Comparing US&Saudi Arabia

[Guest guest]

Let's not be so quick to pillory Saudi Arabia

By CLYDE PRESTOWITZ

 

SAUDI Arabia has recently become the U.S. media's favorite whipping

boy. The talking heads are full of demands that the Saudis change the

curricula in religious schools, make their banking system totally

transparent and turn their government officials over to the mercies

of U.S. lawyers hoping to find someone to pay damages for Sept. 11.

 

To put things in perspective, let's run some of these demands

backward. Like Saudi Arabia, the United States is a very religious

country with strong fundamentalist establishments and schools. Some

of the leaders of these groups have called Islam an evil and

dangerous religion, and these groups, both Christian and Jewish, have

played a significant role in the controversial expansion of Israeli

West Bank settlements. How would we respond to demands that the U.S.

government change the teachings of our fundamentalist schools and

religious groups?

 

Then there's banking. In 1997, the Hong Kong dollar was battered by

wave after wave of speculative attacks mounted by U.S.-managed hedge

funds. The head of the Hong Kong Monetary Authority told me that he

didn't understand why the United States couldn't insist on greater

transparency in its banking system. By 1998, the Asian crisis had

become a global crisis. More recently, the failure of Enron -- partly

as a result of opaque, unregulated derivatives market dealings --

dealt severe damage to the U.S. and global markets. Yet Wall Street

and the Federal Reserve continue to resist requests for openness in

these arcane markets.

 

As for making government officials available to possible prosecution

by foreign legal entities, it is the United States that has been

actively campaigning against establishment of the International

Criminal Court, fearing what a possibly anti-American legal entity

might do to U.S. citizens.

 

I have spoken recently with several Saudi leaders. They are

shellshocked and deeply wounded by what they see as a sudden turning

of the United States on longtime friends.

 

Over the past 50 years, hundreds of thousands of Saudis have studied

at U.S. universities and have come to think of the United States as

their second country. In their view, they have always been there for

the United States, and still are.

 

For example, as the only oil producer with substantial unused

production capacity that can be brought on line quickly in case of

emergency, Saudi Arabia is standing ready to prevent any possible

shocks to the world oil market resulting from a war in Iraq by making

up any supply shortfalls from its unused capacity. The United States

is relying on this Saudi commitment to cushion the American economy

and to keep the price of oil within reasonable bounds.

 

This is a role the Saudis have played frequently over the past 25

years. By using their excess capacity to discipline the market, they

have helped to keep prices in a reasonable range such that the cost

of gasoline for U.S. consumers today is about the same in real terms

as it was before the oil crises of the 1970s. In addition, the Saudis

give a $1-a-barrel exclusive discount on oil sold to the United

States that amounts to a $500 million annual gift.

 

At the urging of the Pentagon, the Saudis are regularly the biggest

foreign buyer of U.S. military equipment, even though much of it is

of questionable use to them. And, of course, whenever Boeing gets in

trouble, the Saudis can be counted on to buy more planes. The Saudis

built their electric grid to U.S. specifications to facilitate sale

of U.S. electrical equipment.

 

And many Saudis ask whether we have so soon forgotten the fact that,

at our behest, Crown Prince Abdullah not only presented an

unprecedented Arab plan for Israeli-Palestinian peace last year but

he also got the whole Arab League to sign on to fully normal

relations with Israel. The plan is in limbo, waiting for the United

States and Israel to agree to a conference.

 

Undoubtedly, the Saudis need self-examination. But we might do well

to remember that despite recent difficulties, they have been and

remain friends and allies whose good will and support we need.