Tragedy in Saudi Arabia: Pitfalls Ahead in Iraq

Abstract: This week's deadly attacks in Saudi Arabia, which killed more than 30 people, show its government must get serious and crack down on al-Qaeda's supporters. The deadly raids also demonstrate why the U.S. must involve Iraqis in the rebuilding of their country and not repeat mistakes made in Afghanistan.

Analysis: Foreigners in Saudi Arabia, living in their gilded security compounds with most of the comforts of home, represent the canaries of the Middle East oil industry.

If U.S. and Arab governments cannot work together to track down the terrorists behind this week's deadly raids in Riyadh and prevent future attacks, then uncertainty will continue to roil oil markets for years to come and weaken the globe's economy.

With care in the face of anger, the U.S. has to show in Iraq that it can help build a better life for repressed citizens long excluded from the region's incredible petroleum riches.

By most media accounts, thousands of U.S., British, Canadian, and citizens of other countries live comfortable lives in Saudi Arabia behind high walls that separate them from most the country's native population. The prison-like conditions, such as armed guards, motion detectors, and security cameras, are part of the price of earning big salaries.

Carefully coordinated attacks on three compounds in Saudi Arabia's capital left at least 34 dead, including eight Americans and nine terrorists. The assaults showed al-Qaeda may have been reduced in the global manhunt that followed September 11, but it can still inflict damage.

President George W. Bush, Vice President Dick Cheney, and other administration officials vowed to track down and even "eliminate" the authors of the attacks. The language may have been extreme but the sentiment behind the words was understandable.

The Saudis have promised full cooperation, but many Americans can be forgiven for being a little cynical about the value of the promises.

In 1996, investigators working on the Khobar Towers bomb attack, which killed 19 U.S. soldiers, ran into many roadblocks from Saudi officials. In the present case, news that FBI investigators on their way to Riyadh were delayed several hours in Europe by the Saudis was not an auspicious start to the search for the terrorists.

The attacks have ratcheted up pressure on the Saudi royal family, particularly Crown Prince Abdullah, the de facto ruler of the desert kingdom where his family has held power since 1932.

He has to walk a fine line between pleasing the West, such as letting the U.S. use military bases in Saudi Arabia in the war against Iraq, and not angering his largely fundamentalist population, where the presence of American troops since 1991 has been a provocation that helped al-Qaeda recruit new members.

If Saudi Arabia wants to convince the world it is serious about fighting terrorism, it needs to clamp down on charities and businesses that allegedly provide the majority of money flowing into al-Qaeda's coffers.

The government must go beyond actions announced late last year, when it said it had frozen some bank accounts and would conduct audits of charities. Reigning in what might be essentially a protection payment scheme--a strategy which, if it exists, has obviously failed--would demonstrate significant commitment to crackdown efforts.

Critics of Saudi Arabia, which include extremes on both sides of the political fence, say this week's attacks demonstrate why the U.S. must reduce its dependence on oil from that country.

The thinking helps explain this week's visit to Russia by Secretary of State Colin Powell. In vivid contrast to chilly relations between Washington and Paris, the Bush administration has worked hard to mend ties with President Vladimir Putin, a fierce opponent to the war against Iraq.

Russia, the Caspian Sea region, and offshore Africa will certainly become much bigger sources of oil for the U.S. in coming years. But in the short term, as pointed out in a recent report from the Energy Information Administration (EIA), Saudi Arabia is the most important supplier of crude in the world.

The war in Iraq and disruptions in Nigeria last month removed 2.7 million barrels per day (bbls/d) of oil from world markets, about equal to the amount lost during the Arab Embargo of 1973, the EIA said. Saudi Arabia's output of 9.6 million bbls/d in April, up 1.6 million from its December total, was the single biggest reason that recent oil markets didn't repeat their paroxysms of three decades ago.

With U.S. oil imports expected to grow almost six percent this year to 11.1 million bbls/d and climb to 11.5 million in 2004, President Bush knows he can't push the Saudis too hard without them reacting in anger and reducing exports. The resulting price jump would damage the still-fragile U.S. economy.

The president could reduce the challenges facing the Saudi government by doing a good job of rebuilding Iraq, much better than what has been accomplished to date in Afghanistan.

The routing of the Taliban and the installation of Hamid Kazai as president in late 2001 was supposed to herald a new era. Despite promises of billions of dollars in aid, the U.S. and other countries have not rebuilt the country's shattered infrastructure. The result has been an erosion of Karzai's power and the rise of regional warlords.

After watching Afghanistan and seeing the U.S. backtrack on promises of freedom to Iraqis, who were told they could choose their own government as long as they didn't imitate Iran and select a theocracy, it's no wonder many Arabs are deeply skeptical about U.S. motives in the Middle East.

President Bush must ensure Philip Carroll, the former Shell Oil executive whom he appointed to oversee Iraqi's oil industry, lives up to promises to let the Oil Ministry make decisions.

Carroll has said the role of the advisory committee he leads will be to provide advice to Iraq's oil experts, not to have a veto over ministry decisions.

There needs to be fewer extensions of contracts to Halliburton and more decisions by Iraqi nationals, such as Thamir Ghadhban, the new head of the Oil Ministry, to reduce cynicism about the White House's intentions toward Iraq.

Saudi Arabia has deep societal problems that a fair process letting Iraqis participate meaningfully in the rebuilding of their country may barely make a dent in. But it's a sure way to reduce the appeal of al-Qaeda's recruiting campaigns, lessening the chance of more coffins being shipped home from the Middle East in the coming years.

President Bush would do well to endure some short-term pain from an independent Iraq rather than help promulgate long-term pain in the world's most crucial source of oil.