activities, radio and
telecommunications, transport, electricity transmission and distribution, and a range of
services including tourism, publishing, real estate brokerage, and insurance. According to
news reports in March 2001, international trade officials expressed disappointment over the
length and scope of the list. The list will be reviewed annually, however, and some observers
have speculated that it will be shortened as the country adjusts to an expansion in foreign
investment.
On June 3, 2001, Saudi Arabia signed three preliminary agreements worth
approximately $25 billion with eight international oil companies to develop three natural gas
fields, together with related power plants, transmission pipelines, and water desalinization
projects. Five of these companies were U.S.-based, including Exxon Mobil Corporation,
Conoco, Phillips Petroleum Company, Occidental Petroleum Corporation, and Marathon.
Exxon Mobil is the lead manager for two of the three gas field projects. Conclusion of final
agreements met continuing delays as Saudi and company negotiators tried to resolve several
issues, including taxes, rate of return on investments, and size of gas reserves being offered.
Some think the September 11, 2001, attacks, which led to increased criticism in the United
States of alleged Saudi links with terrorism, were another factor in delaying final agreement
on gas ventures. (Middle East Economic Digest [MEED], June 27, 2003, p. 5). According
to the MEED article, in January 2003, Foreign Minister Prince Saud reportedly said that one
of the ventures headed by Exxon/Mobil had been suspended, although the article did not cite
a specific reason. On June 6, the Washington Post, citing energy sources, reported that Saudi
authorities had terminated the other Exxon/Mobil-led venture.
With the collapse of the three original gas ventures, Saudi officials began to pursue a
different approach based on a process of “unbundling,” which would involve smaller, less
ambitious projects of more limited scope. In July 2003, two non-U.S. companies, Royal
Dutch Shell and TotalFina (French), agreed on a joint venture with the Saudi company
ARAMCO to exploit gas in the southern “Empty Quarter” of Saudi Arabia, pending final
approval from the Saudi government. Meanwhile, at a July 22-24 conference in London
attended by over 40 companies (including some U.S. companies), Saudi officials offered
three other contract areas for exploitation and issued tenders on September 15. International
oil companies were given until January 26, 2004, to submit bids.
Only six of the 40 companies that had expressed interest, including one U.S. company
(Chevron-Texaco), submitted bids. The three winners, announced on January 26-28, 2004,
were China’s SINOPEC, Russia’s Lukoil Holdings, and a consortium consisting of Italy’s
ENI SpA (E) and Spain’s Repsol YPF S.A. (REP.MC). The state-owned Saudi Arabian Oil
Company (Saudi ARAMCO) will hold a 20% share in each operating company. The U.S.
Chevron-Texaco, which had bid on all three of the contract areas, was unsuccessful in
obtaining any of the contracts. Saudi Oil Minister Ali al-Naimi and other officials said the
bids were assessed strictly in accordance with the terms offered by the various companies,
although some unnamed observers suggested that the bidding process was structured in a way
that favored non-U.S. competitors. Still other observers suggested that the awards reflect
Saudi desire to cement economic ties with Russia, China, and other third countries, and one
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energy expert noted that “[t]he Saudis are clearly shifting around and looking to different
parts of the world.17
Human Rights, Democracy, and Other Issues
Of particular concern to Westerners are pervasive restrictions on women’s activities and
an injunction against the practice of other religions throughout the Kingdom. This injunction
has been applied not only against non-Islamic faiths but also at times against the Shi’ite
Muslim community in Saudi Arabia, estimated at 500,000 or more persons mainly in the
Eastern Province. Since 1990, the Saudi government has moved quietly to ease some
restrictions on Shi’ites. A petition presented by Saudi Shi’ite representatives was followed
by an audience with Saudi Crown Prince Abdullah on April 30, 2003, indicating that both
the government and the Shi’ite petitioners may be seeking to pursue a more cooperative
approach. Also, according to the State Department, high-level Saudi officials have said that
Saudi policy allows for private non-Muslim worship, for example, in private homes or
secluded compounds; however, in its annual report on human rights practices, published on
February 25, 2004, the State Department notes that Saudi officials do not always follow these
guidelines in practice. In the State Department’s most recent annual Report on International
Religious Freedom (September 15, 2004), Saudi Arabia is designated for the first time as a
“Country of Particular Concern.”
Political reforms promulgated by King Fahd in the early 1990s and continued under
Crown Prince Abdullah appear to represent a limited move toward democracy and protection
of individual freedoms. The “main law” announced by the King on March 1, 1992, bans
arbitrary arrest, harassment, or entry of individual homes without legal authority and
specifies privacy in telephone calls and mail. On August 20, 1993, the King appointed a 60-
member consultative council (increased to 90 in 1997 and to 120 in 2001), with limited
powers to question cabinet members and propose laws. In January 2003, Crown Prince
Abdullah proposed an “Arab Charter” advocating internal reforms, increased political
participation, regional economic integration, and mutual security measures. In a further step,
the Saudi government announced in August and September 2004 that municipal elections
will be held for the first time since 1963 in a three-stage process, scheduled to begin on
February 10, 2005. According to current plans, citizens will elect half the members of the
country’s 178 municipal councils. Women reportedly will be excluded from these elections
but may have the opportunity to participate in future ones.
Background to U.S.-Saudi Relations
Political Development
Saudi Leadership. As the birthplace of the Islamic religion in 622 A.D. and as the
home of Islam’s two holiest shrines (the cities of Mecca and Medina), the Arabian Peninsula
has always occupied a position of special prestige within the Middle East. With the
17 Karen Matusic, “Saudis Extend Geopolitical Base with Gas Deals,” The Oil Daily, Feb. 2, 2004;
Simeon Kerr, “Saudi Arabia Strikes Hard Bargain On Gas Rights,” Dow Jones, Emerging Markets
Report, Jan. 29, 2004.
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establishment of Arab empires based in Damascus and Baghdad, the peninsula gradually lost
its political importance and sank into disunity. In the 16th century, much of the Arabian
Peninsula came under the nominal rule of the Ottoman Empire; however, tribal leaders
effectively controlled most of the region. During this period, an alliance developed between
an influential eastern tribe, the House of Saud, and the leaders of a puritanical and reformist
Islamic group known as the Wahhabi movement. During the first quarter of the 20th century,
a chieftain of the Saud family, Abd al-Aziz ibn Abd al-Rahman (later known as Ibn Saud)
overcame numerous rivals with the support of his Wahhabi allies and succeeded in unifying
most of the Arabian Peninsula under his rule. Four sons have succeeded him.
Royal Succession. King Fahd, the current ruler and a dynamic leader for many
years, is approximately 80 years old and suffers from medical problems including diabetes
and arthritis. In early 1996, King Fahd temporarily turned over affairs of state to his half-
brother, Crown Prince Abdullah, for a six-week period while the King recuperated from a
stroke. Amid conflicting reports about the King’s condition, Crown Prince Abdullah has
increasingly carried out many governmental functions since 1996, together with other senior
princes of the royal family. Another key figure is Defense Minister Prince Sultan, a full
brother of King Fahd, who is generally considered next in line of succession after Prince
Abdullah. (King Fahd, Prince Abdullah, and Prince Sultan also hold the positions of Prime
Minister, First Deputy Prime Minister, and Second Deputy Prime Minister, respectively.)
Most commentators believe the royal family would back Crown Prince Abdullah in a
smooth transfer of power if King Fahd should pass from the scene. Various sources describe
Prince Abdullah as more traditional and less western in outlook than King Fahd and more
oriented toward the Arab world. On balance, the Crown Prince seems likely to maintain
Saudi Arabia’s long-standing strategic and economic ties with the United States. U.S.
officials commented that President Bush and Crown Prince Abdullah established a very good
personal rapport during the latter’s visit in April 2002. Some speculate, however, that
succession could become more intricate after Abdullah (who is only two years younger than
Fahd but believed to be in better health) and fear that future intra-family rivalries could
weaken the Saud dynasty over the long term. Possible future candidates include some 25
brothers and half-brothers of King Fahd and a number of sons and nephews.
U.S. Aid, Defense, and Security
As Saudi oil income expanded, U.S. economic aid ended in 1959. Small amounts of
aid continued through 1975, limited to a small international military education and training
(IMET) program after 1968. Total U.S. aid to Saudi Arabia from 1946 through its
termination in 1975 amounted to $328.4 million, of which $295.8 million was military and
$32.6 million was economic assistance. Approximately 20% of total aid was in the form of
grants and 80% in loans, all of which have been repaid. A small IMET program of $22,000
per year to help defray some expenses of sending Saudi officers to U.S. military service
schools was resumed in FY2002 and increased slightly to $25,000 in 2003; $25,000 was
requested by the Administration for Saudi Arabia in FY2004. This amount permits Saudi
Arabia to purchase additional U.S. training at a lower cost than that which is charged to
countries not eligible for IMET. Saudi officials also cite their country’s role as a donor of
aid to less affluent countries; according to the Saudi Embassy in Washington, Saudi Arabia
gave $1.7 billion in development assistance and $14.7 million in relief assistance to
developing countries in 2002.
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Congressional Interest in Saudi Arabia
U.S.-Saudi bilateral issues of interest to Congress in recent years include arms sales to
Saudi Arabia, Arab-Israeli issues including the now somewhat attenuated Arab boycott of
Israel, oil pricing, Saudi trade practices including disputes between U.S. companies and
Saudi clients (largely resolved), and — increasingly — terrorism. In the 108th Congress,
H.R. 3137, introduced on September 17, 2003, would ban direct aid to Saudi Arabia along
with five other named countries. In this regard, as mentioned above, Saudi Arabia only
receives $25,000 in annual U.S. aid under the IMET program. Companion bills entitled the
Saudi Arabia Accountability Act, introduced in the House and Senate on November 21 (H.R.
3643) and November 18, 2003 (S. 1888), respectively, would require the President to
prohibit export of arms or dual use items to Saudi Arabia and to restrict the travel of Saudi
diplomats in the United States, unless the President certifies that Saudi Arabia is fully
cooperating with the United States in investigating and preventing terrorist attacks and taking
other specified counter-terrorist measures.
During the debate on H.R. 4818, the Foreign Operations Appropriations bill for
FY2005, the House adopted Amendment 708 introduced by Representative Anthony D.
Weiner, which states that “None of the funds appropriated or otherwise made available
pursuant to this act shall be obligated or expended to finance any assistance to Saudi Arabia.”
This amendment, which the House passed by a vote of 217 to 191 (Roll no. 389), was
incorporated into as Section 582 of H.R. 4818. Subsequently H.R. 4818 passed the House
by 365-41 (Roll no. 390) on July 15, 2004. The Senate version of H.R. 4818, passed by
voice vote on September 23, does not contain this ban; however, in Section 5110 it expresses
the sense of the Senate that, in light of Saudi Arabia’s designation as a country of particular
concern in the context of religious freedom, the President should negotiate a binding
agreement with the Saudi government requiring it to phase out any programs that contribute
to violations of religious freedom in Saudi Arabia or that the President should take other
appropriate actions under the International Religious Freedom Act.
On July 22, 2004, Senators Charles Schumer and Susan Collins introduced S.Con.Res.
131, calling on the government of Saudi Arabia to cease supporting religious ideologies that
promote human rights abuses and urging the United States government to promote religious
freedom in Saudi Arabia.
Section 4081(b) of the House-passed version of S. 2845, the 9/11 Recommendations
Implementation Act, 2004, would require the President to submit to designated congressional
committees a strategy for collaboration with the people and government of Saudi Arabia
including a framework for security cooperation. This strategy would include special
reference to efforts to combat terrorist financing. The House passed this version of the bill
on October 16, 2004 by 169-229, Roll No. 525. The Senate-passed version also contains a
reporting requirement on collaboration with Saudi Arabia (Section 1017(b)(4)); this version
was passed by the Senate on October 6, 2004 by 96-2, Record Vote No. 199. Senate
Amendment No. 3889, which would have established within the legislative branch a
commission on the U.S.-Saudi relationship, was ruled non-germane by the chair.
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