Oil and Arms in the USA – Saudi Arabia Relationship

Article written by: Hugo Neves

With the recent agreements to normalize relations between Israel, the UAE and Bahrain since 2008, the US’s progressive bet on energy self-sufficiency, largely due to the hydraulic fracking and the necessary investment in renewable energies, both the relationship between the USA and Saudi Arabia, as well as the role of the Middle East in the world energy market has undergone changes that may manifest itself even more dramatically in the future. For this reason, this article proposes to do a succinct exposé of the importance of these factors in the complex historical relations between the secular constitutional republic of USA and Islamic and ultra-conservative monarchy of Saudi Arabia, as well as their impact on the world energy market and the conflicts in the Middle East, relating them to the new reality.

The diplomatic and commercial relations between the countries started in 1933, a year after the creation of Saudi Arabia, based on mutual energetic and security interests from the start, exchanging the production and exportation of oil to the USA, for the exportation of military weapons to its counterpart, initially an extremely poor and unprotected country. Both would become each other’s biggest trading partners – the Kingdom of Saudi Arabia, ruled by the Al Saud royal family since its creation, would become the largest arms importer from the USA, and the US the biggest importer of Saudi oil. The California Arabian Standard Oil Company (CASOC), later known as Arab American Company (ARAMCO) and currently Saudi ARAMCO, started oil exploration in 1938. The first USA embassy in the country would be established in 1944, and in the following year, the general terms (oil and arms) of the lasting trading relationship, when USA president Franklin D. Roosevelt met with the Saudi king Abdulaziz and included in the negotiations a request to establish an American military base in Saudi Arabia. In 1950, in the same decade in which Mohamad Mosaddegh – the Iranian prime minister who nationalized the Anglo-Iranian oil company – was deposed, ARAMCO and Saudi Arabia enter into a 50/50 agreement to share the profits from the sale of Saudi oil. The following year, the Mutual Defense Assistance Agreement was signed, signaling the start of massive arms exports to Saudi Arabia and the creation of the intended permanent American military base in the country.

In 1960, the Organization of the Petroleum Exporting Countries (OPEC) was founded to protect the interests of the oil-exporting countries in the Middle East and Venezuela, and from 1973 to 1974, Saudi Arabia would participate in the OPEC oil embargo to the USA due to its military support of Israel in the Yom Kippur War. This embargo would seriously affect the US economy, showing the importance of intergovernmental organizations in the bilateral relationship. On the other hand, from 1979 to 1988, Saudi Arabia was an important ally of the United States, supporting the Afghan resistance to the Soviet occupation of the country, in which Osama Bin Laden – founder of Al Qaeda in 1988 – would participate with logistical and financial support, demonstrating alignment in military strategy. Additionally, in 1990, when Saddam Hussein’s Iraq invaded Kuwait, Saudi Arabia declared war with US military support, which strengthened the alliance. In 1994, Bin Laden was expelled from Saudi Arabia and on September 11, the well-known terrorist attack involved 15 Saudi citizens among the 19 identified agents, which generated mistrust regarding the bilateral relationship. Indeed, one of the reasons mentioned for the terrorist attack was the buildup of American troops in Saudi Arabia after the Gulf War.

During the Obama administration, the president’s willingness to negotiate with Iran (the main Saudi opponent in the region) and the absence of intervention in the Syrian Civil War caused renewed tension between the two countries, although the diplomatic and commercial relationship was maintained as a priority for both, with public manifestations of support from both sides. In fact, the public perception of this relationship was not particularly beneficial for an American administration with a positive image in international terms, but only the next administration exceeded the value of arms sales to Saudi Arabia during its term. In 2014, Riyadh drastically lowered the price of its oil sales due to several factors, including domestic production in the USA using fracking. The current Trump administration defined this relationship as one of its priorities, defending the close ties between both countries with his first official visit as president to Riyadh, while Saudi Arabia continued to benefit from American weapons for its participation in the Yemen Civil War. The Trump administration publicly demonstrated an approach, comparing to the previous Obama administration, which led the Saudis to defend some of their less popular political decisions, as part of Iran’s concern about terrorism and regional influence. Recently, in 2018, the incident of the death of a Saudi journalist in Istanbul resulted in the blocking of arms sales to Saudi Arabia and the UAE by the American congress and senate relating to a Trump proposal; the following year, at the American naval base in Pensacola, another incident involved a member of the Saudi Royal Air Force.

Regarding the global influence of the Middle East in the energy resources market, about 48% of the world’s oil reserves are in that region, amounting to just 3.4% of the earth’s surface, which translates into international coveting and the continuous search to influence and negotiate, or intimidate and attack countries like Saudi Arabia (17%), Iran (9%), or Iraq (8.5%). These interests are without a doubt at the core of the foreign policy orientation of successive US administrations, but to what extent can the country’s serious human rights deficiencies be ignored – with the exceptional example of the 2018 arms embargo – its participation in wars and indiscriminate attacks on civilians with American weapons, or their involvement in terrorist activities, from Afghanistan, to Jordan, Syria and Yemen? In 2015, Hillary Clinton and John Podesta even mentioned the Kingdom’s financial support for ISIS and other Islamic extremist groups.

‘’America’s full support to Zionism and against Arabs makes it extremely difficult for us to continue to supply the United States with oil, or even to remain friends with the United States.’’

                                                                            Faisal bin Abdulaziz Al Saud, 1973

Both Israel and Saudi Arabia have been the two major US allies in the Middle East for the past 70 years. However, despite the recent approach of the Gulf countries to the former and a common enemy, the relationship between these two allies remains of great tension, mainly due to the Palestinian cause, religion, and the dominant political interests in religion. The USA also partially changed their dependency relationship in the last decade and the world is moving slowly in the direction of renewable energy sources, which in the long term could mean a bigger weight in US support for Israel and the reduction of the Saudi influence in the region, if it does not find a strong alternative to its current strategy. Perhaps this energetic independence, together with a greater cultural approach through university exchanges and a greater international concern with the financing of extremism, will serve to reevaluate the controversial “convenient marriage” under analysis and the influence of oil and weapons in the foreign policy of both countries.

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