Saudi Arabia: Current Issues and U.S. Relations

Saudi Arabia: Current Issues and U.S. Relations

Order Code IB93113
CRS Issue Brief for Congress
Received through the CRS Web
Saudi Arabia:
Current Issues and
U.S. Relations
Updated May 8, 2006
Alfred B. Prados
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Current Issues
Royal Succession
September 11 Terrorist Attacks and Aftermath
Allegations
Saudi Responses
Joint Congressional Report
Joint Task Force
9/11 Commission Report
Major Terrorist Attacks
Saudi Stance on Iraq
Operation Iraqi Freedom
Post-War Iraq: Withdrawal of U.S. Troops from Saudi Arabia
Infiltrators?
Bilateral Relations
Iraqi Debt
Arab-Israeli Conflict
Saudi-Palestinian Relations
Hamas: Pre-2006
Hamas: Post-Elections
Arms Transfers to Saudi Arabia
U.S. Arms Sales
Saudi-China Arms Contacts
Nuclear Concerns
Trade Relationships
Oil Production
Foreign Investment
Human Rights, Democracy, and Other Issues
Background to U.S.-Saudi Relations
Political Development
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
In its final report, released on July 23,
Saud dynasty, enjoys special importance in
2004, the U.S. National Commission on
much of the international community because
Terrorist Attacks upon the United States (the
of its unique association with the Islamic
9/11 Commission) described Saudi Arabia as
religion and its oil wealth. The United States
having been “a problematic ally in combating
and Saudi Arabia have long-standing eco-
Islamic extremism,” while noting that Saudi
nomic and defense ties. A series of informal
cooperation has improved, especially since
agreements, statements by successive U.S.
further terrorist attacks in Saudi Arabia begin-
administrations, and military deployments
ning in May 2003. The National Intelligence
have demonstrated a strong U.S. security
Reform Act (P.L. 108-458, December 17,
commitment to Saudi Arabia.
2004) contains a requirement (Section
7120(b)) that the President submit to desig-
Saudi Arabia was a key member of the
nated congressional committees a strategy for
allied coalition that expelled Iraqi forces from
collaboration with Saudi Arabia, as part of a
Kuwait in 1991. Saudi Arabia subsequently
larger report on U.S. government activities to
hosted U.S. aircraft enforcing the no-fly zone
implement the provisions of this act.
over southern Iraq. Saudi officials expressed
opposition to the U.S.-led military campaign
Other principal issues of bilateral interest
launched against Iraq in March 2003 (Opera-
include security in the post-war Gulf region,
tion Iraqi Freedom), although Saudi Arabia
the Saudi position on the Arab-Israeli conflict,
reportedly permitted certain support opera-
arms transfers to Saudi Arabia, Saudi external
tions by U.S. and British military forces, in
aid programs, bilateral trade relationships and
addition to making some facilities available to
oil production, and Saudi policies involving
them. By mutual agreement, the United States
human rights and democracy. The Consoli-
withdrew virtually all its forces from Saudi
dated Appropriations Act for FY2005 (P.L.
Arabia at the end of August 2003.
108-447, December 8, 2004) contains a ban
on U.S. assistance to Saudi Arabia but pro-
Bombing attacks against several U.S. and
vides for a presidential waiver (Section 575) if
foreign operated installations in Saudi Arabia
the President certifies that Saudi Arabia is
have raised some concerns about security of
cooperating in the war against terrorism. (The
U.S. personnel and what appears to be grow-
President issued this waiver on September 26,
ing anti-Americanism in some segments of the
2005.) On June 28, 2005, the House adopted
Saudi population. Since the attacks on the
H.Amdt. 379 to H.R. 3057 (the Foreign Oper-
United States September 11, 2001, some
ations Appropriations bill for FY2006) by
commentators have maintained that Saudi
293-122 (Roll no. 330); this amendment
domestic and foreign policies have created a
prohibited U.S. assistance to Saudi Arabia and
climate that may have contributed to terrorist
contained no provision for a presidential
acts by Islamic radicals. U.S. officials have
waiver. The Senate version did not contain
generally cited Saudi support in the aftermath
this provision. The bill as signed by the Presi-
of the attacks, including increased intelligence
dent (P.L. 109-102, November 14, 2005)
sharing, law enforcement activities, and track-
retained the ban but provided waiver author-
ing of terrorist financing.
ity.
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MOST RECENT DEVELOPMENTS
A visit by King Abdullah of Saudi Arabia to Beijing in January 2006 was reciprocated
by Chinese President Hu Jintao on April 22, and the two leaders reportedly signed a series
of agreements including energy exploration and security collaboration. According to the
Chinese Ministry of Commerce, trade between the two countries peaked at $15 billion in
2005, after a 41% growth per year since 1999.
BACKGROUND AND ANALYSIS
Current Issues
Royal Succession
The late King Fahd, who ruled Saudi Arabia from 1982 until his death in August 2005,
was a dynamic leader but suffered increasingly from medical problems, including diabetes
and arthritis. Crown Prince Abdullah, a half-brother of the late King and commander of the
elite National Guard forces, had governed the country on a day-to-day basis since then King
Fahd suffered a debilitating stroke in late 1995. King Abdullah’s replacement as Crown
Prince is another key figure in the royal family, Prince Sultan, who has served for over 40
years as Minister of Defense and Aviation. As noted above, the King and Crown Prince hold
the additional positions, respectively, of Prime Minister and First Deputy Prime Minister.
In the aftermath of King Fahd’s death, media reports initially speculated that the new King
Abdullah would name a Second Deputy Prime Minister (a de facto Deputy Crown Prince)
as Abdullah’s recent predecessors have done, but so far the King has not done so. Some
commentators believe the King has deferred taking this step to avoid possible rivalries over
future succession within the large Saud family, which numbers more than 5,000 princes,
according to some estimates.
In the past, various sources described King Abdullah as more traditional and less
western in outlook than the late King Fahd and more oriented toward the Arab world;
however, in recent years he has acquired a reputation as a supporter of limited economic and
political reform. On balance, the new King 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 then Crown Prince Abdullah established a very good personal rapport
during the latter’s visits in 2002 and 2005. His retention of all current cabinet ministers is
interpreted in the press as evidence of likely continuity in Saudi domestic and foreign
policies.
As predicted by many commentators, the royal family backed Crown Prince Abdullah
in a smooth transfer of power when King Fahd passed away. Some speculate, however, that
succession could become more intricate in the future. Some fear that intra-family rivalries
could weaken the Saud dynasty over the long term. Possible future candidates for succession
include some 25 brothers and half-brothers of the late King and a number of sons and
nephews. For example, press sources have mentioned Prince Nayif, Minister of the Interior,
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and Prince Salman, Governor of Riyadh, as possible candidates for the position of Second
Deputy Prime Minister, should King Abdullah decide to fill this position. Like Crown Prince
Sultan, both Prince Nayif and Prince Salman are full brothers of the late King Fahd, thus
belonging to an influential group within the royal family. Some commentators note that the
conservative Prince Nayif is thought to have resisted reforms supported by Abdullah, while
Prince Salman has a lower international profile than Prince Sultan or Prince Nayif.
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
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
Christopher M. Blanchard.) 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, by Alfred B. Prados and
Christopher M. Blanchard.)
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” 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-member
FATF, where attendees focused on terrorist use of charitable organizations to finance
terrorist operations. In February 2005, Saudi Arabia hosted a counterterrorism conference
at which attendees adopted a resolution (the “Riyadh Declaration”) condemning violence and
terrorism. Subsequently, the State Department reported that Saudi Arabia had established
a Financial Intelligence Unit (FIU) on September 10, 2005, to collect intelligence on terrorist
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.
According to the U.S. State Department, the FATF concluded after the mutual evaluation that the
financial control regime adopted by Saudi Arabia met the general FATF obligations recommended
by the FATF for combating money laundering and terrorist financing.
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financing activity. Saudi officials say they have sought to dampen religious extremism in
the Kingdom (see below). In 2004, Saudi authorities reportedly began a program aimed at
re-educating young Saudis arrested as Al Qaeda sympathizers by exposing them to former
radical clerics with strong Islamic credentials who have renounced violence (“Saudi Effort
Draws on Radical Clerics to Combat Lure of Al Qaeda,” Washington Post, May 7, 2006).
Saudi Arabia in Brief

Population (July 2006):
27,019,731 (includes 5,576,076 foreign residents)
Growth rate: 2.18%
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 (2004):
$236.8 billion; growth rate: 5.3%*
External Public Debt (2004): $35.8 billion
Inflation (2004):
0.8%
Unemployment (2004):
13% (males); some estimates range up to 25%
*Unusually high figure, largely owing to mounting oil production. A leading Saudi bank estimates 6.5% in
2005.
Sources: IMF; U.S. Dept. of Commerce; CIA World Factbook; Economist Intelligence Unit (London)
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 Country Reports on Terrorism, 2005
(published April 28, 2006), the State Department mentioned that by the end of 2005, the
Saudi government had captured or killed all 19 wanted terrorists on a list published in May
2003 and all 26 on a second list published in December 2003 (it is not clear if any of these
have been double counted); government efforts continue against 36 on a third list published
in June 2005. 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.
Assets of suspect charities were to 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.” (The Commission was not yet operational,
however, as of January 2006.) According to the State Department report, a Financial
Intelligence Unit (FIU), originally chartered under 2003 anti-money laundering and anti-
terrorism legislation, opened on September 10, 2005.
In testimony before the Senate Judiciary Committee on November 8, 2005, U.S.
Department of the Treasury official Daniel L. Glaser described Saudi Arabia as “one of the
countries most central to our global counterterrorism efforts.” He went on to summarize
measures being taken by Saudi Arabia to put a stop to terrorist financing: increased controls
on the charitable sector (such as the dissolution of al-Haramayn, as noted above); systemic
changes in the Saudi financial sector (including controls on cash-based transactions); and an
active Saudi role in regional cooperative efforts to raise awareness of the problems of money
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laundering and counter-terrorist financing issues. Press reports, however, quote comments
by Glaser that Saudi Arabia needs to live up to previous Saudi promises to crack down on
donors of terrorist funds within in Saudi Arabia and exert Saudi influence over their
international charities abroad.2
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.3 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?”4 On July 29, in response to an urgent request from Saudi Arabia, President
Bush met with Saudi Foreign Minister Saud al-Faisal, 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.5
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
2 Josh Meyer, “U.S. Faults Saudi Efforts on Terrorism,” Los Angeles Times, Jan. 15, 2006.
3 “Classified Section of Sept. 11 Report Faults Saudi Rulers,” New York Times, July 26, 2003.
4 “Saudis Slam Congressional Report Accusing Kingdom of Poor Cooperation in Terror War,”
Associated Press News Wire, July 26, 2003.
5 “Bush Refuses to Declassify Saudi Section of Report,” New York Times, July 30, 2003.
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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
During the period between the two wars with Saddam Hussein, terrorists mounted
attacks on U.S. military facilities in Saudi Arabia in 1995 and 1996. These were followed
by a series of terrorist attacks against Saudi, U.S., and other facilities (including hotel
compounds frequented by foreigners) beginning in May 2003 while slacking off to some
degree since 2004. 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 have said the impetus
for closer cooperation came from the May 2003 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,6 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 the course of a shoot-out in June 2004, Saudi
officials said they had killed Abd al-Aziz al-Muqrin, the leader of an apparent Al Qaeda
affiliate known as “Al-Qaeda in the Arabian Peninsula,” who had claimed responsibility or
support for several terrorist acts including the May 2004 Khobar attack. Subsequent
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 official
denied this report. On April 18, 2006, Saudi authorities announced the arrest of five men
charged with an abortive attack on February 24, 2006, on a large oil facility at Abqaiq in
eastern Saudi Arabia.
6 “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. According to the 9/11
Commission’s report, “[a]s in Pakistan, Yemen, and other countries, [Saudi] attitudes changed when
the terrorism came home.”
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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 then 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
Air Operations Center (CAOC) to coordinate military operations in the region.7 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.
Like several Sunni Muslim-led regimes in the Gulf region, Saudi leaders are reportedly
worried in the aftermath of the war about the possible spread of Shi’ite Muslim influence in
the region, especially Iraq, whose Shi’ite majority may be vulnerable to Iranian overtures.
(“As Saudi Visits, Bush Seeks Help on Lowering Oil Prices,” New York Times, April 25,
2005.) A joint statement by President Bush and then Crown Prince Abdullah on April 25,
2005 called on the international community to support Iraq and urged neighboring states to
avoid interfering in Iraq’s internal political affairs. On September 22, 2005, during a visit
to the United States, Saudi Foreign Minister Prince Saud al-Faisal warned that trends in Iraq
were leading toward greater disunity: “Unless something is done to bring the people of Iraq
together, a constitution alone or an election do it.” In a February 13, 2006, interview with
CNN, Saudi Ambassador to the United States Prince Turki al-Faisal said the Iraqi Sunni
community had two main demands: an equal share in the resources of Iraq (mainly oil) and
safety from retribution (by Shi’ites or Kurds).
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. According to
U.S. officials, approximately 220 U.S. military and contract advisors remained in country;
7 See for example “U.S. And Saudis Agree On Cooperation,” Washington Post, Feb. 26, 2003.
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as of September 2004, many of these were working with the Saudi National Guard.8 In
September 2005, Saudi Arabia and the United States were among 12 countries participating
in the biennial combined military training exercise “Bright Star” conducted in Egypt.
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.”9
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. In late December 2004, unidentified western diplomats in Saudi Arabia
reportedly said that several hundred Saudi nationals are fighting in Iraq from a total of 1,000-
1,500 foreign insurgents, but went on to say that most Saudi infiltrators had come via Syria
or other countries rather than directly from Saudi Arabia, which has tighter border controls.
(London Financial Times, December 20, 2004). A subsequent press report (“Islamic
Activities Sweep Saudi Council Elections,” Washington Post, April 24, 2005) also mentions
“hundreds” of Saudis fighting U.S. forces in Iraq, while a more recent report (“U.S. Faults
Saudi Efforts on Terrorism,” Los Angeles Times, January 15, 2006) quotes an allied coalition
official as saying that “[w]e can confirm that there have been Saudi Arabian fighters in
Iraq....” According to the same article, non-governmental experts estimate that 12% to 25%
of foreign fighters in Iraq are Saudis. In his February 13, 2006, interview, Prince Turki said
as of mid-2005 approximately 10% of captured foreign fighters held in Iraq were Saudis. In
a mid-January 2006 interview with staff from the weekly Middle East Economic Digest
(MEED), Prince Saud asserted that “our border with Iraq is virtually closed” but went on to
criticize Iraqi, British, and U.S. officials for failing to seal the Iraqi side of the border.
Bilateral Relations. Some strains continue between Saudi Arabia and the post-war
Iraqi regime. In a speech to the Council on Foreign Relations on September 20, 2005, Saudi
Foreign Minister Faisal al-Saud expressed concern over Sunni-Shi’ite divisions, the
possibility of civil war, and the growth of Iranian influence in Iraq and commented that “we
are handing the whole country [Iraq] over to Iran without reason.” (Robert Gibbons, “Saudi
Says U.S. Policy Handing Iraq over to Iran,” Reuters news wire, September 20, 2005.) The
Iraqi interior minister rejected Prince Saud’s comments and, without naming names,
implicitly criticized the Saudi regime as a dictatorship: “A whole country is named after a
family.” (Suleiman al-Khalidi, “Iraq Blasts Saudi Arabia for anti-Shi’ite remarks,” Reuters
news wire, October 2, 2005.) Secretary of State Condoleezza Rice later commented during
a Senate Foreign Relations Committee hearing that “I really think the proper role for Saudi
Arabia or for any other country in the region is to help them [the Iraqis], not critique them.”10
On November 8, 2005, Prince Saud al-Faisal told a Washington audience that Saudi Arabia
is providing financial and material aid to the Iraqi people to counter terrorism and noted that
8 The London-based International Institute for Strategic Studies in its annual publication, The
Military Balance, 2004-2005, p. 136, estimates 300 U.S. Army and Air Force personnel.
9 “Saudis Challenge U.S. Over Iraq Fighters,” Washington Post, Aug. 26, 2003.
10 Steven R. Weisman, “Rice, in Testy Hearing, Cites Progress in Iraq,” New York Times, Oct. 20,
2005.
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Saudi Arabia had convened a meeting in early October to seek ways to bring Iraqi factions
together.11
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.12
Arab-Israeli Conflict
Saudi Arabia supports Palestinian national aspirations, strongly endorses Muslim claims
in the old city of Jerusalem, and has been increasingly critical of Israel since the outbreak of
the Palestinian uprising in the occupied West Bank and Gaza in September 2000. Unlike
several other Gulf countries, Saudi Arabia has not established trade or liaison channels for
communication with Israel. At the same time, Saudi Arabia has supported U.S. policy by
endorsing Israeli-Palestinian peace agreements, 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, and adopted a more pro-active approach to
peacemaking. In March 2002, then Crown Prince Abdullah proposed a peace initiative
calling for full Israeli withdrawal from occupied territories in return for full normalization
of relations between Arab states and Israel. The plan was endorsed by the Arab League at
a summit conference on March 27-28, 2002 and used as a basis of discussion between then
Crown Prince Abdullah and President Bush at a bilateral meeting in April 2002.
Over a year later, on June 3, 2003, President Bush, then Crown Prince Abdullah, and
four other Arab leaders met at Sharm al-Shaykh, Egypt, where the attendees endorsed the
Road Map — a phased plan for Palestinian-Israeli peace promulgated by the United States,
the United Nations, Russia, and the European Union (the “Quartet”). At a second bilateral
meeting between President Bush and then Crown Prince Abdullah in Texas on April 25,
2005, a joint statement by the two leaders contained the following: “With regard to the
Palestinian-Israeli conflict, the United States and the Kingdom of Saudi Arabia desire a just,
negotiated settlement wherein two democratic states, Israel and Palestine, live side by side
in peace and security.”13
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
11 Address at the 59th Annual Conference of the Middle East Institute, accessed on Saudi Embassy
website, Nov. 9, 2005: [http://www.saudiembassy.net/]. The Prince did not estimate the amounts
of money or materiel involved. In his February 13, 2006, interview, the Prince added that an Arab
League meeting in November 2005 adopted a plan for inter-Iraqi reconciliation but did not give
details.
12 Tom Everett-Heath, “Opposing Views of the Kingdom to Come,” Middle East Economic Digest,
Jan. 23-29, 2004, p. 1.
13 Available at the following website: [http://www.whitehouse.gov/news/releases/2005/04/print/
20050425-8.html]
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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
report) for this purpose at a telethon sponsored by then 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, by Alfred B. Prados and Christopher
M. Blanchard.) During then Crown Prince Abdullah’s visit with President Bush in
Crawford, Texas on April 25, 2005, Secretary of State Rice told reporters she had discussed
with the Crown Prince “the need for everyone to support, including financially, the
Palestinians as they move forward.”
Hamas: Pre-2006. 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 most recent annual
report on terrorism (Country Reports on Global Terrorism, 2005, published April 28, 2006),
the State Department noted that Hamas receives some funding from Iran, but “primarily
relies on donations from Palestinian expatriates around the world and private benefactors in
Saudi Arabia and other Arab states.” It adds that some Hamas fund raising activity takes
place in Western Europe and North Africa. 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 the Crown Prince, maintained that “no Saudi
government money goes to Hamas, directly or indirectly.”16 (See also CRS Report RL32499,
Saudi Arabia: Terrorist Financing Issues, by Alfred B. Prados and Christopher M.
Blanchard.)
Hamas: Post-Elections. The January 2006 Palestinian elections in which Hamas
secured a majority of seats in the Palestinian parliament has raised new questions regarding
14 “Flow of Saudi Cash to Hamas Is Under Scrutiny by U.S.,” New York Times, Sept. 17, 2003.
15 Don Van Natta, Jr., with Timothy L. O’Brien, “Flow of Saudis’ Cash to Hamas Is Scrutinized,”
New York Times, Sept. 17, 2003. The report cites American law enforcement officials, American
diplomats in the Middle East, and Israeli officials. In addition, Saudi Arabia contributed $1.8
million in 2004 to the U.N. Relief and Works Agency (UNRWA), the U.N. Agency that provides
services to Palestinian refugees in the Middle East; in addition, Saudi Arabia provided $21 million
in 2005 in response to an emergency appeal by UNRWA.
16 Don Van Natta, Jr. with Timothy L. O’Brien, “Flow of Saudis’ Cash to Hamas Is Scrutinized,”
New York Times, Sept. 17, 2003. According to a later report, Saudi Arabia has been giving $15
million a month to the Palestinian Authority. Joel Brinkley, “Saudis Reject U.S. Request to Cut Off
Aid to Hamas,” New York Times, Feb. 23, 2006.
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Saudi relations with Hamas. In a meeting with U.S. Secretary of State Condoleezza Rice on
February 22, Prince Saud rejected the U.S. position that countries should cut off aid to the
Palestinian Authority until a Hamas-dominated government renounces violence and accepts
Israel’s right to exist. Prince Saud commented that “[w]e wish not to link international aid
to the Palestinian people to considerations other than their dire humanitarian need.” The
Prince called for continuation of the peace process, but Secretary Rice questioned “[h]ow do
we keep a peace process alive if one of the parties [Hamas] is not committed to peace?” On
March 19, 2006, Prince Saud reiterated his position, saying that “humanitarian assistance is
not given to a government. It is given to a people ...” to help them deal with a difficult
humanitarian situation.
Arms Transfers to Saudi Arabia
U.S. Arms Sales. The United States has long been Saudi Arabia’s leading arms
supplier. During the eight-year period from 1997 through 2004, U.S. arms ordered by Saudi
Arabia amounted to $7.3 billion while U.S. arms delivered to Saudi Arabia amounted to
$22.9 billion, reflecting earlier orders. An upsurge in Saudi arms purchases from the United
States in the early 1990s was due in large measure to the Iraqi invasion of Kuwait and its
aftermath. The largest recent sale was a $9 billion contract for 72 F-15S advanced fighter
aircraft, signed in May 1993. Saudi arms purchase figures include not only lethal equipment
but also significant amounts of support services and construction. A downward trend has
marked Saudi arms procurement since the mid-1990s as Saudi Arabia completed many of
its post-Gulf War purchases and the country faced straitened finances.
Saudi-China Arms Contacts. 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.” (See below.)
Nuclear Concerns. There have been occasional questions in the past about possible
Saudi nuclear cooperation with other states. For example, 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. Later, a
Washington Times article of October 22, 2003, citing “a ranking Pakistani insider,” reported
that Saudi Arabia and Pakistan had concluded a secret agreement on nuclear cooperation,
under which Pakistan would provide Saudi Arabia with nuclear technology in return for oil
at reduced prices. A State Department spokesman said the Administration had seen the
reports but did not have any information to substantiate them.
Saudi Arabia has been negotiating a full-scope safeguards agreement with the
International Atomic Energy Agency (IAEA). On June 16, 2005, the IAEA approved a Small
Quantities Protocol (SQP) for Saudi Arabia; this protocol exempts countries with minimal
quantities of nuclear materials and facilities from routine inspections and declarations. It is
not clear whether the IAEA will require Saudi Arabia to conclude an Additional Protocol,
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which could give the IAEA more leverage for inspections. IAEA Director General
Muhammad ElBaradei has called the SQP a “weakness” in the nuclear safeguard regime, and
the United States and some western nations are concerned that it does not provide sufficient
transparency in the case of Saudi Arabia. A Saudi official reportedly told European officials
that Saudi Arabia would provide additional information to the IAEA only if all other parties
to the protocol did the same.17 In his January 2006 interview with the Middle East Economic
Digest, Saudi Foreign Minister Prince Saud said “We are not going to pursue any of these
[nuclear] weapons” and went on to comment that nuclear power “is dangerous in itself.”
Trade Relationships
Saudi Arabia was the largest U.S. trading partner in the Middle East in 2005. For that
year, Saudi exports to the United States were estimated at $26.2 billion (up from $20.4
billion in 2004) and imports from the United States at $5.6 billion (up from $4.7 billion).
Comparable figures for Israel, the second largest U.S. trading partner in the Middle East in
2004, were $16.9 billion in exports and $6.5 billion in imports. To a considerable extent,
this high volume of trade is a result of U.S. imports of hydrocarbons from Saudi Arabia and
U.S. arms exports of arms, machinery, and vehicles to that country. 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. During then Crown Prince
Abdullah’s April 2005 visit, his chief advisor said the United States and Saudi Arabia are
very close to reaching a bilateral trade agreement, which would open the door to Saudi
membership in the WTO. On September 9, 2005, the U.S. Trade Representative (USTR)
announced that the United States and Saudi Arabia had completed bilateral negotiations on
terms of Saudi accession to the World Trade Organization (WTO). The USTR added that
the United States will work with other trading partners to complete the necessary multilateral
negotiations. On November 10, President Bush signed a memorandum to the USTR noting
that Saudi Arabia had concluded a bilateral agreement with the United States related to Saudi
accession to the WTO (text in Federal Register, Vol. 70, No. 219, November 15, 2005). In
the meantime, the press noted that Saudi Arabia had concluded bilateral negotiations with
all other interested WTO members, and on December 11, Saudi Arabia became the 149th
member of the WTO.18
Oil Production. With the world’s largest proven oil reserves (estimated at 261.7
billion barrels in January 2001), Saudi Arabia produced approximately 9.5 million barrels
per day (bpd) of crude oil as of October 2005. Approximately 11.3% of U.S. oil imports and
7.4% of total U.S. oil consumption came from Saudi Arabia during 2004. Formerly the
largest foreign supplier of oil to the United States, Saudi Arabia has been exceeded in this
role by Canada, Mexico, and/or Venezuela during recent years (see Table 1).
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
17 George Jahn, “Saudi Arabia Exempt From Nuke Inspections,” Guardian, June 16, 2005.
18 For more background, see American Association of Exporters and Importers, “Saudi Arabia’s
WTO Accession,” Vol. 105, No. 46, Nov. 22, 2005.
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average price of oil moved outside a $22 to $28 price band. This band eroded in subsequent
years as oil prices continued to rise to more than $50 per barrel, and in follow-up comments
after the April 25, 2005, meeting between President Bush and then Crown Prince Abdullah,
the Crown Prince’s foreign policy advisor said the $22-$28 price band has become
unrealistic. (In February 2006, Saudi Oil Minister Ali Naimi said current conditions would
support a price of approximately $50 per barrel, and some Saudi officials spoke of a $40-$50
price range. The Oil Daily, February 8, 2006.) The foreign policy advisor went on to say
that Saudi Arabia has a limited spare capacity of approximately 1.3 to 1.4 million bpd for
increased production. During the April 2005 visit, Saudi officials proposed a long-range plan
to deal with fundamental issues of supply and demand, indicating that they would aim for
production levels of 12.5 million bpd by the end of the current decade and 15.0 million bpd
over time.
Table 1. Oil Consumption and Imports
(in millions of barrels per day)
Category
2002
2003
2004
2005
Total U.S. Consumption
19.761
20.034
20.731
20.587*
Total U.S. Imports
11.530
12.264
13.145
13.527
Imports from Saudi Arabia
1.552
1.774
1.558
1.523
Imports from Canada
1.971
2.072
2.138
2.172
Imports from Mexico
1.547
1.623
1.665
1.646
Imports from Venezuela
1.398
1.376
1.554
1.506
Source: DOE. *Note: 2005 U.S. consumption figure based on first 11 months of 2005.
Foreign Investment. Saudi leaders, notably King Abdullah, have shown increasing
interest in attracting foreign investment, especially in their country’s energy sector. Oil
exploration and production remain generally off limits to foreign investment; however, with
the world’s fourth largest natural gas reserves (235 trillion cubic feet), Saudi Arabia is
emphasizing foreign participation in the country’s gas sector. In 2001, Saudi Arabia signed
three preliminary agreements worth approximately $25 billion with eight international oil
companies (including six U.S.-based companies) to develop three natural gas fields.
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. Eventually, in mid-2003, negotiations collapsed, and Saudi officials
began pursuing a different approach involving smaller, less ambitious projects of more
limited scope. Tenders were issued on September 15, 2003 for three new contract areas.
One U.S. company, Chevron-Texaco, submitted bids for all three; however, it 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 energy expert noted that “[t]he Saudis are clearly shifting around and
looking to different parts of the world.19
19 Karen Matusic, “Saudis Extend Geopolitical Base with Gas Deals,” The Oil Daily, Feb. 2, 2004;
(continued...)
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In the meantime, several U.S. companies are involved in new or projected Saudi
operations. ExxonMobile and ChevronTexaco are among several international oil companies
that the Saudis have approached regarding their plans to build a large export refinery at the
port of Yanbu, potentially worth $5 billion. In addition, in March 2005, the Saudis awarded
a contract to another U.S. company, Bechtel, as part of a joint venture to develop three on-
shore oil fields in eastern Saudi Arabia at a potential cost of $3 billion.20
Saudi-Chinese Commercial Contacts. Saudi-Chinese commercial relationships
continue to expand. Bilateral trade peaked at $15 billion in 2005, after a 41% growth per
year since 1999, according to the Chinese Ministry of Commerce. A visit by King Abdullah
to Beijing in January 2006 was reciprocated by Chinese President Hu Jintao on April 22, and
the two leaders reportedly signed a series of agreements including energy exploration and
security collaboration. Commentators note that Chinese economic ties are attractive to Saudi
and other Gulf leaders because they come with “no strings attached” and focus on economic
rather than political issues. (“Avoiding Political Talk, Saudis and Chinese Build Trade,”
New York Times, April 23, 2006.)
Human Rights, Democracy, and Other Issues
Of particular concern to Westerners are pervasive restrictions on women’s activities21
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 then 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. Discrimination against the mystic-oriented Sufi sects, long opposed by the Saudi
regime, has reportedly eased in the last few years.22 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, the State
Department notes that Saudi officials do not always follow these guidelines in practice and
have not provided specific guidelines to determine what constitutes private worship.
(Department of State, Country Reports on Human Rights Practices - 2005, published March
8, 2006.) In the State Department’s annual Report on International Religious Freedom
19 (...continued)
Simeon Kerr, “Saudi Arabia Strikes Hard Bargain On Gas Rights,” Dow Jones, Emerging Markets
Report, Jan. 29, 2004.
20 “Small Steps Forward,” Middle East Economic Digest, April 22-28, 2005, pp. 42-44; “Sultans of
Swing,” Middle East Economic Digest, May 6-12, 2005, pp. 4-5.
21 U.S. Under Secretary of State for Public Diplomacy Karen Hughes encountered mixed reactions
from a group of Saudi women with whom she discussed restrictions on women’s rights on a recent
trip to the Middle East. Steven R. Weisman, “Saudi Women Have Message for U.S. Envoy,” New
York Times, Sept. 28, 2005.
22 Faiza Saleh Ambah, “In Saudi Arabia, a Resurgence of Sufism,” The Washington Post, May 2,
2006.
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(September 15, 2004), Saudi Arabia was designated for the first time as a “Country of
Particular Concern.” Saudi Arabia was again so designated in the most recent annual report
published on November 8, 2005, but at an accompanying briefing, a State Department
official noted that King Abdullah has taken steps toward inter-religious dialog. In his 2005
State of the Union address, President Bush commented that “[t]he Government of Saudi
Arabia can demonstrate its leadership in the region by expanding the role of its people in
determining their future.” In his 2006 address, the President noted that “Saudi Arabia has
taken the first steps toward reform.”
Political reforms promulgated by the late King Fahd in the early 1990s and continued
under Crown Prince Abdullah have set in motion a limited move toward democracy and
protection of individual freedoms. The “basic 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 (“Shura”) council (increased to 90 in 1997 and to 120 in 2001),
with limited powers to question cabinet members and propose laws. On January 25, 2005,
the Saudi Minister of Defense and Aviation and Second Deputy Prime Minister Prince Sultan
told Saudi newspapers that the council will be expanded to 150 members and given
additional unspecified authority in the next three months; a royal decree in early April 2005
approved the expanded membership of the council.
In further steps, the Saudi government held three rounds of municipal elections on
February 10, March 3, and April 20, 2005, in a three-stage process in which male Saudi
citizens cast votes for half the members of 178 municipal councils in the country’s first
nation-wide elections. Although political parties and coalitions were banned, post-election
reports indicated that in most cases candidates endorsed by popular Sunni Islamic religious
fared best. (Shi’ite Muslim candidates also did well in the Shi’ite centers of northeastern
Saudi Arabia.) Commentators differ as to whether winners represented a moderate religious
trend or a more militant strain. In their joint press conference on April 25, 2005, President
Bush and then Crown Prince Abdullah noted that “[t]he United States applauds the recently
held elections in the Kingdom [of Saudi Arabia] ... and looks for even wider participation
in accordance with the Kingdom’s reform program.” Earlier, in a press interview, the Saudi
Foreign Minister predicted that women will vote in the next election.23 Saudi women were
allowed to vote and run for 12 elected seats for the Chamber of Commerce and Industry for
the major commercial city of Jidda in elections held on November 27, 2005. Two women
won seats in what was described as a historic step. In another vein, during a meeting with
U.S. Under Secretary of State for Public Diplomacy Karen Hughes, several Saudi women
expressed satisfaction with some of the restrictions on women in Saudi Arabia; for example,
one said that she had no desire to drive a car.24
23 “Changes in the Kingdom — on ‘Our Timetable’” (interview by Lally Weymouth with Prince
Saud al-Faisal), The Washington Post, Feb. 27, 2005.
24 Steven R. Weisman, “Saudi Women Have Message for U.S. Envoy,” New York Times, Sept. 28,
2005.
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Background to U.S.-Saudi Relations
Political Development
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 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. Five sons have succeeded him. U.S.-Saudi relations with the
modern Saudi kingdom have expanded over the years. A series of informal agreements,
statements by successive U.S. administrations, and military deployments have demonstrated
a strong U.S. security commitment to Saudi Arabia.
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 $24,000 in 2003 and 2004; and
$25,000 in 2005; $24,000 was requested by the Administration for Saudi Arabia in FY2006
and $20,000 in FY2007. 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. Recently,
on November 13, 2005, U.S. and Saudi officials announced a “strategic dialogue” to expand
cooperation in six key areas: counterterrorism, military affairs, energy, business, education
and human development, and consular affairs.
Congressional Interest in Saudi Arabia
108th Congress. The Consolidated Appropriations Act for FY2005 (P.L. 108-447,
December 8, 2004) contains a ban on U.S. assistance to Saudi Arabia (Section 575) but
provides for a presidential waiver if the President certifies that Saudi Arabia is cooperating
in the war against terrorism. The President issued this waiver on September 26, 2005, by
Presidential Determination 2005-38. Relevant sections of the Intelligence Reform and
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Terrorism Prevention Act (P.L. 108-458, December 17, 2004) capture many of the concerns
reflected in the 9/11 Commission report regarding Saudi Arabia. Section 7105(a) contains
findings that review problems in the bilateral relationship but note improvements in counter-
terrorism cooperation between the two countries since mid-2003. Section 7105(b) expresses
the sense of Congress that “there should be a more robust dialogue between the people and
Government of the United States and the people and Government of Saudi Arabia.” Section
7120(b) requires the President to submit to Congress within 180 days a strategy for
collaboration with Saudi Arabia, as part of a larger report on U.S. government activities to
implement the provisions of this act.
109th Congress. The 109th Congress has continued to show concern over the role of
Saudi Arabia in the war against terrorism, with particular emphasis on encouraging Saudi
leaders to heighten their efforts against terrorist financing. S. 12, the Targeting Terrorists
More Effectively Act of 2005, introduced on January 24, 2005, contains sections on Saudi
Arabia including a statement of U.S. policy to work with the Saudi government to curtail
terrorist financing through a variety of methods; findings that Saudi Arabia has an uneven
record in fighting terrorism; and a requirement that the President submit a report to
designated congressional committees containing a long-term strategy for U.S.-Saudi
engagement and for effective prevention of terrorist financing.25
H.R. 505, the Prohibit Aid to Saudi Arabia Act of 2005, would impose a ban on U.S.
aid to Saudi Arabia and contains no waiver authority; H.R. 604 would halt issuance of visas
to Saudi citizens until the President certifies that the Saudi government does not discriminate
in its visa policies on the basis of religious affiliation or cultural heritage. H.R. 2037, the
Saudi Arabia Accountability Act of 2005, is similar to two previous Saudi Arabia
Accountability Acts (H.R. 3643/S. 1888), proposed but not enacted in the 108th Congress.
Like the earlier bills, it would prohibit export or issuance of an export license to Saudi
Arabia for any U.S. defense articles or defense services on the U.S. munitions list or dual use
items and would restrict travel of Saudi diplomats in the United States.
Section 810 of S. 600, the State Department authorization bill for FY2006-2007,
expresses the sense of Congress that the municipal elections held in early 2005 constituted
a “positive initial step” and adds that it is in the interest of Saudi Arabia to permit women
to vote and run for office in future elections. On June 28, 2005, the House adopted H.Amdt.
379 to H.R. 3057 (the Foreign Operations Appropriations bill for FY2006) by 293-122 (Roll
no. 330); this amendment added a Section 588 to H.R. 3057 prohibiting U.S. assistance to
Saudi Arabia and containing no provision for a presidential waiver. H.R. 3057 passed the
House on June 28. The Senate version of H.R. 3057, passed on July 20, 2005, does not
contain this ban. The conference report (H.Rept. 109-265, November 2, 2005) retains the
ban (renumbered Section 582) but contains waiver authority if the President certifies that
Saudi Arabia is cooperating with efforts to combat international terrorism and that the
proposed assistance will facilitate that effort. President Bush signed the bill as P.L. 109-102
on November 14, 2005.
25 Present legislation — Section 7120 of the Intelligence Reform and Terrorism Prevention Act (P.L.
108-458, December 17, 2004) — requires the President to submit a strategy as part of a larger
reporting requirement within 180 rather than 90 days, as explained above.
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