The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Saudi Arabia:
House of Saud
– Built on Oil ... or Sand?

Aug 16, 1996

On June 25, 1996, nineteen soldiers from the United States were killed and at least 64 injured when a bomb blew up part of the apartment complex in Dhahran, Saudi Arabia, where they lay sleeping. The U.S. government quickly sent high-level military and civilian officials to pressure the Saudi government to identify and arrest the culprits. Five other U.S. soldiers and two Indian soldiers died in an earlier bombing of a U.S. training mission for the Saudi National Guard in November, l995. Terrorists from a fundamentalist Saudi religious sect have been accused of both bombings.

Until now, Saudi Arabia has been the model for stability in the volatile Middle East, known for its peace and prosperity, a loyal ally of the entire West, not simply of the United States. These bombings may indicate that the regime is not so stable as has been said.

The United States-Saudi Arabia Connection

Saudi Arabia has been vital to U.S. interests, according to the headlines of the bourgeois press. Yet, the U.S. is not dependent on Saudi oil, despite the fact that the U.S. uses about thirty percent of the world's oil.

Oil may be the single largest source of energy in the United States, and in some years, oil imports can even approach half of all U.S. oil consumption. But the use of coal and liquid natural gas together surpass the use of oil. And the U.S. has vast supplies of oil on its own territory. Moreover, the U.S. is not dependent for imports on any single country, including Saudi Arabia. In 1992, Venezuela and Mexico exported an amount of crude oil equal to the amount coming from Saudi Arabia into the United States. In 1993, the amount coming from Venezuela and Mexico was 50% more than the amount coming from Saudi Arabia.

Much less than its allies, is the United States dependent on imports. Japan, the second largest importer of oil in the world after the United States, has virtually no natural resources of energy; all of its energy sources must be imported, and it relies heavily on the Middle East. Saudi Arabia and the United Arab Emirates, taken together, supply about half of all its energy. If it were only a question of oil imports, the U.S. might not devote so much money to the support of Saudi Arabia. But there is the question of oil company profits. Oil is not only a useful energy resource, but a highly profitable one. Even today, when they no longer "own" the oil in the Middle East because it has been nationalized, U.S. oil companies still pump it, distribute it, refine it and sell it. The oil corporations are among the most profitable in the West. The six largest oil corporations in the United States had profits in 1994 equal to the profits of the Big Three auto-makers. In years of high oil prices or low ones, in times of crisis or peace, the oil companies remain among the top twenty corporations in the world for profits and sales.

For many decades, the U.S. government devoted a great deal of support to Saudi Arabia. In the middle of World War II, President Franklin Roosevelt declared: "I hereby find that the defense of Saudi Arabia is vital to the defense of the United States." Saudi Arabia even got money from the Marshall Plan, the purpose of which was supposedly to help the war-ravaged countries of Europe to recover after that war. (In reality, it was to help U.S. corporations maintain high wartime profits, and to keep British oil companies from moving in to Saudi Arabia.)

From that time to this, U.S. soldiers have been stationed in or near Saudi Arabia, like the more than 5,000 troops currently assigned to the base in Dhahran with another 4,000 U.S. troops scattered around the Arabian peninsula. The U.S. government has been the top supplier of military weapons to the kingdom. And the United States, along with France and Britain, send military trainers to instruct in the use of modern weaponry. After the Viet Nam war ended, some U.S. military instructors moved over to Saudi Arabia to give the Saudi National Guard the benefit of their experience.

It is scarcely surprising that the West, and above all the United States, sent troops for the nasty little 1991 Gulf War, to keep their oil arrangements intact. If they thus helped to prop up the feudal states on the Arabian Peninsula, they nonetheless were sent there for the purpose of defending the interests of the big oil companies.

Progress in Modernization

From the early 1930s on, U.S. engineers and geologists sought commercially profitable amounts of crude oil under the sands of Saudi Arabia. A gusher finally blew in March of 1938. By 1948, Aramco (made up of the U.S. oil corporations Socal, Exxon, Mobil and Texaco) was paying King Saud about one hundred million dollars a year for Saudi oil; British Petroleum and Royal Dutch Shell had dropped out of the race because they couldn't offer the king so much.

In September 1970, a barrel of Saudi light crude was priced at $1.80. By June of 1973, OPEC (Organization of Petroleum Exporting Countries) decisions allowed the price to rise to $2.89. By October of that year, it had almost doubled to $5.12. It then rose steadily through 1982 to a high of $34.00 a barrel. Saudi revenues went from about 10 billion dollars annually in the early 1970s, to over 100 billion dollars annually by the early 1980s.

And while prices since have fluctuated, even heading down a little, Saudi revenues continued to be impressive, if not quite so high as in the heady days of the preceding decade.

This spectacular rise in oil income paid for a rapid modernization of Saudi Arabia, which seemed to take place in one generation.

The sea of petro-dollars allowed the Saudi government to undertake vast infrastructure building. Before "development" began, ships often had to wait at Saudi ports to unload for as much as six months while food rotted at the piers; a quarter of the phones in Jeddah would be out of order; the capital, Riyadh, had no airport.

Energy consumption in Saudi Arabia began to rise so quickly that in 1980 it was five times higher than in 1960. Two new cities were created: Jubail, in the east, increased oil production facilities; Yanbu, 3,500 sea miles closer to Europe and the U.S. than older ports, facilitated shipping to those markets.

The country also began to fund some university-level work to benefit the oil industry. Ten new production complexes were built by 1982 for lubricant, asphalt, wax, naphtha and the basic chemicals needed to make plastic, synthetic fibers, and rubber, as well as adhesives and fertilizers. The Saudi partners for these new joint ventures were the same companies which no longer "owned" Saudi Arabia's precious non-renewable resource: Exxon, Mobil, etc. In addition, Aramco was gathering natural gas at the new Yanbu and Jubail complexes and helping to electrify the eastern province of the country.

Young men were sent overseas for higher education. They were usually guaranteed jobs with the government upon their return. The wealth of the government allowed Saudis to pay no income tax and to obtain loans on easy terms.

In 1970, less than a quarter of the population of Saudi Arabia lived in cities. The vast majority of Saudis were Bedouins, an Arabic word meaning "wanderers in the desert." The monarchy followed a policy of giving land to the Bedouins in the 1960s to settle them into society (and to end the wandering which had led to border conflicts). By 1990, three-quarters of the population lived in cities.

Life expectancy has risen dramatically: from 35 years in 1950, to 45 years in 1975, to 66 years in 1993. Infant mortality rates fell, though sources differ widely about how much. United Nations sources give the rate as 65 per 1,000 for 1992. This is comparable to the rate in Iran or Iraq or Mongolia. (European and North American infant mortality rates are under 10 per 1,000.) At the same time, a 1994 U.S. Department of State publication gives the infant mortality rate as 38 per 1,000, a figure undoubtedly pleasing, if imaginary, to their Saudi royal friends.

Literacy rates rose, though again, sources vary as to how much. The same Department of State publication says the literacy rate is 71% for men, 48% for women, as of 1992. Since 80% of girls now attend school, the earlier generation of adult women must have been almost completely illiterate.

The oil wealth also allowed the Saudis to build universities specifically for training clerics in Islam. At the height of their riches, the Sauds were supposedly spending ten million dollars a day to encourage religious practices and institutions.

Most of the demographic changes in Saudi Arabia are similar to changes in poor countries when prosperity occasionally reaches them. The statistics of some other countries show a comparable progress in the twentieth century, though taking place less rapidly than in tiny Saudi Arabia. (The U.S. State Department estimated that its population was 12.3 million Saudis and 4.6 million foreigners in 1992.)

Beneath the Surface ...

The gross domestic product of Saudi Arabia rose to $12,000 per capita and then fell to $6,500, as fortunes waxed and waned. Even with enormous oil wealth, GDP can fall. (By comparison, in the early 1990s, the U.S. GDP was over $20,000 per capita.) Nonetheless, even $6500 is high for a non-industrialized country. But a gross domestic product is an average which hides who is rich and who is poor and how many of both exist. Saudi Arabia doctors its statistics or makes this information unobtainable.

We do know that the wealth and power stay strictly with the top layer in Saudi Arabia ? made up of royalty and perhaps a few of their closest friends or "partners." The sons of the original ruler, Ibn Saud, are guaranteed a princely income; subsequent generations also have an income from the state. The journalists from London's Financial Times who wrote The House of Saud estimated the royal share of the national income at between 10 and 15%, more than the share of the budget going for health, education, labor and social affairs combined. The 1977 figure for numbers of princes was two to three thousand, with wives and children accounting for perhaps a total of 20,000 people. A 1996 Business Week journalist in the Middle East gave the current figure as 7,000 royal princes. A guaranteed income for this layer would be a significant item in the national budget of any country, given the level of royalty's well-known conspicuous consumption.

At the time old Ibn Saud died, he was supposed to have built over 40 palaces for his four wives and numerous sons, plus another 30 or so mansions for his concubines. The current king, Fahd, one of his many sons, owns 12 palaces and a war bunker capable of withstanding nuclear, biological and chemical weapons. He owns palaces in Spain, France, Switzerland and a few other vacation spots.

Moreover, corruption on the part of this layer must account for a sizable yearly financial drain. One grandson of King Saud, Prince Khalid, was estimated to have accumulated three billion dollars for making business arrangements. The arms dealer Adnan Khashoggi earned the gold-plated bathroom on his private jet by helping Lockheed and Northrup meet his pal Prince Sultan, another royal grandson and the Saudi defense minister.

When the Dutch giant Phillips won a phone contract worth over six billion dollars, an estimated twenty percent of it went for payoffs. The bribing had become so blatant and expensive during the boom times that the government had to limit the number of companies a single person could represent, and to put a five percent cap on the value of the payoffs per contract. In the early 1980s, foreign visitors were still paying bribes not only for obtaining contracts but also for housing, hotel rooms and even seats on air flights.

A 1995 Business Week profile of Ibn Saud's grandson Prince Alwaleed shows how private wealth and control turns royalty into a new layer of capitalists, almost indistinguishable from their counterparts in the West where the main part of their capital is invested. Alwaleed has a princely stipend (now worth a quarter of a million dollars a year), but his current net worth is ten billion dollars. He made up the difference by serving as a middleman for foreign deals. He began in 1982 as the middleman for a lucrative Saudi military construction contract. In the last five years he has bailed out one of the biggest banks in the world, Citicorp, and also helped shaky Euro-Disney. He may be photographed with his fax and his cellular phone in the Saudi desert playing the sheikh, but he is able to do business exactly like other Western capitalists, making deals with Christian and Jewish financiers even though these latter are on their way to the Islamic hell reserved for non-believers.

Saudi royalty not only controls vast resources and vast personal wealth, but they also make all the political decisions in a country with no parliament, no congress, no constitution, no political parties. The family council controls all government jobs, runs all departments and picks all governors of the provinces.

... and the Majority

Exact details on the rest of the population are not so easy to obtain, but we know wealth does not reach the majority. Given the life of royalty in Saudi Arabia, the majority share of the $6,000 per capita must average considerably less. Every morning, Prince Alwaleed's servants supposedly give money to 60 beggars outside his compound. If this is anything more than a good publicity idea for his Business Week article, Alwaleed is giving charity to 20,000 poor people annually, which testifies to a very high level of poverty in Saudi Arabia.

Work in agriculture employs one person out of every six. That was not always the case, for agriculture traditionally had meant only herding. With the advent of petro-dollars, the Saudi government began heavily subsidizing the price of wheat. The country became self-sufficient in food, importing only luxuries, unlike most underdeveloped countries. Moreover, it has been the policy of Saudi kings to spread financial gifts among the desert tribesmen. We have no way to know the details of how the spoils were distributed. But it was obviously the landowners who benefited, not the agricultural laborers who remain poor.

Government work accounts for a third of jobs, according to U.S. publications. This is typical of underdeveloped countries with few industries to absorb their increasingly urban population. These jobs are no longer guaranteed, as they were a decade ago. And many are described as make-work jobs, since all real decision-making goes through the royal council.

One quarter of the workforce is listed in industry, that is, in oil-related work, and one fifth is "service and commerce." The U.S. figures suggest that Saudi males in the workforce number about two million and foreigners make up about three million. These numbers are highly politicized because the Saudi government does not want to admit its dependence on a foreign workforce.

Political events in the Middle East have always determined which foreign workers were welcome in the kingdom, and which were not. Engineers from the West have been a common sight there from the kingdom's beginnings, for obvious reasons. When the convulsions of nationalism led in the mid-1960s to the split in Yemen between the so- called Marxists and the Saudi-subsidized royalists, Yemeni servants became less popular. Likewise in the oil fields, the politics in Egypt and among Palestinians determined which workers received or were denied work permits in Saudi Arabia. Workers from Pakistan began entering the oil fields in the 1970s. They were Muslim and not from an area of the world experiencing political upheavals. In construction, South Koreans held contracts and did labor in the oil boom.

In a country where strikes and organization of unions are strictly forbidden, it's difficult to know how many workers are fed up with their lives and with the regime. But histories do mention two strikes against Aramco in the 1950s and a strike against Hyundai by construction workers facing slave-like conditions in 1977. In both cases, it seems the strikers were foreign workers, not Saudis.

Snakes in the Garden of Eden

As we view this snapshot of a modernized desert kingdom based on oil wealth, we see the attempts to maintain a social system, a way of life more or less in place a thousand years ago. Perhaps it is most obvious in the position of women.

Women exist in the workforce only as servants. They are prevented from taking other jobs, as they are prevented from being seen in public without their black robes and a male escort; women cannot drive a car, nor eat, work, play or study around men who are not their own families. Saudi women traditionally had no education; rioting occurred when they were first admitted to state schools in the 1960s.

In a certain way, all Saudi women can be viewed as domestic servants. Until 1962, slavery was legal and practiced. A fatwa, an Islamic law, stated that the Koran [the holy book of Islam] approved slavery. After 1962, the former slaves simply became "domestic servants" of the wealthy for whom they already worked.

The religion itself acts as a brake on opposition, since the traditional thinking prescribes a place for each within the family, state, and tribe, under the dominion of an Islamic royalty. The Saud family religion is the Wahhabi version of Islam, which is quite orthodox in its practices. The kingdom is meant to be a place of strict adherence to Islamic law, as interpreted by the Sauds. Other religions can not be practiced. This gives the Saud family a profitable sideline business, thanks to the Islamic duty of all devout Muslims to visit the holy cities of Mecca or Medina, located in the western portion of Saudi Arabia. Thus the House of Saud does its duty as defenders of the faith.

Saudi Arabia spent the most per capita of any country in the world in 1990 for its military, according to World Military Expenditures. And for years it has been either at the top or very near the top in this spending. So the potential for repression is both physical and mental. Dissident clerics can be beheaded as quickly as terrorists accused of bombings. The 1979 take-over of the Grand Mosque in Mecca by a messianic cleric named Juhaiman and his followers was quickly suppressed. Juhaiman and forty-one Saudis were beheaded and a larger number of followers were killed when the military stormed the area around the mosque.

Saudi rulers have tried to make sure no avenue for dissent exists. News, television, videos, articles, books and publications from abroad are censored, if not suppressed altogether. A dissident cleric in exile in London may send his faxes or e-mail, but he keeps out of Saudi Arabia if he doesn't want to spend time in jail like two other dissident clerics imprisoned since 1994 for their criticisms of the regime.

Even royals can face repression. A nephew of King Feisal was found guilty of assassinating his uncle and beheaded. A royal great-granddaughter was killed with her lover for the crime of adultery.

Saudi Arabia is an absolute monarchy of the kind which fell in Europe two to three centuries ago. The Saud family became its rulers after Ibn Saud conquered other desert tribesmen in a series of local wars starting in 1902 and concluding in 1934, when he could not defeat the tribe which became the rulers of Yemen.

Since Saud's death in 1953, four of his sons have been king so far. As the rest of his sons are all in their sixties and seventies, it is doubtful that many others will become king in turn. A family council collectively decides who will take which position. It is, incidentally, quite capable of getting rid of problem members. For example, when Ibn Saud died, the crown prince and eldest living son, a known playboy and drunk, was put aside. His brother Feisal was able to get his religious advisers to use a fatwa stating a ruler had to be worthy. Feisal deposed Saud and took the throne from him.

This country, which was accepted by the world as a kingdom in 1932, has kept U.S. support since its inception.

An Explosion Waiting to Happen?

The long U.S. support for the Saudi regime has not backfired up until now. The oil has continued to flow, even during crises. The Saudi oil minister of the 1970s, Zaki Yamani, even acted as a force within OPEC for the moderation of price increases.

But seemingly stable situations in the past have turned into political nightmares before this. Prior to 1979, the Shah of Iran was, according to his Western supporters like Kissinger and Rockefeller, a force for modernization and stability in the Middle East. The Iranian revolution showed the world that millions of Iranians were willing to risk their lives to be rid of the Shah and his torturers and technicians.

The latest news suggests that the current Saudi bombers, like the four beheaded after the 1995 bombing of U.S. soldiers, were not only dissident Muslims, but were also among the thousands of Saudis who went to fight in the war in Afghanistan. They may have received their education in explosives from the CIA, which ran training camps there during the conflict with the former Soviet Union. How ironic that the "good" fundamentalists, that is, those in Afghanistan or Saudi Arabia, might prove as inimical to Western interests as the "bad" fundamentalists, that is, those in Iran or in the West Bank or Lebanon, the ones called terrorist by the United States.

Usually, fundamentalism in the Middle East can play on religious divisions to shake up a regime. But the Saudi regime is, at least outwardly, devoutly fundamentalist. But its apparent stability covers deep and growing contradictions. The fact that the so-called defenders of the Islamic faith rely on the United States to maintain their power, allowing Western troops to stay in the country, is just one of those contradictions. Maybe it is not the most explosive, but it is the one most visible to those angry with the regime. Is it any wonder if the victims of this regime take aim first of all at that symbol?

The firemen for imperialism have until now managed to quench the fundamentalist flames licking underneath the House of Saud. But who can know when the flames might flare up again!