KEY ISSUES IN SAUDI FOREIGN POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP06T00412R000200160001-1
• Release Decision: RIPPUB
• Original Classification: T
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• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: REPORT

W
National
Foreign
Assessment
Center
Saudi Foreign
Policy
Key Issues in
An Intelligence Assessment
State Dept. review completed
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National Ton Secret
Foreign
Assessment
Center
Key Issues in
Saudi Foreign Policy
Information available as of 2 March 1981
has been used in the preparation of this report.
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Top Secret
Key Issues in
Saudi Foreign Policy
Key Judgments Saudi efforts to promote Arab unity under moderate leadership and to
maintain close ties to the United States have long served as the basis of
Saudi Arabia's foreign policy and search for security. Because of growing
Arab disenchantment with American policy, however, Saudi leaders find it
increasingly difficult to reconcile these objectives. The Saudis in recent
years have become disillusioned with US Middle East peace efforts and
bitter over what they view as US unresponsiveness to their defense needs.
Moreover, they are no longer sure they can count on the United States to
check Soviet expansionism or to pursue policies in harmony with basic Saudi
security interests. These factors taken together have contributed to an
erosion in Saudi confidence in the United States that threatens to undermine
the "special relationship." 25X1
Ironically, recent US moves to reassure the Saudis of the American commit-
ment to their defense against Soviet encirclement have increased their
misgivings about the direction of US policy. The Saudis fear that a US
military presence near the Persian Gulf could be destabilizing and would
prefer that the United States act more discreetly to help its friends.
Moreover, US efforts to enlist the Saudis' cooperation in pre-positioning
equipment have aroused suspicions that the US may be trying to perpetuate
their dependence on the US-and thus reduce Saudi Arabia's room for
political maneuver.
25X6
Saudi leaders believe that pressures will increase from domestic as well as
Arab sources to wield the "oil weapon" because of continued US support for
Israel. Ineffective US criticism of Israel's annexation of Jerusalem and
settlement activities on the West Bank embittered many members of the
Saudi elite and caused Saudi leaders to doubt that the US will ever press
Israel for meaningful concessions. 25X1
As a result, the Saudi Government has taken steps over the past year or so to
broaden its security links to non-US suppliers and to put greater political
distance between itself and the United States. France in particular has
benefited from this shift, although it remains a distant second behind the US
as an arms supplier. Similarly, the Saudis have strengthened their security
ties with regional allies, turning to Pakistan for combat forces to bolster
their weak defenses against the Marxist regime in South Yemen.
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The Saudis, however, still look to the United States as their ultimate
protector against Soviet-inspired threats and hope to return relations to a
firmer footing. The Soviet invasion of Afghanistan has made more acute
Saudi Arabia's sense of vulnerability to Soviet pressure, but it also has
created in the Saudi view strong justification for greater US arms aid. The
US response to the Saudi request for F- 15 accessories has, therefore, become
a test in Saudi eyes of the US commitment to their security
Over time and barring new Soviet moves, the shock of the Soviet invasion of
Afghanistan will diminish. Saudi conviction that the unsolved Palestinian
problem most acutely threatens their security will again dominate their
thinking. Continued Saudi willingness to accommodate US oil and strategic
interests will be greatly influenced by the approach the US adopts toward
this issue. Although not an elected government, Saudi leaders see limits
imposed on them by emotion-laden opposition to the current US approach
among the citizenry and within the royal family. The leadership, therefore,
will press the US hard-directly and through the West Europeans-for a
new negotiating strategy.
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Key Issues in
Saudi Foreign Policy
Quest for Security
Saudi foreign policy is driven by an overriding concern
for security. The search for security underlies Saudi
relations with the United States and the West in
general as well as Saudi efforts to promote Arab and
Islamic solidarity. Saudi Arabia is basically a weak
country surrounded by stronger neighbors. Consolida-
tion of disparate tribal elements under one ruler oc-
curred less than 60 years ago. Modern governmental
institutions are not well developed; the country has a
one-resource economy, poor population resources, and
a weak military.
Recent developments have placed Saudi Arabia under
conflicting pressures. The Soviet invasion of Afghani-
stan underscored the value of the US-Saudi tie, while
US policy toward Israel and the unresolved Palestinian
question have tended to undermine that relationship.
The perceived danger from Moscow is not complicated
and, in Saudi opinion, should be dealt with at the
superpower level. The Palestinian issue, they believe,
radicalizes Arabs, opens opportunities for greater
Soviet involvement in the area, and subjects moderate
Arab governments to pressures to adopt policies-use
of the oil weapon, for example-that may run counter
to other long-range interests. Saudi foreign policy is
very much an attempt to deal with these ambiguities.
? Demonstrate the Saudis' commitment to the Pal-
estinian cause and increase Saudi influence over the
Palestine Liberation Organization.
? Counter the spread of Soviet influence in the Middle
East and Africa.
? Foster a resurgence of Islamic fundamentalism as a
bulwark against leftist revolutionary forces at work25X1
in the region.
? Until 1979, underwrite Saudi Arabia's alliance with
Egypt. 25X1
Saudi financial support, for example, played a key role
in President Sadat's decision in 1972 to eject the
Soviets from Egypt and the subsequent turn of Sudan
and Somalia away from Moscow. The Saudis have 25X1
tried to use similar inducements to undercut Soviet
influence in Syria, North Yemen, and even Marxist
Even a cursory examination of the Saudi foreign aid
program-which now almost rivals the US program in
size-underscores the Saudi approach to maximizing
security
The bulk of this aid has
been intended to accomplish complementary
objectives:
? Bolster conservative and moderate regimes from Mo-
rocco to Pakistan.
? Strengthen the frontline Arab states against Israel,
with the aim of promoting a peace settlement.
The Saudis recognize that their strategic as well as 25X1
economic interests are tied to the West and have
adjusted their oil policy accordingly. The Saudi de-25X1
cision to freeze oil prices from 1976 through 1978
reflected their fear that rising oil costs might trigger a
new recession in the West and help Communist parties
come to power in several West European states. At the
same time, the Saudis have manipulated their growing
state-to-state oil sales, lucrative commercial contracts,
overseas investments, and arms purchases to deepen
the West Europeans' stake in the survival of the Saudi
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monarchy and to prod the European Community to
play a more active role in the Middle East peace
process
The American Connection
Saudi leaders, however, are aware of the limitations on
the West Europeans' ability to influence Israel and to
counter the Soviets in the area. As a result, they have
traditionally looked to the United States as their most
important strategic ally. Since the October 1973 war
the US-Saudi friendship has evolved into an alliance
based on a mutually beneficial trade-off. Saudi oil
sales and policy and Saudi markets for American
goods are exchanged for US help in providing technol-
ogy and expertise for Saudi Arabia's ambitious eco-
nomic development program; building Saudi defense
capabilities and providing a shield against external
aggression; and promoting a resolution of the Arab-
Israeli dispute.
US exports to Saudi Arabia, for example, have grown
more than fivefold since 1973 in constant 1975 dollars,
making Saudi Arabia the seventh largest trading part-
ner of the US worldwide. Over the past five years, US
companies have signed defense contracts with the
Saudi Government worth about $12 billion for hard-
ware and related training and technical services, plus
an additional $3-4 billion for military construction
projects.
In return, Saudi Arabia supplies just over one-fifth of
US oil import needs. But cooperation on oil matters
goes beyond that. The Saudis used their predominant
position within OPEC for several years to hold down
oil prices, partly in response to US urging, until the
Iranian revolution broke their ability to do so. Since
mid-1979, they have kept oil production above their
preferred 8.5 million barrels-per-day ceiling in order to
help make up shortfalls on the international oil market.
The Saudis increased production to 9.5 million barrels
in July 1979 at the behest of the United States, and
they added another 500,000 barrels after the start of
the Iran-Iraq war last fall.
Recent softness in the international oil market has
allowed the Saudis to regain some leverage over world
oil prices. Saudi oil policies are designed to maintain
and increase this leverage partly in the hope that it can.
proach to the Palestinian problem
Growing Strains
The US agreement in mid-1978 to sell 60 F-15 Eagle
fighters to Saudi Arabia over strong Israeli opposition
marked a high point in recent US-Saudi relations. For
the Saudi leadership, the symbolic importance of the
sale far outweighed the defensive value of the planes,
which are not scheduled for delivery until next year.
Saudi confidence in the US commitment
to their security also was bolstered, easing earlier 25X1
disappointments over US reactions to Soviet advances
in the Horn of Africa and elsewhere
The decision of the United States and Egypt, only a
few months later, to conclude the Camp David Ac-
cords without prior consultation with Saudi Arabia
came as a rude shock. The Saudis deeply resented
being taken for granted and forced to choose between
their two closest allies-the US and Egypt-and the
rest of the Arab world over an agreement they believed
was fundamentally flawed.
Rather than defusing the Arab-Israeli conflict, the
Camp David Accords have, in the Saudi view:
? Dangerously polarized Arab politics.
? Neutralized Egypt as a moderating force.
? Increased the vulnerability of leaders friendly to the
United States, making future cooperation more dif-
ficult and politically risky.
? Handed the Soviets and their regional allies an op-
portunity to increase their influence.
? Failed to address adequately the Palestinian prob-
lem, which they believe is the greatest threat to
regional stability.
A number of other problems since 1978 have contrib-
uted to a steady erosion in US-Saudi relations and to
declining Saudi confidence in the United States as a
reliable ally. The Saudis are questioning the ability of
the US to defend its own strategic interests, let alone
protect Saudi Arabia against its enemies. Develop-
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ments that have contributed to this perception are
the fall of the Shah of Iran, the inability of the United
States to rally its European allies to take stronger
measures against the Soviet intervention in Afghani-
stan, the failure of the US mission to rescue the hos-
tages in Iran, and the inadequacy-in the Saudi
view-of US assistance to Pakistan and Somalia
against Soviet threats. These doubts have been only
partially offset by the prompt US response to Saudi
calls for help during the war between the two Yemens
in February 1979 and the dispatch of AWACS aircraft
to Saudi Arabia shortly after the outbreak of the Iran-
Iraq war last fall.
The recent heavy emphasis on the development of a US
Rapid Deployment Force has reinforced Saudi misgiv-
ings about the direction of US policy. They fear that a
US military buildup-if not handled more deftly and
discreetly than it has been so far-will provoke the
Soviets into matching the US effort; stimulate greater
Soviet and Arab radical subversion against Oman,
North Yemen, and other pro-Western states in the
Persian Gulf; and increase the likelihood of a super-
power conflict in the region. Moreover, US efforts to
draw the Saudis into contingency planning and pre-
positioning equipment have aroused suspicions that the
US may be trying to perpetuate the Saudis' depend-
ence on the US rather than bolster their defenses-and
thus reduce their room for political maneuver. They
would prefer that the US demonstrate its resolve
against the Soviets elsewhere; keep US forces dis-
creetly at a distance from the area; and help its friends
more indirectly by selling them arms so that they can
better defend themselves. Recent Saudi efforts to forge
formal security ties with the smaller Persian Gulf
states in part reflect their desire to keep both super-
powers out of the Gulf.
The Saudis have come to see the special relationship as
increasingly tilted in favor of the United States. Crown
Prince Fahd has become especially vulnerable domes-
tically to the charge that he is too accommodating to
the US on oil production and pricing matters and has
received too little in exchange-both on arms and the
Palestinian issue. As a result, Fahd has had to fend off
increasing domestic pressure to cut oil production.
Conservation-minded technocrats worry about wasting
the country's only natural resource. Social conserv-
atives fear that the present massive injection of oil
revenues is leading to uncontrollable social change.
25X1
Both Saudi officials and US businessmen believe that
US export and tax laws are undermining US-Saudi
commercial ties. Of the 163 major construction con-
tracts awarded since 1976 by the US Army Corps of
Engineers-which oversees these projects for the
Saudi Government-only 20 have gone to American
companies. The others have gone to West European
and Asian firms able to underbid the US companie,25X1
Similarly, US income tax laws are discouraging
ARAMCO, which manages the major Saudi oilfields,
and Saudi Government agencies from hiring addi-
tional American contract personnel because they cost
more than other expatriates. 25X1
Above all, the failure of the US in the Saudi view to
disassociate itself more forcefully from the Israeli
Goverment's provocative settlement policy and formal
annexation of East Jerusalem last year has embittered
many members of the Saudi elite
The effect has been a 25X6
weakening of Saudi resistance to domestic as well as
Arab pressures to put more distance between them-
selves and Washington and to wield the "oil weapon"
on behalf of the Arab cause. 25X1
Diversification Efforts
Because of Saudi disillusionment with US peace ef-
forts and its growing sense of vulnerability, Riyadh has
increased its efforts over the past two years to diversify
the sources of its arms and to reduce its dependence on
the United States for other security assistance. France
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in particular has benefited. The Saudis have concluded
arms contracts with the French worth about $4.4 bil-
lion since 1979, including a recent contract for $3.4
billion in French naval equipment. The Saudis signed a
security cooperation agreement with France last
The Saudi-French romance has blossomed for several
reasons. The French are far more pro-Arab than the
other West Europeans on the Arab-Israeli dispute,
publicly calling for Palestinian self-determination.
Purchase of French arms involves no implicit Saudi
political commitments.
The Saudis have instead turned to the West Europeans
and their old ally, Pakistan. Seconded Pakistani mili-
tary personnel have long performed vital support func-
tions for the Saudis; several thousand Pakistanis are
scattered throughout the Saudi armed forces. It was
only a short step for the Saudis to ask for Pakistani
combat forces when the 1979 Yemen crisis made clear
to Saudi leaders that their forces were too weak to
intervene in North Yemen and possibly to defend
Both Prince Sultan and
Prince Nayif, the powerful Ministers of Defense and
Interior, have close personal and business ties with the
French. And finally the Saudis probably believe their
arms purchases from France lend greater credibility to
their veiled warnings that they will turn elsewhere for
arms unless the United States is more responsive to
their political and security needs.
France is not the only European country to benefit
from Saudi unhappiness with the United States. Ri-
yadh has also turned to the British and West Germans
for arms and internal security assistance. The Saudi
request for Leopard tanks from Bonn is the most recent
example.
The fall of the Shah and the Saudi break with Egypt
have also prompted the Saudis to strengthen ties with
regional allies, especially Morocco and Pakistan, and
to improve relations with an old adversary, Baathist
Iraq. The Saudis have provided almost $1.4 billion in
aid to Morocco over the past few years to help King
Hassan stay in power and are working closely with the
against a South Yemeni attack.
Riyadh has no such financial leverage over Iraq, and
relations are colored by mutual distrust and ideological
differences. Nevertheless, the old chill has been re-
placed by closer cooperation as a result of a conver-
gence of Iraqi-Saudi interests over the past two years.
Common opposition to the Camp David Accords has
been one factor. Saudi gratitude for Iraqi help in
settling the Yemeni crisis is another. A closer personal
rapport has developed between Iraqi strongman
Saddam Hussein and Crown Prince Fahd. More
important, the Iranian revolution has forced the two
former adversaries to look to each other for support. In
addition, the Saudis have been encouraged by and have
sought to encourage the growing strains between Mos-
cow and Baghdad and have found common cause with
Iraq within OPEC against the price hawks-Libya,
Algeria, and Iran
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Since the start of the Iran-Iraq war, moreover, Bagh-
dad has found itself increasingly dependent on Saudi
Arabia, Kuwait, and Jordan for political support and
assistance in moving much needed supplies, including
arms, overland to Iraq. The Saudis have turned this
situation to their advantage to encourage greater Iraqi
flexibility on the Arab-Israeli question and to promote
a private rapprochement between Iraq and EgyptF-
has mushroomed in importance because of Saudi dis-
appointment with other aspects of US policy. It has
become a test for the Saudis of whether the US or
Israel will dictate the terms of the US-Saudi defense
relationship. US Congressional approval of the sale,
therefore, would help restore Saudi confidence in the25X1
US commitment to their security and increase their
willingness to cooperate on regional security matters-
It would also increase the Saudis' 25X1
25X1
ability to a ect domestic and Arab pressures to use
If the Saudis succeed in bringing Baghdad and Cairo the "oil weapon" and thus buy the US more time to 25X1
together, they would find it easier to cooperate with consider its next moves i
th
Middl
E
n
e
e
ast peace
Egypt
against commonly per- process.
25X1
ceived threats, such as the Libyans and Soviets. The
Saudis would still be reluctant to embrace Sadat
openly unless there were substantial progress toward a
resolution of the Palestinian problem, or Sadat broke
with the Camp David peace process. Their hope is that
Sadat will look for a way to rejoin the Arab fold.
Without such a face-saving device, the Saudis fear a
Saudi-Egyptian reconciliation would intensify di-
visions in Arab ranks and bring about their own isola-
Finally, the sale would strengthen the political position
of Crown Prince Fahd, the strongest advocate within
the Saudi leadership of close cooperation with the US
and still the most influential policymaker on oil mat-
ters. Fahd has a much stronger emotional attachment
to the US than many of the younger, more nationalistic
members of the Saudi elite-royal and nonroyal-who
are pressing him to adopt a more independent policy 25X1
toward the US. Foreign Minister Prince Saud, a son of
the late King Faisal, is the most prominent and in- 25X1
If Iraq should adopt more moderate policies over the
longer term, the political landscape in the region would
be substantially changed and prospects for negotia-
tions would probably improve. It is too soon to tell,
however, whether these fragile relationships will hold
together. The longstanding rivalry between Iraq and
Egypt for Arab leadership and conflicting Saudi and
Iraqi interests in the Persian Gulf could still undo all of
the efforts at closer cooperation among these states.
A Look Ahead
Despite the strains that have developed in US-Saudi
relations, the Saudis still look to the United States as
their ultimate protector against Soviet-inspired threats
and hope to return relations to a firmer footing. They
probably have been encouraged by the new, tougher
line toward Moscow emanating from Washington and
the new administration's initial criticism of Israeli
settlement activity. But they will wait to see how this
rhetoric is translated into action.
Much will depend on the US response to the Saudi
request for the F- 15 enhancement package (fuel pods,
bomb racks, KC-135s, and AWACS). The arms issue
25X6
Fahd also has come under heavy pressure from another
quarter-his ambitious younger brother Defense Min-25X6
ister Sultan-to press the F-15 accessories issue as the
Sultan has become increasingly powerful over thQ25X1
past year or so as a result of his role in defense matters
and influence with the aging King Khalid. Fahd is 25X1
politically vulnerable because of his close identification
with the United States, and his dependence on Sultan's
support. A US refusal to sell the F- 15 enhancement
items could lead to a withdrawal of Sultan's support
for Fahd's pro-American policies.
25X1
No matter how responsive the United States is to Saudi
arms requests, the Palestinian issue will continue to
bedevil bilateral relations. Because of the change in
US administrations and the Israeli elections at the end
of June, the Saudis probably are resigned to the peace
process marking time until the fall. In the meantime,
they will maintain pressure on the US to discard the
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Camp David negotiating framework, which they re-
gard as bankrupt and a cover for a separate Egyptian-
Israeli peace.
Using the recent Islamic summit conference as a
springboard, Riyadh already has called for a jihad-a
holy struggle. The call is designed to further isolate
Israel diplomatically and to keep the international
spotlight focused on the Palestinian issue. The Saudis
almost certainly will press the West Europeans to move
ahead with their own peace initiative in order to buy
time, if nothing else. The Saudis do not regard the
West European initiative as a viable substitute for an
American one. They only hope that Washington's
NATO allies can help persuade it to change negotiat-
ing tacks.
Whatever new approach emerges, the Saudis believe
that the Palestine Liberation Organization must be
included in the negotiating process. They, however,
have no clear idea how this can be done.
The Saudis acknowledge that no negotiating progress
was possible during last year's US presidential cam-
paign. But by next fall, they will expect the US admin-
istration to take steps to break the present deadlock.
They also hope the US, at a minimum, will endorse the
Palestinians' right to self-determination and will take
stronger steps to disassociate itself from Israel's settle-
ment policy
would not serve their long-term interests and might
invite US retaliation.
Rather the Saudis would, at a minimum, balk at
coordinating strategic planning and become less
responsive to US requests for help in funding arms
purchases for US clients in the region, such as Oman
and Somalia. In addition they probably would turn an
increasingly (leaf ear to US demarches on oil pricing
and,production policies that run counter to their nar-
rower self-interest; enforce the Arab boycott more
strictly against American companies doing business
with Israel; accelerate their turn to Western Europe
for arms; discriminate against US firms competing for
Saudi Government contracts; and use their state-to-
state oil sales more to prod the West Europeans to
recoenize the: PLO and isolate the US on this issue.
safeguarded.
Paradoxically, the Saudis would see such anti-US
measures as necessary not only to protect themselves
but also to lay the basis for a more equitable relation-
ship between Riyadh and Washington. Rightly or
wrongly, Saudi leaders have become convinced that
progress toward Palestinian self-rule must precede
broader strategic cooperation with the US against the
USSR if their long-term security interests are to be
Without a credible demonstration of US resolve to
move the peace process forward, Saudi leaders prob-
ably will feel compelled to increase their diplomatic
pressure and loosen their ties with the US in order to
protect their domestic position and relations with other
Arab states. They would be unlikely to resort to
confrontational tactics or threats. They realize that
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