Reform and Terrorism in Saudi Arabia 
A Roundtable Discussion with Amr Khashoggi

EDITOR'S NOTE:

The National U.S.-Arab Chamber of Commerce and the Center for International Private Enterprise hosted a discussion of current developments and issues related to reforms and the war on terrorism featuring  Mr. Amr Khashoggi on October 7, 2004.  Mr. Khashoggi is CEO of the Amkest Group.  He was also a panelist in last year's Arab-US Policymakers Conference discussing "A Saudi View of the Palestine Problem" under the theme "Strengthening Arab-US Relations: What is Required?"  That presentation is available in the Saudi-American Forum.

Reform and Terrorism in Saudi Arabia 
A Roundtable Discussion with Amr Khashoggi
Presented by The National U.S.-Arab Chamber of Commerce & The Center for International Private Enterprise 

Amr Khashoggi:  Alsalam alaykum -- that means peace be upon you -- and that is how Arabs greet anyone that they meet, regardless of their ethnic, religious, or gender background. Peace is an integral part of our culture and traditions.

I thank the National U.S. Arab Chamber of Commerce and the Center for International Private Enterprises for inviting me to speak to you this morning. I also want to thank each and every one of you for taking time from your busy and valuable schedules to join us. 

The topic that was chosen for me -- I didn't choose it myself -- is "Reform and Terrorism in Saudi Arabia," but let me first address terrorism and share a few thoughts. 

There has been a lot of controversy surrounding the interpretation of what terrorism is. How do you define it? One person's characterization of a terrorist may be another's freedom fighter. Until there is a clear definition, and it is reached globally, I do not think we will be able to fight effectively this global menace. 

I believe that terrorism knows no borders. And, it has happened just as easily in Saudi Arabia, the United States, Spain, Malaysia, Indonesia or anywhere else. I also believe that terrorists have no nationality; they have no religion; they have no humanity, no emotions, and no beliefs except in using discriminatory violence to achieve their dark and hidden murderous agendas. 

When I think of the heinous and horrible events of September 11, 2001, I become exceedingly angry. I am angry because a bunch of misfits have hijacked my religion and made it the target of attack. They tarnished the reputation of my country from which we have yet to recover. And, finally, endangered the life of my son, Mohamed, who lived less than a block away from the World Trade Center. He witnessed the crash of the second plane into the South Tower from his bedroom window as well as the nightmarish vision of bodies hurtling to their certain death. He was evacuated and decided to walk all the way to his college at Columbia University, and we lost contact with him for five hours. During those five hours, his mother and I lived and died many times, I can assure you.  

I was also having lunch at the Hamra Compound in Riyadh one week before the infamous May 12, 2003 bombing that claimed so many lives, some of whom I knew personally. Had I been there one week later, I think it would have been highly unlikely that I would be addressing you today. Two months ago in Jeddah, we had a small explosion across the street from our office. As it turned out, it was just a botched attempt to burglarize the Saudi American Bank -- so don't believe everything you read in the media, with all due respect to the media. 

And, you cannot talk about terrorism and not mention the media. Let me ask you to envision yourselves in a museum in front of an ancient tapestry that depicts a famous and moving mythical and beautiful tale of love and pain. Being old, it has one small square inch at the bottom right-hand corner with frayed threads. Imagine a camera zooms onto this square inch and projects it on a screen the size of the original tapestry. And so, through the power of this media, or medium, you have lost the vision of the beautiful story on the tapestry, and you only got the broadcasted negative image of the minute frayed fault. 

In Saudi Arabia, we work very closely with the media, encouraging them to be more responsible and to move away from incendiary language and provocative pictures. Saudi media has progressed, and not without challenges, and gained a lot of independence. They do play a major role in providing a platform for national debate of everything from education to social problems, to the role of women, to international affairs. We continue to lobby for greater media freedom. Many Saudi newspapers today have now partnered with internationally renowned newspapers such as the Herald Tribune, the UK Independent and Guardian, and more are coming. The reforms I saw by the Ministry of Information in the last five years have been astounding, and we continue to push the envelope for greater media freedom. 

This moves us to the topic of reform, but before I go onto that, let me give you a perspective on how young the country is. As my friend David here told you, today I turn 52, and as a physical body standing in front of you -- or sitting in front of you, actually -- I can tell you I have lived through all of the kings of Saudi Arabia. King Abdulaziz -- Ibn Saud as he is commonly known -- the founder of the Muslim state of Saudi Arabia, died when I was one year old. So, that's an example of how young the country is. 

Secondly, I have to tell you that my mother never got an education. She was not able to go to school because no schools existed at that time for women in Saudi Arabia. However, my daughter graduated from Brown University, and at the end of this year, she will get her masters from Regents College in London in psychotherapy and return to Saudi Arabia to work. And, my son has already been working for a year after graduating from Columbia. Our population is quite young, and 60% of our 23 million souls are below the age of 20. And these people, they need high quality education, and they need jobs. They are the driving force behind reform in Saudi Arabia, and our Crown Prince Abdullah is recognized and admired as the agent of change. 

So, there are external pressures for more reforms and for faster change. This comes mostly from Western countries, such as the United States and Europe, but we are asked to transform our country into the image of America and Europe. I believe this is counterproductive and undermines the effort of well-meaning and liberal-thinking Saudis who want to move the country forward, yet not lose sight of the important role Islam and our historical traditions play in the development of the individual while preserving the sanctity and cohesion of the family and the Umma or, as we say, the nation. 

Everyone recognizes that we must progress, and we must overcome the challenges facing our nation. We need to come up with internally developed solutions that are the result of national debate and that have gained what you would call in America "buy-in" from what I would term as a highly conservative population. This debate will take time and must be based on open, transparent and honest dialogue, and the extent of it will dictate the speed and pace of implementing reforms in Saudi Arabia. 

What I am trying to say here is that we must be realistic at how far and how fast we can go. What we cannot and must not do is sit on our laurels and give up.

Let me just share with you some targeted actions that we have implemented against specific and identifiable sources and conduits of terrorist support have made an immediate impact on the ability of terrorist cells and organizations to operate. 

We have undertaken a number of initiatives aimed at capturing or confronting known financiers for Al Qaeda and other terrorist groups. Our government is taking aggressive, proactive steps against key financiers and facilitators, and that is continuing to serve as an important disruptive element of the war against Al Qaeda. The Saudi government has also taken steps to freeze the assets of individuals and groups designated as terrorist supporters. For each charity, all accounts must be maintained in one single account. And, while sub-accounts are permitted, such accounts are restricted to receiving deposits only. Also, the use of ATM or credit cards with these accounts is forbidden. Payments to these accounts may be made only by checks written directly to the first beneficiary for deposit in a Saudi bank. The Saudi Arabian Monetary Agency's approval is necessary to open a bank account; the account must be opened in Riyals only, and valid customer identification is required in addition to providing the organization's license. Overseas transfers are not allowed from these accounts, and there are only two individuals -- first authorized by the board of the charitable organization -- who are allowed to operate the account. 

The government closely monitors all financial transactions to ensure that no money supports terrorism. We are vigilantly fighting money laundering. The new Financial Intelligence Unit in the Ministry of Interior is a specialized group that was created specifically to handle these cases. The Saudi Arabian Monetary Agency (SAMA) and the Financial Intelligence Unit will collaborate in their efforts to crush corruption in our financial system. You may not know this, but in Saudi Arabia, we do not pay taxes. This means that there are no tax returns, and, for a while, there was no mechanism for creating financial records as in the United States. Now, we have created a system that allows us to trace the money. We have also addressed this problem from a judicial standpoint. SAMA has launched a training program to educate judges and investigators on money laundering and terror financing. The Consultative Council approved harsh penalties for money laundering and the financing of terror in June of 2003, including prison terms of 15 years and fines of $1.5 million. 

Juan Zarate of the U.S. Treasury's Office for Terror Financing said recently, "The measures and initiatives adopted by the Kingdom of Saudi Arabia indicate that the Kingdom stands committed with us to defeating this threat. The targeted actions undertaken by the Kingdom have already produced tangible results, and the systemic changes made by the Kingdom could prove even more effective in defeating terrorist financing over the long term." He added, "We appreciate the efforts of the Kingdom to date -- as they put the lives of their agents and people on the line to fight this battle."

So, as you can see that, we are working on a conducive environment for reform. This can only be achieved if you address the issues of internal security and terrorism control. 

I know that many have come before me and addressed you so eloquently, such as my good friend, Dr. Usamah Al-Kurdi, who has enjoyed the fruits of reform, and today, he is a parliamentarian with greater powers and clout, and the Shura Council, or Consultative Council, will continue to play a greater role in the Reform Movement in Saudi Arabia. 

Today, we are legislating new laws governing the capital market, insurance, labor, tourism, and we have a Supreme Economic Council, Investment Authority, and we are about to have a Higher Council for International Relations, which would help guide and manage Saudi's relations with the outside world. 

I want to touch on the Saudi Arabia and U.S. relations. We have been allies and friends for over 50 years. The Kingdom has been a leader in ensuring an uninterrupted supply of oil.  The Kingdom has long held the view that unstable energy markets and unrealistically low prices are very harmful.  

For example, Saudi oil aided in impeding the spread of communism through the reconstruction of the economies of Europe and Japan after World War II. Saudi Arabia continued to supply U.S. troops in Vietnam during the 1974 oil embargo so that it would not be paralyzed in wartime. During the Iranian Revolution and the Iran-Iraq War, the Kingdom played an important, calming role by increasing production. During the first Gulf War, Saudi Arabia expanded its production once again in order to stabilize the oil market. Because of the Kingdom's help in this area, oil prices were lower when the allied troops attacked than when Saddam originally entered Kuwait. 

In 2003 the Kingdom kept the petroleum market steady when a series of events conspired to raise prices: civil unrest in Nigeria, a workers strike in Venezuela, a huge power blackout in the United States, the Arizona pipeline rupture, and U.S. invasion of Iraq. The price of oil dropped from $37 a barrel seven days before the invasion to $26 a barrel two days after the invasion because of skillful market intervention by the Kingdom. Finally, in the summer of 2004, Saudi Arabia stepped in again to increase production by over a million barrels a day in an effort to curb rising gas prices due to insecurity over the oil supply. 

Saudi Arabia is the largest market for the United States in the Middle East, and Saudi private investment in the United States exceeds $500 billion. Saudi Arabia is ranked the 25th largest importer/exporter worldwide, and in 2002, trade between the Kingdom and the United States amounted to $18 billion. U.S. companies are the largest foreign investors in the Kingdom, with over 280 Saudi-U.S. joint ventures. 

The two countries fought Iraqi aggression together in the first Gulf War and continue to cooperate after the fall and capture of Saddam Hussein. The basis of our relationship is strategic cooperation, and we have a long history of successes. During World War II the Kingdom was an important way station for the allied effort and supply route for Lend-Lease. During the Cold War, the United States and the Kingdom were allied against all the Communist regimes and many rebel movements in the Middle East and worldwide. During the 1960s and 1970s, Riyadh and Washington worked hard to contain Socialist revolutionaries and their pro-Soviet allies. In the 1980s, the two countries were joined-at-the-hip in their efforts to defeat the Red Army in Afghanistan and to prevent the export of so-called Islamic Revolution. In the 1990s, the U.S. government and Saudi Arabia had a very effective alliance during Desert Shield and Desert Storm and allowed American pilots to maintain the southern "no fly" zone over Iraq from our Prince Sultan Air Base. 

During the most recent campaign in Afghanistan against Al Qaeda and the Taliban, all U.S. flights were under command and control of U.S. forces at Prince Sultan Air Base in the Kingdom, and this comprised about 80% of the American contribution to the campaign. In the continuing war on terrorism. President Bush, Secretary Powell and many others have emphasized the excellent cooperation with the Saudis on military, financial and intelligence matters. Since 9/11, we have questioned 2,800 individuals, detained over 200 Al Qaeda suspects, and shared all our intelligence with the United States. The American Administration has said time and time again that, in regard to the war on terror, Saudi Arabia has been fully compliant and accommodating. In the most recent war in Iraq, Saudi Arabia gave America the necessary support through military and economic cooperation, including management of the petroleum markets, access to Prince Sultan Air Base, military assistance to protect Kuwait and economic assistance to offset the impact of the war. And, this cooperation pre-dates 9/11. Since 1997, there has been a joint U.S.-Saudi committee, which holds monthly meetings to share information on Bin Laden and Al Qaeda. 

Let me close by saying that Saudi Arabia and the United States, despite what anyone may say or write, share many important values and respect and understand each other's differences. Let us not allow the likes of Osama Bin Laden to succeed in driving a wedge between our two nations. Let us instead work together in fighting not only terrorism, but let us fight injustices, poverty and ignorance throughout the world.
 
Thank you very much. 

Question & Answer Session Following Mr. Khashoggi's Remarks

David Hamod: We'd now like to open it up to questions and answers. When you raise your hand, please mention your name and affiliation, if you would. 

Hon. Walter Cutler: Thank you. First, Amr, happy birthday. Good to see you again. 

Amr, I wonder if you'll give us a little feel -- obviously, internal security for the Saudi people is important, and everybody knows what happened last year. At the same time, it's tough, sometimes, to really get tough on terrorism, and at the same time, follow a reform program opening up. We have the same problem here: civil liberties and civil rights versus security. I wonder if you'd give us a feel of the sort of priorities as an average Saudi looks at this. How important are these changes vis-a-vis feeling safe? 

Amr Khashoggi: I think you cannot separate reform from internal security. Reform is needed in order to improve the economic environment for investment -- local investment, foreign investment, creating jobs for our many young men and women, for improving, changing the laws to create that environment is very important. Whether it's the capital law, insurance law, or whether it's the new labor law that's being written right now. All of this requires a safe and secure environment. You cannot have terrorist attacks going on while you're trying to do this. You need to address those issues. 

One of the things that happened with regard to the security is that there are many different security agencies, and I think there was no real coordination between them. And as a result, we have had mishaps in handling some of the situations with terrorists. Some of them were able to escape, some of you know about that, and so forth. However, now they are all working under one umbrella that Crown Prince Abdullah created for all the different security agencies to communicate with each other and really to manage the security throughout the entire country. And, we have improved, and there is a direct result and benefit of that. The direct result of that is the number of terrorist attacks going on in Saudi Arabia have gone down quite a bit. 

Now, with the example that I mentioned when someone across from my office -- I mean, I could see from my office -- basically, he wanted to blow up an ATM machine so he could get the money inside. Unfortunately, it was a small little explosion that went off in his hand, and he was hurt. And so, you have to understand the difference between crime and terrorism that is taking place. The second way to really address this issue is that there has been a tremendous amount of public displeasure with what's going in terms of anyone taking violent attacks on anybody. It's not just Westerners that were targeted, but also Arabs and Muslims have been targets of these attacks. And so, I think there is now a growing understanding by the people that this is not the right way to go about it, and we cannot give support to such people who do such things. And instead, they are trying to figure out a way of how we can initiate dialogue, initiate national debate to move the country forward without violent attacks. 

And one of the things that has taken place is, as you know, the religious leaders have the most effective platform for influencing people because they have the mosques. Every Friday they get up there and give a sermon. And, the people that stand up and teach intolerance or try to encourage thoughts of intolerance and hatred, these people have been taken away from these platforms, re-educated, re-indoctrinated, and the ones that have passed successfully through this training program have been allowed to go back to preach. Because, as I said in my first statement, peace is a very important segment of our make-up. For us to teach intolerance and hate is against our religion. These people were erroneously teaching before, and now they have been taught the right way, and they are now preaching the correct way.

Guest: If I could ask you about the pace of political reform, there are a number of reformists on trial in Riyadh, and I wanted to ask you to give your thoughts on what impact that trial is going to have on reform. Do you have a sense that under Saudi law there is grounds for a conviction? Or, what impact -- either conviction or clearing the charges -- what is the likely impact of that trial on public sentiment? 

Amr Khashoggi: Thank you. I think that is a very good question. And, it requires a thoughtful answer. I don't know if I can supply that thoughtful answer, but I will do my best. Let me address, first of all, the issue of political reform. The political reform I believe in and I support is an increasing participation by the people with the government in deciding the future of the country and moving forward. That has been taking place, maybe not in the visible way that the West looks at it, or maybe the way most people look at it, but if you think of the Supreme Economic Council, there are now people that are sitting on it from the private sector, from the common people, who are now participating with the government very actively in creating a national strategy for economic development in the country. And, there are now examples of that: the tourism board and the high investment authority. The Shura Council is a great example of that. 

There are municipal elections, which are actually a revival of what we used to have in the past, and were, for whatever reason, stopped. And, I remember when I was a child in Riyadh, we used to have municipal elections. It was a normal thing to have it revived, and I think this would be another example of participation. Now, it's true that 50% are elected, and 50% are appointed, but I will not be surprised if the 50% who are appointed are more reformist-minded than the ones that are elected. But, that remains to be seen. And, it's an experiment that we will watch very carefully and see how it will happen. 

As far as the trial that you mentioned, first of all, I don't really know what all the fuss is about. All courts are open to the public in Saudi Arabia, so anyone who wants to see what's going on in the trial can see that. Now, of course, the sensitivity of the subject has attracted publicity regarding this trial, and it remains to see what will happen. But, I think it is a very good thing that it is happening because it is giving people a chance to have this debate. I look at it as a positive thing that there will be a debate about reform in Saudi Arabia and who agrees with it, who doesn't agree with it, how it is proceeding, should it go faster, should it be slower, or how extensive it is going to be. These people were asking for constitutional monarchy. Was this something that we should do? Is it right for them to ask for something like that? Or, should they have been more realistic, saying that we need to move the boat slowly, and we are going through very treacherous waters, and we need to address that? So, I think that it is something that remains to be seen, and we need to watch it very closely.

Guest: It looks as though there was a split within the Royal Family over whether to arrest these guys or put them on trial. The things that they were demanding, ironically, the Crown Prince's own people are writing this sort of thing up and didn't think it was such a big deal. But, other members of the Royal Family got upset, and the trial is more about controlling the pace than it is that these guys did anything wrong or should be crushed or something or anti-reform all together, but rather a shot across the bow to slow down the pace or the expectations about political reform. 

Amr Khashoggi: I don't really subscribe to that so much, because when you think about it -- first of all, we are a really private society. And, families are extremely private, I can assure you. You know, I have my family members here. We have internal discussions; you should sit at the dinner table and hear one of our discussions. You know, our neighbors can hear our voices sometimes. But it doesn't mean that we are having major splits or whatever. Now, the Royal Family is like any family. They have discussions; they have disagreements and what have you, but I think how it affects the country and the leadership of the country and the Muslims of the country is really speculation. And, much of the speculation is unfounded. Like, I don't subscribe to conspiracy theorists in Saudi Arabia about what America and the American leadership are doing, saying, "Is there some kind of conspiracy there?" So, it is the same thing. I don't subscribe to conspiracy theorists here who have claimed certain things that are going on in Saudi Arabia. So, I wouldn't give it too much weight. 

Sam Wyman: Your remarks and the questions asked so far tend to point out what to me is perhaps the most troublesome aspect of the Saudi-American relationship, and that is the gulf of misunderstanding between people -- I use that in a very broad sense -- the people of the two countries. In the United States, should we say popular sources tend to focus on what sells product and what attracts attention quickly, easy to read and digest. I suspect the same is probably true in Saudi Arabia. Can you address what efforts the government of Saudi Arabia, or the Royal Family itself, is doing to take on this issue? I'm not talking here about propaganda or what have you. But, in getting the word out, and getting the word out to where it is received, not necessarily through well-written and well-presented publications from the Saudi Embassy or large newspaper advertisements as we have seen because they are seen as propaganda. But, what thought is being given to addressing this problem and getting the word to the outside public, get it out into middle America so that they can understand the realities of what's going on inside the Kingdom? 

Amr Khashoggi: Let me answer your question in two different segments, from the personal point of view and then the government's point of view. And, I have to make everybody understand in this room that I do not represent the government. I am not a government employee. I'm a businessman, and I volunteer to work for the Council of Chambers of Commerce. Last year, I was speaking at the Arab-U.S. Policymakers Conference about Prince Abdullah's peace initiative, and after the speech, a man came to me and gave me an old, yellowed newsletter that was designed for Arab-Americans. And, the date was September 1977. And, my picture was on the cover. I was just a newly graduated student from Menlo College who spoke at the Petroleum Conference in San Francisco about U.S.-Saudi relations. And so, since that time, I have been speaking about U.S.-Saudi relations. And every time, I am really surprised at how little understanding exists between us.  

Over the weekend, there was the reunion at Yale, and I spoke to many of my classmates that I have not seen in 25 years. And, we used to talk about the relationship 25 years ago and about the Arab-Israeli problem and all that. And again, I was surprised at how little they knew. And, many of them thanked me for opening up a small little window on what's going on in our part of the world. After that, I was in New York at the Forbes CEO Forum, and I met with top executives from corporate America. Again, I was surprised to see how little they knew about what's going on and how little exposure they had. And, what little they did know was really influenced by the small amount of coverage that they have in the U.S. media.
 
What the government is trying to do is -- first of all, historically speaking, we Saudis are very poor communicators. And, we have been away from the scene. Basically, it is not our culture to go public and speak, you know. When we say the word "I," we say "God forgive me for saying the word 'I.'" That's how we address it. And, when we are given the opportunity to speak, unfortunately, we don't address the audience that's in front of us. We address the audience back home. You know, what is my mother going to think about what I am saying today and that sort of thing. And, I think that in the last three years, we have started to learn that we really need to communicate. We really need to go out there. We really need to outreach. We have some great examples. Adel Jubeir is a great example of a very capable Saudi who can really speak so eloquently, and I admire him tremendously. And now, that we're getting several people that are beginning to come out, the Ambassador to the U.K. is another great speaker and so forth. And, we need to get as many people out as much as possible. Right now, there is a discussion in Saudi Arabia of people creating a higher council for international relations. It's really, basically, about stressing positive images of Saudi abroad, of understanding between nations, or bridging the gap of understanding, or bridging the gap of ignorance. So, I think that we are heading in that direction. We're not there yet. Still, small efforts and small steps are being taken, but I think that we are heading in the direction that would satisfy your question. 

Dave Ottaway: I'm wondering what your assessment is of the impact of what's happening in Iraq in terms of implementing a sort of democratic system there. What impact do you think that will have on the reform process inside Saudi Arabia?

Amr Khashoggi: First of all, I mean, Saudi's position was against the war in Iraq because we believe it was going to distract us from the war on terrorism to start with. Secondly, I think that the United States planned very well for the war but didn't plan too well for the peace. I think that now we have seen, really, the result of the lack of having international support through the United Nations and the cooperation of everyone, including the Arab countries, in dealing with some of the issues that terrorize them. I was totally surprised when I was watching television and saw that as the Ba'ath Party was being dismantled, and as the army was being dismantled, that the Iraqis were beginning to put on their tribal colors. And, that was the first signal to me, and the first sign, of trouble that was coming ahead. Iraq is a tribal country and has been -- the history of Iraq has always been a bloody history, and they have only been successfully lead and governed by ruthless people. It's not that I'm advocating that we should have another ruthless leader. I think the world is better off without Saddam Hussein, but I think that we need to address the major issues. 

Now, as a businessman, I talked to people at the Donors Conference in Madrid, which had to deal with donations for Iraq from donor countries. And, I was privileged to sit there with people from the Arab world as well as the world community. And, one of the things I said was that we have many joint U.S.-Saudi ventures. The Saudis, with the Americans, are highly mobilized and ready to go. They can move in quickly and provide the basic needs that the Iraqis require in order to survive and have a better life, to see a benefit, and to see the Americans as liberators, not invaders. Unfortunately, no one listened to us at that time. And. they said no, we are going to send new people, new companies and so forth. And, there were people who went in there with very little understanding of what was going on on the ground. No one really was there to navigate them through these treacherous alleys and corridors of Baghdad and Fallujah and all that. And so, nobody was able to provide even the basic necessities that any population needs: water, electricity, medicine, food, housing, and so forth. 

Instead, what was happening is that the militias were taking over the place, and through aerial bombings, indiscriminate deaths of civilians, including children, became a daily affair. And really, it is a very sad and heart wrenching, what is going on. People in your debates can argue about the numbers of what percent are American, 85% or 92% or 2%. But, at the end of the day, what I see there is a lot of death and destruction that is unnecessary. And, I was asked a question at Yale by my colleagues -- they asked me to address them over lunch -- I told them a message I can tell you is that America needs to go to the Arab League and say, look, we need to partner with you in order to really guide us. And, we will take our cue from you on how we can really sort out this mess. And, only then do we stand a chance of help because we can go and talk to people. You cannot. So, that is the way to go, to resolve the situation in Iraq. 

Now, how it affects reform in Saudi Arabia. Iraq is a major destabilizing effect on the whole region, not just Saudi Arabia, on our entire part of the world. And, continuing with that situation will continue to fuel and fan anti-Americanism throughout the region. And in fact, not only throughout the region, but even as far away as the Far East and other parts of the world. And, you don't want that to continue. You want to stem that anti-American feeling by really being able to resolve the situation in Iraq, by really being an honest broker and trying to solve the Arab-Israeli problem. And, only if you can succeed to do that are you going to be able to get the support of moderate voices that exist in Saudi Arabia who are pushing for reform. You know, it is very difficult for us to push for reform when this is going on. So, yes, it does impact it, and a speedy resolution will speed reform in Saudi Arabia.

Dave Ottaway: So, you're saying that the American -- maybe you want to call it debacle in Iraq -- is hurting the reformist movement in Saudi Arabia because somehow reform is equated with Westernism or secularism?

Amr Khashoggi: Economic reform in Saudi Arabia means attracting foreign investment in Saudi Arabia. What better to think of than American companies coming to invest in Saudi Arabia? They're not going to come and invest today. They don't even want to visit right now because they feel that the security situation is not conducive to their feeling of safety. Many corporate offices are being warned against coming. All your embassies keep issuing one announcement after another discouraging Americans from visiting Saudi Arabia. The visa situation is preventing many Saudis from coming here. And, I told people in the State Department last time I was here, I said, "Look, every Saudi who was here and graduated from American universities is your best ambassador." You're losing that. You're also losing interaction between American and Saudi students. So, in fact, it increased the gulf and widened the chasm between our two nations. You are isolating Americans from international affairs and from having a better understanding of international affairs. So, yes, it is affecting it in the sense that the more anti-American feeling is going to discourage many Saudis to do that. They will turn instead to China and India and other parts of the world. 

Guest: Mr. Khashoggi, I just have two quick questions. First of all, what do you think, personally, speaking in your own capacity, is the best use to put the windfall that's occurring to oil right now? Secondly, there's a relationship that's not often discussed these days, and that's right across the Gulf with another large, oil-rich Islamic state called Iran. And, I wondered if you could talk a bit about that relationship. 

Amr Khashoggi: First of all, the first part has already been addressed. Our Crown Prince Abdullah has made a statement that, out of what we call the oil windfall, oil profits, 60% will go to pay off the national debt, which is internally supported. We don't owe any other country outside of ourselves this money. But, we as Saudis, we are owed this money because we supported it through our local banks. And, it is about $200 billion. So, 60% will go towards paying the national debt. The remaining amount will be used -- and I was very pleased to hear -- will be used for what they call developmental projects. That includes increasing education. One of the reforms that took place is that we've opened the door to private investments in educational institutes. So, several colleges are being developed now. And, schools -- remember there is one in New Jersey, the Stevenson Institute -- they made a joint venture with Saudi Arabia, and they are creating an institute of technology because we know that we need to develop the necessary skills that would work with the business environment and the chronic development that we were talking about. So, education is one part. Another part is housing, especially for the poor. I know when most people think of Saudi Arabia they say, oh, it is a rich country. But actually, we do have a lot of poverty there. And, we need to address those issues of poverty through local contributions and charity support but also through government programs. And, the government is intent on developing housing for the poor. And so, the developmental projects will be the second part. 

As far as Iran is concerned, I know that the relationship between Saudi Arabia and Iran has been improving. And, I think it's a good thing because the stronger relations we would have with Iran, I think the more clout we would have with Iran to influence them at least in a way that is not destabilizing to the whole region. So, that's as much as I can say because I'm not an expert. 

Thomas Albert: As we all know, Saudi Arabia's under an unrelenting attack by Congress. I was up there a long time, and I've never really seen anything like it. Among American politicians, it seems as though Saudi Arabia and France are the two whipping boys, sure applause lines for an American politician. And, since American politics is fairly insular and with the government of Saudi Arabia itself, it is very difficult to put pressure. Would you want to comment on what the American political system can do to get the pressure in the system to get a fairer treatment of Saudi Arabia because right now, it's very devastating? 

Amr Khashoggi: I think what you said, Tom, is true. There has been a tremendous amount of attack in Congress against Saudi Arabia, as well as what I would term "carpet-bombing" of Saudi Arabia in some of the media. But, I think that there have also been moderate voices that have come up. They are far and few in between, but they are there. I think the important thing is for moderate and reasonable voices inside of Saudi Arabia to join forces with moderate and reasonable voices in the United States. And, I think such as the National U.S.-Arab Chamber of Commerce and the Council of the Chambers of Commerce and many of these NGOs to work together in promoting that -- Meridian, I know, plays a major role in that. Ambassador Cutler plays an active role individually in this effort. I think we need to continue that, to work shoulder-to-shoulder, to really move against extreme views. And, extreme views exist everywhere. They exist here; they exist back home. It's not only that I speak here about Saudi Arabia, but I also speak in Saudi Arabia about America. I'm trying to promote this better understanding, bridge this gap of misunderstanding. And, if we keep doing this and we keep recruiting more and more people, and talking to voices who are unreasonable to become reasonable, I think we stand a better chance in having better relations. 

Charlie Kestenbaum: Why is it so hard to fund these groups?

Amr Khashoggi: That's a very good question. 

Charlie Kestenbaum: I was just in Riyadh and Dubai last week, and I saw Chas Freeman with another group. And, Chas Freeman came out there with his tin cup and said, "If you don't fund me, the Middle East Policy Council is gone next year." You think that someone would step up because it's in their own interests. 

Amr Khashoggi: I think it's a combination of several things. I think one is that we are not used to funding NGOs. Saudi Arabia has been, the government has been paying for everything. We are the product of being a spoiled child. We were spoon-fed everything during the boom years. And, that's an effect we are suffering from today. I think it would have been better to deprive us of some of these things. It might have made us better and more effective. My wife keeps telling me that I spoil my children, but we continue that tradition there. Secondly, I think it is a matter of people worried about supporting organizations abroad, especially in the aftermath of September 11 and what's going on. I know that many organizations, such as the ones you mentioned and also the Chamber, have suffered in a drop in financial support that people are worried about how it will be construed, will it be seen as politically incorrect, or what will be the effect of that. Few people really understand what the mission of these organizations is, that they are above board, and that they are really doing a good thing. You are not going to get people to fund. 

We've been working very closely trying to generate sponsors of events. We do that with the Jeddah Economic Forum. I've been quite involved with that for the last five years. And, every time we do it, it is surrounded in controversy, and we love that because the more controversial you are, you know that you are hitting on the right nerve. So, we keep pushing the envelope, and today the Jeddah Economic Forum attracts 2,000 delegates and international speakers. We've had George Bush, Sr. We've had Bill Clinton. We've had Helmut Kohl, Primakov from Russia, prime ministers, former presidents, kings, and queens. And, out of the 2,000 delegates, we had 650 women delegates. And, for the first time last year, we had Saudi keynote speakers who were women. We had a panel of three Saudi women. And, it caused a lot of controversy in Saudi Arabia, but it was good. And, we're going to do it next year as well. Now, we have always had a hard time raising money for the Jeddah Economic Forum through sponsors, especially when you are controversial. Some people say they don't want to be too involved. I think what we need to do -- and my advice to a lot of these organizations that come to Saudi Arabia looking for funding -- some of these groups coming to Saudi Arabia need to present their image and their mission very clearly. Sometimes, it's vague. They need to be very specific about what kinds of programs they are intending to do and what will be the result of these programs. You know, just like when I need a business proposal, I think with a business mind. I'm not politically-minded. I want to see a business plan. I want to see the programs -- who are the beneficiaries of these programs, who is being contacted, who is going to be reached, and so forth in detail. And then, I can decide whether this is something I want to support.

Charlie Kestenbaum: With all due respect, sir, you don't think that David Hamod and Chas Freeman and John Anthony and various other advocates haven't done that?

Amr Khashoggi: I feel that because I know them. But I'm talking for the general Saudi public and general Saudi business community. The gap that Sam was talking about still exists. The more we close this gap, the more we will have better understanding and the more you will have support. 

Charlie Kestenbaum: We need to bring more delegations here.

Amr Khashoggi: I agree. Ambassador Cutler and I, we work very closely together in generating that. 

Host: Let me say for the record that we did not plant that question. And, second, I have made no trips to Saudi Arabia seeking funding, but that's just for the record. 

Andy Constantzos: I lived 15 years in Jeddah, and I was very active in promoting Saudi-American relations as David can attest. The fact is that the enemies, and those that want to destroy American-Saudi relations are not the media but are agents of other countries in the area that have interests contrary to the Saudis and the Arab interests. This is a fact. I knew it when we started to fight for Saudi Arabia to buy the F-16, to buy the tanks, and one after another, so many problems that there were. So, it bothers me when about a year or so ago, there was an attack of this separate interest all over and everybody questioning the relations, and, in fact, criticizing our politicians for having relations with Saudi Arabia, and the Saudi Ambassador was absent. There was no response whatsoever, as concluded in one of the several periodic conferences that former Ambassador Chas Freeman -- I'm sure you know him -- is giving on the Hill. He said the Middle East problem is not over there; it's here in Washington. So, as soon as we realize that, we can solve the problem because it bothers me that I was very happy for 15 years in Saudi Arabia, and now the country that I tried for, worked for, is being criticized without any reasons, and there is no reaction. 

Amr Khashoggi: Thank you for your comments, and I was glad to hear that you chose Jeddah to live in because we say "Jeddah is different." That's the city motto. Let me address, first of all, my comments regarding the media. I was using the media as an example but not particularly attacking it. And, I did not attack the whole of the media when I said that the media has a responsible role, has an important role in bridging the gap of understanding. And, a journalist can easily, like a surgeon, can easily save lives and can easily destroy lives. As a surgeon can do with a scalpel, a journalist can do with his pen. So, the power of the media, through my example, was to show how it can play negatively but also how it can play positively by seeking and choosing the human story that exists behind. 

Secondly -- and I think this is the media on both sides, the Saudi and U.S. side -- has been guilty of using incendiary language and provocative stories that will actually fan hatred and fan anti-feelings. And, I think that is something that is bad, and we try to dissuade the media from doing it, at least the media we have access to. As far as the special interest groups that you mention, these exist everywhere. And there will always be pressure groups that will be pressuring for their own agendas. Some are more successful than others. And, I think the way to address this is through continued dialogue and having this communication continue to exist and keeping the channels of communication open. As the question I was just asked about, by having a relationship with Iran, we have a channel of communication, where we can talk to them and say, "What you are trying to do here is really counterproductive, it's not in the best interest of you, or Islam, or the whole region." While if we don't have that channel of communication, we cannot do it. So, I think through better dialogue, we stand to counter the efforts of the pressure groups that are negative and aiming to destroy the relations. 

Guest: The perception is that Saudi financing has been incendiary and has helped to promote terrorism, but in the questioner's experience, it's actually been a very moderating role. Does that sum it up? Your observation?

Amr Khashoggi: I agree. 

Justin Connor: To what degree does the Kingdom remain reliant on foreign labor, and will those plans for economic and legal reform create the sort of economic opportunities that young Saudis would want to pursue? 

Amr Khashoggi: Saudi Arabia has a very large number of expatriate workers. Most of them come from Pakistan, India, the Philippines, Sri Lanka, Egypt, Syria, Lebanon, and so forth. And these, what I would call guest workers, have contributed tremendously to the development of Saudi Arabia and have been an integral part of the Saudi society and its progress. And, I am personally very appreciative of their effort in developing it. Now, however, we have a large, young population increasingly coming out on the market wanting jobs. And, we have been critical of the education system that it has not developed these young Saudis with the necessary skills that would fit with the requirement and needs in the business community. What we are trying to do now is that we have had reforms and changed the curriculum. We are teaching English, for example, from grade six and above. We are introducing computer training at a very young age. So, it is on the increase. We are also changing our laws to allow women more areas to work in, keeping in mind the restrictions that we have with our culture and traditions. 

You know, when 55% of college graduates are women and only 5% make it into the workforce, there is something wrong. We have to address that, and we really have to find more jobs for them. And, I think that this is really beginning to change, and we're getting more jobs created. Also, more women are taking initiatives on their own and setting up and creating their own companies and setting up and hiring women and so forth. So, there are women being hired in the industrial areas and factories and working there, so that is beginning to change. And, it's becoming more acceptable to have women work in these areas. The efforts to train and retrain Saudis to get jobs is taking place. I think, also, the attitude of the Saudi is changing. As I was telling Charlie, we are the product of being spoiled. I think now people are realizing that they need to get their hands dirty; they need to accept menial jobs; they need to accept lower salaries and lower packages. And, they are doing that. So, you're getting now Saudi waiters, Saudis working in hotels, cleaning bathrooms, carrying luggage, and stuff like that. This was not something that we had a few years ago. 

I think slowly the foreign expatriate force is being replaced by Saudis. We're using many of them to train Saudis for their jobs. And, it's going to be a process that will take place. The new labor law is going to help in really identifying and having a national policy that is acceptable, not just a government policy, but a national policy that will really promote Saudization of jobs and creating more jobs for Saudis, which would be working in tandem with the investment authority to create projects and opening up such as free trade cities that will encourage companies to invest and create additional new jobs on the market. And, don't forget, having a very large expatriate force makes the country lose a lot of hard currency as it goes abroad. So, there's something like seven billion Riyals or $2 billion leaving the country every year because these workers send it home. They don't use it locally. If we give it to Saudis, they are going to spend it in the country because they want to build a home or educate their children or pay for medical care or whatever. So, the money remains in the country and encourages further economic progress. 

About the Speaker

Mr. Amr Khashoggi is CEO of the Amkest Group, a holding company with interests in building materials manufacturing and services, food packaging, hygienic and medical products, and land transportation. He also serves as Vice-Chairman of Modern Computers & Communication, a provider of e-business services, consulting, and training, and is President of the Khashoggi Foundation, a family-based philanthropic organization.

Mr. Khashoggi is a former CEO of DITevents and a former CEO of Tanmiah Commercial Group, both of which provide event management of major conferences. He is also a former Managing Director of Triad Holding Corporation.

Mr. Khashoggi is a member of the Saudi Committee for the Development of International Trade (CIT) in the Saudi Chambers of Commerce and Industry. He is a former Chief Advisor to the CIT and Chief Coordinator of its Outreach Program. In addition, he is a Board Member of the Jeddah Marketing Board, a Member of the Committee of International Relations, and a Member of the Information Technology Committee of the Jeddah Chamber of Commerce and Industry. 

Mr. Khashoggi holds a B.Sc. from Menlo College and an M.B.A. from Yale University School of Management.