SAUDIS HOLDING POTENT WEAPONS TO SWAY U.S.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000100150077-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: August 29, 2012
• Sequence Number: 77
• Publication Date: July 7, 1982
• Content Type: OPEN SOURCE

STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/08/29: CIA-RDP90-00965R000100150077-4
ART I CLE APPEARLD
ON PAGE_T, C. 9
WASHINGTON POST
7 JULY 1982
Saudis Holding
Potent Weapons
To Sway U.S.
The United States today is more
vulnerable to foreign pressure than it
has been since the early days of the
republic. This pressure is wielded by
the remote desert kingdom of Saudi
Arabia, whose vast oil wealth is mis-
matched to a small, backward pop-
ulation.
The cautious Saudi rulers are
aware that their influence is not
rooted in real power. They are in-
clined, therefore, to deliver their
threats delicately, lamenting that it
must be done and scolding us gently'
for the follies which force them to do
so.
The latest threat was precipitated
by the Israeli thrust into Lebanon.-
It's not, the Saudis explained for-
lornly, that they want to cut off oil
shipments to the United States and
?withdraw their billions from U.S. re-
positories. But the internal dynamics
of the Arab world may compel them,
however reluctantly, to use their eco-
nomic weapons against the United
States unless the Reagan adminis-
tration can restrain Israel.
This strange tyranny of the weak
over the strong may be succeeding.
For President Reagan appears to be
acquiescing to the Saudi demands
Secretary of Defense Caspar Wein
berger, who wants to take a harde
line with Israel, has now prevailed
over outgoing Secretary of State Al
exander Haig. Supporting Weinber-
ger is the president's national secu-
rity adviser, William Clark, who has
fired some pro-Israel Strategists from
the National Security Council.
Then add George Shultz, who has
been appointed to take flaig's place.
Both Shultz and Weinberger were
brought into the Reagan administra-
tion from Bechtel, which did a min-
imum of $666 million worth of busi-
ness in the Arab world last year. By
far their biggest single customer was
Saudi Arabia.
The Saudis can surely be forgiven
if they get the idea that their be-
hind-the-scenes threats had some-
thing to do with Reagan's realign-
ment of his policymakers.
It's easy enough for Americans to
understand the consequences of a
Saudi oil embargo: gas station lines
and huge increases in fuel prices.
But the threat of withdrawing Saudi
investments from the United States "
is not so easy to grasp.
The Saudis have poured billions
of petrodollars into US. banks, busi-
nesses and land holdings. Their in-
vestments have given them a silent
partnership in ever-widening circles
of our business community.
But their biggest partner is the
US. government itself. Of the esti-
mated $50 billion worth of known
. Saudi investments in this couii ?
- the bulk is in Treasury bills an
r other government securities. This-.
gives the tribesmen in their bur-:
- nooses great clout in the backrOdms-
of the State, Defense, Treasury and
Energx departments. ; !, '4.
-The reason is that a sudden
wholesale withdrawal of Saudi hinds (
would cause serious disruption of the '
U.S. economy. If the Saudis cashed
in their Treasury chips and trans"ferred their billions to banks abroad,
the federal government could still
borrow the money back from crier- ?
seas. But the move would drive op ?
interest_ rates, undercut* business ,re-
covery and prolong the recession and -
high unemployment. ?
As far back as 1978, a CIA report
warned that "temporary dislocation
of international. 'financial markets
would ensue if the Saudi Arabian --'
government ever chose to use its ac-
? cumulated wealth as a political ,
weapon." This is now precisely what.:
the Saudis are threatening to do. ? .
What can the U.S. government do'
. to counter such a Saudi move? The
answer is: freeze their assets. 'Treat-'.
ing the Saudis like the outlaw Iran-
ian government of Ayatollah Kho-
meini would have disastrous political
effects, of course, but it would be ef-
fective.
Except for one thing: the Treas-
ury might noeinow the Saudis were -
pulling their money out until too
late. Information on Saudi invest-
ments is scarce. ? .n.`"
Declassified in Part - Sanitized Copy Approved for Release 2012/08/29: CIA-RDP90-00965R000100150077-4