Saudi Arabia: Third Quarter Economic Update
Samba – Office of the Chief Economist

Summary

In our August 2005 (mid-year) report, we noted that the economy is entering a boom cycle. The growth is the best in the Kingdom’s economic history. Developments in the third quarter affirmed our view for 2005.

Up to mid-year, revenue spikes had been behind this boom. Now we are beginning to witness more of the spending instances of the boom as well. Examples of growth in spending from the third quarter include an announced salary increase for all government employees, more clarity on Aramco’s capital expenditure program, and other announced investment projects and initiatives by King Abdullah utilizing a portion of this year’s budget surplus. These will add more impetus to growth in the oil and non-oil sectors this year and the years to follow. The Kingdom’s accession to WTO at the December Hong Kong ministerial meeting appears likely. Based on third quarter developments, our revised 2005 forecasts are as follows:

The strong global oil market will help sustain Saudi oil prices at an average price of $51 per barrel for 2005.

Real GDP for 2005 is set to climb 6.8 percent, the highest growth level achieved in the country for the past two decades. Nominal GDP will grow 29.8 percent, a phenomenal rise by any economic standards, and driven by the rise in oil prices.

The country is strengthening its fiscal position as revenues continue to be robust. For 2005 we expect government budgetary revenues to total SR 551 billion, spending to total SR 343 billion, for a resulting surplus of SR 208 billion.

The current account will be stronger than our previous forecast of $96 billion. We now forecast that it will reach $101 billion at the end of 2005.

As the government expands its spending programs, like the recent 15 percent government salary increase, the economy will experience some price inflation, especially in the Kingdom’s urban areas. From a previously SAMBA estimated inflation of 0.7 percent, we anticipate that by the end of 2005, inflation will stand at 1.0 percent still at a very healthy level.

Macroeconomic Outlook: 2005-2006

The Saudi economy is booming and it is at its best performing period ever. The advent of King Abdullah brought a new climate of hope about the pace of economic reforms and several developments have occurred early in his reign. Saudi Arabia’s accession to the WTO is now visibly close, as the final hurdle, a bilateral trade agreement with the US, was reached in September. The King instituted a 15 percent salary increase for government employees as well as announcing how a portion of the excess oil revenue will be spent. Our new estimates for 2005 are as follows:

Oil export revenues will hit a 22-year high of a Samba-estimated $163 billion. Saudi Arabia will have a very healthy trade balance and a current account surplus of $101 billion.

Real GDP will grow at 6.8 percent as a result of higher oil production than in 2004, but also due to non-oil private sector growth, which we now expect to grow at 7.9 percent in 2005 and to further pick up pace in 2006.

Through 2005, record high global oil prices will help sustain Saudi oil at an average price of $51 per barrel. High prices for Saudi oil will likely be sustained through 2006.

Fiscal performance will be strong. We anticipate a budget surplus of SR 208 billion, a gradual, yet continuous reduction of government debt to SR595 billion, or 49 percent of GDP, and a continuous build-up of central bank foreign assets, which we forecast will stand at $141 billion at year-end 2005.

We have upped our previous estimate of 6.5 percent real GDP growth (August 2005 mid-year report) for 2005 to 6.8 percent. We believe that both the oil and non-oil sectors will show strong growth, the former due to increases in oil production compared with last year’s output. The oil sector is set to grow in real terms by 7.2 percent. The non-oil private sector is set to grow by 7.9 percent. The government will grow by 3.9 percent in 2005.

Liquidity as measured by overall money supply (M3) has grown through August by nearly 7 percent and we estimate it will grow by over 14 percent for the entire year. Money supply growth fell during July and August. This tends to occur during the summer holidays. We anticipate that money supply will pick up robustly from September through year-end 2005.

Looking into 2006, we anticipate the economy to continue to grow, albeit at a lower rate compared with 2005 growth. As long as global economic growth continues its current strong path, oil revenues will not decline going into 2006. Due to US inflation pressures, interest rates appear likely to continue to rise in the first quarter of 2006 in the US and Saudi Arabia. However, higher interest rates will not slow the Saudi economy. We expect the Saudi economy to enjoy another impressive year:

Oil revenues will continue to be strong, giving another year’s boost to the budget.

Real GDP is expected to grow by 5.1 percent. The non-oil private sector will grow by 8.5 percent.

Inflation will climb to 1.6 percent, but it will not create any macroeconomic distortions. Higher interest rates will also help moderate inflationary pressures.

Government spending will increase with prudent management and fiscal discipline and a likely budgetary surplus.

The current account is expected to record a surplus of $94 billion, the eighth year in a row of surplus.

For the complete report:
Saudi Arabia: Third Quarter Economic Update, Samba, Oct. 22, 2005 (PDF)

Office of the Chief Economist, Samba
Brad Bourland, CFA
Chief Economist
+966 1 477 4770 Ext 1820
brad.bourland(at symbol)samba.com

Samba Financial Group
P.O. Box 833, Riyadh 11421
Saudi Arabia

[Check the on-line report for disclaimers concerning this report.]

Related Material
Samba Economy Watch

The Saudi Economy at Mid-Year 2005 – Samba (PDF)

The Saudi Economy: 2004 Performance, 2005 Forecast (PDF)
Saudi Economic Performance: A Conversation with SAMBA Chief Economist Brad Bourland – SUSRIS Interview – Feb. 27, 2005

Arab World Economies: Prosperity Amidst Political Uncertainty
Brad Bourland – SUSRIS IOI – Sep. 23, 2004

Today we are pleased to present for your consideration the SUSRIS interview with Eng. Khaled al-Seif that was originally published last year. His message about the importance of business in the relationship between the United States and Saudi Arabia remains relevant today. We hope you find this SUSRIS interview reprint useful.

Editor’s Note:

Last week [May 2005] a delegation of Saudi Arabians completed a tour to five American cities. Their mission? Promote new business ties between the Kingdom and the United States as Saudi Arabia enters a new economic boom.

On the delegation’s stop in Atlanta, Georgia on May 11, 2005, SUSRIS had the opportunity to talk with Eng. Khaled Al Seif, a leading Saudi businessman and Chairman of the Saudi Committee for the Development of International Trade at the Council of Saudi Chambers of Commerce and Industry — responsible for organizing the trade mission.

***

A Man With A Mission: Khaled Al Seif Talks About US-Saudi Business Relations

SUSRIS: Thank you for taking time from your busy schedule coordinating the trade mission visit here in Atlanta. Can we start by talking about the importance of the business component of the US-Saudi relationship?

Eng. Khaled Al-Seif, Chairman, Committee for International Trade (CIT)

Eng. Al Seif: The business relationship between the United States and Saudi Arabia is an old and historic relationship, which has been very beneficial for both Saudis and Americans.

Over the years America has been Saudi Arabia’s primary trading partner. Most of the things you see in Saudi Arabia are a result of this relationship — American technology starting from oil exploration to infrastructure and public works. You even see American influence in our standards due to the success of this relationship over the years.

The development that has happened in Saudi Arabia we owe to American companies that have worked hard in the Kingdom. They have gained and we have gained. American exports to Saudi Arabia have provided hundreds of thousands of jobs in the US. Likewise, our economy has benefited from American business involvement so it has been the perfect partnership over all those years.

What happened on September 11 was a shame. What was also a shame was how a group of terrorists could have damaged the relationship between Saudi Arabia and the US. Just as we have been business partners we are now partners in the war on terrorism. Saudi Arabia and America are cooperating in the fight against the terrorists and we are winning this war together.

SUSRIS: What is happening in the Saudi economy now?

Al Seif: What has been happening there is quite exciting. Saudi Arabia is seeing another boom in the making, an economic boom which in my opinion will be wider and deeper than the boom in the 70′s. The main drivers of this economic boom are twofold.

First, there have been the reforms that have taken place in economic laws and regulations in the country along with the privatization program, which opened up the economy. There are so many opportunities in the private sector now that were not dreamed of ten years ago. Economic reform in Saudi Arabia has been extensive. I was talking today with some of my colleagues that even Saudis cannot sometimes recognize our own country with all the changes that are happening.

SUSRIS: What was the motivation for reform of the economic sector?

Al Seif: If you look at the history of the Saudi economy we had an oil boom and then a slowdown in oil production. We were producing around four to four and a half million barrels of oil a day and the population was growing. All of a sudden people started realizing we were getting poorer and that something had to be done. We couldn’t keep relying on oil so diversification of the economy and sources of income was a must.

A lot of ideas were circulating about what to do. Then the government formed the Supreme Economic Council, which was a critical step in the process. They were able to join ministers and officials together, as well as a consultative body made up from the private sector who contributed their practical expertise. The commission was behind the implementation of economic reforms and although it has taken time the positive results are now being seen.

SUSRIS: Besides economic reform what is behind the current boom?

Al Seif: The second driver is the increase in oil production. As you know Saudi Arabia is committed to the stability of oil prices in the world but global consumption has increased tremendously over the last few years. It has been driven, in particular, by the increased demand from new markets like China and India. Since Saudi Arabia is committed to stabilizing world oil prices we started increasing production to try to put the brakes on the rise in prices. We have boosted oil production to 9.5 million barrels a day.

The additional oil production along with the reforms made in recent years are the main drivers of the economic boom that is taking shape in Saudi Arabia and is likely to continue for quite some time. The main reason for sustained growth is the forecasted increase in global oil demand. As you know, Crown Prince Abdullah met with President Bush in April and he confirmed the commitment of Saudi Arabia to not only maintain oil production but he also presented a plan to increase it to 12 ½ million barrels a day by the year 2009 and up to 15 million barrels a day a few years after that.

What this means is that as those new regulations I was telling you about continue to drive improvements in the economy and oil production continues to increase over the next ten years this boom will be longer than the boom of the 1970′s.

SUSRIS: In addition to the increased oil revenues that will expand the Saudi Arabian economy what will new production capacity mean to the oil industry.

Al Seif: Increasing production does not mean that we just open the tap and produce more from the existing wells. That could damage those wells. When we talk about increased production as related to an expansion of capacity it means further exploration and development of new areas and new wells. The Saudi Arabian government is committing around 50 billion dollars in new investments to accomplish these goals.

SUSRIS: What is the relationship between the economic boom in Saudi Arabia and the trade mission you are leading?

Al Seif: The trade mission’s purpose is not just to attract investments. Many in the private sector in Saudi Arabia are worried about the relationship with our American partners. We consider American companies very talented and great friends and we worked with them for many years. As I mentioned the United States has been our primary trading partner for decades. We saw the relationship deteriorate after Sept 11, including the business ties. With the upturn in Saudi Arabia’s economic prospects a lot of people from other countries started coming to Saudi Arabia for business. What we are worried about is that others will take the place of the US as our trading partner.

So given the history of our partnership with Americans we owe it to the relationship to do just what we are doing now — reaching out to American companies, to our old friends, to tell them what is going on in our country, to tell them about all the exciting opportunities out there and to invite them to come over to Saudi Arabia. What we are really saying to them is that Saudi Arabia again welcomes American business partners and we, as Saudis, will be open to work together. There is a great future and great business to be done there and we would love to do it together.

SUSRIS: The recent summit meeting between President Bush and Crown Prince Abdullah in Texas has been called by some as a milestone in the relationship. Are those observers correct?

Al Seif: It is apparent to us that there really is a new stage in the relationship based on the warmth we have seen from the American officials we have met and representatives of the American companies that have attended the trade mission meetings. I’m glad that I can see this first hand in my visit here to the US. In those sessions there have been representatives of the Department of Commerce, the Department of Energy and the US Embassy in Riyadh and they have been encouraging to American companies to do business in Saudi Arabia. Their tone has been very positive. The atmosphere for building on the relationship has improved greatly and I think the meeting between Crown Prince Abdullah and President Bush was just one more step in the historic connections we enjoy.

The delegates of the Saudi trade mission have felt welcomed at every stop. I’ve talked to many of them and they were very happy to see this kind of a reception and to hear these kinds of positive messages. On their part they reciprocated from their hearts. When they were telling people who were interested in their projects they were really saying from their hearts, “Come on over and join with us.” They were very touched by the reception.

SUSRIS: Can you tell us more about the composition of the trade mission delegation?

Al Seif: The delegation was developed by the Commission of International Trade, one of the main committees of the Saudi Council of Chambers of Commerce. It is a private sector initiative.

There is a group of business people participating as representatives of some of the largest Saudi companies. They are here to network with American companies especially those who are new to working with Saudi partners. It is an effort to ease their entry into the Saudi market.

There are also some government officials involved, by our invitation, because we wanted them to explain projects their ministries are planning. Their participation is part of the new transparency in the Saudi economy that we have been talking about. This is part of putting it to the test. We invited these officials to participate, to show our American friends what projects the government will be opening up through about the year 2020. They agreed and have joined the trade mission delegation. Their presentations were very thorough, very specific. They covered details about project size, amount, location — the whole lot. So I think business partners will have benefited tremendously from this information.

SUSRIS: How have the trade mission meetings gone so far?

Al Seif: New York was the first stop and things went quite well. The speakers at the opening session included Mr. William Lash, Assistant Secretary of Commerce for Market Access and Compliance; Mr. Justin Swift, Assistant Secretary for International Affairs in the Department of Energy; and Mr. James Oberwetter, the US Ambassador to Saudi Arabia. This showed the amount of interest that the US government attaches to this relationship.

We were also pleased that Princess Lolowah al-Faisal, a member of the trade mission delegation, made a speech to the participants. This was something new for us and is part of the social change that is happening in Saudi Arabia regarding the role of women, especially in the business world. Her remarks were very well received.

I would also note that the expansive, positive coverage of the trade mission in both the US and Saudi media is another sign of the improving nature of the relationship.

SUSRIS: There is $623 billion dollars in new business being discussed in the trade mission meetings. Can you talk about the scope of the US-Saudi business relationship in the context of those prospects?

Al Seif: The sum of $623 billion is the estimate of the total expenditures that will be required in Saudi Arabia up to 2020. They represent a broad spectrum of projects – private sector expenditures, government expenditures, realty projects and so forth. Now how much of that would go to American companies really depends on how eager American companies are — how willing they are to come over and get involved before it is too late. This is our message to them. Get involved before it is too late. We welcome you.

SUSRIS: Former US Ambassador to Saudi Arabia Wyche Fowler spoke to the trade mission participants here in Atlanta and mentioned the conditions for business relations were improving. Can you elaborate on changes in areas like visas and the security situation?

Al Seif: These are all major steps. I was pleased to hear Ambassador Fowler, as well as the current ambassador, Mr. Oberwetter, in New York. They talked about these situations. As it has been widely reported and commented upon the security situation in Saudi Arabia has improved tremendously. The cooperation between the US and Saudi Arabia on security matters is proceeding very well. We hear there is movement on the questions like travel warnings and hope to see these issues resolved.

I was very encouraged by the comments of Mr. Lash from the Commerce Department. In his speech in New York he described what he saw in his visit to Riyadh about a month ago. He said he went to the marketplace, the souk, in Riyadh for a visit. He mentioned he walked around freely without a security detail, and he said it was just as safe as any other place in the world. It was quite encouraging to hear these kinds of first hand observations shared with others.

The issue of visas is something, I understand, the US side is hard at work on — especially for students because education is extremely important. Most of the leaders in Saudi Arabian society, whether it is in the government bureaucracy or in the private sector were educated in America. That has become part of the foundation of the good relationship that exists between Saudis and Americans. To see these numbers dwindle is not good for the future. So, to enable students to obtain visas is extremely important. Likewise to facilitate business travel is another key component in the relationship. It is very positive that these issues are being addressed.

SUSRIS: Ambassador Chas Freeman, who also served as US Ambassador to Saudi Arabia, told us in an interview last October, at the height of the US presidential campaign, that both Americans and Saudis needed to get together after the elections, at the highest levels, to “reassess and redefine the relationship” or it could “drift permanently into mutually disadvantageous” directions. Do you think our leaders have accomplished anything on that score?

Al Seif: We still have work to do, but I think you should see the meeting that took place between President Bush and Crown Prince Abdullah last month in Texas as a commitment from both leaders to the future of the relationship.

They also realize that this commitment has to filter down. That’s why they formed a joint committee between Foreign Minister Prince Saud al Faisal and Secretary of State Condoleeza Rice. The main objective of this committee is to see that more clarity is put into the relationship at the various levels so that it doesn’t remain good only at the top and unsettled below. You have to make sure it filters all the way through on both sides.

We have received numerous comments from US government officials about our trade mission — that it is a very important way of assisting to strengthen the relationship. That was why they were ready to assist because they can see the total benefit to both our people.

SUSRIS: With your background in international trade you have insights into American as well as, obviously, Saudi society. What is it on each side of the relationship that you see as a major misunderstanding of the other side?

Al Seif: This is a very good question but to tell you honestly, whenever we have had the chance to meet face to face with American groups or individuals the differences disappear.

The minute we start talking the misconceptions start disappearing and you hear comments like, “I didn’t know that” or “I thought it was like this or like that.” This is really what encourages us to continue doing what we are doing because the more people we meet, the more trade missions we have, the more conferences we arrange, the more that people talk then the less the differences are.

We all realize that in reality both sides are on the same side. We all realize that both sides are partners in so many things — partners in fighting terrorism, partners in economic developments and business, partners, even, on political issues. The differences are not that great once we get to talk to each other.

SUSRIS: Well thank you very much for taking time to talk with us. We have been talking to Khaled Al-Seif, the Chairman of the Saudi Committee for the Development of International Trade at the Council of Saudi Chambers of Commerce and Industry.

***

ABOUT KHALED AL SEIF

Khaled Musaed Al Seif is a businessman and a leading member of the business community in Saudi Arabia who manages one of the largest business groups in the Kingdom. He is active in various committees and councils dealing with the promotion of international trade and bridging relations with the West.

Mr. Al Seif currently serves as Chairman of the Saudi Committee for the Development of International Trade (CIT) at the Council of Saudi Chambers of Commerce and Industry. He has officiated as board member of the Saudi-British Council since January 1993; board member of the Arab-British Chamber of Commerce, London, UK since February 1996; on the Board of Directors of Riyadh Chamber of Commerce and Industry, Riyadh, Saudi Arabia (2004-2008); board member of Royal Philanthropic Society for Science (Prince Sultan University) since 1999; and President and CEO of El Seif Group of Companies, Riyadh, Saudi Arabia.

As the President and CEO of El Seif Group of Companies, Mr. Al Seif is a board member of the following Saudi and international companies: Musaed Al Seif & Sons Company; Saudi Medicare Company; International Management Development Company; Dana Investment and Development Company; Al Azizia Commercial and Investment Company; National Power Company; Modern Arab Construction Company; Marina Towers S.A.L.; and El Seif Holding Company in Lebanon. He has founded the following companies: Arabian Medicare Company; Universal Advanced Systems Company; El Seif Engineering Contracting Establishment; and El Seif Development Company.

Mr. Al Seif holds a B.S. in Civil Engineering from the American University in Beirut.

***

Related Items
How Can the U.S. Re-Open for Business to the Arab World? – MEPC Capitol Hill Forum:

• Part 1 – Ambassador Chas Freeman – President, Middle East Policy Council
• Part 2 – Dr. Edward M. Graham, Senior Fellow, Institute for International Economics
• Part 3 – James Andrew Lewis, Senior Fellow, Center for Strategic and International Studies
• Part 4 – Don N. De Marino, Chairman, National US-Arab Chamber of Commerce
• Part 5 – William A. Reinsch, President, National Foreign Trade Council
• Part 6 – Panel Questions and Answers

Engineers Council Poll: One More Step for Saudi Women
Somayya Jabarti, Arab News

JEDDAH, 28 December 2005 — Results of the first-ever election to the Saudi Engineers Council were announced yesterday with a Saudi woman making history again by winning a seat on the 10-member board.

Nadia Bakhurji received 431 votes, the fifth highest among the winners, to join the hall of fame of women, who won elections in other organizations such as the Saudi Journalists Association and the Jeddah Chamber of Commerce and Industry.

Other winners of the Saudi Engineers Council were: Abdul Rahman Al-Rabea, who received 639 vote, Khaled Al-Sultan (533), Abdul Aziz Al-Ateshan (532), Saleh Al-Eidi (482), Abdullah Al-Sheikh (420), Daifallah Al-Otaibi (407), Abdul Aziz Al-Yousufi (400), Yahya Kaushak (387) and Ahmad Al-Yahya (351).

Of the nearly 5,000 members of the Saudi Engineers Council, there were 71 candidates in the running. Despite the low turnout of voters — only 30 percent members cast their ballots — the election was a success with personnel from different sectors such as from the municipality, Ministry of Commerce and chambers of commerce contributing their expertise.

“The entire process and organization prior to or during the elections went smoothly,” said Abdullah Khoja, the head of the Saudi Engineers Council in the Makkah region. “We were assisted by members from the Ministry of Commerce as well as the municipality,” he added.

When asked about the voting procedures followed for the Saudi women engineers and if separate times and places had been made for women to vote, Khoja told Arab News, “Unlike the voting at the chambers of commerce, women members cast their votes where and when their male counterparts did at least in the Makkah region.”

He explained that the number of Saudi women members of the council are only a handful, adding that a majority of them is from the Eastern Province as King Faisal University’s Engineering Department for Girls is located there.

Women’s presence was there from the beginning of the organization in 1982 when it was called the Saudi Engineers Committee. The Saudi Engineers Council was established three years ago. There are only 20 women among its 5,000 members, with only 1,500 casting their votes in the elections mostly in Dammam, Riyadh and Jeddah.

“There was never any exclusion of women engineers from the days of the Saudi Engineers Committee,” said Hashem Al-Shammari, manager of media and public relations. “There were never any regulations that excluded women from the membership of the association. That only one Saudi woman engineer came forward as a candidate is about personal choice.” Bakhurji feels her victory is one more step forward for Saudi women and not a singular triumph that reflected a measure of attitude change on behalf of men in the country as well. “Reactions to my coming forward as a candidate have been positive and supportive,” said Bakhurji.

“This marks a victory for all Saudi women whether in this field or any other.” She added, “The fact that men voted for me is a gauge of how men feel about the involvement of women. It also shows that they’re placing a lot of trust in me. It’s a great honor for me. What comes next is crucial for I’ve a responsibility to which I’m obligated.”

Bakhurji urged women to join and participate in the organization and expressed her belief that the council would become strong and effective with the growing support.

“There’s a lot of skepticism among members and non-members,” said a group of young Saudi engineers or would-be engineers who preferred to remain unnamed. “Be it women or men on the board, it isn’t what matters. We’re waiting for results; not just election results but action results!”

Nadia Bakhurji has joined her peers who were voted onto the boards of other professional organizations: Two Saudi women journalists, Nawal Al-Rashed and Nahed Bashatah, won seats on the board of the Saudi Journalists Association in 2004, and two businesswomen, Lama Sulaiman and Nashwa Taher, recently won places on the board of the Jeddah Chamber of Commerce and Industry.

Source: Arab News

Reprinted with permission

Related Material
Women Create History in JCCI Poll – SUSRIS IOI – Dec 1, 2005

Saudi Women Moving Up in Business – Remarks by Princess Lolowah Al-Faisal – SUSRIS IOI – May 18, 2005

Saudi Women Are Making Strides: Crown Prince – SUSRIS IOI – Apr. 14, 2005

Women of the Holy Kingdom – SUSRIS IOI – Apr. 4, 2005

Women’s Employment Initiative – SUSRIS IOI – Jan. 27, 2005

Saudi Women and the Jeddah Economic Forum – SUSRIS IOI – Feb 12, 2004

“A Saudi Vision For Growth” – Women Make Their Mark at Jeddah Economic Forum – Lubna Olayan’s Keynote Address – SUSRIS IOI – Jan. 21, 2004

On A Dagger’s Edge — Saudi Women, Long Silent, Gain a Quiet Voice – SUSRIS IOI – Jan 14, 2004

DISCUSS

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Saudi Troops Kill 2 Terrorists Who Gunned Down Police
By VOA News
28 December 2005

Authorities in Saudi Arabia say security forces have shot and killed two wanted terrorists, hours after the fugitives gunned down five policemen in a drive-by shooting.

The two dead men are said to have been involved in the al-Qaida terror network’s operations in the kingdom.

One of the suspects, Mohammed bin Abdel-Rahman al-Suwailmi, was fatally wounded in a shootout with government forces that broke out after the initial attack on police Tuesday.

An Interior Ministry official says the second suspect, Abdel-Rahman al-Mutab, made his escape after the original gunbattle, but was caught and shot to death north of Riyadh, Wednesday.

Both men were on Saudi Arabia’s list of most-wanted terrorists. Authorities say they killed five officers in a drive-by shooting in Qassim province.

Saudi Arabia launched a massive crackdown on Islamic militants in 2003, following a series of deadly attacks on foreigners and oil facilities in the kingdom.

Source: voanews.com

Reprinted with permission

Related Material
“Saudi Arabia: Friend or Foe in the War on Terror” – Testimony of Anthony Cordesman – Before the US Senate Judiciary Committee – SUSRIS IOI – Nov. 9, 2005

Saudi Arabia: Friend or Foe in the War on Terror? – Testimony of Daniel Glaser – Treasury Department – Deputy Assistant Secretary for Terrorist Financing and Financial Crimes – SUSRIS IOI – Nov 8, 2005

The Global Scourge of Terrorism: Ambassador Prince Turki al Faisal Shares His Outlook – SUSRIS IOI – Nov. 8, 2005

War on Terror – SUSRIS

Discuss this item in the SUSRIS forum.

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Editor’s Note
You may remember our interview with Omar Bahlaiwa during the May 2005 Saudi Trade Mission visit to the United States. Mr. Bahlaiwa, the Secretary General of the Saudi Committee for Development of International Trade at the Council of Chambers of Commerce and Industry, was asked about overheating in the Saudi stock market which has shown spectacular performance this year.

Saudis are confident in the market because the economy is strong. We have looked at the prospect for growth of the economy for the next fifteen years. Through year 2020 we expect the market to grow by 4.15% per year. The income of the country is very high. After September 11th a large amount of cash came back to the country. People are looking for new fields for investments. The market fluctuates, yes, but at the end of the day, it’s still stable. The economy is very strong.

Today we are pleased to share a detailed analysis of the markets in the Gulf, especially in Saudi Arabia, provided by Khalid al-Rodhan, visiting fellow at the Center for Strategic and International Studies in Washington. He provides an overview of the economies and markets, and other forces at play in the financial picture, including the prospects and implications of market corrections. We thank him for permission to share his perspective with you.

[ Click here to discuss this IOI ]

Introduction

The Gulf States are experiencing unprecedented growth in their economies and stock markets. The hope is that this growth is based on real economic growth, sound market fundamentals, and realistic economic policies. While the majority of companies that are listed on the Gulf Cooperation Council (GCC) stock exchanges have solid track records, there is limited historical data to analyze the basis of this remarkable growth.

By all accounts, the stock markets are overheated, and may need to be forced to cool off. The question is not whether the GCC stock market bubble will burst, but when and at what cost. Economies and stock markets are cyclical, and market corrections are all too common in many of the world’s economies. The Gulf is no exception, but the consequence of a “bursting” of the bubble to the Gulf economies can have strategic and economic implications to the Gulf States.

The GCC Stock Markets

The Saudi stock market Tadawul index increased by roughly 540% during the last five years. From June 2001 to October 2005, the Kuwaiti stock exchange rose by roughly 560%, and from October 2002 to October 2005, the Dubai stock exchange increased by approximately 1024%.1

Table 1 compares the performance of the GCC stock markets between 2003 and 2005. It is important to note that the market cap of each stock market represent a large percentage of GDP. They range from as low as 18% in Oman to as high as 143% in Kuwait. These numbers emphasize the importance of the stock markets in the Gulf States to understanding the recent high growth rates of the respective economies. It is equally important to note that in 2004-2005, with the exception of Bahrain and Dubai, the GCC stock markets are likely to outperform their 2003-2004 growth rates.

Table 1: GCC Stock Markets Performance 2003-2005

Stock Exchange
Index
(10/24/05)
% ∆
YTD

% ∆
(2003-04)
2004 Market Cap
(% of GDP)
Saudi Arabia (TSAI)

14,808.12

107.02%

85%

73%

Kuwait (KSE)

5578.3

69.51%

33%

143%

Abu Dhabi (JSX Comp)

5,452.30

77.28%

44%

38%

Qatar (DSM)

8846.03

113.26%

65%

136%

Dubai (DFM)

6562.88

123.33%

173%

18%

Bahrain (All Shares)

1490.71

21.86%

33%

113%

Oman (MMS)

2050.53

46.18%

24%

36%

Sources: Dinar Standard, http://www.dinarstandard.com/finance/StockMarkets071505.htm, Al-Rajhi Banking and Investment, and AME Info http://www.ameinfo.com/financial_markets.

In addition, according to Al-Rajhi Bank of Saudi Arabia, market capitalization of the GCC stock markets increased by 92% between September and January 2005. It reached $1.042 trillion on September 29, 2005, compared to $543 billion on December 31, 2004 and $119 billion in December 2000. Saudi Arabia contributed to $55.8% of the total increase, with the remainder accounted for by Dubai (21.1%), Kuwait (10.8%), Qatar (9.5%), Bahrain (1.6%), and Oman (1.2%).2

Signs of Overvaluation

The Gulf stock markets have seen major initial public offerings (IPOs) such Saudi Telecom and Dana Gas of the UAE. In each case, investors oversubscribed the shares of these companies. For example, Dana Gas of the UAE was oversubscribed by 140% on its initial public offering in early October 2005. According to the Saudi American Bank (SAMBA), in recent Saudi IPOs, STC was 2.4 times oversubscribed, Saudi Sahara petrochemicals was 124 times oversubscribed, and Ettihad Ettisalat was 50 times oversubscribed.3

In addition, the GCC stock markets have higher than normal price-earning (PE) ratios. For the first quarter of 2005, the Saudi stock market had a PE ratio of roughly 39. In March 2005, the PE of the UAE stock market reached as high as 47. It is significant to note that “sectoral” PE ratios are even higher. According to SAMBA, the PE ratio for the first quarter of 2005 in the agricultural sector was 88.6, electricity was 71.3, service was 54.2, and insurance was 34.2. It is also equally important to compare these numbers to roughly a PE ratio of 20 for the Dow Jones.4

Many experts question whether this growth is due to real market forces or the sign of “irrational exuberance” on the part of Gulf and international investors. As is the case with many intricate economic systems, the growth in the GCC stock markets is due an array of factors.

There are no measures or warnings of economic or stock market bubbles. Few people–if any–predicted the US stock market bubble in the late 1990s or the Asian economic meltdown of 1997. Bubbles, however, do eventually burst. The timing, the amount of loss, and the shape of recovery, however, remain uncertain.

The apparent overvaluation of the GCC stock markets–represented by high PE ratios and unprecedented growth in market capitalization–present a worrisome trend. An active monetary policy to tighten the money supply and cool off the economies in the Gulf may be necessary in the short term. For that, if this bubble is left to burst on its own, it may have long-term economic and strategic implications.

The consequences, however, of a market correction are not fully understood due to the lack of historical data for the Gulf stock markets. Capital markets laws and regulations are just beginning, economies in the Gulf are just starting to open up, and the health of the Gulf economies depend largely on the volatility of oil prices.

Understanding the underlying forces at play, however, is of enormous importance to crafting a policy to address these trends. In addition, it is equally important that this is done ahead of any efforts to launch a common currency, scheduled for 2010 or any further efforts to open up the Gulf economies through trade deals.

Reasons for the “Exuberance”

The Gulf economies may be different than others that have experienced economic and stock market bubbles, but not entirely. With sustained high oil prices predicted for the foreseeable future compounded by the high dependence of the Gulf economies on oil, the GCC states will likely sustain moderate to high growth rates in the near future. The problem, however, is that current growth in the GCC markets is nominal and there is little evidence that this growth is based on real structural economic changes. Several things happened during the last five years that made this growth possible.

First, the Gulf economies, despite efforts to diversify, are still highly dependent on the oil and petrochemical sectors. For most of the GCC economies, oil revenues account for roughly a third of GDP, as much as 75% of the budget, and approximately 90% of export revenues.

During the last five years, the price per barrel of oil increased by roughly 108%. In addition to high oil prices, global demand for oil increased from 78.0 million barrels per day (MMBD) in 2001 to 82.4 MMBD in 2004. According to the Energy Information Administration (EIA), during the same period, the Gulf production capacity is estimated to have increased from 14.1 MMBD in 2001 to 17.26 MMBD, matching nearly three-quarters of the total world demand increase.

The EIA estimates that Saudi oil export revenues, in constant 2000 dollars, were $59.64 billion in 2001 compared to $108.03 billion in 2004, representing roughly an 81% increase. The UAE’s oil export revenues in 2001 were $18.03 billion compared to $28.27 billion in 2004 (57% increase). Kuwait earned $18.63 billion in 2001 and $25.62 billion in 2004 (37% increase). Qatar’s oil revenues rose from $7.03 billion in 2001 to $12.64 billion in 2004 (80% increase). Bahrain is not a major oil producer, and it is worth noting that Bahrain’s stock market performed the worst out of the seven GCC markets.5

Second, due to high budget surpluses, government spending in the Gulf has reached all time highs. Saudi Arabia declared its intention of spending its budget surplus on rebuilding infrastructure, repaying its public debt, and modernizing its educational systems. For example, in 2004, the government announced that the $26.1 billion surplus would be spent on two broad areas: $15.2 billion would be used to pay down the Kingdom’s public debt and the rest would go towards modernizing infrastructure. In addition, the Kingdom has announced a series of major energy projects to increase its production capacity to 12.5 MMBD by 2009, which will cost the government an estimated $16.5 billion. Other Gulf States have also embarked on similar spending patterns.

Third, there has been repatriation of Gulf capital from the West. Large amounts of Arab investments were moved from the US and Europe to the region out of fear of it being frozen after new regulations following the attacks of 911, as a backlash against the US invasion of Iraq, and due to general Arab anger at the US’ position on the Palestinian Intifadhah. The data on the total amount of Gulf capital in the West remains uncertain–estimates range from $400 billion to $800 billion. By all accounts a large portion of this capital has been repatriated and invested domestically in the GCC.

Fourth, the Gulf has seen tremendous growth in its access to information during the last five years. Investors have the ability to do research on individual companies as well as the global economy, and the ability to trade online at cheaper prices. The access to IT, however, has also complicated the regulatory agencies’ ability to monitor the capital markets. Rumors and “hyping” of stocks on the internet are commonplace, and it is a near impossibility for the young regulatory agencies to control it.

Fifth, the GCC countries are “liberalizing” their economies. During the last year, Bahrain signed a Free Trade Agreement (FTA) with the US and Saudi Arabia has signed a deal with the US that opens up its eventual accession to the WTO later this year. In addition, Oman and the UAE are negotiating FTAs with the US, and Qatar and Kuwait are likely to follow suit. In order to qualify for trade deals, the GCC countries have opened up their capital markets to outside investors, introduced foreign capital laws, and streamlined investment inflow. It is, however, important to note that many of these reforms are just starting to take effect and their long-term effect is yet to be known.

Sixth, there have been signs of wealth distribution that did not exist in the Gulf States before. For example, according to SAMBA, more than half of the Saudi population subscribed in the Al-Bilad Bank’s IPO in early 2005. This can be attributed to the emergence of a new generation of Gulf investors, who tend to be younger, come from a diverse educational and economic background, and are more willing to take risks. That is not to say that the entire body of investors is young, but this generational shift is important and given the dynamics of the demographics, this will continue for decades to come.

Seventh, the growths in the GCC stock indices have been driven by giant companies such as STC, Dana Gas and Al-Bilad Bank. According to a recent SAMBA report, 45% of the Saudi stock market capitalization comes from three companies: Saudi Arabian Basic Industries Co. (SABIC), Saudi Electricity Co. (SEC), and Saudi Telecom Co. (STC). This is an indication of Saudi and GCC efforts to privatize major areas of their economies such as communication, electricity, and transportation.6

Finally, the Gulf States are experiencing high levels of liquidity, low interest rates, and low levels of inflation. Table 2 shows key indicators for the GCC economies in 2004. It shows the interaction between low inflation rates, low interest rates, and high GDP growth rates. For 2005, GDP growth rates are projected to be higher while inflation and interest rates are expected to be similar to their 2004 levels.

Table 2: GCC Key Economic Indicators: 2004

Real GDP ($Billion)
GDP Growth Rate
Inflation Rate
Interest Rate
Saudi
254.0
5.3%
0.6%
0.20%
UAE
96.0
8.5%
3.0%
0.19%
Kuwait
41.0
7.2%
1.7%
0.66%
Bahrain
11.0
5.4%
1.0%
0.19%
Qatar
28.0
9.3%
6.8%
0.23%
Oman
25.0
5.3%
0.6%
0.18%
Source: Al-Rajhi Banking and Investment Monthly Newsletter, September 2005; Saudi American Bank, and Global Insight.

One explanation for the low inflation rates, despite the high economic growth rates, is the high dependence of the Gulf economies on the inflow of oil export revenues and the high oil prices. Most of the “nominal” growth is due to the rise of the price of oil without the inflationary pressure other economies may experience in similar circumstances.

These are important factors that present the broad picture of what took place in the GCC economies during the last decade. These factors can have effects that extend beyond the economies of the Gulf, and the uncertainty surrounding the GCC stock markets can add to an “instability premium” in the oil market, international security, and the global economy.

Short To Medium-Term Economic Uncertainties

The questions that remain are: does this call for intervention or should it be left to market forces? And what are the risks of inaction? There are no simple answers to these important questions.

It is all too easy to recommend active policy to burst the bubble before it becomes unmanageable. It is much more difficult, however, to craft sensible economic policies to cool the economy off without impeding real economic progress.

An economic meltdown in the Gulf can have dire consequences on the global energy market and stability of some of these countries. The following are key areas of uncertainty in the GCC capital markets:

• Transparency in the banking systems in the Gulf States have improved over the last few years, and that has added to confidence in the capital markets. Many analysts, however, believe that profits announced by some banks in the GCC, particularly in the UAE, may not be sustainable in the long-run, especially given the fact that banks represent at least half of the listed stocks on the Gulf exchanges.

• Currencies in the Gulf States are pegged to the US dollar. No one fully knows their “real” value in the long-term or their level of volatility. They have always been pegged, and it is important that countries in the GCC do not float them without careful study of their foreign currency reserves, and their ability to support a reasonable value in the short to medium terms.

• While there have been some efforts by the Gulf States to provide a level of transparency on the flow of capital, there is limited data to suggest that countries in the region have developed the necessary mechanisms to deal with excess capital from the oil boom and the repatriation of capital from the West.

• The Gulf States are trying to build an atmosphere that encourages entrepreneurship and builds vibrant private sectors. In light of the high capital inflows, the GCC countries should create venture capital funds to channel some of this excess capital into meaningful domestic startup companies, create infant industries in the high tech and IT sectors, and help create an investor class.

• Another important use of this capital is to address the demographic crunch. Countries in the region are facing a “youth explosion” that will put strain on resources and security apparatus. It is important that some of this extra capital is channeled toward job training, upgrading the educational systems, and improving “nationalization” of the job markets.

• The majority of businesses in the Gulf are family owned. With the demographic boom and the liberalization of economies, these businesses have to be able to compete at the global level. The economy and the livelihood of the citizen depend on these businesses, and a meaningful “transition” into public or private companies is needed for these businesses to survive and thrive in a global environment.

• Opening up the economy to trade is beneficial in the long-term, if it is managed responsibly. It also has its drawbacks. The same rules that allow for capital to flow in will allow it flow out. Capital controls are hard to enforce and are often counterproductive, but countries in the region have to manage the flow of capital and prevent capital flight by building business hospitable environments through limited regulations but strong enforceable laws.

• With the push to open up their economies, countries in the Gulf lack a clear comparative advantage in any sector other than energy. Saudi Arabia has announced plans to make the Kingdom the number one destination of foreign investment and create a vibrant financial sector. Other countries in the region, however, have opened up their economies for the sake of opening up with no clear long-term plans.

• The Gulf countries need to improve credibility and transparency of their monetary and fiscal policies, which is all the more important to attract foreign capital. International investors need to feel confident about the market and economic policies. The Saudi Monetary Agency provided credible reports on annual and quarterly basis. However, there has been limited reporting on the part of the other GCC countries to provide the same level of transparency.

• Countries in the Gulf lack sound regulatory agencies. Hyping, dumping, and rumored investing are all too common in the Gulf. A GCC wide agency or regulatory bodies must be crated in each country to monitor security, equity, and bond trading. In addition, the Gulf must standardize their rules and regulations, especially if they hope to create a monetary union in 2010.

All that said, any casual observer will notice that recent growth in the Saudi and GCC stock markets is unprecedented and requires careful attention. No one, however, can ignore the fact that most Gulf States have taken some steps in the area of economic reforms. There have been some tangible efforts to improve the business environment in the Gulf States. For example, a recent report by the International Financial Cooperation (IFC) shows that these efforts have improved the competitiveness of some of the GCC economies. The IFC ranks Saudi Arabia as the most competitive country in the Arab world and the 38th globally. In one year, the Kingdom jumped 29 places among the 135 countries in contention. Kuwait followed as the 47th, Oman as the 51st, and the UAE as the 69th.

As is the case with many of these theoretical ranking models, they are meaningless if they don’t translate into real improvements on the ground. Dealing with the overvaluation of the stock markets and the risks outlined above is all too important to ensuring robust economic stability in the long-run.

The GCC states have implemented some meaningful market reforms in the last several years. It remains uncertain, however, how and if these reforms will translate into realistic remedies to some serious risks in the various Gulf stock markets.

Implementing these capital markets reforms are important first steps, but like all countries in the world, there is always room for further development. As mentioned earlier, one area necessary for improvement is ensuring that the GCC stock markets and their economies as a whole are strong enough to withstand speculative equity and currency attacks, and to channel the excess wealth into meaningful structural economic reforms.

Saudi & Gulf Economic Outlook in 2005

With sustained high oil prices and high levels of oil production, the Gulf economies will likely see high rates of growth in 2005-2006. Table 3 compares the level of oil production to the oil revenues for the six Gulf States. These EIA estimates are based on relatively low oil prices of approximately $48/barrel, although actual levels may prove to be much higher. It is important, however, to note the steady increase in the inflow of oil revenues and their effect on the overall economic growth in the Gulf.

Table 3: GCC Oil Production and Oil Revenues: 2004-2006

Oil Production
(In MMBD)
Oil Revenues
(In Nominal $billion)

2004
2005
2004
2005
2006
Saudi
9.1
9.5
115.6
150.1
154.3
UAE
2.4
2.5
30.2
39.0
42.7
Kuwait
2.2
2.6
27.4
36.9
40.3
Bahrain
0.035
0.035*
1.3
1.5*
1.6*
Qatar
0.07
0.08
13.5
17.0
17.2
Oman
0.65
0.70*
5.0
6.0*
6.1*
Source: Energy Information Administration (EIA). Note: * Estimated by the author.

It is equally important to note that economic growth is driven by the health of the Saudi economy. As Table 2 shows, the Saudi GDP is nearly 2.5 that of the UAE, 6.3 of Kuwait, 23.1 of Bahrain, 9.1 of Qatar, and 10.1 of Oman. In addition, the Kingdom is a major exporter to its neighbors. Robust economic growth and stability in the Kingdom, therefore, is of enormous importance to the health of the GCC countries.

Early estimates of the GCC economies show higher levels of economic growth in 2005 compared to 2004. Al-Rajhi Bank projects that in 2005, the overall GCC GDP growth is estimated to be 5.48% and the overall inflation rate to be 1.52%.7

As for the Kingdom’s economic outlook in 2005, according to the Saudi American Bank, the Saudi real GDP in 2005 is projected to grow at 6.80% while inflation is expected to be 1.0%. This projection is based on an average oil price of $51/barrel for Saudi oil. It also projects that the Saudi budget surplus for 2005 will be $55.4 billion. The same projection also estimates that the Saudi government will reduce its public debt to $158.6 billion or 49% of GDP, compared to 66% ($163.7 billion) in 2004, and 119% ($166.6 billion) in 1999.8

In addition to paying its public debt, the Kingdom has announced preliminary plans on how it will spend the rest of its budget surplus. The following are key projects that have been announced:9

$8 billion to increase salary of government employees (15% raise).
$10 billion allocated for development and maintenance of services and infrastructure, including:
$2.13 billion for the building of public housing projects.
$1.86 billion for construction of new desalination plants.
$1.33 billion for construction of new highways and roads.
$1.2 billion for street maintenance and drainage system.
$1.06 billion for construction of new schools.
$1 billion for the construction of university campus construction.
$800 million for construction of primary health care facilities.
$666 million for construction of new vocational training institutes.
$4 billion allocated for Saudi Export Program Initiative.
$3.46 billion to increase the capital of the Saudi Industrial Development Fund.
$1.2 billion to increase the capital of the Saudi Real Estate Fund.
$800 million to increase the capital of the Saudi Credit Bank.
$4 billion to increase the minimum social security payment.
Many of these projects will finance areas that were under funded for extended periods of time during the periods of high budget deficits throughout the 1980s and 1990s. While it is too early to tell how these projects will be implemented, it is clear that this level of increase in government spending is likely to spur further economic growth in 2005-2006.

The Importance of High Economic Growth on Gulf Stability

Despite promising trends in economic reforms, there are key areas of uncertainty that require serious considerations. The high oil prices and the vibrant economic growth in the Gulf provide significant opportunities for the GCC countries to use the excess capital to reform their entitlement programs, lessen their dependence on foreign labor, address their unemployment problems, and improve their internal security and military forces. Dealing with these key areas of uncertainty is all too important in the fight against the Gulf States’ most urgent threat–terrorism and asymmetric warfare posed by groups such as al-Qaeda.

Since May 2003, Saudi Arabia has been battling al-Qaeda within the Kingdom. The Saudi security forces’ counterterrorism and intelligence capabilities have been steadily improving, and many analysts believe that the Kingdom is winning the war against al-Qaeda by putting them on the defensive.

The Saudi security forces have proved their effectiveness in tracking terrorists, preventing attacks, and protecting important government, economic, and oil infrastructures. In addition, the security forces in the Saudi National Guard, the Ministry of Defense, and the Ministry of Interior have worked together and have improved their interagency cooperation and “jointness” capabilities.

The Saudi government has also kept the social cohesion during this fight. The Saudi leadership has tried to include the citizens in this fight with public awareness campaigns educating about the danger of terrorism. In addition, counterterrorism forces in the Kingdom have been aggressive, but have not used excessive forces and have tried to limit collateral damage in human and economic terms.

The Saudi security efforts, however, like every country in the world, still need some improvements in the areas of jointness, interoperability, and sustainability. High oil prices provide the Kingdom with the financial ability to support such force transformations.

While the Saudi security apparatus has proven itself capable, it remains unclear whether the security forces in the other Gulf States can handle the same magnitude of threat and attacks. Due to the failures by al-Qaeda to destabilize the Kingdom, many experts believe that al-Qaeda may turn its attention to the Gulf States.

The following are key areas of uncertainties that the Gulf States need to develop their capacity to deal with:

• Countries such as the UAE have many high level targets such as high-rise buildings where terrorists can inflict grave damages to citizens, expatriates, and the economy.

• Security forces in Bahrain, Qatar, and the UAE have a “non-national” component from various countries. This does present a threat for extremist to infiltrate.

• The majority of the population the UAE is foreign workers. It is estimated that 81% of the UAE population are non-citizens, 60% of Qatar, 59% of Kuwait, 37% of Bahrain, 26% of Oman, and 24% of Saudi. Attacks on expatriates can cause an exodus of foreign labor.

• There is limited data on how the GCC States protect their energy infrastructure or build redundant installations in case of damage. An attack on an oil installation in the Gulf can send oil prices even higher to an already tight energy market.

• The radicalization of the region’s youth and the fear of the Iraq insurgency spilling over into neighboring states.

• Implementing meaningful cooperation on border and coast security to prevent the flow of terrorist and arms.

The nature of threat is changing rapidly, and the Gulf security forces are just starting to deal with these changes. Terrorism, proliferation, and asymmetric warfare present a threat to “collective instability” in the Gulf, which requires a “collective response.”

Regardless of the shape or form of security arrangements, it is important that these collective security agreements do not develop into another “glitter factor” vehicle. They have to take into account the nature of threats, the realistic readiness and capabilities of the forces, and the long term economic, social, political, and strategic goals of individual countries and the region as a whole.

This period of high oil prices, large oil revenues, and robust economic conditions presents an opportunity for all the Gulf States to assess their threats and craft comprehensive plans for their strategic future. This involves not only strengthening their security apparatuses, but also implementing realistic reforms in their economies, stock markets, and social structures. For all the talk of political reforms, it is evolutionary economic and social reforms that improve the ability of young people in the region to find jobs, start business, and build their own future, which is most important in the fight against extremists and stability in the Gulf.

Conclusion

By the nature of the economic business cycles, the growth in the Gulf economies is likely to slow down in the coming years. Some experts have predicted that we are likely to see a market correction, or bubble bursting, in 2006. As mentioned above, the issue is not whether growth in the GCC will slow down, but rather how much of a market correction they will face and what are its long-term economic and strategic implications to Saudi Arabia and the Gulf.

The Gulf central banks are facing an important decision: tighten their monetary policy to cool the GCC economies off, or leave it to market forces? Despite the lack of inflationary pressures, the invisible hand may not be as effective in this case, and it is necessary for the GCC central banks to start gradually increasing their target interest rates. The GCC governments must also take a proactive role to prevent the hyping and dumping of the stock market, require more transparency from publicly traded companies, and strengthen the laws of the capital market regulatory agencies.

Given recent developments in the global energy market, it is all too clear that the GCC states will experience high oil revenues in the foreseeable future. This inflow of capital will also be met by high propensity to invest by the citizens of the Gulf, allowing the Gulf States to maintain moderate levels of domestic investment. The question that remains is: will the Gulf States repeat the mistakes of the 1980s and 1990s of mismanaging oil revenues, or will they use their newfound “oil wealth” to implement realistic structural economic reforms?

Furthermore, reforming welfare systems of entitlements, solving the unemployment problems, and reducing the Gulf States’ reliance on foreign labor are as important for the Gulf’s stability as any political or security reforms, and it must not develop into another missed opportunity.

Notes:

1. See each exchange’s website: Saudi: http://www.tadawul.com.sa ; Bahrain: http://www.bahrainstock.com ; Kuwait: http://www.kuwaitse.com/default.aspx ; Dubai: http://www.dfm.co.ae ; Abu Dhabi: http://portal.adsm.ae/wps/portal ; Qatar: http://www.dsm.com.qa ; Oman: http://www.msm.gov.om

2. Al-Rajhi Banking & Investment Corp., Monthly Newsletter, 20th Issue, September 2005.

3. Saudi American Bank, “Saudi Economy at Mid-Year 2005,” August 2005 available at: Click here

4. Ibid.

5. Energy Information Administration, “OPEC Oil Revenues.”

6. Saudi American Bank, “Saudi Economy at Mid-Year 2005,” August 2005 available at: Click here

7. Al-Rajhi Banking & Investment Co., Monthly Newsletter, Issue 20th, September 2005.

8. Saudi American Bank, “Saudi Arabia: Third Quarter Economic Update,” October 22, 2005.

9 Saudi National Security Assessment Project.

About the Author
Khalid Al-Rodhan
Visiting Fellow, Arleigh A. Burke Chair in Strategy, Center for Strategic and International Studies
kalrodhan@csis.org

Publications:

Global Energy Demand and Capacity Building in Saudi Arabia’s Petroleum Sector

Saudi Arabia’s ‘Sustainable’ Capacity and Global Energy Supply and Demand

Saudi Arabia’s Sustainable Capacity and Security Issues

The Changing Risks in Global Oil Supply and Demand: Crisis or Evolving Solutions?

The International Energy Outlook 2005: It is Hard to Make Predictions, Especially about the Future

The Military Balance in the Gulf: The Dynamics of Force Developments

The Saudi and Gulf Stock Markets: Irrational Exuberance or Markets Efficiency?

Center for Strategic and International Studies
Arleigh A. Burke Chair in Strategy
1800 K Street, N.W. • Suite 400 • Washington, DC 20006
Phone: 1 (202) 775-3270 • Fax: 1 (202) 457-8746
Email: BurkeChair@csis.org

Related Material
The Prospects for Stability in Saudi Arabia in 2004 – The Issue of Political, Economic, and Social Reform [Part III]
By Anthony H. Cordesman – SUSRIS IOI – Feb. 23, 2004

“A Saudi Vision For Growth” – Women Make Their Mark at Jeddah Economic Forum – Lubna Olayan’s Keynote Address – SUSRIS IOI – Jan. 21, 2004

On Doing Business: A Conversation with Omar Bahlaiwa – Trade Mission 2005 – SUSRIS Interview – Jun. 14, 2005

DISCUSS

Discuss This Issue on SUSRIS
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Editor’s Note
In October 2005 a project to interview citizens in six Arab countries — Egypt, Jordan, Lebanon, Morocco, Saudi Arabia and the UAE — was conducted under the aegis of Zogby International. The respondents, randomly chosen from different neighborhoods in various cities of each country, were asked about a number of social issues including: concerns facing their country and personal life, the acceptability of women working outside the home, how one describes oneself to another Arab and a Westerner, attitudes toward the United States, likelihood of peace, and employment issues.

The project included 800 interviews in Saudi Arabia — in Dammam, Riyadh, Jeddah, and Mecca — which yielded results that will be of interest to the readers and visitors of SUSRIS. We are pleased today to share the report’s Executive Summary and a selection of the interview results. The complete report is available on-line.

SUSRIS would like to thank Dr. James Zogby, senior analyst and project director for permission to share this report with you.

[ Click here to discuss this IOI ]

Attitudes of Arabs: 2005
December 2005

Report by:
James Zogby, Senior Analyst and Project Director
Young Arab Leaders and The Arab American Institute

Submitted by Zogby International, John Zogby, President and CEO
Copyright 2005 Zogby International

Executive Summary

1. The most important political issues facing the Arab world are largely the same in 2005 as they were in 2004: expanding employment, improving health care, and education ranking first, second, and fourth. In third place is an issue we did not include in our 2004 poll; ending corruption and nepotism. It is noteworthy that “resolving the Israeli-Palestinian conflict” has dropped from second place in 2004 to seventh place in this year’s survey.

2. The most important concerns in personal life are matters close to home; family, qualify of work, marriage, and religion. The significance of religion has declined in most countries and is in 5th place among younger Arabs.

3. Overall, Arabs appear to be satisfied with their present situation and optimistic about their future. Most significant changes occurred in Lebanon where both optimism and satisfaction doubled since 2002.

4. Significant majorities of Arabs in all countries accept women in the work place, especially if the reason is to provide financial support for their families, and smaller majorities also support women working for other reasons: “to find a fulfilling career” or “because she wants to work.”

5. In 2005, more Arabs prefer to self-identify with their country of origin, than with their religion, or “being Arab.” In 2002, religion and sect were principle self-identifiers.

6. Overall, favorable attitudes toward the U.S. have rebounded since 2004, but are still slightly lower than the already low 2002 ratings. Negative attitudes toward the U.S. have hardened due largely to Iraq and “American treatment of Arabs and Muslims.”

7. There is a growing pessimism toward “the likelihood of peace.” Positive attitudes have dropped in most countries, most notably in Egypt and Jordan.

8. Only in Saudi Arabia and the United Arab Emirates do Arabs report optimism in the promise of finding a job in their own country. Majorities, in the other four countries polled, report that they would relocate to another country to find work.

A Sample of Survey Results

[Complete report is available on-line.]

I will now read you a list of issues. On a scale from 1 to 5, where 1 is “most important” and 5 is ‘least important” how important are the following issues facing your country today?
Table 1. Importance of Issues Facing Own Country – 2004 vs. 2005 Overall

Importance (4+5) 2004 Ranking 2005 Ranking
Expanding employment opportunities 3 1
Improving the healthcare system 1 2
Improving the educational system 4 4
Increasing rights for women 7 10
Combating extremism and terrorism 5 5
Resolving the Israel-Palestinian conflict 2 7
Lack of political debate on important issues 10 11
Political or governmental reform 9 9
Protecting personal and civil rights 6 6
Advancing democracy 8 8
Ending corruption and nepotism – 3
Table 1A. Importance of Issues Facing Own Country – 2004 vs. 2005 Overall

Importance (4+5) Egypt Jordan Lebanon Morocco Saudi
Arabia UAE
Expanding employment opportunities 1 7/1 1/2 2/1 2/1 4/2
Improving the healthcare system 1 4/3 4/2 2/3 1/3 2/2
Improving the educational system 3 2/4 9/5 4/4 3/4 2/1
Increasing rights for women 10 3/8 10/10 5/10 9/6 7/8
Combating extremism and terrorism 5 5/10 3/6 1/6 7/2 6/4
Resolving the Israel-Palestinian conflict 8 1/2 2/9 7/9 4/5 1/6
Lack of political debate on important issues 11 10/11 6/11 6/11 10/11 9/11
Political or governmental reform 9 5/9 7/4 9/8 8/10 8/9
Protecting personal and civil rights 7 7/6 7/7 6/5 6/9 5/5
Advancing democracy 6 9/6 5/8 8/7 4/8 10/9
Ending corruption and nepotism 3 5 1 2 7 7
Four of the top five items remain the same from 2004 to 2005. “Expanding employment opportunities” now ranks 1st, followed by “improving the healthcare system” in 2nd, “ending corruption and nepotism” in 3rd, “improving the educational system” in 4th, and “combating extremism and terrorism” in 5th.

I will read you a list of countries. Please tell me if your overall impression of each is very favorable, somewhat favorable, somewhat unfavorable, or very unfavorable, or if you are not familiar enough to form a judgment.
Table 8. Impression of Countries – 2002 vs 2005

Impression

Saudi Arabia

2002
Fav / Unfav 2005
Fav / Unfav
USA 12/87 9/89
China 71/23 40/41
India 54/41 39/43
Russia 51/43 21/62
In the past year, how has your attitude towards the United States changed? Is it now..?
Table 9. Change in Attitude Towards USA – 2005

Change Egypt Jordan Lebanon Morocco Saudi
Arabia UAE
Better 5 13 21 6 8 8
Worse 84 62 49 72 82 58
Same 11 18 27 21 9 31
Overall attitudes toward the U.S. have worsened over the past year. Nearly half or more in every country feel this way, including vast majorities in Egypt and Saudi Arabia.
Which of the following has been the most important factor in determining your attitude towards the United States in the past year?
Table 10. Most Important Factor in Determining Attitude Towards US – 2005

Factor Egypt Jordan Lebanon Morocco Saudi
Arabia UAE
War in Iraq 57 48 34 45 49 31
President Bush’s promotion of democracy and reform 4 6 16 2 9 9
Developments in the Arab-Israeli front 8 13 19 8 8 7
American treatment of Arabs and Muslims 28 28 22 40 32 41
Other 0 3 4 2 0 5
The principal factors in worsening attitudes toward the U.S. include “the war in Iraq” and “American treatment of Arabs and Muslims.”

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Attitude of Arabs: 2005 (Complete report)
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About the Project Director
Dr. James J. Zogby is founder and president of the Arab American Institute (AAI), a Washington, D.C.-based organization which serves as the political and policy research arm of the Arab American community. Since 1985, Dr. Zogby and AAI have led Arab American efforts to secure political empowerment in the U.S. Through voter registration, education and mobilization, AAI has moved Arab Americans into the political mainstream.

For the past three decades, Dr. Zogby has been involved in a full range of Arab American issues. A co-founder and chairman of the Palestine Human Rights Campaign in the late 1970s, he later co-founded and served as the Executive Director of the American-Arab Anti-Discrimination Committee. In 1982, he co-founded Save Lebanon, Inc., a private non-profit, humanitarian and non-sectarian relief organization which funds health care for Palestinian and Lebanese victims of war, and other social welfare projects in Lebanon. In 1985, Zogby founded AAI. [more]

Editor’s Note
The 26th summit of the Gulf Cooperation Council was held in Abu Dhabi on December 18-19, 2005. Leaders from the six GCC states convened the organization’s Supreme Council to review a host of issues including regional security, economic integration, education reform, and more. Reporting on the summit, called the “Fahd Summit” in honor of the late King Fahd bin Abdulaziz of Saudi Arabia, included a review of key issues published today in Arab News and a host of stories from regional and international outlets. Some of these are provided here for your consideration.

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GCC Calls for Nuclear-Free Middle East
Syed Qamar Hasan, Arab News

ABU DHABI, 20 December 2005 — Gulf Cooperation Council leaders ended their summit yesterday calling for a nuclear-free Middle East and backing a Saudi proposal to strengthen the Peninsula Shield, a joint force of the six-member GCC.

The leaders of Saudi Arabia, Qatar, Bahrain, Oman, Kuwait and the United Arab Emirates appealed to the international community to make the Middle East, including the Gulf region, a zone free of weapons of mass destruction, the final communiqué said.

The summit called on “Israel to adhere to the nuclear Non-Proliferation Treaty and to open all its nuclear installations for international inspection.”

Amid mounting international pressure on Iran over its nuclear program, GCC Secretary-General Abdul Rahman Al-Attiya urged Tehran to join the group in its pledge to keep the region free of nuclear weapons.

UAE Foreign Minister Abdullah Al-Nuaimi demanded environmental “guarantees and protection” from an Iranian nuclear plant on the Gulf coast.

“We are in a region very close to the (Iranian) nuclear reactor in Bushehr. We have no guarantees or protection against any leakage (from the reactor) which is on the Gulf coast,” he told reporters after the summit.

The UAE minister commented on a message from Arab League Secretary-General Amr Moussa to the GCC summit, in which Moussa expressed his “concerns about Israel’s nuclear program”.

“We share his concerns… but we in the Gulf also have our own concerns and fears,” Nuaimi said. “I hope that Amr Moussa would take into consideration the GCC states when he talks about the concerns of the Arabs,” he added, in reference to Iran’s nuclear program.

Israel is widely believed to possess around 200 nuclear warheads, making it the only nuclear power in the Middle East, although it has never admitted to having atomic weapons. According to the communiqué, the summit supported the proposals made by Custodian of the Two Holy Mosques King Abdullah toward developing the Peninsula Shield. It urged the council of GCC defense ministers to study the proposals and make their recommendations to the next summit, which will be held in Riyadh.

The GCC leaders also lauded the legislative elections in Iraq and hoped that the results “would turn a new page in the history of Iraq which would secure the territorial integrity of Iraq and its stability”. UAE President Sheikh Khalifa ibn Zayed Al-Nahayan opened the summit on Sunday urging GCC members that they had to move more rapidly to integrate their economies and reform their educational and political systems in order to meet the aspirations of their peoples.

The “Abu Dhabi Declaration” of the GCC leaders talked about the need for a radical modernization of the education systems. It also called for greater efforts to promote scientific research and technological development.

The summit did not discuss the proposal made by GCC labor ministers that restricts the stay of expatriate workers in the member countries to six years, Al-Attiya said.

“The ministerial council after discussing the issue in detail recommended that the proposal be returned to the labor ministers for further study,” the GCC chief said.

The summit welcomed Saudi Arabia’s joining of the World Trade Organization and affirmed that the move would support the GCC’s march forward and as an important element in creating a stable global economy.

The leaders reviewed progress on GCC Customs Union and its positive impact in increasing inter-GCC trade and endorsed a proposal exempting certain commodities from customs duties. The provisional dateline for achieving the Customs Union was extended to 2007.

On the issue of GCC common market, the council reviewed the progress made during this year, particularly in the area of buying and trading shares. A proposal by the economic and financial cooperation committee to extend the scope of economic activities for GCC nationals to include ownership of recruitment offices, car rental and cultural activities was adopted by the council.

Source: Arab News
Reprinted with permission.

Additional Reporting
26th GCC summit concludes, issues final communiqué
The leaders of the Gulf Cooperation Council (GCC) concluded their 26th summit in Abu Dhabi today. Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz headed the Saudi delegation to the summit, which was named the “King Fahd Summit.” In its final communiqué, the GCC Supreme Council lauded the outcomes of the third extraordinary Organization of the Islamic Conference summit held recently in Makkah, as well as the resulting Makkah Declaration.
[more]

Landmark decisions at end of GCC summit
By Muawia E. Ibrahim
ABU DHABI – Leaders of the six GCC member states wrapped up their 26th Summit here on Monday with a set of landmark decisions on the most sensitive dossiers in the fields of security and defence, economy, terrorism and peace in the Middle East.
[more]

Gulf summit stresses regional stability
ABU DHABI, Dec. 19 (Xinhuanet) — Gulf Arab leaders placed top emphasis on maintaining regional security and stability during a two-day summit which wrapped up here on Monday amid rising concerns over Iran’s nuclear program and the international probe of the killing of Lebanon’s ex-premier Rafik al-Hariri.
[more]

Saudi to host next summit
ABU DHABI: The Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud yesterday invited GCC leaders to the next GCC summit to be held in Saudi Arabia.
[more]

Gulf summit and the internal agenda
Gulf, Politics, 12/19/2005
The the Gulf Cooperation Council (GCC) 26th ordinary summit which was opened in Abu Dhabi on Sunday will consider several internal issues, especially extending work in the interim phase of the Customs Union and the electricity and water grid projects among the member states and the timetable program for the monetary Union. The agenda also includes completing all basics needed for the GCC common market which will be inaugurated by the end of 2007, the monetary union in 2010, and the railway network in addition to considering the report over GCC inter military and security cooperation.
[more]

GCC expects new Iraqi govt to restore stability
ABU DHABI, Dec. 19 (Xinhuanet) — Gulf Arab countries expressed hope on Monday that the new full-term Iraqi government, to be set up after the recent Iraqi parliamentary elections, can help restore stability in the violence-plagued country.
[more]

Gulf summit raps Israel, not Iran, on nuclear issue
ABU DHABI (Reuters) – U.S.-allied Gulf Arab leaders called on Monday for a nuclear weapons-free Middle East, but singled out only Israel, not Iran, despite having voiced alarm at Tehran’s nuclear ambitions during their two-day meeting.
[more]

Gulf leaders discuss Iran’s nuclear ambitions
Gulf Arab leaders held a closed session in Abu Dhabi today that was expected to discuss the Iranian nuclear issue and the international tension it has caused. Leaders from the six Gulf Co-ordination Council states have been watching with concern Iran’s increasing confrontation with the West over its nuclear ambitions – which have been further exacerbated by recent anti-Israeli comments by Iranian President Mahmoud Ahmadinejad.
[more]

GCC lobbies Iran in islands row
Leaders of the Gulf Co-operation Council, GCC, will urge Iran to negotiate an agreement with the UAE over their longstanding territorial conflict about three islands in the Gulf, or refer the case to the International Court of Justice, ICJ.
[more]

GCC still falls short of expectations, says Khalifa
By Muawia E. Ibrahim
..All the GCC leaders, except the Amir of Kuwait, are taking part in the meeting, dubbed “Fahd Summit” after late King Fahd bin Abdul Aziz Al Saud of Saudi Arabia. The summit is expected to come up with several recommendations aimed at ensuring regional security and stability. Calling for greater cooperation, Shaikh Khalifa said despite the remarkable achievements of the GCC, they still fall short of the expectations and aspirations of the people, who yearn for speedy realisation of the noble objectives for which the organisation was founded 25 years ago.
[more]

Iran N-Program No Threat: GCC
Syed Qamar Hasan, Arab News
..GCC Secretary-General Abdul Rahman Al-Attiya said the GCC does not fear Iran’s nuclear program, as long as it is for peaceful applications. “If it is not for peaceful applications, then the program becomes unjustified and the issue cannot be neglected,” he said. He said the GCC states have confidence in Iran, “but we do not see Iranian nuclear reactor as a cause of danger and instability to the region.” “We expect Iran to be rational in dealing with the nuclear issue, that it meets peaceful purposes without inflicting damage on its neighbors,” he added.
[more]

Educational reform tops summit agenda
By Hakam Kherallah
ABU DHABI — The rich agenda of the 26th GCC summit that opened in the capital yesterday is an indication of the leaders’ stress on the relevance of the six-member bloc, despite the view of many that progress was slow on a number of issues that relate, directly or indirectly, to the lives of the region’s people. There is an overriding view among top officials and analysts at the two venues of the summit (Hilton Hotel and Emirates Palace Hotel) that internal issues are taking centrestage in the discussions, but not at the expense of regional and international issues. Education and economic issues appeared to be central issues necessary for the progress of the six-member bloc. Top officials emphasised that the proposed changes to educational curricula are not dictated by ‘foreign agenda’.
[more]

Related Material
Gulf Cooperation Council Home Page

GCC Charter

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Editor’s Note
On April 25, 2005 President George Bush hosted King Abdullah bin Abdulaziz, then the Crown Prince, in a summit meeting at the Western White House in Crawford, Texas. The summit joint statement addressed a host of issues fundamental to the decades old partnership. Among them was the concern that: “Our future relations must rest on a foundation of broad cooperation. We must work to expand dialogue, understanding, and interactions between our citizens.” The first step in expanding the understanding and interaction between Americans and Saudis was said to be increasing the number of young Saudi students traveling and studying in the United States.” Many thoughtful commentators saw the meeting as a milestone in restoration of the relationship, damaged in the wake of the 9/11 attacks.

Two months later Secretary of State Condoleeza Rice was visiting Saudi Arabia and, with US Ambassador James Oberwetter, took questions from the media. The issue of visas for students and others was raised. The question about long lines and processing times was fielded by the Ambassador, “First, here in the Kingdom, in particular, we are working with a reduced staff, and because we have a reduced staff at the consulate windows, we’re not able to accommodate all of the interest that we have. The second part to that is our new procedures that we use when one applies for visas. It used to be a very easy thing, but we learned a very hard lesson about that.” Secretary Rice added, “I guess the good news is that people are trying to go, and we’ll try to deal with it.”

A few days after the Rice visit the Ministry of Higher Education announced a grant for scholarships for Saudi students to study in the US, as a direct result of the Crawford summit discussions. However, the availability of funding and the desire of Saudi students for US higher education are not the only hurdles to be overcome. The issuance of visas for Saudis to travel and study in the United States is a major impediment. In November the process was stalled by the closing of the visa office at the US Consulate in Jeddah for security reasons. The frustrations experienced in obtaining visas were highlighted by Raid Qusti writing in Arab News on December 8, 2005. Today Joel Brinkley, writing in the New York Times, provided an overview of Saudi student travel to the US and the troubles in processing visas. It is reprinted here for your consideration.

More Saudi Students in U.S.
By Joel Brinkley

WASHINGTON, Dec. 17 – Urgently trying to improve relations with the United States, the Saudi Arabian government has been promoting a scholarship program that has more than doubled the number of Saudi enrollments at American colleges and universities since last year.

The program, aimed in part at reducing widespread hostility in the Saudi public toward the United States, has reversed a steady plunge in Saudi students here that started immediately after the Sept. 11, 2001, terror attacks.

The Saudi government offered 5,000 students full four-year scholarships, complete with living allowances. About two-thirds of the 5,000 students enrolled in American schools this fall, the State Department said, and the number would have been higher had the United States been able to process all the visa requests.

The academic relationship between the countries has been an area of concern for senior officials. James Oberwetter, the United States ambassador to Saudi Arabia, said in an interview that the drop “in exposure the population has had to the United States” was not helpful for the Saudis “at a time when they need to be looking outward instead of inward.”

The United States had long been the nation of choice for wealthy Saudis to educate their children. Prince Turki al-Faisal, the Saudi ambassador to Washington and a graduate of Georgetown University, noted that two-thirds of his nation’s cabinet ministers had been educated in the United States. “We have a kind of umbilical relationship” with American universities, he said in an interview.

Still, after the Sept. 11 attacks and the revelation that 15 of the 19 hijackers were Saudi, stories of mistreatment and hostility toward Saudis in the United States began flowering in the Saudi press and in public discussions. They continue today. An article last week in the Arab News, an English-language Saudi newspaper, said that in Riyadh, an American Embassy employee had called Saudis waiting in line for visas “animals.” And most Saudis who have traveled here in recent years tell stories about long delays and hard-edged questioning upon arrival.

The number of Saudi students arriving to study here dropped from more than 4,000 in 2001 to a low of just 1,008 last year, according to a State Department count of new education visas. In a broader reflection of the tensions between the nations, the total number of visiting Saudis fell from 46,636 in 2001 to about 12,000 last year.

“The relationship was nearly destroyed,” Mr. Oberwetter said.

In April, however, Abdullah, then the crown prince, visited President Bush at his ranch in Crawford, Tex., and among the issues they mentioned in a joint statement was a desire to “increase the number of young Saudi students to travel and study in the United States.”

This summer, the Saudi Education Ministry announced the scholarship program and for the first two weeks, specified in newspaper advertisements that they were for study in the United States. Later, the ministry authorized scholarships to other nations’ schools as well.

But the visa problem has been significant. The visa offices at the American Embassy in Riyadh Saudi Arabia were overwhelmed by applications from scholarship students, in part because staff had been reduced for security reasons.

Last December, attackers stormed the heavily guarded United States Consulate in Jidda, killing five local employees before four of the five gunman were shot dead. Because of continuing security concerns, the consulate stopped offering visa services last month, reducing the number of visa stations open for business.

Mr. Oberwetter is in Washington this week, and one of his missions, he said, is to get approval to install more visa officers. The State Department does not want to put more personnel into Saudi Arabia at a time when foreigners there are targets of attack.

As it is, Mr. Oberwetter announced in Riyadh last week that students would have to wait eight weeks to get an appointment for a visa interview, and he urged them to “plan well ahead.”

The Saudi Embassy’s cultural and educational mission in Washington manages the scholarship program, and on Thursday, Mazyed I. Almazyed, the cultural attaché, waved toward some 15 staff members charged with processing applications and scholarships, saying: “We are at a standstill. Because of the visa problem, everything is stopped.”

Maura Harty, the assistant secretary of state for consular affairs, noted that visa approval times, once the application has been taken, had been reduced from several months to no more two weeks. As for the eight-week appointment delay, she said the closure at Jidda and the sudden crush of applications had combined to overwhelm the embassy.

On Thursday and Friday, 45 Saudi students arrived in Washington. Prince Turki visited with them at the embassy on Friday morning. They sat quietly in their new winter coats and stocking caps as he told them they were ambassadors with “the message that Saudi Arabia is hoping for a better future where the Saudi people will enjoy the benefits of your education here.”

He urged the students, most of them recent high school graduates, not to socialize only among themselves but to get to know Americans. “Learn the ways of American life,” he told them. “The American people are friendly and hospitable.”

Mr. Almazyed said many Saudi students arrived with preconceptions that were less generous. He lectures them to “forget all that.” Usually he visits students a few weeks after they have enrolled; he recalled one typical encounter this fall.

” ‘This is not what I expected,’ ” he said the student had told him.

“In what way is it different?” Mr. Almazyed asked him.

“‘Oh, well, you know,’” was all the student would say. But he was smiling.

Source: New York Times

Reprinted with permission.

US-Saudi Summits – Special Reports Section – SUSRIS
Secretary Rice Roundtable with Saudi Media – SUSRIS IOI – Jun. 21, 2005
Treat Us Like Human Beings, Saudi Reporter Tells US Ambassador – Arab News – Dec. 8, 2005
Education Official Calls on US to Simplify Student Visa Procedures – Arab News – May 3, 2005
The Need for Education Reform – “Saudi System is the Problem” by Rachel Bronson and Isobel Coleman – SUSRIS IOI – Mar. 31, 2005
Crises and Opportunities in U.S.-Saudi Relations – Ambassador Robert Jordan Interview – SUSRIS Interview – Sep. 4, 2004
“Never Hate in Plurals”: US-Saudi People-to-People Relationships – Khaled Al Maeena at the Hampton Roads World Affairs Council – SUSRIS IOI – Nov. 24, 2004
The Fight Against Extremism and the Search for Peace – Prince Saud Al Faisal – SUSRIS IOI – Sep. 28, 2005
HRH Prince Saud Al-Faisal – Foreign Minister of the Kingdom of Saudi Arabia at the U.S.-Arab Economic Forum – SUSRIS IOI – Sep. 30, 2003
The Prospects for Stability in Saudi Arabia in 2004 [Part I] – Reducing the Threat of Terrorism – By Anthony H. Cordesman – SUSRIS IOI – Feb. 23, 2004
Saudi students surge at Florida Tech – Florida Today – Nov. 25, 2005
Open Doors On-line
Foreign Students’ Toughest Test: Getting In By Susan Taylor Martin – SAF/SUSRIS – IOI – Feb. 24, 2004
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Editor’s Note
The budget for 2006 the Saudi Arabian government released on September 13 contained a “number of superlatives” as highlighted in Riyad Bank’s Weekly Economic Briefing: “..highest government budget surplus ever, highest private sector growth in the last twenty years, one of the highest economic growth for the overall economy, record current account surplus, and record non-oil exports.”

The new budget as well as a review of performance of the Saudi Arabian economy in 2005 was the subject of a special report issued September 13 by Samba’s Office of the Chief Economist, Mr. Brad Bourland. Today we provide that report for your consideration. Complete issues of the Riyad Bank Weekly Economic Brief and the Samba “2006 Budget, 2005 Performance” report, including a number of helpful graphs, can be viewed on-line.

Summary

On Monday, December 12, 2005 the Council of Ministers endorsed the government’s budget for fiscal year 2006 (31 Dec. 2005-30 Dec. 2006) and announced economic and fiscal results for 2005. The central theme is the use of exceptional oil revenues for debt reduction and spending on education, healthcare, and basic infrastructure. The highlights are:

Actual 2005 government spending of SR 341 billion ($90.9 billion) and revenues of SR 555 billion ($148 billion), with a resulting surplus of SR 214 ($57.1 billion). The budget was projected to be in balance with both revenues and expenditures of SR 280 billion ($75 billion). Both revenues and spending exceeded the budget, with revenues more than 90 percent over budget expectations and spending nearly 22 percent above the budget. The government reduced its debt by a Samba-estimated SR 139 billion ($37 billion) to stand currently at SR 475 ($126.7 billion), or a manageable 41 percent of GDP.

2006 budget spending of SR 335 billion ($89.3 billion) and revenues of SR 390 billion ($109 billion) for a projected surplus of SR 55 billion ($14.6 billion). Expenditures are 20 percent higher than in the 2005 budget, but in line with actual 2005 spending. Our preliminary forecast is that actual spending and revenues will again exceed the budget for 2006, but still allow for a sizeable budget surplus.

Preliminary data show that the economy grew strongly in 2005, with real GDP growth of 6.5 percent. Inflation, at 0.4 percent, was insignificant.

Following past practice, the budget appears based on conservative oil price and revenue projections. A Samba-estimated average price for Saudi oil of $35 per barrel at an average 2006 production of 9.5 million barrels per day (b/d) (current production is 9.5 million b/d) would meet the 2006 budget projection. The stimulative 2006 budget — the largest in the Kingdom’s history — combined with private sector growth across the board, the healthy levels of business spending, all point to the strength of the 2005 economy building in 2006.

[This is a brief spot commentary on the new budget for 2006 and preliminary economic performance for 2005. A complete report reviewing fiscal and economic developments and forecasting 2006 performance will be released in early February 2006.

2005 FISCAL PERFORMANCE

We expected 2005 to be a year of exceptional fiscal performance as total oil exports have been the highest in the country’s history at $157 billion, some $52 billion more than last year, which was also a strong year. The government used its anticipated revenues to increase spending over the budget while maintaining its largest surplus ever of SR 214 billion ($57 billion). The second largest surplus was recorded in 1980 at SR 111 billion ($29.6 billion). While growing foreign assets at the central bank (SAMA), the government also spent on both current and capital projects as well as reducing its debt.

Actual spending over the budget by about 15 percent is the historical pattern, but in 2005 revenues so far exceeded the budget forecast, by 98 percent, that the extra spending of 22 percent over the budget was easily covered. The SR 341 billion ($90.9 billion in actual spending represented growth of 16 percent over actual 2004 spending.

SAMA increased its foreign assets between December 2004 and October 2005 (latest data) by more than 53 percent or $46.6 billion. Foreign assets have been growing over the past two years but not at the rate we are witnessing at present. From December 2003 to December 2004 foreign assets grew by $28 billion. Foreign assets now stand at 36 months of import cover. These assets provide substantial financial depth to protect the currency’s peg to the US dollar and budgetary cushion against future downturns in oil revenues.

The government announced that it reduced its debt to SR 475 billion ($126.7 billion), which, by our estimate, is a reduction of SR 139 billion ($37 billion) from year-end 2004 levels. Government debt now stands at 41 percent of GDP, down from a peak of 119 percent of GDP in 1999. The combination of debt reduction and strong GDP growth over the past few years has resulted in marked improvement in the government’s debt profile.

The combination of a large surplus, debt reduction, and the build-up of foreign assets represented the best year in the past 20 of fiscal performance in the Kingdom. The foreign asset position of the government is strong and debt is now declining quickly in both absolute terms and as a percentage of GDP.

2006 BUDGET

The 2006 budget projects spending of SR 335 billion ($89.3 billion). This represents an increase of 20 percent over the 2005 budget, laying the groundwork for strong fiscal stimulus to the economy in 2006. The growth in the 2006 budget follows a year of similar budgetary growth in 2005.

Infrastructure spending is a focus of the 2006 budget. The budget earmarks SR 126 billion for capital projects. The statement from the Ministry of Finance refers to the budget’s “special emphasis on capital expenditures that will enhance economic growth and job creation.” Another aspect of the infrastructure spending is that it is geographically diverse, highlighting an emphasis on building in rural areas. For example, the budget announcement notes plans to build universities in Jizan, Hail and al-Jouf, 2,700 new schools across the Kingdom, and 440 primary healthcare centers in all 13 regions of the country.

Spending priority is given to education and healthcare, in line with the government’s policy shift since the late 1990s that focuses more on the social needs of a rapidly growing population. Sectoral appropriations are as follows:

Education and human resource development received some SR 87.3 billion, an increase of SR 18 billion from last year’s budget allocation. The country’s primary and secondary schooling system will benefit with the construction of 2,673 new schools, in addition to 3,330 schools currently under constructions and the rehabilitation of 2,000 existing schools. Funds are allocated for the construction of three new technical colleges and 15 vocational training centers.

Health and social affairs is the second largest category in the 2006 budget, totaling SR 31 billion in expenditures compared to SR 23 billion in 2005. Twenty-four new hospitals will be constructed in addition to the 89 hospitals currently being built. In social affairs, allocation for public housing projects throughout the Kingdom will be increased to SR 10 billion.

Water, agriculture, and infrastructure is budgeted at SR 22.5 billion. This includes spending for new water, sewage and desalination projects, in addition to infrastructure projects in the industrial cities of Jubail and Yanbu, as well as various agricultural projects.

Municipal services (urban roads, street lighting, city bridges, and cleaning services) will receive SR 12.4 billion.

Transportation and telecommunications will receive SR 11.5 billion.

The 2006 budget also project revenues of SR 390 billion ($104 billion), resulting in a projected surplus of SR 55 billion ($14.7 billion). Typically, non-oil revenues provide about 20 percent of budgetary revenues from sources such as investment income, taxes, customs duties and fees. The amount and sources of non-oil revenues have not changed significantly in many years. The expected income from customs duties will shrink in 2006 as Saudi Arabia lowers tariffs due to WTO accession. We expect that the loss in customs duties will be more than offset by higher proceeds from privatizations and higher corporate tax proceeds in 2006. Non-oil revenues will account, we believe, for about SR 50 billion, or 13 percent, of the SR 390 billion total in the budget.

The rest must come from oil. A 2006 average price for Saudi oil of $34 per barrel (about $41 for WTI) and an average production of 9.5 million b/d, which is currently the level of Saudi oil production, would meet the budget, in our view. As in the past, this represents a conservative outlook on the oil market. We think it likely that the pattern of 2005 will be repeated, wherein both revenues and expenditures exceed the budget, but with the end result being a large surplus. Our current forecast is for the average price of Saudi oil to be $50 per barrel in 2006.

In its December 2005 meeting, Opec decide to adhere to the group’s official 28 million b/d ceiling (excluding Iraq), but rein in excess (200,000-300,000 b/d) to keep strictly within that limit, in anticipation of seasonally weakening demand in early 2006. Opec projects first quarter demand at 29.8 million b/d and the second quarter at 27.7 million b/d, hence a lower requirement for its crude. While prices have declined from their August record high of $70.85 per barrel (WTI), today they are at $61 per barrel, and no signs of a significant drop in price are on the horizon.

Of significance in the budget statement is the government’s strong commitment to significantly lower government debt. We were surprised by the level of debt reduction. In 2004, debt was reduced by about 9 percent, coming down from SR 660 billion to SR 614 billion, and we expected the same amount of reduction in 2005. Instead, debt was reduced by more than 29 percent in 2005 to SR 475 billion. Banking data shows that government debt held by the commercial banks declined through October by about SR 15 billion, or about 11 percent of the total debt reduction. Thus, the majority of the debt that was retired was held by two large government pension funds — GOSI and the Retirement Pensions Agency.

2005 ECONOMIC PERFORMANCE

In its mid-December budget announcement, the government also provides preliminary estimates of macroeconomic performance for the year. The government announced the following for 2005.

Real GDP growth of 6.5 percent, and nominal GDP growth of 22.7 percent. (The difference is primarily due to the increase in price in Saudi Arabia’s oil exports, not domestic inflation.)

Consumer price inflation of 0.4 percent.

Broad money (M3) growth of 9.2 percent through October.

Current account surplus of SR 326.5 billion ($87.1 billion).

This data, combined with the government budget data, portrays an economy experiencing nearly ideal conditions. Growth is robust and accelerating. Rarely does a country experience 23 percent growth in nominal GDP and no domestic inflation. Government finances are healthy with high spending growth but even higher growth budget surpluses. The trade balance is strong, with the Kingdom now enjoying current account surpluses in 9 of the past 10 years. Also evident in 2005 is that economic reform continues to be a central policy theme, even in the context of strong economic performance. The Kingdom became a member of the WTO on 11 December, ending 12 years of negotiations, and made commitments to WTO members of dozens of further actions to improve and liberalize the country’s trade profile.

Conditions for 2006 look equally bright. Oil revenues are likely to remain strong. We believe private sector growth will accelerate, business investment, including by foreigners, will grow strongly, consumer confidence and spending will remain high, and the fiscal stimulus of higher government spending will aid the growth.

How did we do in forecasting? The following table summarizes our most recent forecasts with the actual data. Most data was in line with our forecasts, but we were a bit too optimistic about GDP growth and the trade balance. Higher levels of imports than we expected would account for the difference. What we clearly did not expect was the high level of debt reduction that occurred. We had been watching SAMA foreign assets grow strongly throughout the year, so we did not calculate that as much was going toward debt reduction as was announced.
2005 Economic and Fiscal Performance

Samba Forecast Actual Results
Government Spending (SR billion) 343 341
Government Revenues (SR billion) 551 555
Budget Surplus (SR billion) 208 214
Real GDP growth 6.8% 6.5%
Private sector growth 7.9% 6.7%
Nominal GDP growth 29.8% 22.7%
Inflation 1.0% 0.4%
Current Account Balance (SR billion) 378 327
Oil Exports ($ billion) 163 157

Check Full Version for graphs and notes.

Source: Samba

Saudi Budget Boosts Stocks (MenaFN)

Saudi budget surplus doubles to $57 billion (TradeArabia)

Saudi Stability Ahead (Forbes)

Saudi Arabian Monetary Agency

Editor’s Note
The Organization of the Islamic Conference (OIC) conducted an extraordinary summit December 7-8, 2005 in Mecca, Saudi Arabia. The session provided the 56 nation intergovernmental organization — representing over a billion of the world’s Muslims — the opportunity to refocus the OIC role in confronting challenges and crises. About 40 heads of state represented their countries at the session, the first since the OIC met for the a regular triennial meeting in October 2003. This extraordinary session was convened in response to a call from Saudi Arabia’s King Abdullah bin Abdulaziz.

As Custodian of the Two Holy Mosques, King Abdullah occupies a special place of leadership in the Islamic world. The role Saudi Arabia plays in shaping the course of the OIC as an organization and in the Muslim world in general was summed up by Bernard Dunn in an interview with GulfWire: “Leadership in the Islamic world is diffused, but if there could be said to be a symbolic seat for the center of Islam, it would be Saudi Arabia, because of its custodianship of the two holy mosques, Mecca and Medina.. ..Saudi Arabia and the head of state of Saudi Arabia will continue to be where the Islamic world turns to for guidance, leadership and defense of Islamic interests.” This leadership role is but one of the areas where the United States derives benefits from its close partnership with Saudi Arabia.

The 3rd Extraordinary Summit concluded with agreement on an action plan to move the OIC forward in the face of numerous challenges. We are pleased today to present reports from Arab News on the summit results as well as links to the Mecca Declaration and other summit documents and press reports (below).

Summit Gives Hope to the Muslim World
P.K. Abdul Ghafour, Arab News

JEDDAH, 10 December 2005 — The extraordinary Islamic summit in the holy city of Makkah was a resounding success as it approved a 10-year action plan for the overall development of OIC member countries and gave the world’s 1.5 billion Muslims a new hope about a bright future.

Unlike the previous summits of the 57-member Organization of the Islamic Conference, the Makkah summit was well prepared and presented a future-looking agenda for the Muslim world. It also wanted a complete facelift of the organization in order to play an effective role on the world stage.

The 10-year action plan focuses on reforms and human rights and urges the member states to adopt a united stand on all issues at international forums. It has given the OIC secretary-general more powers and additional financial resources to carry out his mission.

The progressive action plan calls for greater political participation, equality, freedom and social justice for people in OIC countries, and it demands transparency and an end to corruption. It called for cooperation of member countries to achieve amicable settlement of regional conflicts.

The summit authorized the board of governors of the Islamic Development Bank to take necessary steps to increase the bank’s capital and strengthen the International Islamic Organization to Finance Trade. The board is also instructed to set up a special fund to fight poverty as well as to study prospects of either reducing or writing off the debts of certain deserving governments owed to the member states.

Before the summit, a group of leading intellectuals and scholars met in Makkah and presented a new vision for the Muslim world. They stressed the fact that the thoughts and energies of Muslims should be directed toward formulating answers rather than repeating questions. What is needed is a change motivated by and within the Islamic world and not imposed from outside.

“The new vision presented by the scholars was designed to call upon the member states to radically reform their international organization with a totally new mandate,” said OIC Secretary-General Ekmeleddin Ihsanoglu. “A new OIC based on the principles of transparency, accountability, effectiveness, flexibility and pro-activeness must take the initiative to deal with the urgent problems of our day and age.”

A new OIC will have a more comprehensive and larger scope of activities. These activities include monitoring, coordinating, agenda-building, advocacy and raising awareness about such crucial issues as conflict prevention and management, minority affairs, disaster relief, policy harmonization, economic and commercial development, science and research, education and cultural issues, women’s and children’s rights, preventing extremism of all kinds, and easing religious, sectarian and ethnic tensions through the guidance of scholars and leaders.

The Makkah summit and its main architect, Custodian of the Two Holy Mosques King Abdullah, drew applause from Saudis as well as expatriates. According to Abdullah Omar Naseef, former deputy chairman of the Shoura Council, the summit was a big success. “It has presented a number of ambitious and forward-looking programs for the renaissance of the Islamic Ummah,” he said.

The summit has taken concrete steps to strengthen the OIC. “For the first time, we hear the OIC secretary-general talking in a new language, explaining the weaknesses and emphasizing the need for change in order for the OIC to play an effective role on world stage,” he said.

Naseef hoped that the secretary-general would follow up implementation of the decisions taken by the summit.

Abdul Ilah Saati of King Abdul Aziz University said it was the most successful OIC summit in terms of attendance and adoption of vital resolutions such as the 10-year plan, the firm stand against terrorism and the call to reform school curriculum. “I have not seen such resolutions in previous summits,” he added. He said the summit was one of the biggest achievements of King Abdullah.

Ali Hekami, a journalist who covered the summit, attributed the success to non-indulgence in thorny political issues.

Iraqi Foreign Minister Hoshyar Zebari, however, said the summit had discussed issues such as Palestine, Iraq and Kashmir.

Badr Olayan, director general of the Islamic Education Foundation in Al-Hamrah, said he was satisfied with the summit’s resolutions. “I believe if our leaders continue to hold such meetings in order to solve our problems they would have tremendous impact,” he said.

Olayan emphasized the importance of collective decision and action by OIC countries. “Individual action will not be enough and will be very weak,” he pointed out. He said all member countries should follow the decisions taken by the majority.

He said the whole Muslim world would soon enjoy the result of the Makkah summit.

Businessman Khaleel Bahadur praised the resolution calling for increasing trade between OIC states by 20 percent in 10 years.

Abdul Rahman Faqeeh, a well-known Makkah businessman, called upon OIC leaders to establish a permanent exhibition center for the products of member countries in the holy city.

Mustafa Hashim, editorial assistant of “Muslim Youth”, published by the World Assembly of Muslim Youth, commended the king for his initiative that resulted in the 10-year plan, which includes programs to cultivate the spirit of moderation among Muslims and lead the Ummah on the path of modernization through science and technology.

In his comment, Saifudeen Thassim, assistant manager of the Samba Financial Group, made a pointed reference to the 10 fundamental principles outlined by Malaysian Prime Minister Abdullah Badawi. He said the Malaysian model called for harnessing the resources of the OIC countries for the development of science and technology in the member countries. Another important aspect of the Malaysian model plan, he said, is increasing transparency and accountability among the member countries. He predicted that this would go a long way in promoting good governance and combating corruption, which is endemic to some of the member countries.

“The proposals were really encouraging, but they need the right Islamic spirit for effective implementation,” said Habib Badr, a freelance journalist.

— With input from Mohammed Rasooldeen and Galal Fakkar

OIC Action Plan Ordered
P.K. Abdul Ghafour & Abdul Maqsood Mirza, Arab News —

JEDDAH, 11 December 2005 — Custodian of the Two Holy Mosques King Abdullah has instructed Foreign Minister Prince Saud Al-Faisal to meet with OIC Secretary-General Ekmeleddin Ihsanoglu here today to set out a working program to implement the Makkah summit resolutions.

The quick order from King Abdullah, the main architect of the extraordinary summit of the Organization of the Islamic Conference, proves that he was serious when he said the Makkah summit would open a new chapter in the history the Islamic nation.

The two-day conference, which was attended by most heads of state of the 57-member OIC, approved a 10-year action plan for the overall development of OIC countries and sought a complete facelift of the organization in order for it to play an effective role on the world stage.

According to Atta Al-Mannan, spokesman of the Jeddah-based organization, OIC officials have already started discussions with the Islamic Development Bank on establishing a fund to fight poverty as part of efforts to carry out the summit’s resolutions. He said expert committees would identify the priorities among the resolutions and work out an implementation timeline.

Al-Mannan said it would take time to realize the results of the 10-year action plan. “The restructuring of the organization will also take time as it involves changing the OIC Charter,” he said.

Meanwhile, the king launched seven health projects, including a cardiac center, a college of nursing and medical sciences and a bone marrow transplant unit at King Abdul Aziz Medical City here yesterday.

Dr. Abdullah Al-Rabeea, executive director for the National Guard health department, said the projects would cost SR300 million. He said the king had approved a national family security program at the department.

During the inaugural ceremony, Abdullah said the new health facilities would serve Saudis, expatriates and all Muslims.

“These projects are part of efforts to build a modern state, which was inaugurated by King Abdul Aziz, the founder of the Kingdom,” the king said.

The new projects at the medical city includes outpatient clinics, expansion of the emergency ward, the operation rooms, Princess Noura bint Abdul Rahman Al-Faisal Cancer Center and a medical unit to treat burns, Rabeea said.

Reprinted with permission of Arab News.

Organization of Islamic Conference Summit Begins – SUSRIS

Way to go – Editorial – Khaleej Times

Muslim leaders warn of ‘crisis’ – BBC

Arab press hails Islamic summit ‘unity’ – BBC

OIC Sets up Counter-Terrorism Unit – Zaman

Muslim Leaders Pledge Crackdown on Extremism – Fox News

Islamic leaders unveil action plan to rescue a ‘nation in crisis’ – Guardian (UK)

We Can’t Expect Others to Solve Our Problems, Says OIC Chief – Arab News

King Abdullah opens OIC summit with call for unity, tolerance – Saudi Embassy

Organization of the Islamic Conference Profile (SUSRIS)

OIC Summits History (SUSRIS)

OIC 3rd Extraordinary Summit (2005) Mecca Declaration (SUSRIS)

OIC 3rd Extraordinary Summit (2005) King Abdullah Statement (SUSRIS)

OIC 3rd Extraordinary Summit (2005) Secretary General’s Report (SUSRIS)

OIC 3rd Extraordinary Summit (2005) Communiqué (SUSRIS)

Editor’s Note
Saudi Arabia is hosting a meeting of the Organization of Islamic Conference (OIC) which opens today in Mecca. The assembly of nearly 50 heads of state from among the 57 countries representing over a billion Muslims comes at a time when the Islamic world faces a host of profound challenges. Foreign ministers from about 40 of the OIC countries met yesterday to finalize the summit agenda. Writing today in Arab News Siraj Wahab and Abdul Maqsood Mirza reported on the preparation of a ten-year plan of action for consideration of the OIC. Wael Mahdi analyzed the prospects of a Muslim common market in light of today’s OIC summit and the impending WTO session in Hong Kong. Lastly, Lubna Hussain called for members of the Muslim community to be reminded of the principles of Islam at a time when it is “under siege and a billion Muslims worldwide look to these very leaders to guide us into a new era.” These three items are provided here for your consideration and with thanks to Arab News.

Focus on 10-Year Action Plan
Siraj Wahab & Abdul Maqsood Mirza, Arab News

JEDDAH, 7 December 2005 — Nearly 40 foreign ministers of the 57-nation Organization of the Islamic Conference met in Jeddah yesterday to finalize the agenda of a two-day extraordinary summit that opens in Makkah today.

The ministerial conference was held at the Conference Palace in Jeddah’s upmarket Al-Hamra district amid some of the tightest security measures ever seen in the Kingdom. All roads leading to the palace were closed to the public, with traffic diverted due to security concerns. From early in the morning, cars with tinted glass streamed toward the palace carrying foreign ministers of the OIC’s various Muslim nations and non-Muslim member states.

Before the meeting began, Foreign Minister Prince Saud Al-Faisal welcomed the delegates and said Saudi Arabia was proud to host them. He said the OIC should seek to counter attacks on Islam from enemies abroad and also from those within who hold deviant ideologies.

Saud said it was up to the OIC countries to correct the image of Islam and defend Islam’s principles through dialogue. He reiterated the views of Custodian of the Two Holy Mosques King Abdullah that the summit is a historic opportunity and the resolutions of the summit should be a turning point in the history of the Muslim world.

OIC Secretary-General Ekmeleddin Ihsanoglu also welcomed the foreign ministers. He said that the 10-year action plan of the OIC, to be agreed upon during the summit, would be a road map for common Islamic action. The plan was meant to be a blueprint for confronting the massive challenges Muslims face in political, economic, cultural and scientific fields.

The focus of the preparatory meeting was on four documents to be approved by the heads of the OIC countries during the Makkah summit. The first document, an update on the activities of the OIC since its last meeting, was immediately passed without contention. It was with the second document that the real work began.

The second document, a 10-year strategic action plan, is meant to confront the challenges faced by the OIC countries. Throughout the day the delegates to the preparatory meeting poured over the document’s text, paragraph by paragraph, in minute detail. The strategic plan is based on the recommendations of Muslim scholars and intellectuals who met in Makkah in September.

After hours without word of the proceedings, OIC spokesman Atta Mannan stepped out from the meeting to advise the assembled reporters that the deliberations would most certainly be continuing until late in the night. He said the strategic plan was quite exhaustive, dealing with issues central to politics, economics, science, culture and trade in the OIC nations. The plan discusses the means of tackling Islamophobia, how to deal with the state of minorities in non-OIC states, ways to initiate dialogue with the outside world, methods to improve the image of Islam and tactics to seize the initiative from the deviants and terrorists.

Mannan asserted that the time being taken by the delegates to consider the plan boded well for its success. He believes that the intense interest in the details of the 10-year plan indicates the seriousness being given to the summit by the entire Muslim world.

He said that from the discussions taking place inside the Conference Palace, it was evident the delegates realized that the Muslim world had huge expectations from these meetings. “The fact that the delegates are giving so much attention to the proposals shows they don’t just want to sign on the dotted lines” as was sometimes the case at previous summits, he said.

“The delegates want to ensure that the proposals they are approving for their heads of government to see are truly implementable and practical,” said Mannan. It is true that in the past the OIC made many declarations that went unheeded.

Another important document being prepared for approval yesterday was the Makkah Declaration, which was to be taken up after the delegates finalized the action plan. The Makkah Declaration presents the general view of the current global situation and the situation in OIC countries as well as the common aspirations and hopes of the Muslim world.

The final item that was to be agreed upon at the ministerial meeting was the drafting of the final communiqué. Mannan said that a select committee from among the member states had been entrusted with the task of drafting this document.

http://www.arabnews.com/?page=1&section=0&article=74313&d=7&m=12&y=2005

Summit’s Outcome Important for Islamic Countries on WTO
Wael Mahdi, Arab News

JEDDAH, 7 December 2005 — There are two important international events taking place this month in which Islamic countries are participating. One event is political while the other is economic. The Third Extraordinary OIC Summit is the political event; it precedes the economic one, the WTO Hong Kong Ministerial Conference (HKMC).

There is a strong link between the two events in that the outcome of the OIC summit might influence the future of Muslim countries in the World Trade Organization. Without doing a political analysis, it is possible to understand the nature and the importance of the OIC summit by being aware of the challenges that WTO imposes on the economic and political future of Islamic countries. In other words, to understand the political it is essential to understand the economical.

Saudi Arabia and other Muslim countries face significant challenges in the WTO because its rules impose limitations on the interaction of Islamic member countries. The major principle affecting the presence of Muslim countries in the WTO is trading without discrimination. Under WTO most-favored-nation (MFN) treatment, a country cannot discriminate between its trading partners by granting some nations special favors (such as lower tariffs) and not granting them to others. According to this principle, Muslim countries that are WTO members cannot grant each other special favors. Moreover, Muslim countries should treat all member nations equally; this of course includes Israel, which many Muslim countries boycott. Forming a regional trade agreement, however, between Muslim countries might solve the problem of the (MFN) treatment. Under Article 24 of the General Agreement on Tariffs and Trade — GATT was the forerunner of WTO — countries are allowed to form regional trading arrangements as a special exception even though this might sometimes violate WTO’s principle of equal treatment.

The formation of a Muslim multilateral trading bloc as an adjunct to OIC membership could pave the way for those Muslim countries not already WTO members to join the organization. Countries that are not WTO members such as Afghanistan, Algeria, Iraq, Iran, Lebanon and Libya could be easily absorbed into the multilateral trading system once they became part of an Islamic regional agreement. If the OIC were an internationally effective body, it could provide solid ground for negotiating WTO membership for non-member Muslim countries. It would thus be easier to negotiate with one body instead of having to engage in bilateral negotiations with several different states. Moreover, if the non-member countries are part of a free trade agreement with WTO member countries, then the benefit to all WTO members is obvious. In such a case, the tariffs imposed by the non-members will be more or less on a par with those of WTO members so that accession would not create problems in that area. Secondly, most OIC countries are members of WTO and they could exert pressure within the organization for the admission of non-members.

There is plenty of evidence to suggest that Muslim leaders realize the importance of reinventing the OIC as a political and economic organization.

At the present extraordinary summit, OIC countries are considering the establishment of a common market. This is evidence that they have realized the power they could exert on the WTO if they were a unified market. The announcement by Saudi Foreign Minister Prince Saud Al-Faisal that increasing trade and economic integration between Islamic countries are major issues at the summit testifies to their importance. Currently, inter-Muslim trade accounts for only 13 percent of their total trade and the aim is to increase this figure as much as possible.

The strength of the European Union comes primarily from its being a common market; by forming an Islamic common market, the OIC’s role in a multilateral trading bloc could enhance the standing of its member countries already in the WTO. The attendance of the newly elected Iranian president and the announcement of Libya’s participation in the summit are strong indications that leaders have finally been able to abandon their disputes in order to pursue their economic and political interests.

http://www.arabnews.com/?page=1&section=0&article=74320&d=7&m=12&y=2005

Restoring the True Spirit of Islam
Lubna Hussain, lubna@arabnews.com

Today heralds the advent of the summit for the Organization of the Islamic Conference (OIC) where nearly 50 heads of countries spanning the globe will come together in Makkah, the birthplace of Islam, to face one of their toughest challenges yet. It comes at a time when we Muslims the world over are consistently confronted with the fact that the reputation of our faith has been distorted, maligned and plundered by politicized elements both from within our fold and from without.

With Islamophobia on the rise we are at a critical juncture of our history and the decisions that are made about our future will affect the lives of generations to come. In an era when Islam has become symbolic with terror, oppression and intolerance, it’s about time its tarnished image was restored to embody its true spirit and that we, as Muslims, unite to vanquish the demons that have plagued our ranks for far too long.

This week a billion Muslims look forward to seeing concerns addressed that affect our everyday lives. There is a palpable sense of anticipation that, unlike in other years, this summit might just make the difference that is so badly needed. There is a myriad of issues that compound the tribulations that we face, ranging from occupation and war to poverty and poor governance. What remains now to be seen is whether our leadership possesses the courage and determination to not only formulate solutions to the plethora of problems that exist by recognizing its own collective shortcomings, but whether it is tenacious enough to sustain its implementation by actively abandoning the current status quo it has enjoyed for too long.

As a global citizen there are many basic civil rights that I should enjoy and yet, because I happen to be a Muslim, a new climate has pervaded the world that has left me denied of them without recourse. Surely, as a premise of humanity, I should be entitled to treatment that affords me dignity and respect as an individual. Is that too much to ask? And yet it seems that in the current environment it is. More than anything else I would like to have this simple yet fundamental liberty reinstated. Why is it considered justifiable to punish me for crimes that I not only didn’t commit or orchestrate but ones that I never sought to justify or condone? How is it that the vile and heinous acts of a few evil and malicious elements have come to characterize Muslims en masse worldwide? How can a religion whose very name means “submission”, and that has for centuries, since its humble beginnings in the Arabian Peninsula, championed the cause of the subjugated now be depicted as a doctrine of violence, hatred and extremism because of the acts of a handful of deviants over a period of a few years?

More pertinently, those who have misappropriated and subverted a creed that throughout history has been synonymous with peace, moderation and compassion, for their own dark motives should not even be referred to as practitioners of this great faith.

It is time for us to remind the world and ourselves of Islam’s true values and meaning. Nothing could be more far removed from this than the misinterpretations and spurious motives that such fanatics base their incorrigible behavior upon. If they are not in spirit “Muslims” then why is it that I have to bear the brunt of their callous, brutal and disgusting displays of cowardice? How is it that such crimes against the defenseless are termed as “Islamic” acts of terror when, ironically, such crimes are being committed against the faith itself?

But the truth of the matter is that I am held responsible. Being a Muslim, wherever I go I am scrutinized, viewed through prejudiced eyes and regarded with suspicion by default. No longer am I perceived as an individual, but as part of a larger conspiracy to destabilize the world. It really doesn’t seem to matter that hundreds of millions of moderate Muslims, like myself, are appalled by the growing number of atrocities committed in the name of Islam and would like nothing better than to distance ourselves from these monsters who perpetrate them. In order to do this it is time to stop blaming others and start analyzing where it is that we have gone wrong. There is a lot of culpability that rests upon our shoulders and to move away from such trying times means excising from the body of our community several of the malignant aberrations that have been allowed to fester indefinitely. Seeking to create a better future cannot be done without gaining a clearer understanding of the present and the past.

If one of our major objectives is to be treated with tolerance and respect, then we too must espouse these values in our dealings with others. We need to imbibe the principle of reciprocity that has been absent from the very fabric of our societies for too long. This involves respecting the faiths, cultural diversities and traditions of a disparate community that lives within our borders by giving them similar and definite rights to those afforded to them by Prophet Muhammad (peace be upon him) 1,400 years ago. Fostering mutual acceptance is an important aspiration that we must strive to attain. Discrimination based upon whatever criteria must end, as if we wish to be regarded as individuals then we must start viewing others as individuals too. Restriction of rights, whether of women, minorities or foreigners, is a matter of tremendous exigency that needs to be confronted head on and which no longer merits being brushed aside.

Within our own societies there needs to be a much broader focus on education and critical thinking. People not only need to be given basic freedom of thought, but more importantly need to be taught how to think for themselves. Such scope for criticism will leave the young and impressionable less susceptible to the insidious attempts at indoctrination that have proved so effective in recent years. The dissemination of knowledge and the essential precepts that underpin our faith need to be outlined more clearly. The issuing of fatwas and other edicts in an irresponsible, irrational and inflammatory manner needs to be condemned universally and considered as a punishable offense. Islam is a beautifully logical religion that unilaterally rejects violence toward the innocent. How then can we justify watching in impotence as militant elements manipulate its teachings to undermine everything that it represents? Such a “hijacking” of the faith has only been made possible through the perpetration of ignorance within our countries by those who fear being held accountable by a more well-informed and judicious population. This constitutes nothing short of a total contradiction of the Islamic ideal of promoting enlightenment and striving towards erudition. Allowing so many of our people to remain uneducated and isolationist has served to perpetuate poverty, desolation and provided the perfect nidus for the seeds of terrorism to be sown.

Time is of the essence. If we can rise to the challenge and stand together in an honest endeavor to confront our own demons we may have a fighting chance to regain our sovereignty. Islam is under siege and a billion Muslims worldwide look to these very leaders to guide us into a new era where we can once again live with dignity and respect. But before we have a hope of standing united, we first have to learn how to stand.

http://www.arabnews.com/?page=7&section=0&article=74308&d=7&m=12&y=2005

Reprinted with permission.

Braibanti: A Man for All Seasons
Michael Saba, sabamps@aol.com

Nov. 24 was Thanksgiving Day in the United States. On that day, a truly great man passed away. Anyone who knew him or worked with him could certainly give thanks for that privilege. Dr. Ralph Braibanti was truly a man for all seasons.

Braibanti grew up in Danbury, Connecticut. He was the grandson of Polish and Italian immigrants who immigrated to Danbury at the turn of the 19th century to find work in the hat manufacturing business. Braibanti’s father managed hat factories in the Danbury area during the middle of the 20th century.

Braibanti earned his undergraduate degree at Connecticut State University and went on to receive his Master’s and doctoral degrees at Syracuse University. He served in the US Army during World War ll and in the occupation of Japan. He was trained to speak Japanese and spent two years as a military government officer in Japan. This service became a lifelong point of pride and he often said that this experience in Japan was the wellspring for his academic interest in the relationship between culture, religion and “good governance.”

He began his teaching career at Syracuse University in 1947. In 1949, he accepted a teaching appointment at Kenyon College and stayed there until moving to Duke University in 1953 where he remained until his retirement in 1990. While at Duke, he did teaching and extensive research on Western-Islamic relations and he began his often-praised Pakistan program in 1957. He received Duke’s highest and most respected academic honor, a James B. Duke professorship, in 1968.

While at Duke, Braibanti became a legend for his classroom teaching. He received many academic and student awards for his teaching skills and he was noted as one who encouraged and respected a diversity of viewpoints. He directed the extraordinary number of 39 doctoral dissertations and wrote or contributed to 19 books. He was also a frequent contributor to numerous journals, writing essays, book reviews and newspaper articles.

Braibanti was a member of numerous editorial boards, among them the Journal of Pakistan Studies and the Journal of Arab Affairs. He was the founding president of the American Institute of Pakistan Studies which he headed for nine years. His work on Pakistan-American relations helped to nourish strong bonds between the US and Pakistan. Braibanti wrote a biography of a the late A.R. Cornelius, a Pakistani Roman Catholic who, as chief justice of Pakistan administered a legal code derived from Islam. In Cornelius, Braibanti saw a shining example of how two cultures might be bridged.

Braibanti spent much of his academic life teaching, researching and founding institutions dedicated to the further understanding of Islam. He established the Islamic and Arabian Development Studies Center at Duke University, one of the most prestigious universities in the United States in 1977 with the support of 20 US and multinational corporations and the government of Saudi Arabia. He was personally responsible for the donation of over 6,000 books on Islamic subjects to the Duke Perkins Library.

He had a lifelong devotion to his former students, many of whom went on to important positions in government and academia. Those former students include the Saudis Dr. Fouad Al-Farsy, minister of Haj; Dr. Abdulrahman Al-Nafisa, minister-counselor, and Dr. Othman Al-Rawaf, King Saud University professor of Political Science and member of the Shoura Council.

Braibanti was a man of firm convictions. “He became a very strong advocate of the university’s relationship with Saudi Arabia,” said Ole Holsti, an emeritus professor of political science at Duke. “He was not a shrinking violet. Anyone who had interactions with him had no difficulty discerning what his views were.”

“He was someone who clearly was taking the university in some new directions,” said US Rep. David Price, a former Duke political science professor who joined the department in 1973.

A close Saudi watcher, Braibanti advocated that the diplomacy of Saudi Arabia has had a moderating effect on the Muslim world. He has likened Saudi diplomacy as “quiet as the sand dunes of the Rub Al Khali, which move relentlessly but silently — driven only by the whispering of the desert winds.”

Braibanti termed the secret meeting between King Abdul Aziz and President Franklin Delano Roosevelt a “diplomatic triumph for both sides” and said that this set the standard for the conduct of Saudi foreign policy which was conducted by successive rulers of the Kingdom including Kings Saud, Faisal, Khaled, Fahd and Abdullah.

This standard, concluded Braibanti, has been “marked by moderation, conciliation and goodwill, in the best Islamic tradition, but also capable of iron-willed determination as was shown in the Arab oil embargo of 1973.”

Braibanti stayed intellectually active until his final days. He served as professor emeritus at the Duke University Department of Political Science. He published a book of post-World War l poems by his father-in-law, Charles Henry Kauffman, and organized a coalition of his neighbors to promote the esthetic renaissance of his beloved Hope Valley Durham, North Carolina community. When Friends of Saudi Arabia, an American nonprofit people-to people organization was formed earlier this year, Braibanti signed on as a charter member and advisory board consultant stating, “I have been a friend of Saudi Arabia as long as I can remember and I will do anything that I can to help that friendship grow and flourish.”

Haj Minister Farsy commented on the meaning of his former professor’s life: “He was a great teacher and scholar who passed knowledge to all the young minds that he touched. But above all he was a great humanitarian and he was able, wherever he went, to see the common thread of humanity rather than the differences. I loved him so dearly. He was my great mentor and friend. We will all miss him dearly. My sincere condolences to his wife, Mrs. Lucy Braibanti, and all of his family.”

Source: Arab News

Reprinted with permission

Michael Saba is Executive Director of Friends of Saudi Arabia, a non-profit entity dedicated to establishing goodwill and friendship between the people of Saudi Arabia and people of other countries and cultures.

Editor’s Note
Prince Turki Al-Faisal presented his diplomatic credentials to U.S. President George W. Bush today in Washington, DC, marking his acceptance as Ambassador Extraordinary and Plenipotentiary of the Kingdom of Saudi Arabia to the United States of America. Prince Turki, the last son of King Faisal, was educated at Georgetown University, Class of 1968 and went on to serve Saudi Arabia as the Director General of the General Intelligence Directorate from 1977 through 2001. He most recently completed a posting as Saudi Arabia’s Ambassador to the United Kingdom from 2003-2005 before replacing Prince Bandar bin Sultan as the Kingdom’s top diplomat in the United States. Prince Bandar was appointed Secretary-General of the National Security Council on October 16, 2005.

Yesterday Prince Turki delivered a wide-ranging speech at the US Army War College in Pennsylvania. He discussed the issues confronting the United States and Saudi Arabia including the situation in Iraq, Afghanistan, and Israel and Palestine. He also spoke about the US-Saudi partnership in the war on terror and the recently inaugurated Saudi-US Dialogue, a byproduct of the April 2005 Bush-Abdullah Summit. We are pleased to present Prince Turki’s remarks at the Army War College here for your consideration.

Community and Cooperation
Prince Turki Al-Faisal

US Army War College
Carlisle, Pennsylvania
December 1, 2005

Ladies and Gentlemen: This is my first official speech as Ambassador. So it is a privilege to deliver it to such a distinguished audience.

I am reading a book called 1776, in which Gen. George Washington distinguishes himself by avoiding as much bloodshed as possible. Other distinguished military leaders throughout history have been the primary peacemakers that brought seemingly intractable military conflict to peaceful resolution. Eisenhower in Europe, MacArthur in Japan, Sadat in Egypt, Rabin in Israel, DeGaulle in Algeria.

This College will produce the future peacemakers.

The War College is a prestigious institution, and Saudi Arabia has had the privilege of having many of its citizens attend.

As an elite institution, the War College has a rich heritage of integrity, excellence, and outstanding service. Most importantly, though, Carlisle Barracks has a heritage of fostering community. As we face new challenges – which can only be addressed through international cooperation – having a community is a necessity. We must know who we can rely on and who we can trust.

This is because the battles we fight today have no clear front lines. The strife and conflict that exist throughout the world overlap national borders and ethnic divisions, and even cross oceans. As we all know too well, in an increasingly smaller world the stability or security of a nation far away can impact us all significantly at home.

As two nations that are of critical importance to global issues today, the United States and Saudi Arabia share a responsibility to promote understanding where none exists, broker peace where it has been seldom seen, and strengthen our own common bonds of friendship and cooperation.

I predicate this notion on the fact that each of our respective countries enjoys a unique position of influence that is complementary to that of the other, in spite of their admittedly disproportionate capabilities.

The United States is the only superpower in the world today, and this imposes responsibilities and obligations upon it. But there is also a moral dimension to being the world’s sole superpower: respect for law and compassion for the oppressed.

Saudi Arabia also has a unique position in the world. The Kingdom is the birthplace of Islam, one of the world’s three monotheistic religions, and the site of the Two Holy Mosques, where tens of millions of Muslims come from all over the world for spiritual rejuvenation and fulfillment of their religious duty. Five times a day, more than one billion Muslims turn in the direction of Makkah in prayer. Accordingly, Saudi Arabia shoulders a responsibility of influence and moral leadership.

The responsibilities of our nations give us something in common. Despite the differences of our cultures, we have always shared the same basic belief in faith, family and the importance of honest and open communication. And these common attributes have served us well in tackling global challenges throughout the world during the last 60 years.

In 1953, the first US Military Training Mission arrived in the Kingdom to supervise military assistance and training activities. A few years later, Dhahran Airbase hosted American forces as part of the containment of the former Soviet Union. From this initial interaction grew a strategic relationship to ensure global security and stability – a relationship that has included a series of cooperative efforts to address political and military issues in the Middle East, as well as in Africa and South America.

Saudi Arabia stood with the US during the 1950s and 1960s when radicalism in the Arab World threatened to lead a socialist revolution throughout the region.

When the British withdrew from the Gulf in 1970, Saudi Arabia became one of the “twin pillars” of Gulf security. When the other “twin pillar” – Iran under the Shah – became the leading price hawk in OPEC and sought to undermine the primacy of the dollar in world trade, Saudi Arabia steadily increased production to keep oil prices in check, and insisted that oil be priced only in dollars.

During the Vietnam conflict, Saudi Arabia consistently supplied as much oil as needed to US military forces – even during the 1973 oil embargo. When the US withdrew from Vietnam, Saudi Arabia stepped in quietly to provide aid to anti-Communist movements in countries that were falling rapidly into the pro-Soviet sphere: Zaire, Somalia, Angola, and Nicaragua. Most importantly, we both supported the Mujahideen in Afghanistan during 1980s, contributing to the end of the Cold War.

Within one week of Iraq’s invasion of Kuwait in 1990, Saudi Arabia began hosting a coalition of international forces, including over 500,000 US troops and paid for all their in-country support, including free fuel for all military operations. Of all countries in the world, we made the largest direct financial contributions to the effort to liberate Kuwait.

Our troops, ladies and gentlemen, fought shoulder to shoulder with your troops to liberate Kuwait. Our air force, despite its size, made the second largest number of sorties after the US Air Force. With pride, I tell you, our boys had the highest ratio of kills per number of aircrafts.

Throughout the entire post-Gulf War period, Saudi Arabia supported the UN-sanctioned no-fly zones over Iraq by hosting American and coalition planes at Saudi bases.

Then in 2002, when the US fought its successful war against the Taliban in Afghanistan, air operations were headquartered at the Prince Sultan Airbase outside of Riyadh.

And, although we were not in favor of the invasion of Iraq in 2003, Saudi Arabia has made every effort to ensure that the US succeeds in its campaign with the greatest efficiency and the least loss of life.

After Saddam’s government was overthrown and major military operations in Iraq ended, Saudi Arabia further provided a comprehensive aid package, delivered convoys of humanitarian supplies, and sent a large, fully staffed field hospital to Baghdad to alleviate the suffering of the Iraqi people. Saudi Arabia remains fully committed to efforts to foster a stable, peaceful and united Iraq.

A month ago, at the Kingdom’s initiative, a meeting was convened in Jeddah to seek ways to bring all Iraqi factions together: Shia, Sunni, and Kurd. The Secretary-General of the Arab League was tasked at the meeting to consult with our Iraqi brethren about convening all Iraqi factions in Egypt to discuss national reconciliation – a move supported by both the United Nations and the Bush Administration. The meeting was held, and another one will be held after the next Iraqi elections with the objective to reach an agreement on a common future in which Iraq’s unity and territorial integrity is preserved, and in which every Iraqi faction is treated justly. And in the last few days, we have worked to defuse a potentially dangerous situation in Syria by making sure that Syrian officials can be questioned by Mr. Detlev Mehlis, the UN investigator in the Hariri case.

Ladies and Gentlemen: Between the Tigris and the Euphrates Rivers, near where Baghdad now stands, the origins of civilization emerged. It spread throughout the Fertile Crescent, from the Arabian Gulf to the Mediterranean Sea and beyond. Now we are fighting to protect civilization in its birthplace in the Middle East. This fight is not just for the people of Iraq, or the people of the Middle East, but for people all over the world. We are a global community and our neighbors’ peace, stability, and prosperity is as important as our own.

As strategic partners, the US and Saudi Arabia have long understood this fact. And today, we are trying to enhance the level of strategic cooperation we have had during the last 60 years.

As the American military leader, former president, and alumnus of the War College, General Dwight D. Eisenhower stated: “Though force can protect in emergency, only justice, fairness, consideration and cooperation can finally lead men to the dawn of eternal peace.”

As such, we face some clear challenges. We face the challenge of finding a just and permanent settlement to the Arab-Israeli conflict, which has remained an open wound for more than 50 years.

Saudi Arabia has clearly expressed its interest in reaching a peaceful end to this conflict, based on the resolutions of international legitimacy and the principle of land for peace. The Arab Summit in 2002 adopted the peace initiative put forth by then Crown Prince, now King Abdullah for resolving the Arab-Israeli dispute.

The initiative is straightforward: In exchange for Israeli withdrawal from the territories occupied in 1967, including Jerusalem, and the establishment of a Palestinian state, all Arab countries would sign peace agreements with Israel, and the Arab-Israeli conflict would formally end. Normal relations between Israel and all the Arab countries would ensue.

Until the Palestinians finally have their own homeland, where they can live in peace, this conflict will remain not just a tragedy but provide terrorists with an excuse for their terrible actions. If American audiences could see what millions of Arabs see nightly on their television screens, they would understand the overwhelming emotional impact this has on the ordinary man and woman in the Middle East.

We must do everything we can to support these two peoples as they struggle to find a peaceful resolution. The US, however, is the only country that can play a vital role in this endeavor. President Bush’s commitment to a two-state solution and his declared desire to achieve peace between Israel and the Palestinians during his term in office is important and welcome.

I commend Secretary Rice for securing an agreement for the Palestinian people to move safely and unhindered from the Gaza Strip, but this is just the first step. The US must continue to support the process of disengagement from Gaza and the West Bank, and Saudi Arabia will continue to lend its support as well.

We must also work together to support the people of Afghanistan as they try to build a stable nation. Afghanistan has suffered greatly. Its history has been marred by invading forces, civil war, and cruel dictatorship. The country was a boiling pot of discontent which nurtured the birth of Al-Qaeda and became its first training ground.

Today, there is hope for Afghanistan. The Afghan people have fought hard against their aggressors and are now working to ensure a lasting peace. As we witness the first signs of positive development, we must support the emergence of a national government and programs to disarm illegal groups.

The effort we spend to help others – the Iraqis, the Palestinians and Israelis, and the Afghans – however, should be coupled with efforts spent to improve our own relations. We are fortunate our leadership has been taking steps in this direction.

Today, cooperation between the US and Saudi Arabia is greater than ever and has culminated in the establishment of a new way for our countries to work together and to ensure our interests are aligned: the Saudi/US Strategic Dialogue.

The Dialogue was conceived by King Abdullah and President Bush when they met in April as a way to reintroduce cooperation between our countries – the type of cooperation we have known from the day President Franklin Roosevelt first met with the founder of the modern Saudi state King Abdulaziz back in 1945. The Dialogue is intended to institutionalize relations and deepen coordination on strategic and political issues.

The Saudi Foreign Minister and US Secretary of State have already met to commence the first session. The Strategic Dialogue will meet every six months, alternating between the Kingdom and the US. Senior officials from a number of departments and ministries from both countries will participate. Six initial working groups have been created: Energy; Economic and Financial Affairs; Consular Affairs; Partnership, Education and Human Development in the US and Saudi Arabia; Military Affairs; and Counterterrorism.

The Strategic Dialogue helps us in many ways, including keeping our countries at the forefront of combating our most common threat: terrorism. Terrorism, ladies and gentlemen, is unacceptable under any circumstance. The taking of innocent lives is condemned by all the revealed religions, as well as by all universal values.

Saudi Arabia currently operates two joint task forces with the US to combat terrorism and terrorism financing. These task forces have been effective in achieving their missions, and have become a model for how nations can work together to defeat this evil.

Our nations are clear targets of the terrorist groups, including Al-Qaeda, which seek to disrupt our longstanding cooperation. We have suffered together as a result: in 1995, at the Saudi National Guard Training Center in Riyadh; in 1996, at the Khobar Towers; in 2001 the attacks of September 11; and in the last three years, the Kingdom has experienced more than ten attacks, resulting in hundreds of innocent civilian deaths and more than 90 of our brave security forces have died in the line of duty.

These attacks that have shaken our communities – from the thousands of Americans who live and work in the Kingdom to the thousands of Saudis who live and work in the US – but they have not shaken our resolve.

Some people believe that the war against Al-Qaeda is a war between East and West; between Christianity and Islam. Some see it as a clash of civilizations. But I do not subscribe to these theories. We are not engaged in a clash of civilizations. We are engaged in a war for civilization.

Al-Qaeda opposes us because we are a nation trying to move forward, to modernize and become a part of the world economy. Saudi Arabia is a threat to Al-Qaeda because we are routing out the extremist philosophy they espouse, that feeds their deviant and amoral mentality. To win the war against terrorism, we must win the war of ideas.

The Saudi government has looked within its society and recognized where improvement is needed. The Kingdom is undertaking a comprehensive revision of its education system and updating its textbooks. The need for this program derives not only from the necessity to prepare our citizens for life and work in a modern, global economy, but also from the need to prevent our children from being influenced by extremism and intolerance.

Saudi religious leaders too have been consistently condemning Al-Qaeda’s actions and beliefs. It is proving to be the body most qualified to delegitimize Al-Qaeda’s twisted interpretation of Islam. Shaikh Abdulaziz bin Abdullah Al-AsShaikh, the Grand Mufti of Saudi Arabia and Chairman of the Council of Senior Ulema, recently stated:

“Killing and terrorizing innocent people and the destruction of property are not condoned by Islam. Attributing all these horrific incidents to Islam is unjust. Muslims should tell the truth and unveil falseness, and inform all people that Islam is a religion of righteousness, betterment and progress.”

Ladies and Gentlemen: Long before the US and the Kingdom had a strategic relationship there were common friendships and business relations between our countries.

Trade has always been a key part of our relationship, and the US still stands today as the Kingdom’s largest trading partner. Saudi Arabia, of course, is looking to expand and strengthen its interests, and with recent accession to the World Trade Organization, we will be able to participate more fully in the global economy. This is an important component of creating more jobs for Saudi youth and diversifying our economy away from oil. The United States’ support has been invaluable and much appreciated.

Oil, obviously, has been and will continue to be a very important aspect of Saudi/US relations. In fact, Americans were the ones who helped us discover our oil. Being a desert kingdom, water has always been a most critical, but elusive resource. So, 76 years ago, King Abdulaziz asked the American businessman Charles Crane to help explore for water. Crane sent a geologist who traveled all over the Kingdom looking for water. But after drilling well after well, he failed. No water. Luckily Crane’s geologist found oil.

(Saudi Arabia has had this problem ever since: Every time we look for water, we find oil.)

As the world’s largest producer and exporter and the world’s largest consumer and importer of oil, Saudi Arabia and the US have a natural partnership. Saudi Oil Minister Al-Naimi met with US Energy Secretary Bodman in Riyadh in mid-November to discuss ways to better ensure the stability of the oil markets.

The Energy Secretary also attended a session of the International Energy Forum, which inaugurated the new headquarters of the Forum’s permanent Secretariat in Riyadh and launched the Joint Oil Data Initiative. This database is intended to enhance the transparency of world oil markets by incorporating oil-related data from more than 90 countries.

The goal of the International Energy Forum is to promote a better dialogue between producers and consumers, and the Joint Oil Data Initiative will help to accomplish this by bringing together information to help producers and consumers plan for the future.

King Abdullah believes this undertaking is critical to maintaining a stable energy market, and is important to the world economy. In order to ensure a fair and reasonable price for and adequate supply of oil for consumers, Saudi Arabia must be able to increase its production capacity without jeopardizing the interests of future generations or damaging its oil fields. Improved planning and cooperation with consumers, like the United States, will help accomplish this.

Improving dialogue and understanding between the US and Saudi Arabia does not end with oil, however.

Saudis know the United States well. We know America because tens of thousands of Saudis have studied here, including myself. And hundreds of thousands of Saudis have come here to vacation, for medical treatment, and to visit family. Our business interactions date back to the 1930s, and our governments have cooperated successfully on many levels for decades.

However, the American people know very little about Saudi Arabia – except that it is a far away place, where the people wear robes, and there is plenty of oil, sand, and camels. In some ways this perception is improving, but I feel in many ways, Americans’ view of my country is devolving.

There is a cartoon show in the US on the Fox network called “American Dad.” It is about a C.I.A. agent. In two recent episodes, this American Dad was sent to Saudi Arabia as punishment for ruining his boss’ birthday party.

This is belied by the fact that Saudi Arabia is home to one of the largest American civilian communities in any country in the world.

I believe how we are educating ourselves about each other is critical. How we are informed affects our understanding of each other. And cartoon TV shows just don’t do it. While Saudi Arabia can accept some responsibility for this lack of understanding, we both have ways to go, and I know we are working to correct that.

The Kingdom has opened its doors to the international media, so they can observe for themselves what Saudi society is truly like, and report on it accurately.

Some independent efforts are also taking place.

At my alma mater, Georgetown University, the McDonough School of Business is coordinating programs with the Effat College for women in Jeddah, Saudi Arabia. In October, representatives from both institutions met to share information about how businesses and business educators in Saudi Arabia can work together. They are also developing ways to better educate women as future business leaders.

Efforts such as this, to not only use our strengths for mutual benefit, but also to foster better cultural understanding between our nations, are critical to the future of our relationship.

While there are certainly differences between us, our common attributes far outweigh them. If this were not the case, we would not have the long history as friends and partners that we do – in business, trade, energy, fighting the war on terrorism, or seeking a stable and peaceful Middle East.

Our historic ties have evolved to become bonds of cooperation and friendship, as the global community has become smaller and our nations’ interests interlocked with those of others.

We are two nations with the fortitude, ability, and resources to act for the good of humanity. Our continued cooperation is of the utmost importance and of consequence to the future because, as did our ancestors before us, we have an obligation to our children and grandchildren, to leave our world in a better state than we found it.

Thank you, and God’s peace and blessings are upon you.

About Prince Turki al Faisal

Royal Embassy of Saudi Arabia Bio

BBC Profile

Global Security.org

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The Global Scourge of Terrorism: Ambassador Prince Turki al Faisal Shares His Outlook – SUSRIS Item of Interest – Nov. 8, 2005

Saudi ambassador’s credentials accepted by United States

Transcript of interview with Prince Turki Al-Faisal in the New York Times Magazine

Prince Turki Al-Faisal interviewed on CNN’s ‘Wolf Blitzer reports’

JEDDAH, 1 December 2005 — Two women — Lama Al-Sulaiman and Nashwa Taher — created history yesterday by winning election to the board of directors of the Jeddah Chamber of Commerce and Industry.

In highly surprising and exciting results to the extremely competitive elections, the Lejeddah group, which included Lama Al-Sulaiman and Nashwa Taher, swept the 12 seats in the elections. A total of 17 women ran in the historic elections, but no one expected any of them to win. It was the first time ever that women were elected to the JCCI board.

“I’m excited and exhausted,” Al-Sulaiman told Arab News. “I’m still in a shock. I worked hard and went for a win but I also gave myself a leeway so as not to be disappointed if I didn’t win.” She hopes that by winning she would be able to do her part as a businesswoman on the board and help in opening the door for future participation of women in business.

Taher, who helps run a group of family companies with interests ranging from foodstuffs to contracting, said, “This means there is trust (in women). Professionalism is very important … And this is my message to Saudi women: Take your work seriously, without forgetting your role as a mother and wife.”

“We should give them (women) a chance because they have little representation in society,” one male voter had said on Tuesday, adding that he had voted for four women.

Taher, 44, attributed her success to the support of both her parents and husband, as well as her own perseverance.

The fact that women, who previously were entitled only to vote for the Jeddah chamber’s board, stood as candidates “was also an unique event which contributed to making this election unusual,” said Othman Basaqr, a member of a task force which assisted the elections committee.

“This is what everybody seems to be telling me,” Al-Sulaiman said when asked if she felt she had made history.

Many observers of the elections expected members of the Lejeddah group to win most of the seats due to their early start and well organized campaign. The group listed six nominees under the commerce sector and six under the industrialist sector. They ran on a seven-point platform: Developing Jeddah’s economic environment, supporting small establishments, reviewing and facilitating government procedures, supporting businesswomen, supporting Saudization, supporting the chamber’s initiatives nationally and internationally, and developing the chamber administratively and technically.

The final tally of the votes was: Under commerce sector — Ziyad Al-Bassam with 1,475 votes, Mohammed Al-Fadhl 1,248, Lama Al-Sulaiman 1,138, Nashwa Taher 1,015, Sami Bahrawi 943 and Abdul Ghani Sabbagh with 920 votes.

Under the industrialist sector the tally was — Mohammed Jameel with 1,946 votes, Saleh Binladin 1,658, Mazin Batarji 1,389, Abdullah Al-Muallimi 13,48, Mohyeddin Kamil 1,320 and Saleh Al-Turki with 1,268 votes.

The Lejeddah group made a statement thanking God for their success, the voters for their confidence and the team members for their hard work. They also thanked Custodian of the Two Holy Mosques King Abdullah for providing the opportunity for the citizens to serve the commercial and industrial sectors. They thanked Makkah region governor, the minister of commerce and the public for their support, especially of women, and they reitgerated their commitment to the country’s Islamic values.

The final tally of the votes was not announced until the early hours of yesterday morning. Although the counting of the votes was electronically done except for the last 120, the unprecedentedly large number of voters contributed to the delay in the announcement which everyone expected to be made by Tuesday evening.

Five of the winners are members of the previous board of directors. The other seven are new to the board. The Ministry of Commerce will appoint six members to the 18-member board. This election was distinguished in being the first to include women candidates, to have the largest number of candidates and attracting the largest number of voters ever.

Some 21,000 members of the Jeddah chamber, or about half the total membership, were eligible to take part in the polls. Election officials said both the turnout and the number of candidates were a record in the chamber’s 60-year history.

In their campaigns, both Al-Sulaiman and Taher vowed to back a center that assists businesswomen and to help women working from home.

Victory “means we will have more work … There’s a lot for us to learn, but I’m sure we will manage,” said Al-Sulaiman, who holds a doctorate in nutrition from King’s College in London.

Reprinted with permission of Arab News.

Related Material
1st Female Saudi Officials Elected – LA Times

Two women win in Saudi election – BBC

In minor election, a major step for Saudi women – Christian Science Monitor

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After I moved from Atlanta to Saudi Arabia recently, many friends were shocked, thinking I’d joined the Taliban or found a Saudi prince. Part of the kingdom’s beauty is its inaccessibility and retention of Arab character. But many in the West are pushing Saudi to apologize, confess to its “unacceptable” culture and change according to their values. If the truth about this country were known, the anti-Saudi rhetoric from the West would stop and people might want to visit. But Westerners invariably see only abayas (black cloaks), women prohibited from driving and oppression with no context.

When I was one of the few analysts in U.S.-Saudi relations in America, I was fighting an increasingly futile uphill battle against an unreceptive audience. With hostility and ignorance toward a people who happen to share the same birthplace as one wanted man and 15 dead men, the insults and hatred became intolerable.

In Saudi Arabia I can speak freely, appearing in media without threats. I am respected as an intelligent, outspoken woman.

The Wahhabi mutawa (religious police) are my friends, as are members of the Majli A’Shura (parliament). Highly educated and multilingual, they come to my apartment to discuss politics, religion and “why is America doing this to us?”

I live in Riyadh, the “ultraconservative” capital. No one has objected to seeing me alone in public with men, and I haven’t been hauled away by the religious police when kissing a man goodbye on the cheek on the street. I pass for, dress and live as a Saudi. I don’t cover my face, and the abaya frees me from having to worry about my figure. And there is no law mandating such clothing. However, recently some women were told to remove their niqabs (face veils) on the job and they refused.

Driving is not an issue for most, and after years in Atlanta traffic, I welcome the freedom. Women here are strong. There is far less domestic violence than in the United States and only 2 percent of Muslim men have more than one wife.

I can buy Pop-tarts and Oreos at Safeway, clothes at Saks 5th Avenue and furniture at Ikea. With Christmas coming, shop displays are green and red, with Santa T-shirts on the racks. At Jarir Books, I can sit with my cappuccino in Starbucks, perusing Erica Jong, in view of shelves of “Venus & Mars” and Harry Potter books.

I have the BBC, CNN or endless channels of music video stations, with scantily dressed Arab women in seductive scenes. Sometimes I will catch a Saudi orchestra, with their black tuxedos and violins, stage decorated like Cirque du Soleil, or HBO’s uncensored “Sex In The City.”

So I ponder how virtually every word written in the West is diametrically opposed to the truth. I have not been to one compound where Americans have lived for decades behind barbed wire. They will tell you what it is like here, yet they admit they have never visited a Saudi’s house, do not speak Arabic and only mix with foreigners.

Crime is very low. I leave my windows open and doors unlocked. As for terrorism, Saudi Arabia has an extraordinarily high success rate of catching suspected terrorists. No one I’ve met, including “extremist” religious scholars, sanctions al-Qaida or Osama bin Laden.

Far from the playboy image, royal family members work daily from morning until midnight. There is great wealth but it is spread to the people of the kingdom: no income tax, free health care, free housing for the poor, and free education, including university.

Most will fail to understand my apparently drastic move, or what lies behind the veil of Saudi Arabia. But at least I am here now, free to document the country firsthand, from quite a unique perspective.

Tanya C. Hsu was one of the contributors to this month’s written testimony on Capitol Hill on the kingdom for the Senate Judiciary Committee.

Published on: 11/28/05 in the Atlanta Journal-Constitution. It is reprinted here with permission of the author.

Tanya C. Hsu, past Director of Development and Senior Research Analyst for the Institute for Research: Middle East Policy in Washington D.C., is a political analyst focusing on Saudi Arabian and US relations. Having analyzed the role of trade and policy between the Arab world, the US and Europe, Ms. Hsu focused her strategic analysis on political parties occupying both sides of the Atlantic in a book she is completing, “Target: Saudi Arabia”.

Editor’s Note
We are pleased to bring to your attention new books dealing with US-Saudi relations and developments in the region. Today we present information about “Saudi Arabia in the Balance: Political Economy, Society, Foreign Affairs” — Paul Aarts, Gerd Nonneman (Editors).

Please post your comments about this book on the SUSRIS Discussion Forum (Click here)

Amazon (UK) Listing
Saudi Arabia in the Balance
Political Economy, Society, Foreign Affairs
Paul Aarts, Gerd Nonneman (Editors)

London / New York: Hurst & Company / New York University Press, 2005

Table of Contents

‘Introduction’ — Paul Aarts & Gerd Nonneman

IDEOLOGY AND CHANGE

‘The Wahhabi Ulama and the Saudi State, 1745 to the present’ — Guido Steinberg (Chancellor’s Office, Berlin)

‘Islamo-Liberal Politics in Saudi Arabia’ — Stéphane Lacroix (Sciences-Po, Paris)

‘The War of Ideas: Education in Saudi Arabia’ — Michaela Prokop (Asian Development Bank)

POLITICAL ECONOMY

‘Saudi Arabia’s Economy: the Challenge of Reform’ — Monica Malik (Dun & Bradstreet) & Tim Niblock (University of Exeter)

‘Segmented Clientelism: The Political Economy of Saudi Economic Reform Efforts’ — Steffen Hertog (Oxford University)

‘Saudi Arabian Business: From Private Sector to National Bourgeoisie’ — Giacomo Luciani (European University Institute)

REGIME AND OPPOSITION

‘Circles of Power: Royals and Society in Saudi Arabia’ — Madawi Al-Rasheed (Kings College London)

‘Checks, Balances and Transformation in the Saudi Political System’ — Iris Glosemeyer (Stiftung Wissenschaft und Politik, Berlin)

Political Opposition in Saudi Arabia’ — Abdulaziz Sager (Gulf Research Center, Dubai)

‘The ‘Cycle of Contention’ and the Limits of Terrorism in Saudi Arabia’ — Roel Meijer (Radboud University, Nijmegen)

EXTERNAL RELATIONS

‘Determinants and Patterns of Saudi Foreign Policy: ‘Omnibalancing’ and ‘Relative Autonomy’ in Multiple Environments’ — Gerd Nonneman

‘Coping with Regional Challenges: a Case Study of Crown Prince Abdullah’s Peace Plan’ — Yossi Kostiner (Tel Aviv University)

‘Understanding US-Saudi Relations’ — Rachel Bronson (Council on Foreign Relations)

‘Events versus trends: The Role of Energy and Security in Sustaining the US-Saudi Relationship’ — Paul Aarts

CONCLUSIONS & OUTLOOK

‘A Triple Nexus: Ideology, Economy, Foreign Policy, and the Outlook for the Saudi Polity’ — Gerd Nonneman & Paul Aarts

[ Click here to talk about this book on the SUSRIS Discussion Forum ]

[ Click here for more information and to order ]

[ More about Gerd Nonneman ]

[ More about Paul Aarts ]

From the official web site “Painting and Patronage”

The Painting & Patronage initiative was established in Riyadh in 1999 and is today one of the most prominent private cultural and educational exchange initiatives between the Kingdom of Saudi Arabia and Europe. It was created by its founding patron and son of His late Majesty King Faisal of Saudi Arabia, HRH Prince Khalid Al-Faisal bin Abdul Aziz Al-Saud, in partnership with the initiative’s founding chairman, Mr. Anthony Bailey.

The principal aim and activity of the initiative is to build valuable bridges of cultural, artistic and educational understanding between the Arab world and Europe. Through doing so, the initiative aims to establish a higher and deeper level appreciation and understanding of each other’s distinct and diverse cultures and traditions.

The Painting & Patronage initiative also serves to create international and high profile platforms for statesmen from the Arab world and Europe to highlight and promote their roles as either artists in their own right, or as patrons of the arts on both a national or international level. Worthy cultural exchange programmes for students between participating countries provide the educational framework and solid charitable foundation necessary for each Painting & Patronage initiative. Due to the high level nature of each initiative, private sector sponsors are usually sort to finance each exchange in conjunction with the respective state authorities.

The first Painting & Patronage initiative took place in London in 2000 and united HRH Prince Khalid Al-Faisal bin Abdul Aziz Al-Saud with HRH The Prince of Wales in what became the largest ever cultural exchange program between the Kingdom of Saudi Arabia and the United Kingdom.

The Painting & Patronage exhibition, featured paintings by HRH Prince Khalid Al-Faisal Al-Saud and HRH The Prince of Wales and a number of other British artists. Her Majesty Queen Elizabeth II, HRH The Duke of Kent, and leading HM Government, parliamentary and diplomatic officials also visited the exhibition which was held at the Palace of Whitehall in Central London. A visual Arab village was also created in the basement of the Palace of Whitehall.

A Summer School for young artists was funded as a result of the exhibition and a formal exchange program was established between The Prince’s Foundation and the King Faisal Foundation. The exhibition was sponsored by BAE SYSTEMS and Shell and was widely reported in the British, Arab and European media. The organizer of the exhibition was leading reputation management company, Eligo International.

The second Painting & Patronage exhibition was held in Riyadh, Kingdom of Saudi Arabia, in February 2001. The exhibition followed the same format, style and content as the London exhibition and was opened by The Custodian of the Two Holy Mosques King Abdullah bin Abdul Aziz Al-Saud (as Crown Prince), HRH The Prince of Wales and HRH Prince Khalid Al-Faisal bin Abdul Aziz Al-Saud.

The third and current Painting & Patronage initiative [was scheduled to] be launched at the historic National Palace of Sintra, Portugal, in September 2005 with a return event to be held in Riyadh, Saudi Arabia, in early 2006.

His Excellency Jorge Sampaio, President of the Portuguese Republic, has granted his high patronage to the initiative which will include the hosting of an exhibition of the most recent paintings by HRH Prince Khalid Al-Faisal as well as a number of other high profile events aimed at promoting and encouraging wider bilateral ties between the Kingdom of Saudi Arabia and the Portuguese Republic.

Prince Khalid Al-Faisal will officially visit Portugal from 4-14 September 2005 at the invitation of HE Prof Dr Diogo Freitas do Amaral, Portuguese Minister of State and of Foreign Affairs, and HE Dr Isabel Pires de Lima, Portuguese Minister of Culture.

As an on-going private royal initiative, Painting & Patronage would like to initiate further cultural exchange programmes and are currently planning to broaden its activity within the coming years to include other European and North American nations.

For more information visit the “Painting and Patronage” web site.

http://www.paintingandpatronage.org.uk/en/main.htm

Editor’s Note
The International Energy Forum Secretariat (IEFS) was inaugurated on November 19, 2005 in Riyadh at a ceremony attended by King Abdullah. The IEFS is the result of then Crown Prince Abdullah’s effort to improve the dialogue between oil producing and consuming countries. The ceremonies included the launch of the Joint Oil Data Initiative database, providing oil and gas information from about 90 countries.

This SUSRIS Item of Interest provides the text of King Abdullah’s remarks at the inauguration as well as an article by M. Ghazanfar Ali Khan of Arab News, detailing the day’s events and background on the IEF.

Address by Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz at the opening of the International Energy Forum Secretariat headquarters in Riyadh November 19, 2005

In the Name of Allah, Most Compassionate, Most Merciful

Praise be to God, and peace and blessings upon his messenger Mohammed and all his kin and companions.

Dear Friends: May Gods peace and blessings be upon you. It is our pleasure to welcome you to the Kingdom of Saudi Arabia, and to celebrate with you the inauguration of the headquarters for the International Energy Forum Secretariat, and the launch of the international project of the Joint Oil Data Initiative. It is our hope that the work of the Secretariat will contribute effectively to enhancing the dialogue between producers and consumers, and protect the global economy from turmoil. This is the reason why we proposed the establishment of the Secretariat five years ago.
Dear Friends: Our oil policy is clear, and is characterized by honesty and transparency. It is based on our firm belief that we are part of the world we live in, and that we share our world’s fortunes as well as misfortunes, and that our national interest does not conflict with the interests of the international community. This policy is based on two main objectives: the first is to realize a fair and reasonable price for oil, and the second is to provide adequate oil supplies to all consumers.

In order to realize these two objectives, we have increased our production capacity to a level that does not jeopardize the interests of future generations or do damage to the oil fields. We have adopted moderate positions, within and outside of OPEC, with regard to production and pricing. We have increased production whenever there were shortfalls in supply, and we have adopted a policy of consultation and coordination with both consumers and producers. However, all the efforts exerted by producing countries are fruitful only when they are met with a positive attitude by the major consuming countries, in the form of limiting speculation in the oil markets and refuting rumors and misleading information which cloud the realities of the market. It is also incumbent upon these nations to reduce the burdens on their citizens by reducing taxes on petroleum products when oil prices rise.

Dear Friends: Our oil policy is part and parcel of our overall policy which seeks dialogue rather than argument, and cooperation rather than confrontation.

We ask God Almighty to grant success to all who labor for the benefit of humanity, for He is the all hearer, the all responsive. God’s peace and blessings be upon you.

Cut Energy Taxes, Says Abdullah
M. Ghazanfar Ali Khan, Arab News

RIYADH, 20 November 2005 — Custodian of the Two Holy Mosques King Abdullah yesterday called upon oil consuming nations to cut energy taxes to bring down soaring prices. He said Saudi Arabia would continue its efforts to stabilize world oil market by ensuring adequate supplies.

“The oil policy of Saudi Arabia is based on two main factors: Achieving a reasonable and fair price for oil; and ensuring enough supplies to all the consumers,” said King Abdullah while opening the headquarters of the International Energy Forum here.

“But all the efforts of the producing countries will not bear fruit if they are not met with positive steps by the main consumer states,” he said. “These states should alleviate the ordeal of their citizens by cutting taxes on petroleum products when prices increase.”

The king also launched the new oil database, prepared by the Joint Oil Data Initiative (JODI), during the ceremony attended by oil ministers of several producing and consuming countries. He emphasized the Kingdom’s readiness to increase oil supplies “without affecting the rights of our future generations and oilfields.”

OPEC chief and Kuwaiti Energy Minister Sheikh Ahmad Fahd Al-Sabah supported King Abdullah’s call and said the Organization of Petroleum Exporting Countries would seek tax cuts in consumer countries.

“This is a financial issue of their own, but everyone should know that in Europe, 80 percent of the price (of oil) is made up of taxes,” he told reporters. “They ask for an increase in production, and we ask for a cut in taxes … which are one of the reasons for the hike in prices,” he said.

The OPEC chief expected oil prices to rise again with the advent of a harsh winter in the Northern Hemisphere. “If the winter is very cold and long, undoubtedly the prices will again go up,” he said.

The forum was the first major gathering for world’s energy consumers and producers after oil prices hit a historic high of $70.82 a barrel on Aug. 30, before retreating to around $57 at present. “The worst scenario now is that this (price) ceiling of $70 is the highest ceiling” that prices would not cross, he said.

In his address, Petroleum and Mineral Resources Minister Ali Al-Naimi said the establishment of the SR16.5 million IEF secretariat would institutionalize dialogue between producers and consumers.

Later speaking to reporters, Naimi said Riyadh was spending $50 billion to raise output capacity but wants a clearer picture of where the extra production is needed.

Producers are seeking “a road map for demand in consuming nations,” Naimi said. “As producers, we do not want to build the facilities which will not be met by demand.”

The oil minister, however, said Saudi Arabia’s expansion plans, which aim to increase output capacity to 12.5 million barrels per day by 2009, would not be made conditional on a guarantee of demand.

Qatari Energy Minister Abdullah Al-Attiyah said the energy market would see increased oil supplies in the second quarter of 2006, possibly pushing down world prices. “There will be more oil floating and this might be a concern, we have to deal with it very carefully,” Attiyah told reporters.

The daylong closed session forum, meant to smooth out the volatility of the market and ensure stable prices, was attended by energy and economy ministers of the United States, France, Britain, Germany, Mexico, Iraq, Iran and the United Arab Emirates.

Established in 1991, the IEF serves as a vehicle for dialogue between oil and gas producers and consumers on vital issues like energy prices, security and supplies as well as technological and environmental issues.

US Energy Secretary Samuel Bodman, who is currently on a visit to Riyadh as part of a four-nation tour of the Gulf region, said on Friday it would take oil producers at least two years to provide enough oil that would ease concerns in the market.

Britain’s Finance Minister Gordon Brown said yesterday a database of world oil producers and consumers launched in Riyadh will help bring stability to the world economy.

French Finance Minister Thierry Breton said he and Brown had come to Saudi Arabia with a message from the G-7 industrialized nations for oil producing states to increase investment in production and refining to help curb high oil prices which he said had hurt the global economy.

Ambassador Arne Walther, IEF secretary-general, thanked Saudi Arabia and its Oil Minister Naimi for providing so much political and financial support to the forum’s activity and bearing the total cost of the building.

He said: “The opening of the IEF secretariat testifies to the importance and potential of the producer-consumer dialogue at the IEF at a time when oil prices and energy security are a major global concern”.

He said that “the inauguration of the IEF secretariat by King Abdullah, with its meeting with ministers of key countries and industry executives, enhances the importance of the IEF, and Riyadh, as a focal point for global dialogue across traditional political, economic and energy policy dividing lines between nations”. Addressing a press conference Friday night, Walther called on the ministers to contribute to the budget of IEF’s secretariat.

Source: Arab News

[Reprinted with permission]

Related Material
U.S. Energy Secretary Bodman Completes Middle East Trip – Nov 20, 2005 – US Dept of Energy

Bodman Blames Lack of Refining Capacity for Instability in Oil Market – Nov. 19, 2005 – Arab News

Joint Oil Data Initiative

International Energy Forum Secretariat

Editor’s Note
Readers of this information service undoubtedly appreciated the thoughtful commentary that Prince Turki al Faisal, the new Saudi Arabian ambassador to the United States, shared at the annual conference of the Middle East Institute on November 8, 2005. Hopefully you took that opportunity to explore the web site where that speech and the many panels from the conference are archived. In case you haven’t yet surfed through www.mideasti.org, we highly recommend it. There you will see a host of resources in addition to the conference summaries, full transcripts and audio files.

Among the illuminating presentations made at the conference was the keynote address of Doctor Zbigniew Brzezinski. He outlined the scope of an American crisis of leadership and legitimacy in the world, especially in the Middle East, and he offered a prescription to address these profound challenges. We offer it here for your consideration along with our suggestion to follow up your reading of Doctor Brzezinski’s remarks with a review of the balance of the Middle East Institute’s conference deliberations.

Middle East Institute 59th Annual Conference
“Fractured Realities: A Middle East in Crisis”
November 7-9, 2005
National Press Club, Washington, DC
Introduction by Edward S. Walker, President, Middle East Institute

Dr. Brzezinski was the National Security Advisor for Jimmy Carter from 1977 to 1981. He crossed swords with the Nixon-Kissinger policy of over-reliance on détente and spoke out in favor of the Helsinki process, which focused on human rights and peaceful engagement in Eastern Europe. He pressed support for the Afghan mujahedin based on his conviction that the Soviet Union would meet its Vietnam in Afghanistan. He supported East German dissidents, to the alarm of the State Department. While he was criticized as seeking to revive the Cold War, his ideas and philosophy had enormous impact on our history and demonstrably helped lead to the fragmentation of the Soviet empire and the subsequent collapse of communism. Ladies and gentlemen, the Honorable Dr. Brzezinski.

Complete introduction by Ambassador Walker
Zbigniew Brzezinski

Thank you very much, Ambassador Walker, Your Excellencies, ladies and gentlemen.

Fifteen years after winning the Cold War, America’s leadership role in the world today, in my view, is in serious jeopardy. If we look around the world, in different parts of that world, regions are beginning to think increasingly of their own collective self-interest while quietly detaching themselves from their close connection – in some cases, organic connection – with the United States. This is happening in the Far East, where the beginnings of an Asian community of interests is taking shape and doesn’t see itself as doing that on a trans-Pacific basis but on an Asian basis. In a more subtle way in Europe, the sense of European identity, over the years so closely tied to a shared sense of mission with the United States, is less and less being defined on a transatlantic basis and more in terms of a European role in the world. In the last few days the president of the United States was in Latin America. I don’t think I need to elaborate on the kind of issues that arose in the course of his visit.

The fact is that for anyone seriously concerned with the large global picture and America’s place in it, we are today facing a serious crisis of American credibility, of American legitimacy and – it pains me particularly to say – of American morality. I think that cumulatively has implications for our long-term security.

All of that is very much at work particularly in the Middle East. Our response in the Middle East after 9-11 in many respects has been the catalyst for these, in my view, serious trends.

After the terrorist attack – and I emphasize, a criminal terrorist attack – on the United States, instead of isolating our enemies our policies have tended to generate support for them, particularly because of the enlargement of the sphere of conflict by our own decisions. Instead of discrediting publicly the chief propagator of terrorism, our emphasis on his proclamation of the jihad has elevated his status in the eyes of many people to that of a prophet.

Instead of mobilizing Muslim moderates on our side, some of our officials in their public statements have come close to using Islamophobic terminology, particularly in their insistence always on identifying the terrorists as Islamic terrorists. We don’t do that when we talk of IRA terrorism in Northern Ireland. We don’t go around saying it’s Catholic terrorism. We don’t do it when we talk of the Basques in northern Spain. We don’t say this is Catholic terrorism. Unfortunately the use of these over-arching adjectives tends to create a subconscious identification of those people who see themselves as Muslims or Islamists with those who are being identified. That is the way the psychological mechanism works. This is why we don’t call the IRA terrorists Catholics.

Occasionally we will even go further than that. We have talked, at times at very high levels, of a crusade. We have talked about waging a war against an Islamic caliphate. We have even referred to Islamo-fascism.

This is not helpful. Worse than that, I think it is posing the danger of the United States gradually sliding into a lonely American war against the world of Islam. That is to be avoided. It’s not in our interest. It’s not in the interest of the world of Islam. It certainly is not inevitable. But it is happening and one has to think about the implications of that seriously.

In my view, it follows that a course correction is needed in our policy, in our posture. Not a change in our commitments, not a change in our traditional values, not a change in our sense of obligation to those who may be threatened or insecure, but a course correction in the way we conduct our affairs.

Let me suggest to you four changes – course corrections, if you will – which I think are desirable, starting first with the easiest and then going on from there.

The first can be put quite simply: watch your language. Avoid religious connotations. Don’t undertake rhetoric that has the effect of fusing political grievances with religious fanaticism. Both exist – political grievances exist and so does religious fanaticism. But it is not in our interest to facilitate the process of fusing the two.

Let us avoid semantic traps which limit our freedom of action and which create uncertainty as to what our true objectives are. No one in America opposes democracy anywhere, including in the Middle East. Everyone in America favors democracy, including in the Middle East. But it should not be a codeword for destabilizing regimes for this or that reason – unrelated, in fact, to the cause of democracy. It should not be a codeword for avoiding the real problems. The vice president speaking such a long time ago in Davos at the annual meeting made it very clear that, in his view, peace in the Middle East between the Israelis and the Arabs could only take place once there is democracy in the region. When reasonably can we expect that to be the case? If so, does it mean that peace is deferred until then? Or does it mean that the quest of democracy is so accelerated that in fact nilly-willy – but perhaps willy – it becomes in fact the codeword for destabilization?

What we say counts. It doesn’t help for the country that has been the principal symbol of freedom, legitimacy and morality in our very troubled age now to be saying to the world, as so often we have in the last several years, “if you’re not with us, you’re against us.” That has been said so many times, scores of times. I’ve run it through the computer just to see how often a particular individual in the US government has used that phrase. I often wonder whether he himself knows who the original author of that phrase was. Those of you who are not historians of Marxism-Leninism may not be aware of the fact that that phrase was coined by Vladimir Lenin to justify the elimination by the Bolsheviks of their Social Democrat rivals. “Since they were not with us, they were against us, and therefore they should be eliminated.”

So my first admonition simply in changing course, in a course adjustment, is watch your language.

The second is a little more specific and concrete. It is that the United States should become more specific about the destination of the Roadmap for the Israeli-Palestinian peace. There is no benefit in a process that perpetuates the conflict, intensifies mutual suspicions, reinforces the presumption that the other side is always going to cheat and is determined to outmaneuver the other side while moving on the road to this unknown destination.

So, we should be more specific. I strongly believe that clarity by the United States on this subject would help the peace process, would help to mobilize the majorities among the Israelis and Palestinians in favor of peace by clarifying what peace would really involve. Not in any great detail, but at least by codifying the key responses to the most fundamental issues. In fact, a lot of them already exist. Some of them are part of the record. But they haven’t been jointly codified in a clear and politically compelling fashion.

The president, in his letter of a year or so ago to Prime Minister Sharon, in fact did address two key elements in saying that a final peace solution will involve no comprehensive right of return and no return automatically to the 1967 lines. Much as it may be difficult for the Palestinians to swallow that, that in fact is a realistic statement. It is difficult to imagine a viable solution which would not include these two principles.

But the president also earlier this year, speaking jointly in the Rose Garden in the presence of President Abbas, stated that any changes in the 1967 lines – to which there will be no automatic return – have to be by mutual consent. Mutual consent, which tends to rule out unilateral changes or their imposition. And that the Palestinian state needs to be a viable state with contiguity, which implies something significant on the Israeli settlements.

Hence, all that is missing from a truly open and forthright codification that becomes a compelling definition of the ultimate destination is the statement that territorial compensation will have to be part of the arrangement for territorial changes, since they are going to be by mutual consent anyway, and that a formula for the sharing of Jerusalem has to be part of the eventual outcome. Ultimately everybody knows that this is the necessary collection or the codified definition of the ultimate process. But the point is that, if it is on the table, it becomes more difficult either to seek an imposed solution or indeed to maintain a position of quietly abetting violence as a way of derailing the Roadmap. So peace would benefit from it and would certainly help to address one of the major issues in the region that has contributed to a high level of political emotions, to political grievances, to intense resentments.

The third step that is needed, which is even perhaps more difficult, is for the United States to clarify the options for Iran so that the Iranians themselves know – and even more importantly their publics know – that Iran faces a basic choice, either of persisting and damaging isolation – indeed, eventually self-isolation – or the benefits of beneficial inclusion in the international community.

Our policy toward Iran is a combination of abstinence from serious engagement in dealing with the problem and intensely hostile rhetoric, which has the effect of intensifying political insecurity on the part of the ruling elite – but worse than that, of creating the fusion between Islamic fundamentalism and Iranian nationalism. We talk about regime change. We talk about rogue state. We talk about criminal activities. All of that intensifies the insecurity of the rulers while arousing the patriotism of the masses, whereas in recent years there was an obvious tendency for an evolutionary change, which separated particularly the younger generation from the ruling mullahs.

Worse than that, we’re not seriously engaged in dealing with the nuclear problem. I invite you to think of another country, which in our elegant political rhetoric was also included in the designation “axis of evil.” Iran of course was one of them, but North Korea was the other. What have we been doing toward North Korea? We have been participating in multilateral discussions regarding the challenge that North Korea poses in the nuclear area. We have been actively participating with the South Koreans, the Japanese, the Russians, the Chinese, and last but not least, the North Koreans themselves. We have been sitting around the table negotiating with them. We categorically refuse to do that with the Iranians. We want the French, the British and the Germans to do that.

But that’s not all. After refusing to do so for quite a long time, in addition to engaging in multilateral negotiations with the North Koreans we are simultaneously conducting bilateral negotiations with the North Koreans. Despite their apparent membership in the axis of evil, we’re negotiating with them directly. We wouldn’t dream of doing that with the Iranians, on the grounds that it might, according to one of our top officials, “legitimate the regime.” I do not know whether we have now decided to legitimate the North Korean regime or not, but somehow or other that does not prevent us from engaging in a bilateral dialogue in order to reinforce the seriousness of the multilateral dialogue.

Thirdly, with the North Koreans, both in the multilateral setting and the bilateral setting, we are implicitly committed to being direct participants in any quid pro quo that emerges from the negotiating process – if it does. That is to say, if there is an arrangement that is mutually beneficial, there will be North Korean concessions of the kind that we desire regarding their nuclear arsenal and there will be benefits flowing to North Korea – not just from the Chinese or the South Koreans or the Russians or the Japanese, but also from us. That is simply out of the question in our position toward Iran.

Hence, I am sorry to say that our policy toward Iran is part of the problem that we confront today in the Middle East. It really is not a policy. It’s a posture. A posture by itself does not often lead to desirable consequences. We need to do more than that and we can. I would think that our approach towards North Korea is the way we ought to be dealing with Iran, and in the long run that in my view has the highest probability of eventually creating a separation between the aspirations of the younger generation of Iranians and the fundamentalism of the present regime. Don’t forget, Iran is a country with an ancient history, a serious culture, a sense of historical self-worth, highly educated, with more women in universities than men and with women playing important roles in the professions, and one of them recently winning the Nobel Prize for Peace. It is not a country that you can simply define away with some sort of label.

The fourth task that confronts us and which in my judgment calls for a course correction is the most difficult at all. I believe we need in our interest – in our urgent self-interest – a serious scaling-down of the definition of expected success in Iraq. We need then to act accordingly on it, and preferably sooner rather than later.

We need to redefine what success in Iraq means. That definition until now has been a viable, democratic state, secular, embracing our values, sharing our unique love of freedom, which others apparently find difficult to partake. The Iraqis are expected to make that leap soon and we are going to see an Iraqi state that’s a genuine democracy, a viable united state in which the different key components cooperate in it on the basis of a truly successful self-determination.

That strikes me as not a very realistic objective. If convinced that the situation on the ground is actually improving – which I’m not – it follows from it that we better face that reality sooner rather than later. That we better undertake an analysis of the relationship between costs and benefits and the costs are certainly rising – in blood, in money and in our international standing.

Do we really have a solid basis for concluding that the situation will improve? Certainly the evidence until now does not support that. There were incidentally far-sighted people even before the war who warned about it. Let me read you a couple of passages from what I thought was a very perceptive and prescient analysis of the crisis in Iraq prepared by the U.S. Army War College just before the war started.

“Long-term gratitude is unlikely and suspicion of US motives will increase as the occupation continues. A force initially viewed as liberators can rapidly be relegated to the status of invaders should an unwelcome occupation continue for prolonged time. Occupation problems may be especially acute if the United States must implement the bulk of the occupation itself rather than turn those duties over to a postwar international force.”

The case goes on to argue, “After the first year, the possibility of a serious uprising may increase should severe disillusionment set in and Iraqis begin to draw parallels between US actions and historical examples of western imperialism.”

In my view, if we leave sooner rather than later, perhaps after the full adoption of the constitution and the referendum and elections, we still have a high chance of having a relatively viable Iraqi state, dominated by a Shi’ite-Kurd coalition to which the Sunnis will have to adjust given the enormous imbalance of power between the two sides. But the longer we stay, the less likely that conflict within Iraq is likely to be resolved because we’re not staying there in sufficient force to crush it entirely, but we are staying there in sufficient force to let it percolate and percolate and percolate. As a result, we see the intensification of two conflicts: a sectarian conflict between the Shi’ites and the Sunnis and a nationalist reaction against the external, alien occupying force.

The art of statesmanship is at some moment to cut the Gordian knot. To me, the war in Iraq has the closest analogy to what France faced in the war in Algeria. General de Gaulle had the stature to face that. I think it’s in our interest that we do so.

But I want to end by saying that none of those four corrective steps stands on its own feet. All four of them have to be pursued at the same time. A single one will not resolve our dilemmas. A single one will not diminish the threat. A single one will not end the kind of volatile dynamic that is at work in this very large and historically important and economically important and geopolitically important region. That is the challenge that we face. The recognition of the interconnection between the need for course corrections in several domains is only likely to happen if the decision-making process is open and not closed, if it doesn’t operate in a narrow group-thinking in which conviction becomes dogmatism, in which simple slogans substitute for reason.

So this is the reason why I share these concerns with you. This is why I offer these remedies, because I think we are at a stage in which the challenge of statesmanship but also of civic responsibility is to raise these issues with a sense of genuine gravity and with a sense of urgency about the need for a serious course correction.

Thank you.

Questions & Answers

Question:
Dr. Brzezinski, is the Bush administration capable of course correction?

Dr. Brzezinski:
Let me be diplomatic. I think at some point in my life I should be. I think America is.

Question:
Thank you. Given the recent comments by Iran’s president regarding Israel, how can the Bush administration justify engagement with Iran?

Dr. Brzezinski:
I believe it’s tomorrow or the day after tomorrow that the Bush administration is going to be talking to Mr. Chalabi, who’s just been in Tehran greeting the Iranian president. So if you’re worried about it, I think you ought to address that question to the White House.

Obviously no one endorses what the Iranian president said. It was first of all a stupid remark, incredibly stupid. On top of that, outrageous. There’s no doubt about it. I don’t think anybody in the world has any doubt about it.

Question:
Have you had the opportunity to share your views with the White House and have they listened?

Dr. Brzezinski:
Until about a year ago, yes. But progressively, as my criticisms were being articulated, the process became – shall we put it, more infrequent. To the point of zero.

Question:
This question actually comes from the US Army War College representative. How does the US develop an exit strategy for Iraq, and Afghanistan for that matter, that doesn’t look like accepting loss and encouraging terrorism?

Dr. Brzezinski:
I think there’s a very important difference between Afghanistan and Iraq. In Afghanistan we have a large Afghan constituency in the government, in the key ministries, that fought on our side and we supported them, so we were their allies too. This is why we have a body of genuine commitment and loyalty and solidarity in Afghanistan that makes the situation altogether different than in Iraq.

In Iraq, basically there’s a very simple test of who has the capacity potentially for being self-sustaining and who does not. It’s a very simple test. Take a look at Iraqi leaders and see which ones have Americans for bodyguards and which have their own people for bodyguards, and you know the difference.

Question:
What would you suggest as the appropriate policy toward Syria which did not compromise Lebanon’s independence, as was done in the period of the Gulf War when Syria joined with us? Not this Gulf War, the previous one.

Dr. Brzezinski:
I think we’re very wise in working together with the French on this. The French have an established knowledge about that part of the world, the Levant. They’ve dealt with the Lebanese, they’ve dealt with the Syrians. I think if we work closely with the French, we’ll be able to exercise a fair amount of pressure on the Syrians – who are not unaware of their own self-interest and therefore perhaps over time we can effect some significant changes in their attitude, in their posture, in their conduct.

Amb. Walker:
I may have the last question here, relating to reform, our reform efforts in the Arab world and the democracy program. You did focus on changing our rhetoric but is that the only change needed in our policy in order to encourage this kind of reform and democratic movement?

Dr. Brzezinski:
If one reads the document prepared a couple years ago – I forget its exact title but it was the Alexandria declaration by Arab intellectuals – there’s no doubt that the Arab elites know what the dynamic of history is, what is the meaning of change, what is the meaning of modernity and democracy. I don’t think they need lessons from us. We can support them, but only if we’re clever and indirect about it. But nowhere has democracy been imposed by force, by occupation armies, by preaching, by denigrating those who are supposed to become democratic. I think the region itself has traditions and capabilities which over time can be nurtured. We can encourage that. One sees already a lot of differentiation in Islamic countries. They’re not all at the same level of development or progress or change. In the ones in which there is more of modernity and democracy, the process has been indigenous and not imposed from the outside.

Amb. Walker:
Thank you so much.

Source: Middle East Institute

Now.. visit the SUSRIS Discussion Forum to share your opinion of Dr. Brzezinski’s argument. Do you agree or disagree with his premise and prescription? [Go to the Discussion Forum]

MEI Annual Conference (2005) Transcripts
Zbigniew Brzezinski

Editor’s Note
The inaugural session of the US-Saudi Arabia Strategic Dialogue was held today in Saudi Arabia between delegations led by US Secretary of State Condoleezza Rice and Saudi Foreign Minister Saud al Faisal. The dialogue, a product of the summit between President George Bush and King, then Crown Prince, Abdullah bin Abdulaziz, at the Western White House, Crawford, Texas in April 2005, provided an opportunity for high level review of strategic issues of vital importance to the two countries.

The first session of the dialogue was summarized during a press availability which we are pleased to provide to you here.

Jeddah, Saudi Arabia
November 13, 2005

FOREIGN MINISTER SAUD: I’d like to welcome U.S. Secretary of State Condoleezza Rice and your distinguished delegation to the Kingdom of Saudi Arabia today. Today, we have convened the first Strategic Dialogue between the Kingdom of Saudi Arabia, which was agreed on by the Custodian of the Holy Sites, President King Abd al-Aziz, and President Bush during their meeting April 25th in order to enhance the historic ties between the two countries for over six decades. And it was described by the new leaders as the new era that will witness the development of the historic relationship in order to face the challenges that we are facing as well as the opportunities that exist for the future relationship between the two states.

The Strategic Dialogue is designed in order to institutionalize the relationship between the two states, between the two countries. These dialogues are conducted through senior officials to discuss a variety of strategic issues and political issues — security, financial, economic, cultural and social and other matters — especially in light of the challenges that we both face at the same time and through the threat of terrorism and the misconceptions that exist among people on both sides, as well as the continuous crisis that face the region in the Middle East that would require a great deal of work in order to face and confront through exchanging of views and create more points of views and coordination and joint understanding to allow the institutions on both sides to work jointly.

Here I would like to say that the Strategic Dialogue is considered as a continuation to the mechanisms of coordination between the two states and establishes a new mechanism under the umbrella of strategic dialogue. This is what was discussed today. We have discussed the various structures for the dialogue and objectives and the responsibilities in a way that meets the challenges of the period that we face and it is important for these structures to be flexible enough to deal with a variety of issues under the specific mandates.

We are confident that the joint will, the sincere will and the hard work will achieve the intended objectives of the Strategic Dialogue, with God’s help and support, and it will help to put a new cornerstone to the achievements that we have already achieved over the past six years and we will look forward to achieve our mutual goals and objectives.

I will give the floor to Secretary Rice.

SECRETARY RICE: Thank you very much, Minister, Royal Highness. We’ve just had, as the Minister has said, a very wide-ranging discussion. We’ve launched our Strategic Dialogue, the dialogue that was envisioned by the President and then Crown Prince, now King of Saudi Arabia, King Abdullah. The Strategic Dialogue will allow us to, in a more systematic and institutionalized fashion, have regular discussions about a number of issues of interest to us. And this is described in the joint statement so I will not go further in that regard.

We have also had discussions of the broad strategic interests that we hold together in fighting terrorism, in bringing about stability in the post-conflict areas of Afghanistan, Iraq, and of course we have talked about our partnership in the Core Group for Lebanon. We have had discussions of our economic relations, and I want to just say that we welcome Saudi Arabia into the World Trade Organization, congratulate Saudi Arabia on its accession, and look forward to the post World Trade Organization [accession] period in which we will be able to work even more closely on economic issues.

We also have had an opportunity to discuss, as we always do, the course of reform that Saudi Arabia has set out on. I just want to note that, of course, the President has said to King Abdullah, I’ve said to the Minister and we believe deeply, that this is reform that is being done for the Saudi people by the Saudi leadership; it is a matter of indigenous reform, but it has been a very good discussion of what is going forward and I look forward to continuing those discussions.

Finally, let me thank Prince Saud for being the first to wish me Happy Birthday, with a very nice cake. It’s a day early, which when you’re as old as I am you count every day and try not to get there early, but I really do appreciate it. Thank you very much. And I think now we’ll take questions.

FOREIGN MINISTER SAUD: May I just say here I am delighted to say how much we appreciate the position the United States has taken about the entrance to the WTO for Saudi Arabia. Their help was instrumental in this decision that was taken a couple of days ago, so our thanks again, Madame Secretary.

And may I also say that either a statement has been distributed to you or will be distributed to you about the meeting between us.

QUESTION: Hello, Madame Secretary. With the President Bush approval ratings at an all-time low and the American people having doubts about progress of the war in Iraq, does the U.S. have an exit strategy out of Iraq and when does it expect to start pulling out its troops from Saudi Arabia?

SECRETARY RICE: Thank you very much for the question. The President, when he, with the coalition, decided that it was time to enforce the just demands of the world on Saddam Hussein and to remove this threat from the region and then ultimately to give the Iraqi people an opportunity to build a more democratic future, recognized that this would entail sacrifice and that it would not be an easy road ahead. The United States therefore remains committed to the goals that were set out, which is to take a situation in which tyranny existed and to help the Iraqi people to build a democratic future on the ruins of that tyranny.

Our strategy is one for success and we don’t talk in terms of exit strategies. We talk in terms of success strategies. And that means that we are supportive of the political process that is underway in Iraq to bring about an Iraq that is for all Iraqis. And I want to thank the Saudi Government for its support of a political process in Iraq that would be inclusive so that all of Iraq’s groups might feel that their future is with this new Iraq.

I’d note, too, that the political process is well underway. There have been two elections and there will be a third in December. And the Iraqi people — I was just there — appear very committed to that process.

It is also the case that we are helping to build Iraqi security forces because the best outcome will be when Iraqis can secure themselves. But the multinational forces are there under a UN mandate and they are there because they are needed. They are there because the Iraqis are facing down terrorists who seem only to want to kill innocent Iraqis in the service of whatever cause it is that they’re espousing. And they are, by the way, many of the same people who wish to cause harm to populations here in Riyadh or in London or, for that matter, in New York or Washington.

I do believe that the United States and others will not need to keep forces of the size that we have there because the Iraqis are going to step up and are stepping up to their responsibilities. But any decisions about our troop strength will be on recommendation from the commanders on the ground and will be a result of the conditions on the ground.

QUESTION: Sue Pleming from Reuters. Your Highness, are you still concerned that policies in Iraq will lead to its disintegration? And Madame Secretary, did you get adequate assurances that Saudi Arabia will follow through on its assurances to give $1 billion for Iraq reconstruction?

FOREIGN MINISTER SAUD: Well, I can give the assurance .. that we will remain committed .. for the efforts of Saudi Arabia in Iraq. We are working within the Arab League and the work is work that goes along in helping the process that is going on to achieve its objective. After all, the political process, whatever it is, without common understanding between the factions in Iraq, would be limited and would threaten the unity of the country.

Now that that step has been taken, my fears which I have expressed earlier are much more eased today than they were at the time that I expressed them.

SECRETARY RICE: Were you — did you have trouble hearing? More eased? Is that what you were saying?

FOREIGN MINISTER SAUD: No, she was asking –

SECRETARY RICE: No, I had trouble hearing the very end, I think.

FOREIGN MINISTER SAUD: More eased.

SECRETARY RICE: Right, okay. Thank you.

Yes, you just got the assurance and I believe strongly that Saudi Arabia will fulfill that commitment. And let me just say that what happens in Iraq, of course, is a concern to both of us. This is not the United States trying to [encourage] Saudi Arabia to be concerned about Iraq or about the future of Iraq. Saudi Arabia has had to live with the threat of Saddam Hussein in the past, and of course because of that threat was a very strong coalition partner in the Gulf War in 1991. It just shows how close Iraq is to Saudi Arabia. And so we understand that the future of Iraq is of very deep concern to Saudi Arabia.

But we are in very good discussions with each other but also with the Iraqis about (inaudible) that that future will be a bright one.

FOREIGN MINISTER SAUD: Must be nervous.

SECRETARY RICE: Yes. Well, somebody doesn’t want to hear it. (Laughter.)

QUESTION: Secretary of State, Happy Birthday, first of all.

SECRETARY RICE: Thank you.

QUESTION: My question is, during your visit to Iraq and again here you are talking or expressing your hope that Saudi Arabia play a role in Iraq actually in convincing the Sunni Arabs to participate in the coming election. But we hear from time to time from some Iraqi officials, especially the majority Shiite Iraqi in the ruling party, that they don’t welcome such a role to be played by any neighboring country.

So my question is what the Government of America did to convince those parties that the role that Saudi Arabia might play is a positive role and that it’s not interference in their internal affairs, especially that Saudi Arabia succeeded in bringing together the different parties in Lebanon during the Cedar war.

SECRETARY RICE: Yes, thank you. You make a very important point. All of us — Saudi Arabia, the United States, other — and the neighbors — need to be engaged with the Iraqis and encouraging the Iraqis toward a political process that is inclusive. But it is, of course, an Iraqi process, and if the Iraqis themselves are not the owners of that process, it will never work.

That is why it is a good thing that there are meetings, perhaps even an Arab League meeting, that there have been interactions at Sharm el-Sheikh with the Iraqis, about how to encourage people to participate. But when it comes right down to it, it has to be the Iraqis that embrace each other.

The remarkable thing to me is that despite the years of tyranny, despite the fact that these groups have existed side by side and that Saddam Hussein exacerbated tensions between them with a small minority oppressing the large majority of the people — and I might add, Sunnis also suffered under Saddam Hussein. It was not just Shia and Kurds. It was also many Sunnis who did. Despite that, now that they are trying to solve their problems by politics and compromise rather than by force and coercion; they seem to be to be showing an incredible willingness to try and overcome their differences through political institutions.

If you look at the constitution when it was first drafted, it was not a constitution that most Sunnis believed expressed their interests. Changes were made practically right up until the last moment to try to encourage that. But perhaps the most important change that was made was that there was an agreement — or the most important aspect of the constitution is that there was an agreement that many of the important decisions about what laws would govern, for instance, federalism, were put off to the next national assembly, and the next national assembly will be more representative because Sunnis are now engaged in the political process.

So I think we ought to express confidence in the Iraqi people because they are demonstrating that they are prepared to have an inclusive and very good process, political process, to overcome their history of violence, and also because they are paying with their lives to be a part of this political process. In January the terrorists threatened them and 8.5 million of them voted. In December — sorry, in October the terrorists threatened them and almost 10 million of them voted. And so the Iraqi people deserve our confidence and deserve our admiration for how they are trying to overcome this long history that they have.

Peter. I think Peter — we’ll come back to you. Peter.

QUESTION: Thank you. Peter Mackler, Agence France Presse. Madame Secretary, can you give us your reaction to yesterday’s meeting in Bahrain? Are you disappointed that it broke up without the adoption of a declaration?

And Your Highness, it has been said that sometimes that the Saudis are less than enthusiastic supporters of the U.S. democracy agenda. So to that end, can I ask you, the municipal councils that are supposed to be the most visible sign of your democratic progress have yet to meet. When will they meet? And have you had a chance to read the Secretary’s speech on democracy of several months ago?

SECRETARY RICE: Oh, all right, I’ll start. First of all, I thought the meeting yesterday was terrific and the Foreign Minister was there. He can speak to it. I thought it was remarkable that we sat in this room together, talked in detail about human potential, talked about how to enhance political participation, how to enhance the empowerment of women. We had civil society with us, which has been an — was an unusual development here in this region. Civil society groups from all over the region were there.

We established the Fund for the Future which will help entrepreneurship and business, but perhaps most importantly we produced the Foundation for the Future. And that is a foundation to which Arab states and Western states have contributed alike. It’s the first institution really of the Broader Middle East Initiative and it will help to fund small projects by nongovernmental organizations.

Now let me speak directly to the issue of the declaration. These are hard issues. People actually care what this declaration says. And in the eleventh hour, at the very end, there were — there was a concern — it really boiled down to a concern — about language concerning the NGOs and their status, legal status, in various countries. And rather than have ambiguous language, we decided not to have the declaration. I think it was done actually in a way that was legitimate and democratic, if you will, given the circumstances.

But I have to say I was really quite surprised when I read this morning that somehow a forum that produced this kind of interaction, that produced a Fund and a Foundation, that produced a commitment to continue this dialogue, that is taking place in a context of a Middle East that is changing dramatically, with a democratizing Iraq, with a democratizing Afghanistan, Syrian forces out of Lebanon through international cooperation and, by the way, the cooperation of Saudi Arabia and Egypt, where Saudi Arabia has had municipal elections, where in Kuwait women have the right to vote, and we could never have imagined that two years ago, I find that we didn’t have a declaration because of one point, to have been a minor issue here and one that by no means undermined the importance of the meeting and what has been achieved.

FOREIGN MINISTER SAUD: As you can see from the subject matter of the conferences that the Secretary explained how delicate many of the issues that were discussed are. And indeed, if there is anything surprising it’s the high level of attendance to the conference and the high level of representation in the conference. So I wouldn’t define that as failure of the conference. I think it is to the credit of the United States that instead of pushing for a statement that has some reservations by some countries, it waited for a future meeting to adjust whatever differences that exist.

All in all, I think the United States came out very well in its position from this conference and I think the conference was able to discuss many sensitive issues in a spirit of understanding, and the common ground between the countries has expanded rather than shrunk. And so I wouldn’t call it by any means a failure.

As to the elections, I think they will meet on the scheduled time after the end of the elections. I don’t know the exact date, but they will certainly meet for the municipal elections.

QUESTION: I will go to the backbone of the Saudi-American relationship. It is noticeable that the American administrations always discuss Saudi-American relations saying it’s solid and strong, but there are many attempts by various Jewish lobbies to affect the U.S.-Saudi relations, including the potential discussions in the Congress about Saudi Accountability Act. Does the State Department see a contradiction in these efforts as far as how international relations are conducted?

Also the other issue is the latest terrorist acts in Amman, Jordan. Does that encourage you to establish an international center, as the King of Saudi Arabia proposed early on, to combat terror?

SECRETARY RICE: I’m sorry, an international center?

First of all, there are many voices in the United States and they speak out about their views of our relationships around the world. And this is true not just for the U.S.-Saudi relationship, but for any relationship that you can name there are many voices about the course of that relationship and about how it is going.

The fact is that the Administration views the relationship as one that is strong and broad and where we have many, many common interests and where we are acting on those common interests.

It is no secret that we have had to intensify our efforts on a number of fronts, particularly, for instance, concerning terrorism, terrorism financing. The questions about charitable organizations and what role they might have played without the knowledge of governments on the financing of terrorism has been a concern not just to us but to the Saudi Government. And I might note that we didn’t have a very good understanding of this inside the United States until after September 11th as well. And so yes, we’ve had to intensify our efforts on terrorist financing and we believe that we’ve made progress, but there is always more progress that can be made.

We also have made clear that we would hope that the Saudi Government will do more on issues of incitement, issues of the way that there is a portrayal of countries around the world, sometimes a portrayal of the United States, sometimes a portrayal of Israel. We’ve made that very clear.

But there is sometimes an underlying sense that if there are issues in a relationship then you don’t have a good relationship. Well, there are issues in almost every relationship that we have around the world. The key is to be able to address those issues honestly, to be able to address differences honestly and to have mechanisms in which to address both that which is common and that which is not common.

That is one reason that we thought the Strategic Dialogue, which now has six working groups that can get to know each other and go into issues in more detail, is an important innovation.

And as to the Zarqawi terrorism, while it does reinforce our desire and our will to fight terrorism, I think we have very good cooperation and we’re always open to ideas on how more cooperation can be brought to bear on the problem.

FOREIGN MINISTER SAUD: (Inaudible) say one thing about this question. There is no doubt that there is at least misunderstanding regarding the public opinion in the United States about the Kingdom of Saudi Arabia. There is also misunderstanding within the public opinion in the Kingdom of Saudi Arabia about the United States. Both of us believe that policies that combine between two countries that it’s not based on deep understanding among the publics on both sides must create some problems sometimes.

Therefore we and the United States are working very harder to affect the public opinion on both sides in order to explain the policies of mutual interest and also clarify the views of the public opinion on both sides. In addition to what we have done today in establishing this new mechanism, I believe that will play a major role in improving the public opinions’ point of view on both countries to meet the mutual understanding and interests.

SECRETARY RICE: Steve.

QUESTION: Thank you. Steve Weisman with the New York Times. Your Highness and Madame Secretary, Prince Turki, the new Ambassador to the United States, gave an interesting speech recently, saying that the main political reason for terrorism and the anger among some is the failure to resolve the Israeli-Palestinian conflict. He also suggested that the Bush Administration could be more even-handed in its approach.

Your Highness, I wonder if you could expand on that point and tell us if you discussed that today. And Madame Secretary, of course, if you could respond to what seemed to be a criticism. Thank you.

FOREIGN MINISTER SAUD: I don’t hold myself responsible always for what the new Ambassador in Washington says — (laughter) — but in this case I do agree to a great extent. Certainly, the continuation of the Palestinian-Israeli conflict helps in giving — allowing the terrorists to justify their actions in the eyes of some young people who are not of full knowledge of the situation and who are still in the formative years of their development.

Terrorism of that sort cannot be condoned under any circumstances, but it does give justification and it allows their recruitment. And in that tract alone, it behooves us to do everything we can to remove that, and because getting rid of terrorism not only means fighting them and not allowing financing to go to them, but to stop recruitment, or it will be a never-ending cycle. And that is why we say what we say in terms of the Palestinian-Israeli question, just as a fact of life to us.

SECRETARY RICE: Well, I appreciate very much what the Foreign Minister has just said. There are obviously people who try to use the Israeli-Palestinian conflict to justify their acts against innocent civilians. There are those who try to do it within the Palestinian territories. I think what the Palestinians themselves have said is that, in fact, there is not that justification because they want a peaceful course for the development, and those who are using violence are, in fact, doing nothing but frustrating the hopes and the aspirations of the Palestinian people for a peaceful life side by side with the Israelis. But the people use it as an excuse, people have used it as an excuse; the good thing is the world is now saying, as the Minister has just said, there isn’t a justification for the killing of innocents.

Now let me make just one other point about the Palestinian-Israeli conflict. It ought to be resolved because Palestinians deserve a better life and Israelis deserve a better life. That’s why it ought to be resolved. And that’s why we are working as hard as we can to try and build on what has happened with the disengagement of Israeli forces and Israeli settlements from Gaza. That’s why we believe that the roadmap is a reliable guide to a two-state solution. That is why we press both parties to live up to their obligations under that roadmap, because the Middle East will most certainly be a much better place when there is a Palestinian state, a democratic Palestinian state living side by side in peace with Israel. It will be a better place for the Palestinians, it will be a better place for the Israelis, and it will be a better place for their neighbors as well.

We are encouraging the others — we remember fondly that Crown Prince Abdullah talked about a way forward. Some of the elements of that were incorporated into a statement to which Saudi Arabia was a party at the time of the Sharm el-Sheikh meetings with President Bush in 2003. Questions like the need to end incitement, questions like the need to reach out and try to find ways of engagement with Israel — all of these issues are very important and everybody has their part to play. But we agree completely that the resolution of the Palestinian-Israeli conflict is of the highest priority, one of the highest priorities that we have, because people should not have to live in the conditions of terror, hopelessness, lack of economic and development that the Palestinians do, or in the conditions of fear that the Israelis do.

FOREIGN MINISTER SAUD: And may I add that Saudi Arabia’s position cannot be better defined than it was defined by the proposal that Kind Fahd himself had placed in the Arab Summit in Lebanon, and so that describes not only our interest in peace but our willingness to work that peace, towards that peace, and the peace that allows both the Israelis and the Arabs to live a better life than they have in the past.

We will take two more questions.

QUESTION: I have two questions, one for His Royal Highness and for your, Madame.

FOREIGN MINISTER SAUD: You’re taking both questions? (Laughter.)

QUESTION: It’s very short. Madame Secretary, in fact, how much you are convinced that the Syrians very genuinely wants to cooperate with the international investigation since President Bashar says that whatever they will do, they are not going to convince the American Administration?

And I would like to ask His Highness, His Royal Highness, the Crown Prince, will be visiting Egypt soon. What is the importance of the visit?

SECRETARY RICE: Well, I think we have to say that the Syrians have not yet showed the full desire to cooperate. There seems to be some desire to negotiate with Mr. Mehlis instead of saying yes to his requests. But one way or another, I hope that Syria is going to cooperate. It is the demand of the international community that they do.

We need to know who was involved in the murder of Prime Minister Rafik Hariri. We need to know the degree to which some of the very disturbing findings that Mr. Mehlis had in his interim report are indeed the case once he has finished the investigation, because these are very serious charges.

And I believe that the entire international community, represented in the 15-0 vote by the UN Security Council, is telling Syria that it is indeed time to cooperate. And so I have not seen it yet. What I’ve seen is, so far, a lot of criticism of the process and a lot of criticism of the investigation. That just isn’t going to — it’s not going to cut it. The situation is very clear. The 15-0 vote could not have been clearer. And I know that people are delivering the message to Syria that it indeed ought to cooperate.

I think he asked you about the King’s visit to Cairo.

FOREIGN MINISTER SAUD: You have a better memory than I. (Laughter.)

Yes, the Crown Prince is visiting Cairo and I am sure the discussions will range and discuss most of the issues that face the region and bilateral relations between both countries. So the subject, I am sure, will crop up and they will discuss it.

QUESTION: Your Highness, in the United States it is still widely thought or suggested that the Saudis are not “serious” about the war on terrorism. One of the issues has been raised in this press conference that there is still too much incitement, anti-U.S. incitement, anti-Israel incitement, in this country. So may we know your response on that, please? Is your government serious about the war on terrorism?

And Madame Secretary, same question: Do you think the Saudis are?

FOREIGN MINISTER SAUD: I suggest that the media has a lot to do with that impression. And you are here. Visit the country and see whether we’re serious about fighting terror or not. Our people are being killed. Our resources are being squandered on terrorist activity. We are fighting as hard as we can. We have made incitement a crime, not just an ordinary thing that should be sanctioned. And we have made programs for education, for public opinion, about terror, the causes of it, the results of it. Our ulema have spoken clearly against terror and the incitement against terror, but yet we only hear the talk of some unknown sheikh in one of the mosques and we leave alone the word of the main religious people in Saudi Arabia and not report on it.

So whatever we do, it seems that we are lacking in our efforts. But I would dare anybody to say that there is any other country that is fighting terror as hard as Saudi Arabia is. And I do wish you would come not within a visit like this but come and see and take for yourself what we are doing.

SECRETARY RICE: The reason that countries and leaders are fighting terrorism is not to please us. It’s not to please the United States. It’s because their own people are dying from these terrorists. It is because the region is suffering a sense of instability and a sense of insecurity from these terrorists. It is because no one wants to contemplate a future in which the aspirations of the people are being met by strapping on suicide bombs and killing innocents.

We’re united in this fight. The people who are isolated are people like Zarqawi and bin Laden and his people. Because when you go around the world and you talk to governments, many of which now have experienced terrorism — Riyadh has experienced terrorism. Right here in Jeddah there was an attack against our Consulate in which Saudi security forces died. The al-Qaida network here has been pursued and pursued actively to the point that I think some more than 20 — it may be 25 or 26 top leaders have been captured or killed. The Saudis are working on financing. Of course, they can do more, we can do more, on the terrorist financing side.

But I think we make a mistake if we somehow believe that people don’t want to fight terrorism. They do want to fight terrorism. Terrorism is a scourge. It is a threat to us all. It’s a threat to civilized people everywhere when a suicide bomber walks into a Palestinian wedding in Jordan and kills 17 people. It’s a threat to us all when, in Beslan, Russia hundreds of Russian children and school teachers are killed by terrorists who decided to take over a school. It’s a threat to us all when people fly airplanes into the Twin Towers and into the Pentagon on a fine September day.

So we’re united in this fight. This took a long time to develop — these terrorist networks — and it’s going to take a while to break them down. But both because we are pursuing them actively as a law enforcement and intelligence matter and pursuing them in cooperation, we’re having some successes, and because I think everybody is beginning to understand that the real permanent solution has got to be to develop within countries circumstances in which human potential can be reached and in which people really do feel that their aspirations can be met in a positive way and not be driven to these extremes.

And so I want to thank the Saudi Government for its cooperation in the war on terrorism. I am certain that the Saudi Government can do better. I am certain that all of us can do better. But there is, I believe, no lack of will.

FOREIGN MINISTER SAUD: Thank you, ladies and gentlemen.

Source: US State Dept.

Joint Statement by President Bush and Saudi Crown Prince Abdullah – Crawford, Texas – April 25, 2005 – SUSRIS

Secretary Rice, Foreign Minister Saud Al-Faisal Meet the Press – Joint Press Availability Secretary Condoleezza Rice With Saudi Foreign Minister Saud Al-Faisal – Riyadh, Saudi Arabia – June 20, 2005
SUSRIS IOI – June 21, 2005

Overcoming Mutual Apprehensions: Prince Saud Al Faisal on Relations with the West – The Saudi-British Forum, London – February 23, 2005 – SUSRIS IOI – March 19, 2005

The United States and Saudi Arabia: A Relationship Threatened By Misconceptions – Prince Saud Al Faisal, Foreign Minister of Saudi Arabia -
SUSRIS IOI – May 7, 2004

Examining the Relationship – Saudi Foreign Minister Prince Saud al-Faisal – Remarks to the Foreign Policy Association and US-Saudi Business Council – April 26, 2004
SUSRIS IOI – April 28, 2004

On Relations and Reforms: Secretary of State Colin Powell and Foreign Minister Prince Saud Al-Faisal – Riyadh
SUSRIS IOI – March 24, 2004

Saudi Officials Take on Challenges in the Media – Prince Saud Al-Faisal and Prince Turki Al-Faisal Respond to Charges
SUSRIS IOI – Sep 12, 2003

Editor’s Note
The twelve year odyssey for Saudi Arabian trade negotiators and World Trade Organization officials comes to a conclusion tomorrow in Geneva at a signing ceremony marking the Kingdom’s WTO accession. Michel Cousins, writing in Arab News today, provided an incisive review of the process and insight into what WTO accession will mean for the Kingdom. We are pleased to share that article for your consideration.

Investments to Look Up After Formal WTO Accession
Michel Cousins, Arab News
JEDDAH, 10 November 2005 — Saudi Arabia’s accession to the World Trade Organization as its 149th member will be formally agreed to tomorrow at a meeting of the body’s General Council in Geneva.

Leading the Saudi delegation, the Minister of Commerce and Industry, Dr. Hashem Yamani, will sign the accession papers on behalf of the Saudi Council of Ministers. Membership takes effect 30 days after signing — which will allow Saudi Arabia to take a full part in the WTO ministerial summit in Hong Kong next month.

The accession, approved in principle by the WTO last month, brings to a close 12 years of tough and complex negotiations. The Kingdom originally applied in June 1993 to join the General Agreement on Tariff and Trade (GATT), which was then succeeded by the WTO.

It was hoped that the process would be complete by the end of last year but negotiations dragged on. The last hurdle, and one of the toughest, was the talks with the US, which were only completed in September. Bilateral agreements with most other countries were completed over a year ago.

Membership will bring no overnight changes. The Kingdom, one of the last major economies outside the WTO, has been changing its commercial and economic laws over the past few years to comply with the WTO’s rules. Where it has been noticeable and where it has had the greatest effect so far is in the distribution, telecommunication, banking and insurance sectors.

Last month Yamani, who has led the Saudi negotiating team, called the decision to invite Saudi Arabia “a victory for the principles and objectives of the multilateral trading system.” The country had sought WTO membership, he said, because “We pride ourselves on having an open and liberal trade regime and believe in the market mechanism” as a means to growth and development. “Our road to accession has been long but finally rewarding,” Yamani said. Saudi Arabia had made “far-reaching, very substantial and commercially meaningful concessions and commitments on goods and services” that would benefit its trading partners.”

Commenting at the same time, WTO chief Pascal Lamy spoke of the decision to admit the Kingdom as “historic,” both for the WTO and for the multilateral trading system. “I know the negotiations have been difficult and long. But I also know that both Saudi Arabia and the members have gone the extra mile to ensure the success that we see today.”

The Council of Ministers last month authorized Yamani to sign WTO accession documents, which include 38 bilateral agreements with member states, an accession protocol and the final report of the working team.

Expectations are that WTO accession will boost foreign investment in the Kingdom, providing funds for diversification of the largely oil-based economy, and bring new export opportunities for Saudi firms, especially in the petrochemical industry.

Support for the Kingdom’s WTO membership has been whole-hearted from the country’s chambers of commerce according to Dr. Ghassan Al-Sulaiman, chairman of Jeddah Chamber of Commerce and Industry. “We don’t want to be among the few countries excluded from the global alliance and its benefits,” he told Arab News.

Source: Arab News

[Reprinted with permission]

WTO Accession: One Step Closer – SUSRIS IOI – Oct. 12, 2005
WTO Accession Info
WTO Members Approve Saudi Accession
Saudi Arabia gets OK to join WTO (Business Week)
Saudi Arabia gets nod for WTO entry by year-end (Reuters)
Saudis on brink of WTO membership (BBC)
WTO
GATT
Uruguay Round
Working Party

Editor’s Note
This week the U.S. Senate Judiciary Committee held a hearing on the topic “Saudi Arabia: Friend or Foe in the War on Terror.” If you missed the televised session on November 8, 2005, SUSRIS has compiled the witnesses’ testimony on SUSRIS.org. We are also pleased to share with you the testimony of Doctor Anthony Cordesman, a frequent contributor to the literature on Saudi-US relations and co-author, with Nawaf Obaid, of the recently published book, “National Security in Saudi Arabia: Threats, Responses and Challenges.” Links to all of the witnesses’ testimony are below.

Testimony
United States Senate Committee on the Judiciary
Saudi Arabia: Friend or Foe in the War on Terror?
November 8, 2005

Anthony Cordesman
Co-Director
Middle East Program – Center for Strategic and International Studies
Arleigh A. Burke Chair in Strategy
1800 K Street, N.W. • Washington, DC 20006
Phone: 1 (202) 775-3270 • Fax: 1 (202) 457-8746
Email: Acordesman@aol.com

Anthony H. Cordesman
Arleigh A. Burke Chair in Strategy

Let me begin my testimony with an important caveat. Saudi Arabia is no more perfect than any other country. Like us, Saudi Arabia has made many mistakes in dealing with terrorism, in foreign policy, and managing its domestic affairs. There are many areas where leading Saudis recognize that Saudi Arabia needs major reforms, and these include education and ensuring that clerics recognize their responsibility to preach tolerance, the value of other faiths and branches of Islam, and the dangers of violence and terrorism. I have spoken and written about these needs for reform on many occasions over many years — as, for that matter — have many Saudis.

I am also all too aware of the level of anger and resentment against the US and the West that the US sometimes finds in Saudi Arabia, and that Saudi clerics and intellectuals can use extreme and hostile rhetoric. It is one of the tragedies of the aftermath of 9/11 that both Saudis and Americans still lash out at each other, posit conspiracy theories, and act out of fear and anger.

I would remind the Committee, however, that US clerics, intellectuals, and members of Congress have discussed Islam and Arabs in equally regrettable terms. We have leading clerics that do not hesitate to call for assassinations. We had two leading clerics who reacted to the attack on the World Trade Center and the Pentagon by suggesting that God was inflicting a just punishment on the US for its sins. A substantial number of Christian preachers tolerate Judaism because they feel that the bible indicates that Israel is the road to Armageddon and to rapture, and that the second coming will, in any case, involve the conversion of all the Jews.

No country has a monopoly on intolerance, foolish anger, and careless words.

Looking Beyond Saudi Arabia: The Real Challenge

What is more important, is that both the West and moderates throughout the Arab world and Islam face a very real struggle against Islamist extremism and terrorism. This is a struggle we cannot win alone. It can only be won by moderate Arabs and Muslims, and such allies are essential to any victory in the war on terrorism.

It is both dangerous and misleading to single out Saudi Arabia. We need to remember that 9/11 was the exception and not the rule. Most of the prior attacks and attempted attacks on the US were by North Africans, Egyptians, and Arabs from the Levant. Long before we confronted Islamic extremism and a “war on terrorism,” nations like Egypt and Algeria were fighting major extremist movements, and a different kind of Islamic extremism had come to dominate Iran. No country in the Middle East or Islamic world is free of this threat, and every moderate regime is under attack. This is a clash within a civilization at which we are on the margin.

The anger against the US and the West in Saudi Arabia is scarcely unique, and is not a product of Saudi Sunni Puritanism. Almost all of the terrorist and extremist movements that threaten the US, the West, and every Arab moderate regime are neo-Salafi and have their ideological roots in movements coming out of Egypt, not Saudi Wahhabi practices. This includes Bin Laden and Zarqawi. It was President Zia of Pakistan, not Saudi Arabia, that was the leading supporter of Pashtun Islamic extremism in Afghanistan and the forces that created the Taliban. Khomeini and his more extreme successors in Iran are Shi’ites.

Islamist extremist movements represent a small fraction of Arabs and Muslims. They can, however, feed on broad resentment of cultural change and the impact of globalism throughout the Arab and Islamic worlds. There is deep anger over the Arab-Israeli conflict, and against the US because it is perceived as Israel’s ally. The Iraq War has compounded this anger, and it has led to high levels of popular resentment of the US by the population of many of our friends in the region.

These trends are reflected all too clearly in the work of one of the most respected polling organizations in the US, and are summarized in the charts attached to this testimony. The Pew group reported, “In the predominantly Muslim countries surveyed, anger toward the United States remains pervasive.. Osama bin Laden is viewed favorably by large percentages in Pakistan (65%), Jordan (55%) and Morocco (45%). Even in Turkey, where bin Laden is highly unpopular, as many as 31% say that suicide attacks against Americans and other Westerners” are justifiable.

There are many other surveys that deliver the same message, just as there are many surveys of US and Western opinion that reflect anger against terrorism, and hostility towards Islam and the Arab world.

Fortunately, these trends do not yet reflect a consistent trend upwards and there are significant downward trends in some countries. But, members of the committee should look carefully at the data for Jordan, Morocco, Pakistan, and Turkey. And, these are the figures for friendly countries. It is not possible to conduct similar surveys of the level of anger in countries whose regimes are hostile to the US or where internal turmoil makes surveys impossible.

There are good reasons that President Bush gives a high priority to helping Israel and the Palestinians agree on a peace settlement and to making massive improvements in our public diplomacy. There are good reasons to see the wart in Iraq as a political struggle both for Iraqi hearts and minds and those of all the people in the region.

We face a political and ideological struggle that cuts across all of North Africa and the Middle East; and ranges into Central, South, and Southeast Asia. The forces involved are generational, and they can only be made worse if we fall into the trap of attacking Islam or the regimes that are fighting the same battle against terrorism and extremism that we are.

The forces of demographic change, and the other factors shaping regional tensions and acting as a breeding ground for extremism should caution us that reform and change have to be pushed forward with care, that consistent efforts to work with local reformers and that regimes to achieve evolutionary change are the only alternative to revolution and upheaval.

There is no single cause for Islamist extremism, and no easy correlation between any given set of the region’s problems and support for violence and terrorism. Once again, some of the factors at work are shown in the graphs and tables at the end of this testimony. More broadly, virtually every expert would agree that the problems that face this region include:

Weak secular regimes and political parties have pushed the peoples of the region back towards Islam and made them seek to redefine the role of religion in their lives.

Massive population increases: The Middle East and North Africa had a population of 112 million in 1950. The population is well over 415 million today, and approaching a fourfold increase. It will more than double again, to at least 833 million, by 2050.

A “youth explosion,” where age 20-24s — the key age group entering the job market and political society — has grown steadily from 10 million in 1950 to 36 million today, and will grow steadily to at least 56 million by 2050.

Some 36% of the total MENA population is under 15 years of age versus 21% in the US and 16% in the EU. The ratio of dependents to each working age man and woman is three times that in a developed region like the EU.

A failure to achieve global competitiveness, diversify economies, and create jobs that is only partially disguised by the present boom in oil revenues. Direct and disguised unemployment range from 12-20% in many countries, and the World Bank projects the labor force as growing by at least 3% per year for the next decade.

A region-wide average per capita income of around $2,200 versus $26,000 in the high-income countries in the West.

A steady decline in non-petroleum exports as a percentage of world trade over a period of nearly half a century, and an equal pattern of decline in regional GDP as a share of global GDP.

Hyperurbanization and a half-century decline in agricultural and traditional trades impose high levels of stress on traditional social safety nets and extended families. The urban population seems to have been under 15 million in 1950. It has since more than doubled from 84 million in 1980 to 173 million today, and some 25% of the population will soon live in cities of one million or more.

Broad problems in integrating women effectively and productively into the work force. Female employment in the MENA region has grown from 24% of the labor in 1980 to 28% today, but that total is 15% lower than in a high growth area like East Asia.

Growing pressures on young men and women in the Middle East and North Africa to immigrate to Europe and the US to find jobs and economic opportunities that inevitably create new tensions and adjustment problems.

Almost all nations in the region have nations outside the region as their major trading partners, and increased intraregional trade offers little or no comparative advantage.

Much of the region cannot afford to provide more water for agriculture at market prices, and in the face of human demand; much has become a “permanent” food importer. Regional manufacturers and light industry have grown steadily in volume, but not in global competitiveness.

Global and regional satellite communications, the Internet, and other media, have shattered censorship and extremists readily exploit these tools.

A failed or inadequate growth in every aspect of infrastructure, and in key areas like housing and education.

Growing internal security problems that often are far more serious than the external threat that terrorism and extremism pose to the West.

A failure to modernize conventional military forces and to recapitalize them. This failure is forcing regional states to radically reshape their security structures, and is pushing some toward proliferation.

Strong pressures for young men and women to immigrate to Europe and the US to find jobs and economic opportunities that inevitably create new tensions and adjustment problems.

Unlike today’s crises and conflicts, these forces will play out over decades. They cannot be dealt with simply by attacking today’s terrorists and extremists; they cannot be dealt with by pretending religion is not an issue, and that tolerance can be based on indifference or ignorance.

We can only win the “war on terrorism” if we accept the need to work systematically and consistently with friendly regimes, and moderates and reformers in the region, for evolutionary change. If we posture for our own domestic political purposes, call on other faiths and cultures to become our mirror image, or demand the impossible — we will further undercut our influence and breed more anger and resentment.

If we are careless in our efforts, seek to impose them, or use threats, we will aid the extremists. We will reinforce the impression that is already all too common that we are “crusaders,” “occupiers,” and use reform as a tool create our own puppet regimes, and that we are not sincere in acting as a force for progressive change.

Saudi Arabia as a Friend, Not a Foe

I realize, however, that this hearing focuses on one key issue: Whether Saudi Arabia is a friend or an enemy. The question we are here to address is not whether Saudi Arabia has flaws or needs reform, nor whether Saudi Arabia has a different culture and set of values. The question is rather what Saudi Arabia’s relations with the US have been, are and will be.

In spite of all the anger over 9/11, we need to consider the following facts — all of which the Committee can confirm and supplement in far more detail at the classified level with Administration witnesses:

Military Cooperation

We fought side by side during the Gulf War, and US forces operated out of Saudi Arabia against Iraq until the end of the Iraq War. Both countries failed, however, to appreciate the impact that a continuing US presence had in focusing Bin Laden’s attention on the US and Saudi regime. Both nations were slow to take him seriously as a threat and slower to take tangible action.

Saudi Arabia did not support our invasion of Iraq at the political or diplomatic level. The idea of such a war was (and is) very unpopular among the Saudi people. Moreover, the foreign minister warned us of the problems we would encounter in the aftermath of such an invasion, and the Kingdom’s fear it could destabilize the region.

Nevertheless, Saudi Arabia provided critical support to the US in the war against Saddam Hussein, in spite of the fact the Saudis had strong reservations about the war. Saudi Arabia opened up its airspace, made available its airbases, and housed special forces when Turkey reneged on basing US forces at the last moment. The town of Ar Ar on the Saudi border, for example, virtually became a US base.

Unlike Turkey, which was offered a $30 billion aid package for its support, the Kingdom did not ask for any compensation. In fact, it provided free and subsidized fuel to US forces. Saudi Arabia also provided crude oil to Jordan to compensate for the loss of crude oil Jordan was receiving from Iraq.

After the invasion, the Kingdom sent relief supplies to Iraq, including a field hospital that performed over 200,000 procedures when there was no functioning hospital in Baghdad. Saudi Arabia also offered loans and export guarantees worth over $ 1 billion to the Iraqis, and offered to supply gasoline and diesel fuel when Iraq ran short of both in the run-up to the elections in early 2004. It has discussed forgiving both Iraq’s debts and reparations obligations.

Saudi Arabia has worked with the US to mobilize Iraq’s neighbors in support of Iraq. Last year, it floated the idea of sending peace-keeping troops from Arab and Muslim countries not neighboring Iraq to Iraq to help with security (The UN welcomed the idea, the US was lukewarm). Currently, it is working within the Arab League to try and bring Iraq’s various factions together to agree on a common future. This move has been welcomed by the US.

While US combat forces have left Iraq, the US remains Saudi Arabia’s principal military advisor, supplier, and source of technical assistance. Work by Richard F. Grimmett of the Congressional Research Service shows that Saudi Arabia signed $5.6 billion worth of new arms transfer agreements between 2001 and 2004, and $3.8 billion (68%) came from the US.

War on Terrorism

We need to remember that that the United States put intense and consistent pressure on Saudi Arabia to aid Islamist freedom fighters in Afghanistan during the Cold War, and that the US then saw Saudi support of Islamists as a counterbalance to communism. We were both slow to see the risks of what we were doing and how extremist might take advantage of such efforts — just as Israel once made the mistake of aid Islamists as what it hoped would be a counterbalance to the PLO.

Like the US, Saudi Arabia was slow to commit itself to the struggle against terrorism and extremism, but it drove Bin Laden out of the country in the mid-1990s and helped push him out of the Sudan.

Saudi Arabia was slow in taking substantive action after 9/11 — and some Saudis lived (and still live) in a world of denial and conspiracy theories. Nevertheless, Saudi leaders immediately condemned terrorism after 9/11, as did leading Saudi clerics. Saudi cooperation with the US has steadily improved over time, and has become far closer since when Saudi Arabia came under attack in mid-2003.

Saudi Arabia is now actively involved in an internal battle with Al-Qa’ida terrorists. Many such terrorists have been killed or captured, and many Saudi security personnel have lost their lives in the line of duty. This battle is being fought with considerable US support, and US and Saudi cooperation has become much stronger in recent years.

The full scale of this cooperation, like Saudi cooperation with the US in the Iraq War, is highly sensitive. I have discussed this cooperation at length with US and Saudi officials in Saudi Arabia, however, I would urge the Committee to seek a briefing on the details from the Bush Administration in closed session, on why the State Department praised Saudi Arabia for its internal and foreign efforts to fight terrorism in the annual report on “Patterns in Global Terrorism” that it issued in April 2004. Ambassador J. Cofer Black, Coordinator for Counter-Terrorism, stated in his introductory remarks that: “I would cite Saudi Arabia as an excellent example of a nation increasingly focusing its political will to fight terrorism. Saudi Arabia has launched an aggressive, comprehensive, and unprecedented campaign to hunt down terrorists, uncover their plots, and cut off their sources of funding.”

There are, however, a number of examples that are a matter of public record. At the initiative of then Crown Prince, now King Abdullah, Saudi Arabia and the US established two task forces; one to combat terrorism, the other to combat terror financing. Officials from both countries now work side-by-side in the war on terror, and these task forces have become models for international cooperation.

Saudi Arabia has strengthened liaison relationships with other countries. Saudi Arabia held an International Counter-Terrorism Conference in Riyadh in February of this year. Over 50 nations sent high-level representatives who were experts in the area, including the US, which sent a delegation headed by Fran Townsend, Adviser to the President for Homeland Security. The resulting report and Riyadh declaration has called upon the UN to create a new international center to fight terrorism as well as on all countries to strengthen their cooperation and national efforts.

In addition, Saudi Arabia regularly reports to the United Nations Security Council Committees on its actions to against terrorism, and has complied with key UNSCR regulations. These include freezing the financial assets of the Taliban regime (Resolution 1267) and funds of listed individuals (Resolution 1333). It has signed the International Convention for Suppression and Financing of Terrorism (Resolution 1373), and implemented Resolutions 1390 and 1368

The Financing of Terrorism

Saudi Arabia can still do more to fight terrorist financing — although US Treasury experts have come to praise Saudi cooperation when they initially condemned it. We should understand, however, that governmental efforts to control terrorist financing have sharp limits, and have probably reached the point of diminishing returns.

Individuals in Saudi Arabia, and many other Arab and Islamic countries, will continue to support such organizations or their fronts, and regional governments can only do so much to limit such funding. Merrill Lynch estimates that the capital controlled by wealthy individuals in the Middle East rose by 29% during 2003-2004, to a level of approximately $1 trillion dollars raises serious questions about how much governments can do. Much of this capital is in private accounts outside the region, terrorist operations are only moderately expensive, and Merrill Lynch projects a further 9% annual rise in such holdings from 2004 to 2009.

Yet, Saudi Arabia began to try to control such funding in the 1990s — long before most of the states in the region. It froze Bin Laden’s assets in 1994. SAMA and the Ministry of Commerce issued guidelines to the Kingdom’s financial and commercial sectors for combating money-laundering activities, and began to create units to counter money laundering in the Ministry of Interior, in SAMA and in commercial banks in 1995.

Saudi Arabia has since taken the following steps:

Required all Saudi banks on September 26, 2001 to identify and freeze all assets relating to terrorist suspects and entities in response to a list issued by the United States government.

Issued rules ’Governing the Opening of Bank Accounts’ and ’General Operational Guidelines’ in order to protect banks against money-laundering activities in May 2002,

SAMA began to implement a major technical program to train judges and investigators on legal matters involving terrorism financing and money-laundering methods, international requirements for financial secrecy, and methods followed by criminals to exchange information in May 2003.

Council of Ministers approved new legislation that puts in place harsh penalties for the crimes of money laundering and terror financing in August 2003.

Created a Joint task force on terror financing. American and Saudi officials work side-by-side in this area. The US is providing training programs for Saudi officials in this area.

Saudi Arabia has frozen all charitable activity outside the Kingdom. Charities cannot withdraw cash from their accounts.

Charities cannot collect cash donations in public places.

Saudi Arabia has implemented the 40 recommendations of the Financial Action Task Force (FATF) of the G-8 on money laundering and the 8 recommendations on terror financing. FATF conducted a mutual evaluation of the Kingdom’s mechanisms in the Fall of 2003 and found them in line with international standards. The Kingdom is today a member of FATF.

FATF found the Kingdom’s laws on money laundering and terror financing to be in line with best practices, and pointed to examples of successful prosecutions in the Kingdom.

The Kingdom has set up a Financial Intelligence Unit (FIU) and is in the process of joining the Egmond Group. The US Treasury Department has been assisting the Kingdom in this process, which should be completed in the near future.

The Kingdom has put in-place regulations for taking cash from or into the country.

The Kingdom is in the process of establishing a National Commission for Charitable Activities Abroad through which all private charitable activities will take place. Until such time as this commission is established, no Saudi charity can send funds abroad. Exceptions were made during for the Tsunami and the tragedy in Darfur under strict oversight by the Saudi Red Crescent Society, an arm of the Saudi government. In some other cases, funds are delivered by Saudi government institutions to legitimate recipients (for example, aid to the Palestinians; the case is made that Saudi charities raise money for suicide bombers and deliver them. The Saudi Red Crescent Society no longer provides funds directly to entities in the territories. Funds going to the Palestinians are sent to the PA via official channels.

Energy

For all the noise over energy independence, the fact remains that over 60% of the world’s proven conventional oil reserves are in the Gulf and 25% are in Saudi Arabia. Furthermore, the EIA estimates that the “best case” limit US energy policy can put on our percentage of dependence on oil imports through 2025 is to keep it constant, and the reference case shows a major increase.

Saudi Arabia has historically maintained a production cushion of 2-2.5 mb/d for use during shortfalls in production elsewhere. It tapped into that cushion after the fall of the Shah in 1979, during the first Gulf War in 1990-91 when there was a shortfall in Kuwaiti and Iraqi production, in the run-up to the war with Iraq in early 2003, and today as a result of various factors (Iraqi shortfalls, political instability in Nigeria and Venezuela, Yukos in Russia, natural disasters).

Unlike many oil powers with more limited reserves, Saudi Arabia had long sought to keep prices moderate to ensure consistent long-term demand. It has responded to the recent rapid increases in world energy demand, and lack of surplus crude oil and refinery capacity, by investing over $50 billion in its oil sector over the next seven years.

This in part responds to US calls for an increase in its oil production to 12.5 million barrels/day. Saudi Arabia has also talked about the possibility of increasing output to 14-16 million barrels a day. It almost certainly can never reach the absurdly high levels called for in some theoretical models — which call for an increase from around 11 million barrels a day today to 22-26 million barrels by 2025. These models, however, are theoretical demand-drive econometric models. No country, and no major US or Europe oil company, has ever found such models to be credible.

Education and the Role of the Clergy

There are many areas where both our countries need to do a far better job of educating ourselves about other nations, cultures, and religions. There is no question that Saudi Arabia long focused on building schools, and measures like teacher to student ratios, and did little to modernize its curriculum, or review the nature and quality of what was being taught. It tended to pay little attention to what its clerics said as long as this did not have an internal political impact, and much of what some said was the mirror image of hate literature in the West.

I know how extreme these attitudes can be from my own talks to Saudi students, educators, and clerics inside Saudi Arabia. In general, few societies are friendlier and more polite. Yet, I have been attacked to my face simply for being an American, and behind my back for being a tool of Israel. People have tried to discredit me simply by saying I am Jewish — something I would be proud to be but am not. I have read sermons and literature at the margins of Saudi society and culture that should never have had broad circulation without active protest and rebuttal.

More broadly, we are two very different societies and cultures. Saudi Arabia has a population and mix of clerics that are much more conservative than its ruling family, the Al Shaikh family (the descendents of Muhammad al Wahhab), and most top Saudi officials, intellectuals, and businessmen. The stereotype of political development in the West — a progressive people pushing against the resistance of a conservative regime — does not fit this society. Saudi Arabia also is very much a consensus society, and this means progress is often slow and indirect.

Having Saudi Arabia as an ally does not mean that Saudi culture is going to become Western, that it will not be a puritanical Islamic state, or that we will not differ sharply over the rate of progress in an Israeli-Palestinian peace process.

At best, Saudi Arabia will take years to make the kind of progress that took decades in the West. Popular support for open religious activities by other faiths may well be a matter of decades. Saudi Arabia also is going to have to re-educate some of its clergy and find better teachers — eliminating Egyptian and Jordanian Islamist teachers in the process.

Nevertheless, Saudi Arabia should not be judged by the literature it issued back in the 1990s, or by its worst sermons, literature, and teaching aids today. No society can be judged by its worst performance, and real progress is taking place. Saudi Arabia is, after all, a nation whose Crown Prince — and now King — not only took the risk of publicly calling for a comprehensive peace with Israel, but helped win agreement on such proposals from the Arab League.

Saudi Arabia is in the midst of a three-year program to overhaul its educational system. Materials deemed offensive are being purged from textbooks, new teaching methods are being introduced, and programs to retrain public school teachers are being put in place. This is a multi-year effort, and is extremely politically sensitive and difficult. Some outside pressure helps. Too much outside pressure fuels resistance and efforts by Islamic extremists.

Similarly, the Ministry of Islamic Affairs is in the midst of a program to put in-place better monitoring of what is taught at religious schools, and what is said in mosques. To date, Saudi Arabia reports that over 2,000 imams have been disciplined or dismissed for preaching extremism and intolerance. Saudi Arabia might well be able to take more action and take it more quickly, but my visits to Saudi Arabia — and talking to US embassy officials and critics of the government — confirm that the effort is real.

Saudi Arabia has vetted its Islamic Affairs Departments at its Embassies abroad and severely curtailed their numbers and activities. For example, the Saudi Embassy in Washington had over two dozen officials at its Islamic Affairs Department during the 1990′s. Today, there is only one official, and he is a Foreign Service Officer, not an employee of the Ministry of Islamic Affairs, or one of the Islamic Universities.

Saudi Arabia began efforts to warn its public about extremists back in the late 1990s at a low level and reinforced them after 9/11 and May 2003. It launched a large-scale national public awareness campaign early in 2005 which focused on the fact Islamist extremists are “deviationists” and the message to Saudis that terrorism and extremism, for any reason, are not part of the Islamic faith.

This campaign included advertisements on billboards and TV, documentaries, and seminars at schools and mosques. Throughout the month of Ramadan, for example, programs dealing with extremism and intolerance, were broadcast during the prime viewing hours on Saudi television.

Various government ministries have carried out internal campaigns to build awareness of the threat posed by terrorism and extremism, and have organized lectures and exhibitions in schools, universities and public areas. Saudi-based businesses and organizations include counter-terrorism messages in their communications with customers, including ATM transactions, utility bills and text messages.

While I have no way to evaluate the exact level of activity taking place, Saudi Arabia began a campaign in February 2005 to educate the society at large, with different series produced for children and adults:

Full-length documentaries that examine different aspects of terrorism and religious tolerance, such as “Religious Dialogue,” a multi-series program that identifies the rise and expansion of Islamic extremism throughout the Muslim world and demonstrates the ways in which terrorism defies Islamic values;

Short films that inform the public about steps the government is taking to fight terrorism, including “The Secure Land,” which focuses on the different branches of Saudi security (e.g. Border Patrol, Customs, National Guard, etc) and demonstrates how the Kingdom’s security forces cooperate to defend Saudi Arabia from acts of terror;

Cartoons that inspire moderation and nationalism, including “My Town,” a children’s series that reinforces the tolerance intrinsic to Islam and encourages patriotism as a means to fight terrorism;

Interview programs that broadcast the opinions of academics and terrorism victims, such as “Why?,” a series that introduces the nation to families of security forces killed during terrorist attacks as well as religious scholars who condemn the reasoning communicated by terrorists as justification for their acts;

TV dialogue programs that encourage critical thinking and debate about issues related to terrorism, such as “The Discourse of Mind and Logic,” in which academics and specialists analyze the atrocities committed in the name of religion and examine different ways to fight the spread of terrorism and terror ideology.

It is also carrying out a advertising campaign with advertisements on a number of Arabic satellite networks including Al-Arabiya, MBC and Future Television, as well as on Saudi TV channels. This campaign began in early 2005, and has three phases:

Phase I – The first phase of the advertising campaign aims to stir public emotion by presenting victims of terrorist acts and to personalize the horrors of terrorism. This phase is exemplified by an ad in which a father looks through photos of his son, whose life was taken by terrorism.

Phase II – The second phase of the advertising campaign seeks to reinforce the notion that terrorism is wrong and in no way represents Saudi values or the tenets of Islam. This message is demonstrated in an ad where a man is seen building an explosive device, and then realizes that such work is destructive to humanity at large.

Phase III – The third phase of the advertising campaign aspires to promote national unity in the fight against terrorism. The message of this phase is illustrated by an ad in which thousands of Saudis are seen carefully placing rocks in a particular structure; as the camera pans away, the audience sees that the assemblage of Saudis have recreated the map of Saudi Arabia in stone.

Since 9/11, the Saudi government has also sponsored a number of internal dialogues on reform and modernization, and international dialogues on religion, cultural differences, and the need for tolerance. The King Faisal Foundation is one such organization sponsored by leading members of the royal family.

In September 2005, Saudi Arabia convened a conference of Islamic scholars at the initiative of King Abdullah. Representatives came from all over the world, including the US to discuss such issues as “extremism, intolerance, dealing with the other, the role of a Muslim minority in a non-Muslim state, the issuing of fatwas, terrorism, etc.”

The recommendations of the scholars will form the basis of the Extraordinary Summit of members of the OIC, which will be held in Makkah in early December 2005. This event is an important milestone in shaping thinking in the Muslim world about these issues, because Saudi Arabia, as the Custodian of the Two Holy Mosques, is the most important Islamic nation.

Other Aspects of the US Saudi Relationship

Economic relations are not always a measure of friendship, but Saudi Arabia is one of our largest trading partners. It is our largest market in the Middle East, and American companies are among the largest foreign investors in the Kingdom. Saudis, in turn, are still among the largest foreign investors in the US, and the Saudi government has been one of the largest buyers of US debt instruments.

Saudi Arabia quietly donated over $100 million to help the victims of Hurricane Katrina. The supplies are bought in the US and distributed directly to those who need them. In some cases, this aid arrived before Federal or State aid arrived.

A US Strategy for Saudi Arabia and the Region

For all of these reasons, I see the Saudi Accountability Act as the kind of US posturing that will do far more to aid Bin Laden and extremism than put meaningful leverage on Saudi Arabia or any other friendly Arab and Muslim country. It will simply reinforce all of the regional stereotypes and conspiracy theories that the US does not understand the region, cares little about its people and a great deal about its own interests, and is trying to impose its values and create puppet regimes for its own purposes.

The Bush Administration has almost certainly been correct in stating that the Arab world and Middle East can only achieve stability through reform. Terrorism and extremism can only be defeated at the ideological, political, economic, and social level. Without such action, military and internal security efforts will fail — sometimes quickly as in the case of Iraq and sometimes slowly as in the case of today’s more successful “one man” regimes.

The Need for the Right Kind of US Reform Effort

Where the US, the Bush Administration, and the Congress need to be careful to avoid acting on the assumption that reform can come from the outside, that the same largely American or Western solution can work in all Arab and Islamic states, and that “democracy” is somehow a magic word that transforms entire societies.

The fact is that meaningful religious reform can only come from within Islam, the region, and individual states. The US and the West cannot fight Islam’s battle for the soul of Islam. This is a struggle that can only be fought and won within the region. If it is left to outsiders, or dealt with through denial, it is a struggle that will go on indefinitely and sometimes be lost. It is a struggle that every Middle Eastern intellectual, and every government, needs to face.

The most outsiders can do is point out the obvious: This struggle is the most important single strategic priority for virtually every Middle Eastern and Islamic state. It is necessary and unavoidable, and interacts with the broader struggle for a tolerant global society based on mutual respect and human rights.

More broadly, the US, the Bush Administration, and the Congress need to be careful to adopt realistic time scales for evolutionary change, and to avoid focusing on “democracy” as if a simple political fix could be encouraged or imposed on every nation from the outside and at the nearly the same time.

At a minimum, workable “democracy” means taking the time to create government with strong checks and balances. It means priority for human rights and the rule of law over the simple act of voting. It means creating functional political parties capable of both serving the nation and looking beyond one man, one vote, one time. Pure democracy has never worked in any state. Sufficiently crude democracy is little better.

Both development, and regional strategic stability, will occur one nation at a time, and at different rates and in different ways. They will be driven either by local reformers and by political evolution, or will often collapse into forms of revolution that may be worse than the status quo.

The real world priority for reform also has to give equal balance to economic reform, employment, education, social services, and reducing population growth rates. It means finding solutions to ethnic and religious divisions, and social change. It means giving at least as much priority to the economic role of women as the political role; creating a broad and globally competitive labor force.

This kind of evolutionary reform can only occur at a different pace and in a different way in each state in the region. Like religious reform, it can only come from within and must be driven by local reformers. It cannot be driven by US public diplomacy, or by seeking to makeover every state in something approaching the form of the US or Europe. We are not talking about a few years; we are talking a decade and sometimes decades.

If we are to avoid letting extremists like Bin Laden drive us into a true clash of civilizations, we need a realistic strategy for reform on both sides. Saudi Arabia, the Arab world, and other Islamic states cannot deal with their needs for reform through denial, through complaining about outside states and forces, complaining about US and other external calls for reform, or waiting for the solutions to the region’s other strategic problems. The US cannot deal with the issue by demanding mirror images, instant action, and all the other aspects of its traditional initial solution to every problem: “simple, quick, and wrong.”

The Saudi and Arab Side of the Effort

The Middle East and Arab world will succeed, if and when, it starts to solve its problems one nation at a time, honestly, and without waiting for outside aid or solutions to all the region’s ills. It is also important to note that it now has a unique window of opportunity.

The resources for action are also much greater today. The current projections of the EIA indicates that MENA oil export revenues will rise from a recent low of around $100 billion in 1998 in constant 2004 dollars to over $500 billion in 2005 – reaching or exceeding the former peak of some $500 billion reached in 1980.

The question is whether MENA governments will act upon this window of opportunity, whether the wealthier states will look beyond their own needs, and whether the poorer states will actually move towards effective development and reform. No nation has developed since World War II that did not develop itself, and solve virtually all of its own problems. If Asian states like Taiwan, South Korea, Japan, or other Asian states had waited for peace or regional solutions, Asia would be another Middle East.

The US and Western Side of the Effort

The US and Europe, however, need patience, a balanced approach to reform, strong country missions capable of encouraging local governments and reformers, and the understanding that different societies and cultures will often take a different path. In practice, this means a very different strategy based on persuasion, partnership, and cooption rather than pressure and conversion:

Implement a broadly-based reform strategy: Social, economic, and political reforms should be supported, but in an evolutionary sense. The US and Western states, however, cannot be seen as pushing these reforms in ways that discredit local officials and reformers. Outside pressure for change will be resisted even if the reforms are necessary, and too much overt pressure is counterproductive.

One size does not fit all. The Arab and Islamic worlds are not monolithic. Each country requires different sets of reforms and needs. Some need help in reforming their political process, others need economic aid, and others need special attention to their demographic dynamics and population control. The West, therefore, must avoid any generalized strategy of dealing with the Arab-Islamic world as one entity.

Work on a country-by-country approach and rely on strong country teams, not regional approaches: Regional polices, meetings and slogans will not deal with real world needs or provide the kind of dialogue with local officials and reformers, tailored pressure and aid, and country plans and policies that are needed. Strong country teams both in Washington and in US Embassies are the keys to success.

Recognize that the pace of reform will be relatively slow if it is to be stable and evolutionary, and dependent on partnership and cooption. Artificial deadlines and false crises can only lead to failed tactics and strategies. Outside support for reform must move at the base countries can actually absorb, and shift priorities to reflect the options that are actually available. History takes time and does not conform to the tenure of any given set of policymakers.

Carefully support moderate voices: “Moderates” in the region do need the support of the West, but obvious outside backing can hurt internal reform efforts. Moreover, “moderate” must be defined in broad terms. It does not mean “secularist” and it does not necessarily mean “pro-American.” It also, however, does not mean supporting voices that claim to support freedom and democracy, but are actually the voice of extremism.

Democratization is only part of reform and depends on creating a rule of law, checks and balances and a separation of powers, protection for minorities and human rights, and effective political parties. Trying to force or “rush” democracy on Middle Eastern countries is impractical and counterproductive. The goal should be to help MENA countries develop more pluralistic and representative governments that respect the rights of minorities.

Recognize that the key to effective action is local political action, dialogue, education, efforts to use the media, and public diplomacy: The West and the US cannot hope to win a struggle for Islam and reform from the outside. It is the efforts of local governments, reformers, educators, and media that will be critical. Encouraging and aiding such efforts is far more important than advancing the image of the US or Western states or trying to shape local and regional attitudes through Western public diplomacy.

Avoid generalizing about Muslims: generalizing Islam as a source of violence and discriminating against Muslims in the west can alienate “uncommitted” Muslims.

Demonizing any part of Islam will aid extremists: The problem of terrorism is not the problem of “puritan” or “Wahhabi” Islam, but the attitude of violence and intolerance of politically motivated groups that exploit religious teaching to gain legitimacy in the eyes of their recruits and followers. To defeat these groups, their motivations need to be understood and fought at their roots. E.g. Al-Qa’ida’s goal of ruling the “Arabian Peninsula.”

Avoid supporting “secularism” against “traditionalism:” The region has seen its share of failed governance systems. Most efforts to secularize have failed and the US should not be seen as a driving force behind what may be assured failure. Moreover, the word “secularism” translate into “elmaniyah” is often intermingled with “atheism.”

Don’t try to divide and conquer: The West should stay clear of issues like Sunni-Shiite frictions, and taking sides with ethic and sectarian groups. It does not serve anyone when they are played against each other. The Iran-Iraq War was a perfect example of how interfering can backfire. The US should avoid playing any role that could encourage such divisions, particularly given the current environment in Iraq.

Liberalism vs. counter-terrorism: The liberty democratic societies afford people is sometimes the same tool extremists use to spread their hateful ideology. The west must be careful in advocating immediate liberalization and freedom of speech of the Middle East.

Apply a single set of standards to Western and regional counterterrorism: Do what you preach and preach what you do. The West and specifically the US should void being seen as supporting violation of human rights and abusive security measures in counter-terrorism, which advocating human freedom. Violence by states against civilians be it Russia, Egypt, or Israel should be equally condemned.

In short, any effective strategy to deal with terrorism and extremism means addressing two key strategic issues that go far beyond the so-called war on terrorism. One is whether the Arab world can recognize the need for reform and achieve it. The second is whether the West, and particularly the US, can learn to work quietly with nations for effective reform, rather than seek to impose it noisily, and sometimes violently, on an entire region.

[Additional materials (tables, etc.) posted at SUSRIS.org (click here)]

Source: US Senate Judiciary Committee Hearing Web Site

Testimony of Daniel Glaser – Treasury Department – Deputy Assistant Secretary for Terrorist Financing and Financial Crimes

Testimony of Anthony Cordesman – Arleigh A. Burke Chair in Strategy, Center for Strategic and International Studies

Testimony of Steve Emerson, Executive Director, The Investigative Project on Terrorism

Testimony of Nina Shea, Director for Religious Freedom, Freedom House

Testimony of Gulam Bakal, Secretary, Board of Trustees, Islamic Association of North Texas

Saudi Arabia’s Role in Combating Terrorism – State, Treasury and FBI Officials Testify to Congress

Saudi Arabia and the Fight Against Terror Financing – Testimony by J. Cofer Black

Editor’s Note
There are several conferences on the Washington calendar where top decision makers and thought leaders gather to discuss developments in the Middle East and America’s role there. One of the best is the annual conference of the Middle East Institute (MEI) which meets this week in Washington. Among the distinguished speakers at the conference this year is newly posted Ambassador to the United States, Prince Turki al Faisal.

Prince Turki, the last son of King Faisal, was educated at Georgetown University, Class of 1968 and went on to serve Saudi Arabia as the Director General of the General Intelligence Directorate from 1977 through 2001. He most recently completed a posting as Saudi Arabia’s Ambassador to the United Kingdom from 2003-2005 before replacing Prince Bandar bin Sultan in Washington in September of this year as the Kingdom’s top diplomat in the United States.

Today we are pleased to share with you Prince Turki’s presentation to the MEI conference where he provides an overview of the nature of the terrorism threat and Saudi Arabia’s commitment to fight alongside the United States and the international community against it.

Prince Turki Al-Faisal address to the 59th Annual Conference of the Middle East Institute

Prepared statement of Prince Turki Al-Faisal, Ambassador of the Kingdom of Saudi Arabia to the United States to the 59th Annual Conference of the Middle East Institute,

Washington, DC
November 8, 2005

Ladies and Gentlemen: When Ambassador Walker invited me to speak to you today, I remembered what my boss told me when I was appointed ambassador.

He said: “A diplomat will say yes when he means maybe; he will say maybe when he means no; but if he says no, then he is no diplomat.” So here I am not saying no to Ambassador Walker.

Forty years ago, when I was a student at Georgetown University, the Middle East Institute was the only organization dedicated to promoting understanding of the Middle East. The fact that the institute is still going strong is a tribute to its leadership and the relevance of its mission.

It is a privilege to be with you today at this important conference, and to address you on one of the greatest challenges facing our world: terrorism and the misunderstanding it has created about Islam and the Islamic World.

The scourge of terrorism has defiled our world. Nothing makes it right. Nothing justifies it. It has ripped communities apart. It has eaten away at international and cultural understanding. It has tried to turn friends into enemies.

Terrorism has become the biggest single threat to international peace and stability.

Al-Qaeda, and other groups like it, ladies and gentlemen, are evil cults with a political terrorist agenda. They thrive on spreading fear and destroying bonds between people and nations.

The actions of these cults are condemned by all rational individuals and governments; by people of every color, creed and persuasion; from north to south and from east to west.

There are those that would have you believe that the current wave of terrorism springs from and is, or has been, supported by Saudi Arabia.

That is absolutely not true. We have suffered as a result of terrorism. We do not support them. We do not fund them. These terrorists are as much against us as they are against you.

Yes, 15 of the 19 terrorists involved in the 9/11 attacks were Saudi citizens. This fact is a scar on our history. It is a burden that my countrymen will have to live with for the rest of our lives. It is a fact about which we are frequently reminded. But these deviants do not represent Saudis or the Islamic faith.

We no more supported the criminal act committed on September 11 than the people of Italy or the Italian government supported the terrorist activities of the Red Brigade, or the Germans supported the violence of the Bader-Meinhof gang. As the 9/11 Commission stated: “We have found no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.”

Terrorism is not the exclusive domain of one people. It does not belong to one time or to one place.

The challenge posed by Al-Qaeda is that unlike other terrorist organizations, it has no one declared enemy, and no one focus. Al-Qaeda has pitted itself against the whole of humanity.

Ladies and Gentlemen: Extremism is the mantra of a few, of a tiny group whose minds have been twisted and turned to serve an evil agenda. They have left logic, reason and compassion behind. They do not belong to any nationality or any faith. They have disconnected themselves from nations and peoples, from any true faith, and from humanity as a whole. Bali, Madrid, London, Riyadh, New York, Sharm Al-Sheikh, and Casablanca have all become compass points on the global map of terror. There is no logic to these evil attacks, no obvious target. The victims are old and young; Muslim, Christian, Jew and Hindu; English, American and Saudi.

The question we ask ourselves is why?

What makes a man end his life and, in the process, take the lives of innocent people?

Let me be absolutely clear: It has nothing to do with any faith.

Much as Al-Qaeda tries to connect its acts with Islam, it cannot, any more than the Waco suicide pact of David Koresh and his Branch Davidians, which killed 74 people, can claim to be Christian, or Baruch Goldstein who massacred more than 20 Palestinians in a mosque in Hebron can claim to be Jewish, or the suicide pact of the Order of the Salar Temple which killed 56 people can claim to truly have anything to do with Hinduism.

Al-Qaeda is not, and never has been representative of Islam. Well before 9-11, religious scholars in Saudi Arabia had consistently and unequivocally condemned terrorism in general and suicide bombings in particular.

It is true that our senior ulama – our religious scholars – follow a fundamental school of Islam. It is true that they lead a morally conservative life. But it is also true that they condemn all suicide bombings and the taking of any innocent life.

It is to our despair that terrorists claim to be faithful to Islam and faithful to God. They are not.

They wrongly attempt to use Islam to bolster and proselytize their extremism. They wrongly pervert Islamic texts in order to support their political agendas. They wrongly issue politically motivated fatwas permitting suicide bombings and the taking of innocent lives.

They are totally and utterly wrong and they are absolutely in violation of the basic teachings of Islam. This is not Islam and these acts are absolutely not the work of God.

Ladies and Gentlemen: There is no faith that condones the taking of innocent life or celebrates suicide.

“Thou shalt not kill” is one of the Ten Commandments passed down to us all by the Prophet Moses.

“Whoever kills a person has killed the whole of humanity,” states one of the best-known Qur’anic verses.

I believe suicide reflects an individual’s alienation from God and from the human family which binds us all together. This human bond transcends all other divisions among us. It is at the heart of our survival as human beings. It is a bond revealed at its best in moments of tragedy – think of the heroes and heroines who came to the rescue of the victims of the 9/11 attacks on New York and Washington, or Hurricane Katrina, or the terrible earthquake in Pakistan, or the Asian Tsunami. Think of the people who put their lives at risk to help others, who when hungry and cold share what little they have with their neighbors.

This is the best of humanity.

Let me share with you something that was said recently by one of the victims of the July 7 bombing in London this year. I was in London at the time of the bombings, which occurred less than a mile from our London embassy. The city came to a standstill. Dozens of people were killed and hundreds cruelly and dreadfully injured and maimed.

Ian, a young man traveling on the subway at the time of the attack was one of those maimed for life. He was blasted out of his seat and thrown out of the exploding carriage and against the electric cables of the subway tunnel. His survival in itself was a miracle. In a report broadcast three months after the attack, he remembered that terrible day.

Recalling the smoke, the fear, the shouting, he said – and I quote: “You saw the best of humanity and the worst of humanity. What springs to mind is not the worst of humanity. Anyone who straps explosives to themselves to make a point, whatever point they are making is a murderer and you cannot get into the mind of a murderer as a rational person. So you focus on the best of humanity. What people did to save other people, tearing off their clothes to use as blankets and bandages, running for water, phoning the relatives of people who were hurt.”

Ian recalled a man reaching out and grabbing his leg and, despite his own injuries, trying to pull this man from the pile of bodies amassed around him. And he remembers trying to shake into consciousness another man frozen with terror.

Despite his own injuries, his instinct was to help others. He didn’t ask who they were – whether they were white, black or Asian, whether they were Christian, Jew or Muslim, whether they were old or young, men or women. All he knew was that he must help them.

Allow me to share with you another eyewitness account, this time about the terrorist attacks in Riyadh in May of 2003. Talal, a young Saudi and a resident of the Al-Hamra compound, had this to say:

“As a resident of the Al-Hamra compound targeted by the terrorists in the devastating attacks in Riyadh last week, I saw it happening before my eyes. For the first time in my life I realized what the word ‘terrorism’ really means. It wasn’t anything like what we hear in theories and hypotheses floating around or on television programs and comments. It was something beyond human comprehension. On that day I lost a number of good friends and neighbors, Muslims and non-Muslims alike, with whom I had shared moments of joy and sorrow.

“On that day I saw the flesh of innocent people who had been killed as they slept. I saw bullets flying indiscriminately killing Muslims and non-Muslims. I heard the cries and moaning of the injured whose only fault was that they happened to be there at that particular moment. I saw the door and windows of my own house being blown away and glass flying everywhere. I was injured, but I must thank and praise God for whatever comes from Him.

“I saw the burned bodies of two small children still hugging each other. I saw buildings collapse, fires raging and people dying.

“On that night I realized our need to wake up from a long sleep and confront the causes and conditions that allowed such a terrible thing to happen. This is vitally necessary in order for neither people nor government to become hostage to one group or a set of ideas that wants to confine an entire population to the narrowest kind of thought.”

There are so many human stories like these from New York, Washington, Riyadh and London. It is clear from these accounts that the pain inflicted by terror transcends nationalities and religions. It affects all of us as human beings.

This natural humanity is our human bond.

Ladies and Gentlemen: Like Ian and Talal, I do not believe we can rationalize or understand those who carry out these evil crimes.

Terrorism presents us with a stark vision of the terrible abyss in which mankind can find itself. But as we stare into this abyss, we must cling more tightly to our faith and to our belief in life and the inherent goodness of man.

But who are these terrorists? Why do they follow the twisted and evil path of Al-Qaeda? They violate the principle of humanity, and the teachings of their faith. They are criminals. Their twisted vision is a cancer in the body of Islam that must and will be excised and cast out.

It is alien to the healthy body of the faith that holds the world’s one billion Muslims together.

Muslims are people of the book, along with Christians and Jews. Muslims revere Abraham and Isaac and all the prophets of the Old and New Testaments from Noah to Jesus. Together, we hold in common a belief in one just and loving God, and in the sanctity of the life we have been given. As it says in Deuteronomy (chapter 30 verse 19): “I have set before you life and death, blessings and curses: choose life so that you and your descendants may live, loving the Lord your God, obeying him and hold fast to him.” This is an important message for us all.

The challenge is to find a way to root out this evil from our midst without tearing apart communities and tearing to shreds friendships built over 100 years or more.

It is imperative that we find a way of destroying this evil cult which is trying to contaminate the Islamic faith and drive a wedge of destruction between East and West; between Muslim and Christian and Jew.

How do we meet this challenge?

First, we must face the fact that these terrorists receive financial and physical support, otherwise they could not survive.

We must cut off this network of support. One country cannot do this alone. This is an international organization that has spread its evil tentacles across our precious world. And so the communities of the world must stand shoulder to shoulder in the fight against these terrorist organizations, against those who support them and against those who condone their actions.

We in Saudi Arabia are committed to this fight. As the Custodian of the Two Holy Mosques King Abdullah has declared, we will show no mercy to those who kill the innocent. We will fight them for as long as it takes to destroy them. We will fight them for 10 or 20 or 30 years. And in the end, God willing, we will rid our nation of this scourge.

In Saudi Arabia we are fighting terrorism on every level.

First, our security forces are actively tracking and chasing down any terrorist groups or individuals found to be operating within the Kingdom.

We have questioned thousands of people. We have detained over 800 suspects. We have killed or captured more than 100 known terrorists, and in the process stifled over 50 terrorist attacks.

And we have paid a steep price. More than 90 of our security forces have lost their lives, and more than 150 have been injured in the line of duty. For the sacrifices they have made to ensure the safety of our citizens and residents, these brave men will forever have our respect and gratitude and appreciation.

Second, we are actively cutting off any possible financial support from within the Kingdom. We have frozen the assets of those suspected of supporting terrorism.

We have introduced stringent new laws to prevent funds from reaching unknown destinations and terrorist groups directly or indirectly. According to one official from the G-8’s Financial Action Task Force, our new regulations “probably go further than any country in the world.”

We have regulated our charities nationally and internationally and are in the process of setting up a National Commission for Charitable Works Abroad to monitor charitable activity outside the Kingdom. We are taking no chances. Until it is up and running, all Saudi charities are prohibited from sending funds abroad.

We believe that the scourge of terrorism and drug dealing are intertwined. Terrorists are using drug dealing to fund their operations, and drug dealers are using terrorism to protect their turf. Take out one, and you diminish the other.

Third, we are seeking to further strengthen international cooperation and coordination against the international threat of terror. Al-Qaeda is more dangerous than previous terrorist organizations because it is not against one society, but against all societies. It is not national but supranational.

To this end, we have established cooperative relationships with many countries, including the United States. In fact, we currently operate two Joint Task Forces with the US to combat terrorism and terror financing. These task forces have been effective in achieving their missions, and have become a model for how nations can work together to defeat terror.

To seek ways to enhance international cooperation, Saudi Arabia last February hosted an international conference in Riyadh that brought together, for the first time, security experts from over 50 nations, including US Homeland Security Advisor Frances Townsend, who remarked: “We stand with the Saudis in [the war on terrorism] and this conference is a testament to their commitment – to their dedication to combating terrorism.”

They came together to discuss the global threat and to seek ways to enhance effective international cooperation against the terrorism.

One of the key recommendations endorsed by delegates at this conference was the Riyadh Declaration to set up an international counterterrorism centre.

Fourth, and finally and most importantly, we are addressing any misunderstanding about the true meaning and faith of Islam. We are doing everything we can to educate people about the true tenets of our faith, a faith of peace and compassion, not of war and terror.

Shaikh Abdulaziz bin Abdullah Al-AsShaikh, the Grand Mufti of Saudi Arabia and Chairman of the Council of Senior Ulema, recently stated: “Muslims should .. inform all people that Islam is a religion of righteousness, betterment and progress.. ..The unjust killing of a human being in Islam is forbidden.”

We have launched an unprecedented public awareness campaign to educate our citizens about the dangers of terrorism and extremism.

We are updating our educational curriculums and removing any material that can be possibly interpreted as advocating intolerance or extremism.

Our senior religious scholars speak out actively against any evil interpretations of Islam, any mixing of politics with religion. Our Ministry of Islamic Affairs is implementing a long-term program to monitor the messages emanating from our mosques and religious schools and to ensure that those messages reflect the true spirit of Islam.

And action has been taken against anyone found to be preaching intolerance. So far, more than 2,000 imams have been dealt with as a result of this new policy.

Ladies and Gentlemen: Islam acknowledges and celebrates the differences between us – it does not condemn them. As revealed in the Quran: “Oh mankind! We created you from a single (pair) of a male and a female, and made you into nations and tribes, that ye may know each other.”

We must strengthen our mutual respect for one another and look for greater understanding as nations and tribes. Our differences should not divide us, but be a source of enrichment in our lives and relationships with one another.

We must address one other important issue, one further challenge. What are the politics, the philosophy behind these terrorist attacks? There is a well-known saying in Arabic: “Your true friend is one who is honest with you, not one who agrees with you.”

So I will be honest with you. I believe there are issues, important political issues that we have to address to reduce the ability of Al-Qaeda to recruit from among the youth in the Muslim world.

Al-Qaeda feeds its global pool of supporters, with a diet of discontent and perceived injustice.

Images of destruction, people without homes, soldiers standing at roadblocks, the broken landscape of countries plagued by discontent are beamed across our world. The explosion in communications technology and the advent of the Internet has brought this despair into our homes, onto our computer and television screens. And these images are used by Al-Qaeda to recruit foot soldiers in its global war on humanity.

Nothing has done more to damage Western and Islamic relations than the uneven handling of affairs between Israel and the Palestinian people. The unguarded confusions and vulnerability of the peoples of Iraq and Afghanistan as they search for stability have proven to be more ugly breeding grounds for terrorism.

Al-Qaeda has used this unsettled and ongoing turmoil to support its mantra of discontent and in the process invoked the name of Islam, the idea of jihad.

Let’s briefly look at each of these issues.

The Arab-Israeli conflict has been an open wound in the Middle East for over five decades. According to figures published last month by the highly respected International Institute of Strategic Studies in London 30,000 people have died as a result of that conflict since 1978. In the past five years, 4,000 people have died. The tens of thousands injured, made homeless and destitute by this conflict is incalculable.

It is this cause above all others that has given lifeblood to this evil cult of hate, that has fed the followers of Al-Qaeda.

It is a cause which can no longer be ignored or set aside. At no time in history has the resolution of this problem been more urgent. And at no time in history has the solution been clearer.

The Arab Summit in Beirut in 2002 adopted the peace initiative put forth by then-Crown Prince, now King Abdullah for resolving the Arab-Israeli dispute.

This initiative is straightforward: In exchange for Israeli withdrawal from the territories occupied in 1967, including Jerusalem, and the establishment of a Palestinian state, all Arab countries would sign peace agreements with Israel and the Arab-Israeli conflict would formally end. Normal relations between Israel and all the Arab countries would follow.

What became known as the “Arab Peace Initiative” was supported by the United States and the vast majority of nations. But Israel has yet to respond to this genuine offer of peace.

Ladies and Gentlemen: The world must now act – with resolution, with urgency, with commitment and with justice. We must do everything to support these two countries as they struggle to find a peaceful and fair resolution of this conflict. The US is the only country that can play a vital and important role in this.

President George Bush’s commitment to a two-state solution and his declared desire to achieve peace between Israel and the Palestinians during this term of his office is extremely important and welcome. But in committing itself to work for peace in this region, America must be even-handed. They must look for a just solution, not only for the sake of the Palestinians and Israelis but for the sake of the world community.

Let us look briefly at Iraq. The confusion, despair and vulnerability of the Iraqi people as they search for stability in their country after decades of oppression and political abuse have provided another breeding ground for the evil philosophy of terror.

Here, suicide bombers have become the insurgents’ weapons of choice.

These terrorists are followers of Abu Musab Al-Zarqawi and Al-Qaeda who claim to be fighting the American forces. But they are killing Iraqis and, more dangerously, fighting the emergence of a secure, stable and united Iraq.

To counter this, we have provided financial and material aid to the Iraqi people, and we are doing what we can to support all efforts to bring about stability between the different factions. Three weeks ago, and at the Kingdom’s initiative, a meeting was convened in Jeddah to seek ways to bring all Iraqi factions together.

The Secretary-General of the Arab League, Mr. Amr Moussa, was tasked at that meeting to travel to Iraq and consult with our Iraqi brethren about convening a meeting of all Iraqi factions in Egypt in order to explore the means for arriving at national reconciliation.

These efforts have been supported by the United Nations and by the Bush administration. And we pray that our Iraqi brothers will be able to reach agreement on a common future in which Iraq’s unity and territorial integrity is preserved, and in which every Iraqi faction is treated justly.

Finally, allow me to turn to Afghanistan, a nation which has suffered greatly during the past 25 years and more. It has been subjected to invasion, civil war and cruel and extreme dictatorship. It has been a boiling pot of discontent and so nurtured the birth of Al-Qaeda and became its first training ground.

There is hope for Afghanistan. Today the first glimmers of positive development can be seen in Afghanistan. We must support the emergence of their national government, new programs to disarm illegal groups and the development of the country. It is a fragile stability. We must support it in every way we can.

Ladies and Gentlemen: There are those who believe that the war against Al-Qaeda is a war between East and West; between Christianity and Islam. Some see it as a “clash of civilizations.” We are not engaged in a clash of civilizations; we are engaged in a war “for civilization.” It is a war that pits all peace-loving people, regardless of their culture or faith, against the forces of darkness.

Differences are real and need to be acknowledged, but the bonds of common humanity, of common values, of being citizens together of one world are stronger.

The challenge is to speak up, to speak out and drown the voices of extremism and intolerance, regardless from where they emanate. And we must build bridges of understanding between our cultures and faiths.

We cannot meet this challenge alone. We need to act together as one strong world community, one force for good.

Let us all remember that we are but guests passing through and staying a while in this small and precious world in which we live.

We have an obligation to our children and grandchildren, like our ancestors before us, to leave our world in a better state than we found it.

Thank you, and God’s peace and blessings are upon you.

Source: SaudiEmbassy.net
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Eid al-Fitr – “celebration of the breaking of the fast” – marks the end of the month of Ramadan in the Muslim world, the month of fasting and reflection, one of the five pillars of Islam. The Eid holiday is generally marked by celebration, family gatherings and gift giving.

Today, we are pleased to share a compilation of news stories on celebrations of the Eid in Saudi Arabia and in the United States.

We wish you a blessed celebration — Eid Mubarak.

Eid Marked With Fervor
P.K. Abdul Ghafour, M. Ghazanfar Ali Khan & K.S. Ramkumar, Arab News

JEDDAH/RIYADH, 4 November 2005 — Muslims across the Kingdom celebrated Eid Al-Fitr yesterday with a variety of cultural and recreational programs while imams leading Eid prayers emphasized the need for strengthening Muslim unity.

Custodian of the Two Holy Mosques King Abdullah, Crown Prince Sultan and senior officials took part in Eid prayers held at the Grand Mosque in Makkah along with nearly two million faithful who included foreign pilgrims.

The large mosque complex and its vast courtyards overflowed with worshippers and thousands joined the prayer standing in nearby streets and pathways. Authorities deployed a large number of security personnel to control the crowd.

In his Eid sermon, Dr. Saleh Bin-Humaid, chairman of the Shoura Council and one of the mosque’s imams, called upon Muslims to stand united in the face of growing challenges.

“Muslims are divided at a time when they must unify their ranks to confront major challenges and threats,” the Saudi Press Agency quoted him as saying.

“Reform and change will come only from within, most importantly from the mind,” Dr. Bin-Humaid said.

He emphasized the importance of constructive dialogue and objective criticism, saying they are some of the noble human values. “World civilizations were the result of positive interactions of individuals and societies dealing with various issues,” he explained.

Bin-Humaid called upon scholars and thinkers to shun intellectual tyranny, saying dialogues must aim to achieve higher interests of the religion, society and state.

Citizens and expatriates across Saudi Arabia enthusiastically participated in the congregational prayers. Hundreds of thousands of people took part in Eid prayers offered at open grounds and mosques in many parts of the Kingdom.

Riyadh Deputy Governor Prince Sattam, who received and exchanged Eid greetings with a large number of princes, ministers, scholars and high-ranking government officials in the capital, offered prayers at the Dira Eid Ground.

In his address to some 30,000 worshippers, Grand Mufti Sheikh Abdul Aziz Al-Asheikh invoked the blessings of Allah on those who had observed the fast during the holy month of Ramadan and hoped that they would carry forward the spirit of fasting, which they had imbibed during the period.

The mufti reminded the faithful not to forget the plight of their unfortunate brethren amid the festivities.

Expatriates from Pakistan and India offered special prayers for the victims of the Oct. 8 earthquake that brought about widespread destruction of life and property. “After the Eid prayers, we offered prayers especially for the quake victims,” said Shaharyar Abdul Raza, a Pakistani construction supervisor in Jeddah. In the wake of the earthquake, members of the expatriate community offered regular prayers and collected donations in cash and kind for the victims under the guidance of the Pakistani diplomatic missions in Riyadh and Jeddah.

“I felt very happy, while receiving guests, embracing them and exchanging greetings. We also gave charity before prayers,” said Abdul Hafeez Khan Jamil, an expatriate who works at ICICI Bank, at a Telemony center of the Arab National Bank.

Major roads and streets in Riyadh, Jeddah and Dammam presented a near-deserted look toward the afternoon, unlike during the month of Ramadan when shopping malls were filled with shoppers.

Hotels in Makkah and Madinah were full with pilgrims. Most of the five-star and fourstar hotels said they had a good Ramadan month with guests coming from overseas and elsewhere in the Kingdom. Families visiting the major cities spent the time at amusement parks for the sake of children. Parks and picnic spots also attracted families wishing to spend quiet evenings during the Eid holidays.

In Jeddah, families headed toward the Corniche, some of them spending the whole night in tents. Some of the Corniche roads were jammed with traffic. Similar was the case with the roads leading to the Half Moon Bay in the Eastern Province.

The Riyadh Zoo remains open for visitors.

All hospitals across the Kingdom are open to enable visitors to meet with their friends and relatives and exchange Eid greetings.

While some expatriates had gone home on vacation, those who stayed behind spent the time in between prayers exchanging family visits or watching television.

Source: Arab News

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[Reprinted from Washington File - usinfo.state.gov]

U.S. Exports to Arab Countries Projected To Continue Surge in 2006
National U.S.-Arab Chamber of Commerce Chief Hamod examines the trend

By Phillip Kurata
Washington File Staff Writer

Washington — The National U.S.-Arab Chamber of Commerce (NUSACC) is projecting a continuing surge of U.S. exports to Arab countries in 2006, with opportunities “across the board” for doing business in the region, according NUSACC President David Hamod.

U.S.-Arab Tradeline, a publication of the chamber, predicts that U.S. merchandise exports to Arab countries will reach $37.9 billion in 2006, an increase of 40 percent compared to the expected figure for 2005.

In its September/October edition, Tradeline projected that U.S. merchandise exports to the Arab world in 2005 will reach $26.7 billion, a 38 percent increase over the 2004 level.

“The opportunities are really across the board and bode very well for U.S. companies wanting to do business in the region,” Hamod recently told the Washington File.

The Tradeline forecast dealt with 21 Arab countries and the Palestinian Territories, from Mauritania and Morocco in northwestern Africa eastward to Iraq and the countries bordering the western shore of the Gulf, as well as Sudan, Somalia and Djibouti.

Hamod said that some of the obvious areas of opportunity are in financial services, construction/engineering, information and communication technology and consumer products.

“In many ways, trade is the star of the show,” he said. “Politics is taking a back seat to trade and investment because business is playing a more direct role in creating jobs and putting bread on the table.”

Tradeline attributed the surge in U.S. exports to the Arab countries to three main factors:

• Higher oil prices that are boosting the import purchasing power of Arab countries;

• Increased investment by the Arab private sector, especially after September 11, 2001, when Arab businessmen began staying “closer to home,” and;

• An expanding consumer market as a result of globalization.

“This has been especially true for construction and engineering projects, like those involving petrochemicals, but there have also been major investments in leisure and residential development projects,” Tradeline wrote. Those large-scale projects “focus on infrastructure, and contain a substantial amount of U.S. goods and services,” Tradeline added.

“Arab consumers are more aware than ever about the appeal and availability of U.S. products, and they are flush with disposable income,” Tradeline said.

FREE-TRADE AGREEMENTS

Hamod said that the Bush administration’s policy of seeking free-trade agreements (FTAs) with Arab countries as part of its goal to create a free trade area in the Middle East by 2013 has “tremendous potential.”

The United States has completed FTAs with Israel, Jordan and Morocco, has finished FTA negotiations with Bahrain and Oman, and currently is negotiating an agreement with the United Arab Emirates. The United States and Egypt are weighing a decision to open FTA negotiations.

Tradeline projects that Egypt will be the third-largest market among Arab countries for U.S. exports in 2006, absorbing more than $5 billion worth of goods. Saudi Arabia, the largest U.S. market among Arab countries, is expected to buy $10.7 billion worth of goods in 2006, followed by the United Arab Emirates, which is predicted to import $10.2 billion in U.S. goods.

Hamod said that Egypt is a different type of market from Saudi Arabia or the Emirates because the Egyptian government places a high priority on foodstuffs and meeting the basic needs of its 70 million people.

The current Egyptian government “is working together to promote economic reform better than any team we’ve seen in the past,” Hamod said, adding that it is “systematically bringing about these economic reforms and doing away with decades old subsidies.”

He said that in light of the “bread riots” that occurred in Egypt in 1977, “Egypt can only move so far so fast, but the Egyptian people seem to be supportive of what’s going on.”

An FTA links the economies of the United States and its signatory partners, removing virtually all barriers to trade and investment in both directions. FTAs include protections of foreign investment, the environment, intellectual property and workers’ rights and open government procurement procedures.

Hamod says that Arab governments seek FTAs when they consider it in their best interest to do so.

“These are major decisions being made by the Arab countries in terms of positioning their economies for the 21st century,” Hamod said. “The governments can sign all the agreements they want, but unless they get the support they need from the private sector, the agreements won’t be worth the paper they are written on. The governments are opening the door to the private sector. Now it’s up to the private sector to walk through and decide how they can leverage these FTAs and create trade and investment.”

In 2000, Jordan became the first Arab country to conclude an FTA with the United States, leading to surges in exports, foreign investment and job creation. From 2000 to 2004, Jordanian exports to the United States grew from $63 million to $1.1 billion.

Hamod says it may be unrealistic to expect other Arab countries will experience comparable growth after signing FTAs.

“Countries’ expectations of what happens after the FTA gets signed need to stay reasonable. I don’t think we’re going to see a huge surge in either direction right off the bat. It takes time,” he said.

TRADE FAVORS DEMOCRACY, STABILITY

Hamod said that beneficial consequences of increased trade are greater rule of law, transparency and economic reform as people “become a more active part of the international trading system.”

“Trade has the potential to support the effort to spread democracy, but it’s not a given,” he said. “From the perspective of our chamber, we’re focused on the FTAs for the economic benefits that they’ll bring to people — Americans and Arabs. If democracy promotion is one of the side effects, so much the better.”

Source: Washington File

For additional information on U.S. trade in the region, see U.S.-Middle East Free Trade Area.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

About National US-Arab Chamber of Commerce

U.S. Trade Rep – Middle East/North Africa

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Georgia Exports to Saudi Arabia: Coke, Innovation and Islam – By Grant F. Smith – SAF Essay – Nov. 9, 2004

Virginia Exports: Diversifying for New Saudi Demand – By Grant F. Smith – SAF Essay – Sep. 29, 2004

The Dynamics of Economic and Commercial Reform: Near-Term Prognoses – Usamah Al-Kurdi – SUSRIS IOI – Sep. 27, 2004

Arab World Economies: Prosperity Amidst Political Uncertainty – Brad Bourland – SUSRIS IOI – Sep. 23, 2004

The Impact of U.S. Visa Policies: Implications for America’s Economy – An Initial Inquiry – By National U.S.-Arab Chamber of Commerce – SUSRIS IOI – Sep. 12, 2004

Saudis Fight Militancy With Jobs – Private Posts Formerly Held by Foreigners Are Offered to Locals – By Scott Wilson – SUSRIS IOI – Sep. 1, 2004

Drill Bits and Data Bytes: The Texas-Saudi Export Relationship – By Grant F. Smith – SAF Essay – Jul. 21, 2004

Restoring Saudi Visitor Flow: The American Stake – By Tanya Hsu and Hassan Elkhalil, Esq., Forecasts and quantitative analysis provided by Grant F. Smith – SAF Essay – May 13, 2004

Saudi Women and the Jeddah Economic Forum – By Maggie Mitchell Salem and Reem Al Jarbou – SUSRIS IOI – Feb. 12, 2004

“A Saudi Vision For Growth” – Women Make Their Mark at Jeddah Economic Forum – Lubna Olayan’s Keynote Address – SUSRIS IOI – Feb. 12, 2004

Special Energy Supplement: The New Geopolitics of Oil – By Joe Barnes, Amy Jaffe & Edward L. Morse – SUSRIS IOI – Jan. 6, 2004

U.S.-Arab Economic Forum – One World. Two Cultures. Endless Possibilities – SUSRIS IOI – Sep. 30, 2003

At Your Service: Future U.S. Service Exports to Saudi Arabia – By Grant F. Smith – SAF IOI – Aug. 20, 2003

Getting Back on Track: Saudi Study in the United States – By Grant F. Smith – SAF Essay – Jul 16, 2003

Political and Economic Transition on the Arabian Peninsula: Perils and Prospects – By James A. Russell – GulfWire Perspectives – May 15, 2003

Shaybah Cafe: Saudi Aramco Gathers Business Leaders to Ponder Future – By Stephen L. Brundage and Rick Snedeker – SUSRIS IOI – Sep. 13, 2004

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Saudi Arabia: Driving Michigan Export Growth – By Grant F. Smith – SAF Essay – Aug. 30, 2004

Economic Reform in Saudi Arabia – Summary of Remarks by Usamah Al-Kurdi – SUSRIS IOI – Jun. 4, 2004

Examining the Relationship – Saudi Foreign Minister Prince Saud al-Faisal – SUSRIS IOI – Apr. 28, 2004

The Prospects for Stability in Saudi Arabia in 2004 – By Anthony H. Cordesman
Part II – The Saudi Economy in 2003 and 2004 – SUSRIS IOI – Feb. 25, 2004

Part III – The Issue of Political, Economic, and Social Reform – SUSRIS IOI – Feb. 23, 2004

Al-Ikhbariya Makes Waves – By Raid Qusti – SUSRIS IOI – Jan. 15, 2004

Saudi Arabia is under attack again, with critics going to new lengths to not only portray the Kingdom as hostile to the US, but to smear any groups and individuals who have even remote connections with Saudis.

A new study on what American school children are being taught about Islam and Arab history produced by the Jewish Telegraphic Agency (JTA) demonstrates the dangerous direction taken by this assault. Arguing that “teaching programs funded by Saudi Arabia [are making] their way into elementary and secondary classrooms.” The JTA report attacks any and all materials being proposed to help broaden understanding of Arabs and Islam in the US.

The JTA report cites three ways that then “Saudi-inspired” materials are influencing US educators:

1) “teacher training seminars that provide teachers with graduate .. credits,”

2) “the dissemination of supplemental teaching materials designed and distributed with Saudi support,” and

3) “school textbooks paid by taxpayers, some of them vetted by activists with Saudi ties, who advise and influence major textbook companies.”

As evidence to buttress their claim the JTA report singles out respected university-run programs at Harvard, Georgetown, and Columbia and also groups of educators and diplomats who have committed decades of their lives to correcting past errors and omissions in US educational programs. Using smear tactics, reminiscent of McCarthyism, they are accused of Saudi links.

Specifically targeted, for example, is the group of Arab American educators who produced the Arab World Studies Notebook (AWSN), an extraordinary and comprehensive effort designed to provide teachers with supplementary materials to enhance their teaching of Islam and Arab history, and the Washington-based Middle East Policy Council (MEPC), the group which has, for over a decade, helped to distribute the AWSN.

Because the group of educators who produced the AWSN received a grant from ARAMCO and because MEPC is chaired by the former US Ambassador to Saudi Arabia, Charles Freeman, and has received grants from Saudi businessmen, the JTA dismisses both and suggests that they are tarnished and suspect.

Quoting criticisms of the AWSN by the American Jewish Committee, the JTA study virtually endorses efforts to have the materials banned and even endorses Congressional legislation to interfere in educational programs.

Equally dangerous as this effort is the most recent campaign of former CIA Director James Woolsey. In a bizarre speech before a Prague conference I attended, Woolsey observed that the US is “at war today with three major ideological movements” which he identifies as: Ba’athism, Shi’ite theocratic totalitarianism, and Sunni theocratic totalitarianism (of two types: “Jihadist and Salafists such as al-Qaeda and loyalist Salafists, such as the Wahhabis.)

Woolsey was to have enlarged on this near hysterical rant in testimony he was to have given last week before a Senate hearing on “Saudi Arabia: Friend or Foe in the War on Terror.” (That hearing before the Senate Judiciary Committee was cancelled. The list of witnesses invited to testify was shamefully biased. Included was: a former Israeli intelligence official, two individuals with long records of antipathy to Saudi Arabia and Islam and a Muslim American who fashions himself as leading “the only Muslim group opposed to terrorism.” While the hearing may be rescheduled, there is no confirmation of a new date.) [Ed. Note: The hearing has been rescheduled for November 8, 2005.]

In his testimony, made public in advance of the hearing, Woolsey describes Wahhabism as a totalitarian movement which he compares to Nazism and Communism. Shameful, yes, but also dangerous, because motivated by this extremist rhetoric Woolsey concludes with the proposal that the US government take measures to deal with domestic affiliates of the Wahhabi threat (by which he appears to mean some mosques and Muslim groups) the way it dealt with the Communist threat, i.e. “make their lives miserable” by making “Wahhabi affiliated” groups “register” (presumably as “foreign agents”) and infiltrating them with “large numbers of FBI agents.”

The Woolsey proposals and the JTA report are not US policy. Both efforts will be vigorously opposed by civil libertarians and educators who understand the dangers inherent in using such tactics to limit freedoms and stifle an open educational system. At the same time, however, it is important to recognize the threat they pose and the extent to which, at least among some extreme currents, anti-Saudi propaganda has become a tool to smear critics and target efforts to build ties between Saudis and Americans.

["Saudi Arabia Under Attack" was published in Washington Watch on October 31, 2005. It is reprinted here with permission.]

About Dr. Zogby and AAI
Dr. James J. Zogby is founder and president of the Arab American Institute (AAI), a Washington, D.C.-based organization which serves as the political and policy research arm of the Arab American community.

Bio:

“Washington Watch” is a weekly policy column by Arab American Institute President Dr. James Zogby. It appears in over one dozen countries worldwide.

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For comments or information, contact James Zogby

About AAI

Also by Dr. Zogby
Saudis Reject Bin Laden and Terrorism By Dr. James J. Zogby – SUSRIS IOI – Aug. 13, 2003

Threats to U.S.-Saudi Ties By Dr. James J. Zogby – SAF IOI – Jun. 15, 2004

Editor’s Note
No discussion of the Saudi-US partnership can be considered complete without an understanding of the energy security dimension — a component that undergirds relations between the countries. Recognizing the importance of the energy issue SUSRIS frequently provides timely articles and reports on developments in the field. Such is the case today as we share with you the recent testimony of Robert E. Ebel, Chairman of the Energy Program at the Center for Strategic and International Studies (CSIS) in Washington. He provided the context for understanding how US energy needs fit into the global scheme in general and the Middle East in particular.

His cogent appraisal of Saudi Arabia’s role in US energy security, indeed the global needs for energy, may be helpful to those who have come to be misinformed in the gasoline shortage “blame game” that periodically flares in some media circles:

Saudi Arabia currently supplies about 8% of total US demand, although by any measure it remains the most prolific, reliable and secure source of oil for global consumers. With the exception of the targeted oil embargo of 1973, Saudi Arabia has been one of the very few highly reliable producer/exporters of the past 30 years. Its performance in providing the world with incremental supply in time of need (eg, in the lead up to the 1991 Gulf War, during the 2002 Venezuelan strike, more recently in advance of the 2003 Gulf conflict and as prices spiked in the past two years) is unsurpassed.

Mr. Ebel testified on October 20, 2005 before the Subcommittee on Near Eastern and Asian Affairs of the US Senate Committee on Foreign Relations. A report on his testimony was published October 31, 2005 in the Middle East Economic Survey and is reprinted here with permission.

Patrick W. Ryan

US Foreign Policy, Petroleum And The Middle East
By Robert E. Ebel

Mr. Chairman, members of the subcommittee, I appreciate the opportunity to appear before you today to discuss an extremely timely, somewhat complex and often misunderstood topic dealing with “US Foreign Policy, Petroleum and the Middle East.” In your invitation to testify, Mr. Chairman, you identified three principal areas of interest:
How has US foreign policy been shaped by our need for affordable oil?
What effect would greater energy efficiency and alternative energy sources have on US foreign policy?, and
The interaction between the Departments of State and Energy with respect to the handling of such issues.
As the State and Energy Departments are most ably represented here today, I will focus my remarks on the first two topics and also provide some general impressions and thoughts that are most relevant to this discussion.

Energy And Foreign Policy
Borrowing a characterization from Secretary Rumsfeld, let me begin a discussion of the energy and foreign policy issue by listing what I feel are some of the “known knowns” with respect to this topic:

First, as recognized by a wide range of officials ranging from President Bush and Alan Greenspan to Prince ‘Abd Allah and President Chavez – energy is a strategic commodity. It is the lifeblood of our economic wellbeing, fuels the troops that protect our homeland, provides essential services in growing our crops, heating and lighting our homes, transporting goods to market, moving local, regional, national and international commerce, making information transfer via the internet possible, and providing us with the quality of life and mobility that we have come to enjoy and expect.

This is not a new phenomenon. But for the past 25 years or so, global surplus conditions (relative to demand) – in the case of spare oil producing capacity, global refining capacity, and in this country, natural gas production and power generation – have produced complacency and masked the critical role which energy plays in our everyday lives. It is only now when we are faced with conditions that threaten its reliability, security and affordability that we begin to more fully appreciate its importance.

As a consequence, energy policy formulation in this and other countries over the last quarter century has been, at best, a tepid attempt at balancing conflicting or competing economic, environmental, and foreign policy objectives – along with local political concerns – rather than a serious attempt to secure sustainable supplies on a forward looking basis. That era may now be over.

Secondly, globally speaking, the largest hydrocarbon reserve holders, at least in terms of conventional fuels sources – and this is true for both oil and natural gas – are found in the Middle East, and also in Russia. This fact has several important implications:

1. Until we achieve the technological breakthrough that might make energy independence more than a political wish, we would do well to adopt policies and strategies that encourage interdependency and improve stability in various parts of the world; and

2. As we move to increase our dependence on LNG supplies from abroad as a means to satisfy our seemingly insatiable energy demand, consider the risks inherent in making our electric grid as import dependent as our transportation system.

For the past several decades, US energy security policy, has been based on four pillars – encouraging the development of a wide variety of energy supplies at home and abroad; (periodically) promoting improved efficiency, conservation and the development of alternative energy sources; establishing the strategic petroleum reserve and the international sharing arrangement provided by the IEA (International Energy Agency); and relying on Saudi Arabia to act responsibly as the swing producer to moderate price and supply volatility. In addition, we have, at times, been moved to call on America’s military to defend facilities, protect transit routes and secure inhospitable areas.

In combination, these policy tools have worked reasonably well over the course of the past several decades. However, as the surplus conditions I referred to earlier have eroded and global demand has accelerated, energy markets and infrastructure have been greatly strained. The recent hurricanes in the Gulf have made that situation even more precarious.

Political Instability In Context

Much has been written about US import reliance and how “undue” reliance on foreign oil imports from “unstable” parts of the world has undermined US security. In point of fact, while it is frequently overlooked, Canada is the number one supplier of oil (crude and refined products) to America. And three of our top four suppliers (Canada, Mexico and Venezuela) are in the western hemisphere – and comprise over 48% of total US petroleum imports.

Saudi Arabia currently supplies about 8% of total US demand, although by any measure it remains the most prolific, reliable and secure source of oil for global consumers. With the exception of the targeted oil embargo of 1973, Saudi Arabia has been one of the very few highly reliable producer/exporters of the past 30 years. Its performance in providing the world with incremental supply in time of need (eg, in the lead up to the 1991 Gulf War, during the 2002 Venezuelan strike, more recently in advance of the 2003 Gulf conflict and as prices spiked in the past two years) is unsurpassed.

While I recognize the focus of this hearing with respect to foreign policy choices in the Middle East, I would be remiss if I did not point out that the energy calculus is also in play with respect to security, foreign and economic policy choices made in other parts of the world and with global players as diverse as Canada, Mexico, Venezuela, Russia, China, Iran, Iraq, Nigeria, Sudan, and the Caspian.

One final note on this topic before moving on – and that relates to our definition of instability and conditions that affect continuous supplies. For all the hoopla surrounding the various centers of political unrest last year – and there were many – from concern about supply continuity in Russia in the wake of Yukos, the referendum in Venezuela, repeated sabotage in Iraq, strikes in Norway and Nigeria, the threat of unrest in Saudi Arabia – the single largest loss of global energy output in 2004 was the result of hurricane Ivan in the US Gulf of Mexico. And I suspect that, barring any calamitous disaster occurring over the next quarter, the largest loss of production for 2005 will again be the result of hurricanes in the Gulf of Mexico.

Wealth Transfers From Oil Price Increases

The IEA and EIA (US Energy Information Agency) have both projected huge increases in oil export revenues for all of the major producing/exporting nations. As collectively significant reserve holders, producers and exporters, this is particularly true for OPEC members and the GCC nations of the Middle East. Although it should be noted that Venezuela, Nigeria, Norway, Canada and Russia have also benefited greatly from higher energy export prices. EIA estimates that the GCC countries as a group will realize in excess of $300bn this year in oil export revenues. Over the course of that past 10 years, export revenues for all OPEC members have at least doubled, and in the case of Qatar, have tripled.

While I cannot comment on how this revenue is used by the host governments, I would only offer that given the enormous population, demographic, and social challenges faced by many of those countries in the coming years, one might well ask if this increased wealth can be more of a stabilizing or destabilizing factor. In short, would their plight and situations be improved if they were poorer?

Opportunities For Improved Efficiency And Use Of Alternative Energy Forms

I have saved this last point until the end, because it represents the one area on which I would hope that this panel would have the most consensus. The question posed by the committee was whether and to what effect would improvements in energy efficiency and the development and use of alternative energy forms have on US foreign policy.

As the energy market is global in scope, with producers and consumers engaging inter-regional trade, increases by one nation, even the US as the largest energy consumer, might not be enough to tilt the scale anytime soon. In fact, to the extent, the US opted for a more costly energy form, freeing up lesser expensive conventional supplies to competitor nations, we could well find ourselves at a competitive disadvantage from an industrial point of view.

Alternatively, however, the prospect of increasingly ramping up global production to meet ever increasing demand and pitting strategic consumers against one another, competing for available and secure supplies is equally unappealing.

While not a supporter of the current hype associated with the increasingly pervasive “peak oil” theory, I recognize that as a world we are consuming conventional energy resources at a rate far in excess of replenishment. Therefore, we should welcome the addition of supplemental sources of supply, encourage the adoption of conservation and efficiency initiatives and promote the deployment of promising technologies for a wide variety of economic, environmental, health, trade, and security reasons.

The Stone Age did not end because we ran out of rocks. The oil age will likely be with us for decades to come. But we owe it to ourselves, our children and our children’s children to do better.
Source: MEES

Reprinted with permission.

Related Material
The Outlook for the World Oil Market by John Browne [more]

Foreign Investment In Saudi Arabia’s Energy Sector By Gawdat Bahgat [more]

Saudi Arabian Oil Fields Brimming – Saudi Aramco’s Dimensions [more]

Saudi Arabia Ready to Boost Crude Oil Output – SUSRIS NID [more]

Homemade Oil Crisis – By David Ignatius [more]

Novak: Bandar, Bush and Plan of Attack – By Robert Novak [more]

Saudi Arabia’s Oil Reserves – By Dr. Sadad Al-Husseini [more]

Saudis Out to Help the U.S., Not Push for Bush Re-election – By Frank Richter [more]

U.S.-Saudi Relations and Global Energy Security:

– James Wolfensohn – President, The World Bank, with introduction by Eric Peterson [more]

– Ibrahim Al-Assaf – Minister of Finance, Kingdom of Saudi Arabia, with introduction by Eric Peterson [more]

– Rex W. Tillerson – President, Exxon Mobil Corporation, with introduction by Dan Yergin [more]

– Abdallah S. Jum’ah – President and CEO of Saudi Aramco, with introduction by Dan Yergin [More]

– Guy Caruso – Administrator, Energy Information Administration, with introduction by Dan Yergin [More]

– Kyle McSlarrow – Deputy Secretary of Energy, U.S. Energy Department, with introduction by Brent Scowcroft [More]

– Ali al-Naimi – Minister of Petroleum and Mineral Resources, Kingdom of Saudi Arabia, with introduction by Brent Scowcroft [More]

International Energy Outlook 2004 Highlights [more]

Future of Global Oil Supply: Saudi Arabia – A Conference Hosted at the Center for Strategic and International Studies on Feb. 24, 2004 [more]

Saudi Arabia – Country Analysis Brief – Energy Information Administration – US Dept of Energy [more]

Editor’s Note
On October 28, 2005 World Trade Organization Director-General Pascal Lamy announced the conclusion of “Working Party” negotiations for Saudi Arabia’s accession to the global trading organization. Closing the Working Party phase, a process that began in July 1993, was the last significant hurdle on the path to WTO membership for the Kingdom. The final step, said to be merely a formality, is referral of the accession request to the WTO General Council, expected to occur on November 11, 2005.

Today Arab News, the largest English daily in the Kingdom, in an editorial, discussed the implications of WTO membership and globalization on businesses in Saudi Arabia. We are pleased to share it with you.

Patrick W. Ryan

Editorial: WTO Membership
Arab News

http://www.ArabNews.com

30 October 2005
That the Kingdom is on the threshold of full membership in the World Trade Organization demands a look at what it would mean for country and our economy. The conclusion Friday of 12 years of long and complex negotiations will lead to formal acceptance of the Kingdom’s membership application by the WTO General Council when it meets on Nov. 11.

It has been a long haul in which the negotiators have concerned themselves with both the minutiae of trade such as quails eggs and major issues such as capital markets liberalization. Although it has taken a long time, all those involved, both in the WTO and the Kingdom, deserve warm congratulations for sticking doggedly and successfully to their task. Even while the process was taking place, the notion of globalization in world trade became central. Though the rising industrial nations such as China and India are building their own new technology and expertise, they are largely producing on behalf of companies from other countries — generally, though not exclusively in Europe and North America.

Globalization effectively means that it is no longer countries which are trading with each other but the world that is trading with itself. For the Kingdom, WTO membership was essential if it wished to become part of this new globalized economy. Among the 148 existing WTO members, there were those long convinced that the absence of the world’s largest oil exporter was an absurdity and that its voice should be heard.

However, for the Kingdom itself, membership poses considerable challenges, both commercial and psychological. Saudi business is going to have to learn two hard lessons virtually simultaneously. First it must figure out how to survive without captive markets. At the very same time, it has to find out how to face competition from international companies which themselves long ago learned how to survive in highly competitive markets. During the transitional period of WTO membership, some Saudi companies will have no difficulty in transforming themselves into world-class businesses, if they are not so already. Others will take foreign partners. Still others will merge to strengthen their capital and operational bases. There will however be many who will simply not manage the transformation. Part of their problem may be that they will not persuade middle management and other employees to review the way they work, tighten their discipline and look always to the best way to increase efficiency and profitability. With an increasing flow of graduates coming into the job market, existing workers will also begin to realize that if they fail to deliver, there will be others eager to take their places.

It is understandable that a few Saudis still regret the need to embrace the changes inherent in WTO membership and point to the considerable achievements the Kingdom has made by itself in the last 30 years. They ignore the fact that the world moves on. Indeed, it is because of the astonishing achievements of the last three decades that we are now ready to take our place in the WTO and face up to the challenges that membership will bring.

Source: Arab News

Reprinted with permission.

Related Material
World Trade Organization Accession: Saudi Arabia Gets “Green Light” – SUSRIS NID – October 28, 2005

The WTO Home Page

Editor’s Note
In August 2002 the GulfWire e-newsletter service distributed an article called, “Don’t Make Saudi Friend Into Arab Foe,” by David Silverberg, managing editor of “The Hill.” The introduction to the article mentioned the “official Washington” flap of the week:

One wonders if RAND Corporation analyst Laurent Murawiec could have imagined his July 10, 2002 briefing “Taking Saudi Out of Arabia” to the Defense Policy Board (DPB) would have launched him into his “15 minutes of fame” inside the Beltway less than a month later. That’s exactly what happened when an August 6, 2002 Washington Post article by Thomas Ricks, titled “Briefing Depicted Saudis as Enemies,” outlining the think-tank presentation, reinvigorated the post-”9/11″ wave of Saudi-bashing.

Two days earlier Jack Shafer writing in Slate on-line provided more details on Murawiec’s briefing, including the PowerPoint slides:

..Murawiec’s PowerPoint scenario.. makes him sound like an aspiring Dr. Strangelove.. ..The first half of Murawiec’s presentation reads calmly enough.. ..about why the Arab world hates the United States.. ..But then Murawiec lights out for the extreme foreign policy territory, recommending that we threaten Medina and Mecca, home to Islam’s most holy places, if they don’t see it our way. Ultimately, he champions a takeover of Saudi Arabia..

Well, he’s back for another 15 minutes. This time it’s a book called, “The Saudi Assault on the West.”

And then for something completely different there is Riz Khan’s portrait of Alwaleed bin Talal, the Saudi Arabian prince ranked #4 on Forbes list of the wealthiest individuals in the world in 2004. AlWaleed, according to Forbes, is a “jet-setting prince [who has transformed] himself into a businessman-cum-political-activist.”

With that as background, we present for your consideration a review of both books by Doctor F. Gregory Gause, III, associate professor of political science at the University of Vermont. This review appeared in the Washington Post on-line on October 16, 2005 and is reprinted here with permission.

Patrick W. Ryan

The Saudi Assault on the West
By Laurent Murawiec

AlWaleed: Businessman, Billionaire, Prince
By Riz Khan

Desert Conundrum
Two vastly different takes on the puzzle that is Saudi Arabia

Reviewed by F. Gregory Gause III

Are these two books about the same country? The first depicts Saudi Arabia as a violent, benighted place whose ruling family is pursuing a decades-long plan to subvert American power. The second is the authorized biography of the richest man in Saudi Arabia, a member of the ruling family, who is portrayed as the consummate mix of “East” and “West” — a man who can bridge cultures and repair the torn U.S.-Saudi relationship. Unfortunately, neither is a reliable source about politics and life in Saudi Arabia today, nor does either book shed much light on the fascinating, difficult issues involved in relations between Riyadh and Washington.

Laurent Murawiec had his 15 minutes of fame in August 2002, when his briefing on Saudi Arabia before the Pentagon’s Defense Policy Board (a group of outside experts and former officials) was leaked to this newspaper. Murawiec portrayed Saudi Arabia as the “kernel of evil” in the Muslim world, the source of the jihadist movements metastasizing there and thus directly responsible for the Sept. 11 attacks. His recommendation: To defeat terrorism, take the “Saudi” out of Arabia. This book, translated from the French original published in 2003, is an extended elaboration of his PowerPoint slides.

Murawiec raises serious issues here but does not treat them in a serious way. The official Saudi interpretation of Islam, Wahhabism, is a narrow, puritanical and intolerant reading of the faith. Saudi oil money, both governmental and private, has played a central role in spreading the Wahhabi interpretation through the Muslim world. Wahhabism is one element in the toxic ideological and political mix that produced Osama bin Laden and his jihad against the United States. But in his zeal to indict the Saudis for everything that has gone wrong in the Muslim world (and beyond), Murawiec loses all sense of proportion. He twists facts, distorts history and ignores contrary evidence to hammer away at his target.

His account of the relationship between bin Laden and the Saudi royals is a case in point. Bin Laden has openly called for the overthrow of the monarchy since the mid 1990s, and Riyadh stripped him of his citizenship in 1994. Yet Murawiec contends that the two parties were tacitly cooperating all along. He chalks up the switch in bin Laden’s strategy — away from targeting “apostate” Arab governments and toward targeting the United States — to a payoff by Saudi royals to lessen the jihadists’ pressure on them at home. The bin Laden-inspired (if not orchestrated) bombing campaign in Saudi Arabia that was launched in 2003 is simply dust in our eyes, according to Murawiec. Since no members of the ruling family have been killed, the House of Saud’s deal with the devil must still obtain.

No direct evidence is presented to support these charges. Murawiec simply says that it has been “rumored for some time in international intelligence circles” and confirmed to him by “an Arab foreign minister.” Contrary evidence, like the 9/11 Commission’s finding that there were no financial relations between the senior members of the Saudi royal family and bin Laden, is simply ignored.

Murawiec’s account of the long history of close U.S.-Saudi relations is equally slanted. The 1973 oil embargo is dealt with at length as an example of Saudi hostility toward the United States. But the previous and subsequent decades of close cooperation are simply attributed to the Saudi success in buying influence in the circles of American power. (Chapter 11 is entitled “Washington on the Auction Block.”) When the Saudis did cooperate with the United States, as in the 2003 war against Iraq, it was because they “could not have done less,” whatever that means.

The potted history of Saudi Arabia that Murawiec presents is just plain bad. One of the central themes of the book is that the Saudi royals are the latest manifestation of marauding desert tribesmen, ignorant, violent and destructive of settled civilization. Murawiec is wrong on two counts here. First, his 19th-century stereotyping about “Bedouins” is based on the most outdated and discredited sources. Second, the al Saud are not desert tribesmen. They are from the settled population of central Arabia. They have worked tirelessly to strip the tribes of any real autonomy and settle them in order to better control them. If Murawiec had read the academic literature on the country (or even if he had read more carefully some of the sources he cites), he would have known this.

This is not a serious work of history, but Murawiec wants to make a serious policy argument. Unfortunately, his plan for “taking Saudi out of Arabia” is so far-fetched that readers might mistake him for an academic. First, detach the oil-producing Eastern Province of the country as an “autonomous state protected by the international community . . . but not subject to foreign occupation.” Murawiec later acknowledges that “the West” — that is, the United States — will have to occupy the oil fields to accomplish this. Then set up a Middle East oil authority to spread the oil wealth of this new state throughout the region. Who will set up this authority? Presumably, again, “the West.” Finally, establish an “international Muslim college” to administer the holy places in Mecca and Medina. Will “the West” establish this college and present the holy cities to it? Murawiec is unclear. Given how difficult the comparatively modest task of establishing democracy in Iraq has turned out to be, his recommendations border on the ridiculous.

Murawiec’s book is a subtraction from the sum total of our knowledge about Saudi Arabia; Riz Khan’s authorized biography of Prince Alwaleed bin Talal is simply not an addition. Then again, it is not really meant to be. Khan, a former CNN International correspondent, has written a celebrity businessman’s biography, and he’s done a reasonable, if overly long, job of it. The prince — who, according to Forbes magazine, is the fourth-richest man in the world — resides in the private jets, massive yachts and luxury hotels that are the country without borders of the incredibly rich. Khan chronicles his travels, business dealings and philosophical musings. Remarkably, he fails to tell us why Citigroup, of which the prince is a major stockholder, divested itself in 2004 of its major Saudi asset, a share in the Saudi American Bank owned by Alwaleed. While Murawiec accepts all the negative stereotypes about the Arabian Peninsula, Khan gives us some of the positive desert stereotypes — Bedouin true to their traditions, princely generosity distributed in the traditional Arabian manner (in a tent, even!). Neither stereotype helps us understand the problems confronting modern Saudi Arabia.

Alwaleed represents many of the values that Americans would like to see in Saudi Arabia: hard work, openness to new ideas, concern for equitable gender policies, friendship with the United States. His energies, however, seem more concentrated on managing his extensive international portfolio than on politics at home. His recent effort to play politics in Lebanon (his mother is from one of its leading Sunni Muslim families) was a failure. He set himself up as a rival of Prime Minister Rafik Hariri, who, since his assassination in Feb. 2005, has become the symbol of Lebanese nationalism. Alwaleed supported the pro-Syrian president of the country, Emile Lahoud, whose days in office now seem numbered. This foray does not speak well of the prince’s political acumen. It remains to be seen whether he has the desire and skill to play a political role in Saudi Arabia.

The United States has an interest in the stability of Saudi Arabia’s oil production, and thus of its politics. We need it to play both a more limited and a more positive role in the Muslim world. Getting that balance right requires a deeper understanding of how Saudi Arabia works. It is unfortunate that neither of these books provides that. ·

F. Gregory Gause III is an associate professor of political science at the University of Vermont and the author of “Oil Monarchies.”

Related Material
“The PowerPoint That Rocked the Pentagon: The LaRouchie defector who’s advising the defense establishment on Saudi Arabia,” by Jack Shafer, Slate, August 7, 2002
The PowerPoint Brief
“Taking Exception: The U.S. Defense Policy Review Board’s Briefing on Saudi Arabia – Al Jazeerah Interview with Dr. John Duke Anthony,” GulfWire Perspectives, August 6, 2002
“Scapegoating Saudi Arabia for 9/11,” by Ahmad Faruqui, Saudi-American Forum, Dec. 17, 2003
By F. Gregory Gause, III
Developments in the Relationship: A Conversation with Gregory Gause – SUSRIS Interview – March 31, 2005
How to Reform Saudi Arabia Without Handing It to Extremists
By F. Gregory Gause III, SUSRIS IOI, September 22, 2004
How to Reform Saudi Arabia Without Handing It to Extremists – Panel Discussion
Part 1, SUSRIS IOI, September 19, 2004
How to Reform Saudi Arabia Without Handing It to Extremists – Panel Discussion
Part 2, SUSRIS IOI, September 19, 2004
Executive Summary — The Approaching Turning Point: The Future of U.S. Relations with the Gulf States by F. Gregory Gause, III, SAF IOI, May 14, 2003

Editor’s Note
The Kingdom of Saudi Arabia has pursued membership in the world’s leading international organization dealing with the rules for trade between nations since June 1993, about a year and a half before the formation of the World Trade Organization. In 1993 it was the General Agreement on Tariffs and Trade, or GATT, that was responsible for formulating international trade rules until the end of the Uruguay Round and the inauguration of the WTO on January 1, 1995.

Since July 1993 Saudi Arabia’s progress has been governed by a “Working Party” that oversaw every twist and turn of the multilateral and bilateral negotiations required to meet WTO accession requirements. Today that “Working Party” completed its work on negotiations for Saudi Arabian accession — turning on the green light — leaving only approval by the WTO Governing Council to complete the membership process. That step will come on November 11, 2005 and is viewed as being a formality.

This SUSRIS NID provides a wrap-up of reporting on the Working Party’s completion along with information on what the WTO is and how it works, and links to other background material on Saudi Arabia’s 12 year path to join the world’s top trading organization.

WTO Statement
Lamy welcomes conclusion of Saudi Arabia’s WTO negotiations

Director-General Pascal Lamy, on 28 October 2005, welcomed the conclusion of the Working Party negotiations on the accession of Saudi Arabia to the WTO. “This is a very important step in Saudi Arabia’s accession to the WTO. I am glad to see that the tremendous amount of work done by Saudi Arabia has now brought it closer to WTO entry. We look forward to confirmation by the General Council in the days to come,” he said.

Source: WTO.org

News Reporting
WTO Members Approve Saudi Accession
P.K. Abdul Ghafour, Khalil Hanware & Maha Akeel, Arab News

JEDDAH, 29 October 2005 — Major trading nations yesterday approved Saudi Arabia’s accession to the World Trade Organization during a key meeting in Geneva as WTO chief Pascal Lamy called the decision historic.

Commerce and Industry Minister Hashem Yamani, who led the Saudi negotiating team, called it “a victory for the principles and objectives of the multilateral trading system.” Saudi economists applauded the WTO accession as “an important milestone” in the Kingdom’s history.

The WTO working team, including all major trading nations, yesterday approved the final package of Saudi entry terms, which must be endorsed by the ruling General Council on Nov. 11. Approval in the Council is seen as a foregone conclusion, officials said.

[more]

Saudi Arabia gets OK to join WTO (Business Week) [more]

Saudi Arabia gets nod for WTO entry by year-end (Reuters) [more]

Saudis on brink of WTO membership (BBC) [more]

About the WTO — by the WTO
The WTO was born out of negotiations; everything the WTO does is the result of negotiations.

> What is the World Trade Organization?
> Principles of the trading system
> The case for open trade
> The GATT years: from Havana to Marrakesh
> The Uruguay Round

Ten benefits of the WTO

1. The system helps promote peace
2. Disputes are handled constructively
3. Rules make life easier for all
4. Freer trade cuts the costs of living
5. It provides more choice of products and qualities
6. Trade raises incomes
7. Trade stimulates economic growth
8. The basic principles make life more efficient
9. Governments are shielded from lobbying
10. The system encourages good government

The Organization – The WTO is ‘member-driven’, with decisions taken by consensus among all member governments.

> Whose WTO is it anyway?
> Organization chart
> Membership, alliances and bureaucracy
> Secretariat chart
> Special policies
> Members list
> Least-developed countries list

Source: WTO.org
On SUSRIS
WTO Accession: One Step Closer – SUSRIS IOI – Oct. 12, 2005
WTO Accession Info

Editor’s Note

We are pleased to bring to your attention new books dealing with US-Saudi relations and developments in the region. Today we present information about “National Security in Saudi Arabia: Threats, Responses and Challenges,” by Anthony H. Cordesman and Nawaf Obaid.

CSIS Press Release

With continuing instability in Iraq, the threat of a nuclear Iran, and the everpresent reality of further terrorist attacks within its own borders, Saudi Arabia has been forced to make some hard decisions with regard to the structure of its security apparatus, as well as dealing with economic and demographic threats.

What has been accomplished since 9/11, and what are the real prospects and implications for further reform? Cordesman and Obaid describe in detail the current developments in the threats to Saudi Arabia, its options for regional security, the developments in its conventional forces, and its steadily improving internal security capabilities.

They analyze Saudi security spending, arms imports, and the readiness and capabilities of each military service, including the services’ relative war-fighting capability. The authors argue that Saudi security requires further efforts to create effective Saudi forces for both defense and counterterrorism.

At the same time, they suggest that Saudi Arabia has embarked on a process of political, economic, and social reform that reflects a growing understanding by members of the royal family, technocrats, and businessmen that Saudi Arabia must reform and diversify its economy and create vast numbers of new jobs for its growing population.

Further progress is required here as well, and economic reform must be combined with political and social reform if the Kingdom is to remain stable in the face of change.

Anthony H. Cordesman holds the Arleigh A. Burke Chair in Strategy at CSIS and is a national security analyst for ABC News. Nawaf Obaid is a Saudi national security and intelligence consultant based in Riyadh, Saudi Arabia, and an adjunct fellow at CSIS.

Praeger/CSIS 472 pp. September 2005

ISBN 0-275-98811-2 6” x 9” $54.95 (hb)

National Security in Saudi Arabia: Threats, Responses and Challenges
by Anthony Cordesman and Nawaf Obaid

Contents

Introduction:

1. The New Balance of Threats in the Gulf Region
2. Asymmetric Threats and Islamist Extremists
3. External Strategic Pressures
4. The Saudi Security Apparatus
5. Saudi Military Forces
6. The Saudi Paramilitary and Internal Security Apparatus
7. Saudi Energy Security
8. Military Reform
9. Internal Security Reform
10. The Broader Priorities for Security Reform

Notes:

[ Click here for more information and to order ]

[ More about Anthony Cordesman ]

[ More about Nawaf Obaid ]

Editor’s Note

Ambassador Karen Hughes, the Under Secretary of State for Public Diplomacy and Public Affairs, visited Saudi Arabia during her travel to the Middle East in September. The objective of the visits, according to the US State Department, was to hear the views of officials, students, and other leaders and to discuss the mutual challenges faced by the US and the Arab world.

Jonathan Karl, ABC News foreign affairs correspondent, traveled with Ambassador Hughes’ party on the trip and recorded his observations in an article published by The Weekly Standard on October 10, 2005. We are pleased to share it with you.

Patrick W. Ryan

Karen of Arabia:
I, Mom Meets the Imams.

Jonathan Karl

Jeddah, Saudi Arabia

When Karen Hughes’s motorcade pulled up to Dar Al-Hekma women’s college in Jeddah, there was one pressing question for the reporters traveling with her: Would we be allowed inside?

America’s new public diplomacy czar had arrived to hold a town hall meeting with about 500 Saudi women. Unlike the more controlled events with “opinion leaders,” this had the potential for real unpredictability. When had any group of women in Saudi Arabia been invited to question a senior U.S. official?

Unfortunately, half of the reporters traveling with Hughes were men. Bringing us into the auditorium would be a violation of Saudi Arabia’s strict segregation of men and women in public places. At first we were shuttled to a separate room and told we would have to watch the event on closed-circuit television. After just a few minutes, there was a surprise announcement: All the reporters, men included, would be allowed into the auditorium. U.S. Embassy officials couldn’t believe it. One called it “historic.” Men and women together in public. A shocking thought in the Saudi world. Gamal Helal, a longtime Arabic interpreter and adviser to Democratic and Republican presidents, told Hughes it was “a Rosa Parks moment.” Maybe not quite “Rosa Parks,” but Saudi reform advocates say the recently crowned King Abdullah is serious about reform, and this could be an indication they are right.

We walked in to see 500 Saudi women, all covered in abayas, a sea of black except for a handful of white head scarves. The traveling press, however, would be segregated by sex: The women in our group were instructed to sit on the right side of the auditorium, the men on the left. Cameras were not permitted.

Hughes was only two days into her five-day “listening tour” of the Middle East, and she was relentlessly “on message.” Her unshakable discipline in sticking to the script has a mind-numbing effect when you watch her through several events a day.

“I go as an official of the U.S. government, but I’m also a mom, a working mom,” she told reporters on the flight from Washington to Cairo.

To college students in Cairo: “You’ve heard my title, but that’s the fancy stuff. I am really a mom.”

“My most important job is mom,” she said in an interview with NBC News. “I still have to pinch myself a little when I am sitting in a meeting with the king [of Saudi Arabia] and realize that I’m there representing our country.”

At a joint press conference in Turkey: “I am a mom, and I love kids. I love all kids. And I understand that is something I have in common with the Turkish people.”

That’s right, the Turkish people love kids.

Even when she talked about Muslim religious leaders, instead of saying “Imam,” she would say, “I-mom.” All this “I-mom” diplomacy left some people a bit mystified. When it came time for a photo op with the Saudi information minister, the TV cameras picked up this exchange:

Saudi information minister: “Tell me what you are seeking to hear–”

Hughes (interjecting): “I’m really here to listen.”

Saudi minister: “I’m not sure what it is.”

The event at the women’s college in Saudi Arabia started like all the others. “My most important title is that of mom,” Hughes told the women, many watching from behind their veils. But things were about to get interesting.

“I know here in Saudi Arabia, you had municipal elections earlier this year,” she said. The elections were the first in Saudi history, but women were not allowed to vote.

“We certainly hope and encourage–again we don’t want to impose–that women will be allowed not only to vote but to perhaps run for office, and we look forward to the day when women will be able to fully participate in Saudi society.”

When it came time for questions from the women, two things became clear: (1) These students didn’t find Karen Hughes’s status as a mom particularly relevant; and (2) they resented being portrayed as victims.

Student after student stepped to the microphones in the hall. Peering out from behind their abayas, they denounced the portrayal in the American news media of Saudi women as powerless and abused.

“We are not oppressed. We are not prisoners in our own homes,” said one student. “We are all pretty happy.” She demanded to know why Americans have such a negative view of the way Saudi women are treated.

With this Hughes saw an opening and, for the first time on her trip, went into completely uncharted territory.

One reason Americans feel that way about the treatment of Saudi women, Hughes said, is the ban on women driving. And here she went significantly further than her boss, Secretary of State Condoleezza Rice. During her own recent trip to Saudi Arabia, Rice specifically declined to criticize the ban on women driving. In contrast, Hughes took on the Saudi ban on women driving and did so in a nuanced, even artful, way.

“I believe women should be full and equal participants in society,” she said. “And I feel as an American woman that my ability to drive is an important part of my freedom. It has allowed me to work during my career, it has allowed me to go to the grocery store and shop for my family, it allows me to go to the doctor. It gives me a measure, an important measure, of independence,” Hughes said.

“Now I understand that your culture and traditions here in Saudi Arabia are very different,” she continued. “So I don’t think we should try to impose from outside an outcome for you all. But I do think we can encourage greater participation, encourage opportunities like this for women in Saudi Arabia to speak up and speak your minds.”

Her point was simple: Saudi women should have a say in whether or not they are allowed to drive or vote.

Hughes later told reporters that as she was leaving the auditorium, “more than five women came up to me and said, I’m so glad you said that. They whispered it very quietly.” Another U.S. official at the meeting said one of the teachers told her she planned to discreetly start teaching students to drive next year.

After the meeting was over, I waded into the crowd and started talking to the women, who weren’t even supposed to be in the same room as me. Dismayed school officials watched as other reporters, men and women, started doing the same thing.

The women were eager to talk, almost all of them insisting that Americans are all wrong about Saudi Arabia and the role of Saudi women. Soon, however, it became clear that these women, for the most part, are convinced their country is changing.

“Besides driving, name one way we don’t have equal rights,” said a student named Aram.

“Can you travel without permission of a male relative?” I asked.

“No. But we still travel.”

“Do your brothers need permission?”

“No! But, of course, they tell their parents where they are going.”

“Can you vote?”

“No. But we’ve only had one election so far. And I think I read that women and blacks in America weren’t able to vote for a long time.”

Many of them defended the driving ban. They like being driven around, they insisted. Although one woman in the audience told the Washington Post’s Glenn Kessler, “We are very happy and satisfied, but we would be happier and more satisfied if we could drive.”

At first I was mystified that such intelligent, highly educated, ambitious women would be defending a system that denies them equal rights, but I soon realized that’s not what they were doing at all. What they were doing was taking issue with the portrayal of them as powerless victims. They were also expressing a confidence that their society is changing. If there hadn’t been school officials within earshot, they would probably have been even more direct in talking about the need for change, but the point came through anyway.

“What do you want to be 10 years from now?” I asked several of the students.

“Lawyer,” said one.

“Banker.”

“Ambassador,” said Aram, the woman student who had been most aggressively refuting the notion that Saudi women don’t have everything they want.

“Ambassador?” I asked. “Does Saudi Arabia have any women ambassadors, anywhere in the world?”

“No,” she said. But Aram, who just a few minutes earlier had defended the fact that her country did not allow women to vote, told me she is convinced that her country is changing so much that Saudi Arabia will soon have women ambassadors.

Virtually all of the students wore fashionable western garb visible under their abayas. As I was talking to one of the students, her headscarf started to slip, eventually falling completely off. A school staffer came over to join the conversation, putting herself between me and the student. By the time the reporters were ushered out of the room, I noticed three women had let their headscarves fall off. That may not be a big deal anywhere else, but in Saudi Arabia it’s a radical statement.

As I left the auditorium, I asked several students if I could email them. I was surprised by their addresses: “sweeteyes,” “cuteygirl85,” “blackrose,” etc. There’s something going on in Saudi Arabia.

Jonathan Karl is senior foreign affairs correspondent for ABC News.

The Weekly Standard – October 10, 2005
Reprinted with permission.

Related Items

Karen Hughes – Biography

Briefing En Route Cairo, Egypt – Karen Hughes, Under Secretary for Public Diplomacy and Public Affairs – En Route Cairo, Egypt – September 25, 2005

In Pursuit of Understanding: Karen Hughes in Saudi Arabia – SUSRIS IOI – Sep. 29, 2005

Editor’s Note

King Abdullah bin Abdulaziz ascended to the throne of the Kingdom of Saudi Arabia on August 1, 2005 on the passing of King Fahd. Abdullah, in his capacity as Crown Prince, has been recognized as the de facto leader of the country since Fahd suffered a stroke in 1996. The transition from Fahd to Abdullah was a smooth affair, in full accordance with the Basic Law of Saudi Arabia and was followed by pledging of allegiance to the new King by officials and citizens in the Kingdom.

In his first television interview since assuming the title and role of King, Abdullah chose ABC News reporter Barbara Walters. The interview was conducted at the new king’s palace in Jeddah, Saudi Arabia and aired on ABC in the United States on Friday, October 14, 2005. A segment was included in the 20/20 news magazine show with a longer, follow on segment broadcast on Nightline later that evening.

Following the interview on Nightline, Barbara Walters talked with Ambassador Richard Haass, President of the Council on Foreign Relations concerning King Abdullah’s comments and other issues in the US-Saudi relationship. You can read his comments on SUSRIS.

We are also providing in e-mail and on-line a reprint of comments made by King Abdullah, then Crown Prince, in February 2001 during a meeting with Doctor John Duke Anthony, President of the National Council on US-Arab Relations and with me, then editor of the GulfWire e-newsletter service. We hope you find these additional materials of interest and helpful in understanding developments in the Kingdom and the current state of the relationship.

Patrick W. Ryan

King Abdullah Interview

ABC News 20/20 – Friday, October 14, 2005

[Introduction by Barbara Walters - video of scenes in Saudi Arabia and King Abdullah]

..Abdullah is already bucking tradition. Starting with the fact that in a country notorious for its discrimination against women, he has chosen to do his first television interview with a woman, me.

KING ABDULLAH: One of the reasons that I have made the decision to do this interview with you in particular, is that reason.

[Interview break for video clips and Walter's comments]

BARBARA WALTERS: I understand that now that you are king, you prohibited your subjects from kissing your hand. Were you embarrassed to have your hand kissed?

ABDULLAH: I have tremendous distaste for such matters because I believe that one only bows before one’s God, not before another human being.

WALTERS: When you visited President Bush this past April, there were photographs of you and the president holding hands. This is not a gesture common among American men. Did it have significance?

ABDULLAH: Yes. In our culture, holding hands is a sign of friendship and a sign of loyalty and you do it with people dear to you. And President Bush is a friend whose friendship I value and treasure.

[Interview break for video clips and Walter's comments]

WALTERS: Americans are very concerned about the rising price of oil. In the past ten years the price of crude has tripled. Do you see the price of oil continuing to rise.

ABDULLAH: God only knows. But we in the Kingdom of Saudi Arabia don’t accept these increases. Without a doubt we have benefited financially but we believe the damage to other countries is tremendous and we don’t believe that the prices should be at these levels.

WALTERS: Is there anything that Saudi Arabia can do now to keep prices down?

ABDULLAH: We are trying and we continue to try. We have increased our oil production to over 10 million barrels a day.

[Interview break for video clips and Walter's comments]

WALTERS: The world’s demand for oil does keep going up. There is concern that the Saudi oil fields may be running dry, may be peaking. Are you concerned about that?

ABDULLAH: According to the scientists and the geologists and the experts in this area, the Kingdom of Saudi Arabia’s reserves are sufficient to provide supplies for longer than 60 or 70 years.

[Interview break for video clips and Walter's comments]

WALTERS: A flashpoint for Westerners is that Saudi Arabia is the only country in the world in which women are not allowed to drive. It seems to be symbolic of a woman’s lack of independence. Would you support allowing women to drive?

ABDULLAH: I believe strongly in the rights of women. My mother is a woman. My sister is a woman. My daughter is a woman. My wife is a woman. I believe the day will come when women will drive. In fact if you look at the areas of Saudi Arabia, the desert, and in the rural areas, you will find that women do drive. The issue will require patience. In time I believe that it will be possible. I believe that patience is a virtue.

WALTERS: You cannot just make a decree that women can drive? You are the King!

ABDULLAH: I value and take care of my people as I would my eye.

WALTERS: Is that an answer?

ABDULLAH: Yes, I respect my people. It is impossible that I would do anything that is not acceptable to my people.

[Interview break for video clips and Walter's comments]

WALTERS: Your majesty, there are so many restrictions against women. Do you see this changing?

ABDULLAH: Yes, I believe we can. But it will require a little bit of time.

WALTERS: Saudi Arabia is the only Arab country where women do not have the right to vote. Do you foresee that the will be able to vote, perhaps in the next municipal elections.

ABDULLAH: Our people are just now beginning to open up to the world. And I believe that with the passing of days, in the future, everything is possible.

BREAK – closing commentary by 20/20 commentators.

ABC News Nightline Segment – later in the evening >>

[Introduction - Barbara Walters Comments - Video clips]

..King Abdullah sat down with us at his palace in Jeddah. The fact that he decided to do his very first interview as King with an American reporter is telling. Though he claims a close relationship with President Bush he seems to want to reach the American people directly, especially on the subject of September 11th.

WALTERS: Because 15 of the 19 hijackers were Saudis, is this something that has caused you great grief? Would you like to say anything to the American people about that?

ABDULLAH: Yes, of course it has, and we were shocked. It has had a negative impact on all Saudis because this is not who we are nor is it what our faith teaches us. We as Arabs are always loyal to our friends and we value such friendships.

WALTERS: Well, officially our two countries are friends and allies, but unofficially there seems to be some suspicion and even hatred. Why do you think this is?

ABDULLAH: Yes, the Saudi people have some disagreements with the United States, in particular when it comes to the issue of the Palestinian question, the war in Afghanistan and the war in Iraq, and I believe this may have influenced the opinion of the Saudi public towards the United States.

[Interview break for video clips and Walter's comments]

ABDULLAH: ..What we ask for is that justice and equity prevail among all of the ethnic groups in Iraq. We believe that all Iraq is one country in which all Iraqis live in peace and justice. The Kingdom of Saudi Arabia until today has not interfered in Iraq’s affairs. We have not done so because we don’t want to open up ourselves to charges or accusations that we have a hand in the disintegration of Iraq. We also have been accused in the past of having a hand in what happened in Iraq, in particular with regards to terrorism and the violence, and we are innocent of these charges. And we have remained neutral in spite of the injustices that we see currently going on.

WALTERS: Let’s talk about Iran. Iran has become more powerful as a result of the turmoil in Iraq. Do you see that as a threat to the region?

ABDULLAH: The questioner is often times more knowledgeable than the questionee.

WALTERS: So, you are not worried about Iran becoming more powerful?

ABDULLAH: Iran is a friendly country. Iran is a Muslim country. We hope that Iran will not become an obstacle to peace and security in Iraq. This is what we hope for and this is what we believe the Iraqi people hope for.

[Interview break for video clips and Walter's comments]

..the question then for King Abdullah, if Iran gets those [nuclear] weapons would Saudi Arabia have to have them too?

ABDULLAH: The Kingdom of Saudi Arabia, like other countries in the region, rejects the acquisition of nuclear weapons by anyone, especially nuclear weapons in the Middle East region. We hope that such weapons will be banned or eliminated from the region by every country in the region.

WALTERS: President Bush has said that one of his goals is to spread democracy in your region. Is this realistic?

ABDULLAH: If you look at democracy in the United States, you will see that it took many, many, many years to develop.

[Interview break for video clips and Walter's comments]

WALTERS: A flashpoint for Westerners is that Saudi Arabia is the only country in the world in which women are not allowed to drive. It seems to be symbolic of a woman’s lack of independence. Would you support allowing a woman to drive?

ABDULLAH: I believe strongly in the rights of women. My mother is a woman. My sister is a woman. My daughter is a woman. My wife is a woman. And I was born of a woman. I believe the day will come when women drive. In fact, if you look at the areas in Saudi Arabia, the deserts and in the rural areas, you will find that women do drive The issue will require patience. In time, I believe it will be possible.

[Interview break for video clips and Walter's comments]

WALTERS: There are so many restrictions against women. Do you see this changing?

ABDULLAH: Yes, I believe we can. But it will require a little bit of time.

[Interview break for video clips and Walter's comments]

ABDULLAH: Our people are just now beginning to open up to the world, and I believe that with the passing of days in the future everything is possible.

[Interview break for video clips and Walter's comments - commercial break]

[Return from break - comments]

WALTERS: Why do you think Saudi Arabia is becoming fertile ground for al Qaeda?

ABDULLAH: Madness. Madness and evil. It is the work of the devil. Such acts cannot be perpetrated by any individual who has a sense of decency or humanity or justice or faith.

WALTERS: Do you feel that you have eliminated the threat here in your own country?

ABDULLAH: No.

WALTERS: You’re still worried about it?

ABDULLAH: I have stated after the first terrorist attack that we will fight the terrorists and those who support them or condone their actions for 10, 20 or 30 years if we have to until we eliminate this scourge. I believe that the world must stand shoulder to shoulder with each other if we are to eliminate this evil from our midst.

WALTERS: Terrorism to some degree starts with extremism, and there are people who feel that the educational system in Saudi Arabia has in the past contributed to extremism and hatred. When we were here three years ago, we found textbooks that called for the killing of Jews. What is being done to stop this extremist teaching?

ABDULLAH: I will not deny that such extremism existed in the Kingdom of Saudi Arabia, but such extremism exists in almost every country in the world. If you look at the United States and what people have said about Islam I ask myself why the focus is only on Saudi Arabia when it comes to such matters when we all should be fighting such extremist thought everywhere. Muslims are not bloodthirsty people. Islam is a religion of peace that forbids the killing of the innocent. Islam also accepts the Prophets, whether those prophets are Mohammed, God’s peace and blessing be upon Him, or Moses or the other prophets of the books.

WALTERS: In this country, however, you cannot practice a religion other than Islam publicly, although there are five million foreigners in this country.

ABDULLAH: Public worship is not allowed, you are correct, because Saudi Arabia, as you know, is the birthplace of Islam. To allow the construction of places of worship other than Islamic ones in Saudi Arabia it would be like asking the Vatican to build a mosque inside of it. However, people in Saudi Arabia are free to practice their faith in the privacy of their homes.

WALTERS: The Council of Foreign Relations reported last year, and I’m quoting, “Saudi Arabia continues massive spending on fundamentalist religious schools which export radical extremism that can lead to terrorism.” Will you or can you stop this funding of these schools?

ABDULLAH: It doesn’t seem logical. We are fighting terrorism and extremism in our midst. Why would we be funding it somewhere else? It is not logical or rational for us to be supporting it. We have also regulated our charities and we have closed offices around the world, and we have withdrawn support for institutions that we found to be extremist.

WALTERS: And changed your textbooks?

ABDULLAH: Yes, we have. We have toned them down.

WALTERS: Toned them down. I want to talk about young people. Sixty percent of your people are under the age of 20 and they’re reaching the age when they’ll need jobs. There is already a good deal of unemployment. That can lead to discontent and some people feel it can lead to radicalism. What are you doing about that?

ABDULLAH: I would like to say first that the issue of unemployment in Saudi Arabia has improved greatly in recent years, and we have been able to reduce it substantially. We need to find approximately 100,000 jobs for those who are seeking jobs but cannot find them at this time.

[Interview break for video clips and Walter's comments]

WALTERS: Since this is the first interview that you are doing on television and the first for America, what would you most like my country to know about yours? What would your message be for America?

ABDULLAH: Yes, the message is that the American people have been our friend for over 60 years. There was no conflict or problem or doubt that existed between us until the tragic events of a few years ago in New York City, which were perpetrated by a small and deviant group of individuals who have no respect for humanity or for the teachings of their faith. I also want to convey my greetings to President Bush and to all Americans, young and old.

[Broadcast transcribed by SUSRIS.]

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April 25, 2005 Summit Reporting

Special Report – US/Saudi Arabia Summit – Joint Statement

Special Report – US/Saudi Arabia Summit – Press Briefing – Secretary of State Condoleeza Rice and National Security Advisor Hadley

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Editor’s Note

King Abdullah bin Abdulaziz ascended to the throne of the Kingdom of Saudi Arabia on August 1, 2005 on the passing of King Fahd. Abdullah, in his capacity as Crown Prince, has been recognized as the de facto leader of the country since Fahd suffered a stroke in 1996. The transition from Fahd to Abdullah was a smooth affair, in full accordance with the Basic Law of Saudi Arabia and was followed by pledging of allegiance to the new King by officials and citizens in the Kingdom.

In his first television interview since assuming the title and role of King, Abdullah chose ABC News reporter Barbara Walters. The interview was conducted at the new king’s palace in Jeddah, Saudi Arabia and aired on ABC in the United States on Friday, October 14, 2005. A brief segment was included in the 20/20 news magazine show with a longer, follow on segment broadcast on Nightline later that evening.

Following the interview on Nightline, Barbara Walters talked with Ambassador Richard Haass, President of the Council on Foreign Relations concerning King Abdullah’s comments and other issues in the US-Saudi relationship. You can read his comments on SUSRIS. We are also providing in e-mail and on-line a reprint of an interview with King Abdullah, then Crown Prince, in February 2001. The interview with Doctor John Duke Anthony, President of the National Council on US-Arab Relations and with me, then editor of the GulfWire e-newsletter service.

This SUSRIS IOI provides a reprint of the February 2001 interview with King Abdullah.

We hope you find these additional materials of interest and helpful in understanding developments in the Kingdom and the current state of the relationship.

Patrick Ryan

King Abdullah Interview – February 2001

GULFWIRE TALKS WITH SAUDI ARABIAN
CROWN PRINCE ABDULLAH

FEBRUARY 4, 2001

GulfWire is pleased to present a summary of a meeting with H.R.H. Crown Prince Abdullah, First Deputy Premier and Commander of the Saudi Arabian National Guard, on February 4, 2001. GulfWire Publisher John Duke Anthony and Managing Editor Patrick W. Ryan are escorting a prominent defense delegation to Saudi Arabia. Earlier today, they were granted an audience with the Crown Prince at his office in Riyadh. Crown Prince Abdullah shared his observations of the relationship between Saudi Arabia and the United States, the Middle East peace process, regional defense and other current issues.
[GulfWire -- Riyadh -- Feb. 4, 2001]

“One of the first things I would like to tell you is that I support whatever is in U.S. interests. That is because whatever is in the interest of the U.S. is also in the interest of Saudi Arabia.

“The America that is of your parents is one of equality, justice and fairness. I believe America has moved away from those principles. America has deviated from that way. In the past few years America has said not one word about the conduct of Israel. Does this mean that Israel has committed no errors?

“America has interests and they have suffered. America’s friends have stood up and defended it but it has become harder to stand up and defend America. This is not good for America. America and the American people are good and their approach to issues is based on equality and justice and non-discrimination.

“I know President Clinton did his duty. I know he was very constrained. Without a doubt he was a President who deserved respect.

“With regard to the new administration, we wish it success. I don’t know President Bush. I know his father; I know his father very well. And I pray to God that he will succeed so he can serve America, he can serve the peace-loving people of the world and all humanity.

“We are looking for equity and justice from the American people. Let me repeat, we are looking for equity and justice from the American people. America has a conscience and America appreciates the difficulties the Palestinian people are enduring.

“I have heard some in the Congress suspect I am anti-American. I’d like to discuss this. I am a direct and an honest man and I am very honest and straightforward with my friends. We have a saying in Arabic that “A friend is someone who will be straightforward with you.”

“Yes, I do criticize America — because it is in its interest [for its friends] to be critical. I don’t criticize to be unfriendly. I can’t change my nature. I am honest and straightforward with my friends and whoever asks my opinion. That’s the way I am. I believe that all your Presidents who have dealt with me share that opinion.

“I knew President Carter, President Bush, and President Clinton. President Reagan and President Ford I knew at a distance. I couldn’t describe my relationship with them as a close one.

“I know Israelis criticize me. I’m convinced that the wise people of Israel and the Jewish community believe I’m honest and that it is in their interest for me to be honest.

“Forty years ago in the Middle East you couldn’t find an Arab who would shake hands with an Israeli. Today, after preparation, the Arab world is ready for peace. If we miss the opportunity, and peace does not hold, there will be a very negative backlash.

“Israel was created in the region. The Arabs were created in the region. It is imperative that relations [between the two people] be improved. We must remove the hatred completely. Most of Arab leaders want this. Many question whether Israelis want this.

“Israel must account for the fact that its friends may not be around in 50 years. Israel is a small drop in the bucket in the Middle East. It must improve its relationship with the Arabs and agree on something reasonable. Because the only power that is permanent is the power of God. I believe my directness is in the interest of future generations.

“I believe there is no reasonable and rational Israeli who doesn’t believe this. The current situation may remain 10-20 years, but for how long can Israel remain in a hostile sea?”

Q. “In the most recent GCC Heads of State Summit in Bahrain this past December, Your Highness and other heads of state spoke of the need for a ‘collective defense pact.’ Could you explain what you meant?”

A. “I was telling my brothers what I felt. I told them defense without a
political agreement is worthless.”

Q. “But ‘political agreement’ on what kinds of issues?”

A. “Common defense. A common defense requires a common policy and political agenda first. I emphasized that we have to have a political agreement.”

Q. “How should the U.S. change its policy on Iraq and Iran?”

A. “With regard to Iraq, the primary concern is the well-being of the Iraqi people. Secondly, we’re concerned about the unity of Iraq. And we want President Saddam Hussein to comply with all the UN Security Council Resolutions.

“With regard to Iran, America has interests in Iran. I was asked by an American what Iran was like and I answered, ‘You should be telling me because you had economic, human, and military contacts as well as commercial interests. Had you maintained them you would have more insight. So if you were to have commercial relationships with Iran, U.S. companies could provide you with an understanding.’

“We’ve reached an understanding with Iran and decided to move forward to the benefit of the region. In the 1980s, when the Hajj [Islamic pilgrimage] took place, we would often have problems. It was very difficult for us to have such problems with another Muslim nation. They provoked us to take steps to deter and contain them. Had we not done so, it would have caused harm to other pilgrims. For the interests of the region, and our own national interests, we have reached an accommodation. President Khatami is a good man. He seeks to do good for Iran.”

Q. “How is Saudi Arabia approaching future oil price levels?”

A. “I want to emphasize a fundamental principle of Saudi Arabia: anything that hurts the consumer is not in our interest. At the same time, we do not wish to cause harm to ourselves or any other OPEC nation.

“I proposed a dialogue between consumers and producers at a conference in Riyadh a few months ago. I recommended the establishment of a permanent Secretariat as a means of maintaining dialogue between the two groups. I believe this will provide a valuable opportunity for consumers and producers to handle issues away from the media. It would also make it more difficult for anyone with an agenda to harm relations between consumers and producers. I also suggested that not only governments but, also, oil companies be included.

Q. “Could you comment on challenges and priorities for U.S. and Saudi Arabia regarding Gulf defense issues?”

A. “I believe the cooperation is excellent.”

Q. “How would you evaluate the Middle East peace process?”

A. “America did all it could. The peace process came very close until events took over, inflamed passions, and put a halt to it. There is an imbalance between people using tanks against rocks. There have been horrific images on television. Everyone saw the horrible picture of young Muhammad Durrah being killed and his father wounded. The situation damaged American interests in the Middle East because the U.S., as Israel’s major benefactor, could not restrain Israel.”

“I believe there is no human being who cannot analyze facts and reach a conclusion as to what is right. Every human being can assess what is rightfully his — what he is entitled to and what he is not entitled to.

“Saudi Arabia is a close ally of the U.S. Nothing will shake the foundation of that. Many have tried to do so, but they have not been successful.

“We hope America will look out for its interests, because that will serve our interests.

“We’re not seeking aid from America. We’re looking for friendship. If we ask for U.S. military assistance, we hope America will oblige us, as we will pay our way.

“At the same time, we hope America will consult with us, because we know this region better than the United States and better than anyone else that America consults. We’ll always look out for America, because that’s in our interest and in the interest of the world.

“I send my highest and sincerest regards to President Bush and President Clinton.”

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Crown Prince Abdullah Interview – Scott MacLeod – Time Magazine – Feb 2003 (GulfWire)

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Special Report – US/Saudi Arabia Summit – Joint Statement

Special Report – US/Saudi Arabia Summit – Press Briefing – Secretary of State Condoleeza Rice and National Security Advisor Hadley

Summit Press Briefing: Adel Al-Jubeir

Crown Prince Abdullah Addresses Saudi-American Business Council in Dallas

Remarks of H.E. Abdulaziz Al-Quraishi at Business Council Dinner in Dallas

Editor’s Note

King Abdullah bin Abdulaziz granted his first interview since his ascension to the throne on August 1, 2005 with ABC News reporter Barbara Walters. The interview was aired in the United States on October 14, 2005 in segments broadcast on ABC’s 20/20 and Nightline. Following the Nightline segment, Walters talked with Ambassador Richard Haass, President of the Council on Foreign Relations about King Abdullah’s comments in the interview and other issues in the relationship between the US and Saudi Arabia. Here are his comments.

Haass Interview

BARBARA WALTERS: I’m joined now by Richard Haass. He served as an advisor to both President Bushs – in the National Security Council for the first President Bush and then in the State Department until 2003 for the current president.

Ambassador Haass is now president of the Council on Foreign Relations and he is the author of a new book called The Opportunity: America’s Moment to Alter History’s Course.

Welcome Ambassador, let’s talk about the opportunity to alter Saudi Arabia’s course.

Is the fact that he’s doing this interview with an American, but with a woman, is that significant as he suggests?

AMBASSADOR HAASS: It’s significant to the extent that it obviously shows the he and the Saudis are aware they have a problem and they want to effect American public opinion, media opinion, Congressional opinion. But ultimately, what’s going to depend, is not what they say on television, but what they do. And they have a long ways to go still.

WALTERS: The King talked about trying to make some reforms for women. He pushed it a little bit because he has the religious conservatives so against it. Do you think those reforms are really going to happen, that women can drive, that women can vote, that women can do things without a male’s permission?

HAASS: I think you’re likely to see gradual process in women getting the vote, as part of the larger process of Saudis getting the vote for meaningful choices. Things like driving, the veil, those are more symbolic. Those really do go right up against the religious conservatism. Those will probably come much more slowly.

WALTERS: Let’s talk about Iraq. You had the Saudi foreign minister saying, and worrying Washington, when he said that Iraq is on the verge of disintegration, leading perhaps into a civil war. Then the king says we’re going to be neutral. Why this discrepancy?

HAASS: Well, the Saudi comments have been extremely harsh. They have been somewhat frustrating. A lot of their young men have gone into Iraq and made the situation there worse. And diplomatically the Saudis haven’t really lifted much of a finger to help the struggling government there. But what they’re really worried about are two things. One is Iranian influence. And second of all is the primacy there, the move to power there, of the Shia in Iraq who are a majority there, but who are a small, say 10-15%, minority in Saudi Arabia.

WALTERS: But why isn’t the King, perhaps with some of the other Arab nations, doing something to be helpful?

HAASS: Part of it is just this Arab allergy about, against, getting involved in their neighbors. They’re also not quite sure what to do. What are they going do? They really don’t have forces to send there. They could help financially. And there they have not done as much as they could or should do.

WALTERS: The king talks about the fact that there are Saudis who are fighting in the insurgency, or at least implies that there are. He says he has nothing to do with that. Can’t he stop that in any way?

HAASS: He could certainly stop any young man with a one-way ticket getting on a plane out of Saudi Arabia heading toward anywhere else in the Middle East, particularly if it’s to Syria because that’s the most common transit point into Iraq. So there, the Saudis could do more, for sure.

WALTERS: You know, your own report, the Council on Foreign Relations, said that the Saudis are sponsoring extremism, and terrorism with the madrassah schools. And he said that’s illogical, why do that. So, who’s right?

HAASS: The Saudis have made progress in one area. I think they have cut down on the amount of money going from Saudi Arabia directly into the hands of Al Qaeda and other terrorists. There you have to give them an improving grade. The problem is what the Saudis are also letting to continue. And that is money going into radical education, in Saudi Arabia and around the world. It is this soft money that the Saudis are allowing to go to schools and other Islamic institutions. That’s the problem.

WALTERS: He says no. He says he’s stopped that.

HAASS: He hasn’t stopped it and in some ways he can’t stop it. There’s a bargain in Saudi Arabia. You have the House of Saud, this family that rules, has something of a bargain with the religious establishment. Like most bargains it’s somewhat uneasy. They can perhaps dial it down a little bit , but I don’t think they can stop it. That’s probably asking too much, but in any case, it’s asking more than they are willing to risk.

WALTERS: Abdullah has been king for just two months. But he has been running the country as Crown Prince for many years because the king was ill. Can this king, make a difference. Is Abdullah of Saudi Arabia going to be a major figure in the world?

HAASS: The biggest question might be demographic. He’s already in his early 80s. An awful lot depends on how long he can keep his health and how long he can actually rule. But even though he’s an absolute monarch he doesn’t rule absolutely. He has to share power with his brothers, with all the princes, thousands of members of the royal family, he has the religious establishment. He will only be able to make a difference if he’s willing to take risks and if he’s in power for quite a number of years.

WALTERS: Taking risks, is that something you think that this king can do?

HAASS: He has something of a reputation as a reformer. He’s an intriguing man. We couldn’t do better right now than Abdullah if we had to choose who would run Saudi Arabia. The real question again is time. How hard he is willing to press it. Whether on the issues you’ve raised, like women, on democratic reforms more generally, on doing something about the quality of Saudi society which really isn’t part of the modern world. One has to hope, though, that he does have the time, because it is very difficult to see one of the alternatives doing better.

WALTERS: On the question of oil, the king says, look, it’s not up to me — there are other factors. Is any of it up to him?

HAASS: The Saudis can’t expand their output meaningfully overnight. They can probably expand it somewhat over the next few years. But the biggest factor in oil prices right now really is about the demand for it. It is the thirst, if you will, coming out of this country, the Untied States and increasingly coming out of India and China. So Saudi Arabia, while it’s the biggest exporter in the world, the king actually has a point. The much more significant development in oil right now is the demand for oil around the world.

WALTERS: Thank you Ambassador Haass.

[Broadcast transcribed by SUSRIS.]

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Crown Prince Abdullah Interview – Scott MacLeod – Time Magazine – Feb 2003 (GulfWire)

April 25, 2005 Summit Reporting

Special Report – US/Saudi Arabia Summit – Joint Statement

Special Report – US/Saudi Arabia Summit – Press Briefing – Secretary of State Condoleeza Rice and National Security Advisor Hadley

Summit Press Briefing: Adel Al-Jubeir

Crown Prince Abdullah Addresses Saudi-American Business Council in Dallas

Remarks of H.E. Abdulaziz Al-Quraishi at Business Council Dinner in Dallas

Kingdom Moves Closer to WTO Accession, Says Yamani
P.K. Abdul Ghafour, Arab News

JEDDAH, 12 October 2005 — Saudi Arabia has completed the requisite documents for its accession to the World Trade Organization (WTO), Minister of Commerce and Industry Dr. Hashem Yamani said yesterday.

“The Saudi minister told a session of the WTO working team in Geneva on Tuesday that his country had completed all it had been asked to do by its trading partners to win WTO membership,” the Reuters reported quoting high-level WTO sources.

Saudi Arabia has already signed 38 bilateral agreements — including with the European Union and the United States — and introduced 42 new laws and regulations to bring its trade rules in line with those of the WTO. Yamani expressed his confidence that the Kingdom’s accession to the WTO would strengthen the economy, especially the industrial sector. “The Kingdom’s imports and exports represent about two-third of the gross domestic product, which is higher than that of many other WTO member states,” he pointed out.

The Saudi documents would be submitted to a key meeting on Oct. 28, the sources said. At that session, the working team, which has steered the marathon talks, is almost certain to support the package, clearing the path for the Kingdom’s entry.

The WTO General Council, the organization’s highest executive body, is likely to endorse the Kingdom’s accession early November, paving the way for Riyadh to attend the WTO’s Ministerial Meeting in Hong Kong in December as a full member.

Last month, Saudi Arabia signed a landmark trade agreement with the United States. The bilateral pact requires the Kingdom to open its markets to imports of more US farm and manufactured goods, as well as service companies in sectors including banking, telecommunications, energy, express delivery, transportation and hotel and restaurant management.

Saudi Arabia’s move to join the WTO has drawn mixed reactions from businessmen. Fawaz Al-Tuwaijeri, who has investments in agriculture, said WTO membership would have negative effect on the Kingdom’s industrial and agricultural sectors. “Farmers will not get most of the incentives they receive now,” he said.

He said he feared that Saudi Arabia and other developing countries would become dumping grounds for major producers like the US and European countries.

Abdul Nasser Al-Nahdi, another businessman, said investments in agriculture and industry would suffer as a result of WTO accession. “At least 60 percent of the agricultural and industrial projects, especially the smaller ones, face bankruptcy following WTO accession as they will not be able to compete with international firms,” he pointed out.

But Agriculture Minister Dr. Fahd Balghunaim described the WTO deal with the US as a major achievement, adding that the world trade body did not pose any threat to Saudi interests. He said WTO entry would improve services and products.

The minister also emphasized the WTO accession would not affect the government’s support to farmers. “The government aid received by the agricultural sector now is much less than what is allowed by WTO regulations,” he said, adding that the government would continue to support the agricultural sector. Dr. Muhammad Al-Mutlaq, executive director of Al-Mutlaq Group, described the Kingdom’s efforts to join the world body as “a courageous move.”

Reprinted with permission of Arab News.

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Muslims worldwide participate in the month of fasting

The holy month of Ramadan is a special month. For over one billion Muslims worldwide, it is a time of inner reflection and devotion to God. It is the month of
fasting.

Ramadan is the ninth month of the Islamic calendar. The start of the month is based on a combination of physical sightings of the moon and astronomical calculations. The Islamic calendar itself is a lunar calendar, and months begin when the first crescent of a new moon is sighted. This year, Ramadan officially began on the evening of October 4, 2005 although some locations did not sight the new moon crescent until October 5th.

Ramadan is special to Muslims because it is during this time that the fourth of the Five Pillars of Islam, Siam Ramadan, is practiced. As described in the book, “Saudi Arabia: All You Need to Know” by Dr. Nasser Ibrahim Rashid and Dr. Esber Ibrahim Shaeen, Siam Ramadan is the “fasting by every Moslem during the holy month of Ramadan. Fasting takes place from dawn or first light until sunset. During this period, one must not eat, drink, smoke, or carry on sexual activity. People who are sick, elderly, pregnant women and those who are traveling may be excused and should make up the days missed at a later date in the year. Those physically incapable must feed sixty needy persons for everyday of fast missed.

“Fasting is regarded as a healthy exercise making people more sensitive to the sufferings of the needy. Moslems break the fast with a light meal called iftar or break-fast. Communities and streets become alive at night. Everyone is usually in a festive mood. The nights of Ramadan are marked with religious activities, including long periods of prayers (Tarawih) performed after the last prayer of the day (Salat Al-Isha). One of the major holidays is Eid Al-Fitr, which marks the end of Ramadan. Celebrations go on for four days. It is a happy time, especially for children who traditionally receive clothing, toys and other gifts.”

Another important day during Ramadan is the 27th night of the month. It is generally taken that this is the night in which the Qur’an was revealed to the Prophet Mohammad. The night is known as the “Night of Power” (Lailat ul-Qadr). Many Muslims spend the entire night in prayer.

For Muslims, Ramadan is a time for inner reflection and devotion to God. The Siam Ramadan, or fasting, is intended to teach patience and self-control as well as to remind one of the less fortunate.

In Saudi Arabia, non-Muslims are urged to respect Ramadan by abstaining from eating, drinking and smoking in public during the day. In a statement released by the Saudi Interior Ministry last year, the ministry said, “Non-Muslim residents of this country must respect Muslims’ feelings by refraining from eating, drinking or smoking in public places, in the streets and workplaces during the dawn-to-dusk fast observed by Muslims throughout the holy month.” Violators of the rules could face possible deportation, according to the ministry.

This year, the end of the month of Ramadan is marked by Eid al-Fitr on November 4, 2005.

Related Links

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BBC – Ramadan In Pictures

The Five Pillars of Islam

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Eid al Fitr

Lailat al Qadr (27 Ramadan): The Night of Power

Ramadan 2005 – BBC

Ramadan on the Net

Religion and Ethics – Islam (BBC)

Ramadan Diary – Faiza Saleh Ambah

Part One — “Enough Faith to Fast?”

Part Two — “A Month of Fast and Feast”

Part Three — “Halfway through the Ramadan Fast”

Part Four — “Waging ‘Inner Jihad’ on an Empty Stomach

Part Five — “As Fasting Ends, the Lessons of Ramadan Linger”

Editor’s Note:

For your consideration we present an interview with Engineer Usamah al Kurdi, a member of the Consultative Council of Saudi Arabia. Last year SUSRIS was pleased to bring you our first interview with him where he shared his insights on reform and developments in Saudi-US relations. SUSRIS has also published his presentations at various conferences and symposia (see below for more).

We were fortunate to hear Engineer al Kurdi and Doctor Ghassan al Suleiman, Chairman of the Jeddah Chamber of Commerce and Industry, last month in Washington. At a forum organized by the National US-Arab Chamber of Commerce in cooperation with Meridian International Center, the Middle East Policy Council and the Middle East Institute, they talked on the topic “Opportunities for Economic and Political Reform in Saudi Arabia.” Their presentation as well as an interview with Doctor Ghassan will be provided separately in SUSRIS.

This interview was conducted in Washington, DC on August 12, 2005.

***

SUSRIS: Thank you for taking time to talk about developments in the Kingdom and the state of Saudi-US relations. Last year when you were in Washington you spoke with us about reforms in the Kingdom. Can we start with an update on developments in this area?

Usamah Al-Kurdi

Al-Kurdi: Well I am happy to report that since we spoke a year ago, reform in Saudi Arabia is continuing. The emphasis on job creation and business opportunities is continuing. The attention to social reforms, addressing social ills, is continuing. Overall, I can say reform in Saudi Arabia is healthy and proceeding.

New reform steps have been taken this year with an important one among them, in my opinion, being Resolution 120. It provides for the government to address the well being of women of Saudi Arabia. This resolution included the creation of a national committee for women. It also included special attention to services provided to women, business opportunities for women and, of course, job opportunities for women.

On another front — the relationship between the US and Saudi Arabia — I’m glad to have seen the dramatic success of the Crawford Summit between King Abdullah and President Bush in April. There were many significant areas of mutual interest addressed in the summit joint statement. In my view a very important part is the plan to continue cooperation in the area of education — opening the doors of American universities to Saudi students.

The educational component of the US-Saudi relationship has always been important and this step ensures that it will not be damaged. I was happy to see that the leaders addressed this area.

Generally speaking, the summit and the resolution removed a lot of psychological uncertainties about where the relationship was going. It made clear to everyone around the world how each side values the relationship.

As I have been heard saying many times in the past we have no choice but to have a good relationship. This is good for the world. It is good for the Muslim countries. This is good for the Arab countries. This is good for the causes of both Saudi Arabia and the United States.

SUSRIS: The substance of the summit discussions and the joint statement, as you pointed out, served to strengthen the strategic relationship between the US and Saudi Arabia on a variety of issues. However, the focus of press reports surrounding the meeting was squarely on the issue of gas prices. Why do you think there is such attention given to this single issue when there are so many important items on the bilateral agenda?

Al-Kurdi: Unfortunately, where oil is concerned many people think in terms of the 1980s and early 1990s. They recall an era where Saudi Arabia, and even OPEC for that matter, was able to dramatically influence the price of oil. Those days have changed.

The controlling factors no longer include OPEC. In my opinion, they include the fact that oil is a freely traded commodity on the open market. They include the fact that refining capacities around the world are less than what they should be. They include the fact that production capacities have been unable to keep up with the increased demand –and I must say that Saudi Arabia is working hard on boosting production.

So, as far as both Saudi Arabia and the United States are concerned the idea is to cooperate, to put controls on the market so that there are no spikes in the price as well as the level of production. Saudi Arabia is working — and has announced this — to increase its production capacity because it is becoming clear, in my opinion, that this is the single most important factor influencing the market. We have, at great expense, installed additional production capacity in Saudi Arabia. We have seen new oil fields opening in Saudi Arabia. Yet, despite making huge investments in the area of additional production capacity in Saudi Arabia, we are not seeing similar efforts to meet demand from other countries, including the US, as far as increasing refining capacity.

Less than a year ago, when our Minister of Oil visited the United States, he made an offer for the Saudi oil companies to build two refineries here. In my opinion that would have helped ease the high price of gasoline in the US.

I think the high price of oil is not in the interest of Saudi Arabia. Higher prices reduce consumption. Higher prices make it more economical to find alternatives to oil. What I would like to have seen in the latest energy bill passed by Congress was more emphasis on curtailing consumption so that oil will last longer. In the end we will clearly have to find alternatives but we must all use energy wisely for everyone’s benefit.

SUSRIS: The perception of the Saudi-US relationship among Americans seems to never stray far from the oil question, especially criticism over price manipulation. Does it bother you that most Americans don’t know the full scope of reasons for a strong relationship?

Al-Kurdi: Actually it does bother me because the people who are in the know are not telling the people who are not in the know that the situation has dramatically changed.

We are not in the 1980s or the 1990s. We are in a period of time during which production capacity and refining capacity are the issues that impact the price of oil. The people who do not know the facts insist that Saudi Arabia wants to emphasize the high price of oil. These people need to be told by us and other people in the know that this is not true.

SUSRIS: How important are other factors in the United States’ relationship with Saudi Arabia, such as the strategic geographic position of the Kingdom at the crossroads between Europe and Asia, the influence that Saudi Arabia has as the custodian of the holy places, its leadership in the Islamic world?

Al-Kurdi: You have just listed very important reasons, and there are more, as to why Saudi Arabia and the US must have excellent relations. I don’t say “good,” I say “excellent” relations.

The fact is that Saudi Arabia is an important country in the Middle East and the Islamic world and our close relationship supports US interests in that regard. Those are things that people should understand. They should know that the US is the number one trading partner for Saudi Arabia. They should know the important role that both countries play in the international arena. People should know about all these things, not just the energy component of the relationship.

SUSRIS: There have been obvious strains on the relationship from both sides since 9-11. Some Americans are concerned about Saudi Arabia’s commitment to fighting terrorism. Meanwhile some Saudi Arabians are opposed to elements of American foreign policy. Can you tell us what policies of the United States concern Saudi Arabians?

Al-Kurdi: Let me first tell you that a very important part of the relationship stems from the efforts of both countries to fight terrorism. It is extremely important that we cooperate together to fight terrorism, including going after money laundering that serves to finance terrorism.  Earlier this year we organized an international conference to coordinate international anti-terrorism efforts. We have proposed an international center for fighting terrorism and we have even proposed financing it. It is clear that Saudi Arabia and the United States are in close cooperation in the war on terrorism.

Now let’s go back to the issue of policies of the US that are not popular in Saudi Arabia. It would be difficult for me to find a policy of the US that if it is not popular in Saudi Arabia, is unpopular only in Saudi Arabia. You will find it is the case not only in Saudi Arabia but in many countries, and not only in the Middle East, but in many different countries around the world.

In general, the policies regarding military bases in the Middle East and in other parts of the world; regarding Afghanistan; regarding Iraq, of course; and regarding Palestine are the issues. At this moment the situation in Iraq is especially of concern.

They generate resentment from many people around the world, and from Saudis. The war in Iraq has damaged the US image. The support that is provided to the occupation of Palestinian land by Israel does not generate a positive view. The same thing applies to Afghanistan. So it is important for the US — and I am glad to see there are some efforts in that direction — to improve its image not only in Saudi Arabia and in the Middle East but also in many countries around the world.

In the year that followed the unfortunate events of September 11 my travels took me to many different countries in the world: in Europe, in South America, in Africa and in Asia. I was surprised to see how many friends America had lost. Instead of gaining friends as a result of being victims of September 11, they have lost a lot of their friends. Again, I am h