Saudi Arabia's Accession to the WTO: Is a "Revolution" Brewing?
Middle East Policy Council Capitol Hill Conference Series on US Middle East Policy
U.S. Capitol
Washington, D.C.
January 13, 2006

Robert Jordan
Former U.S. Ambassador to Saudi Arabia

AMB. FREEMAN: Bob Jordan's tenure as ambassador was dominated, it's fair to say, by the aftermath of 9/11, but it's very appropriate for him to be here today because I think this issue of WTO accession and the benefits it would bring the United States as well as Saudi Arabia was very much at the top of his agenda. Bob, you're invited to take the floor.

AMB. ROBERT JORDAN: Well, Chas, thank you very much, and I am delighted to be here today. Chas has provided me a tremendous amount of information from the time I was first contacted about becoming ambassador. It's also a pleasure to be on the panel with Charlie Kestenbaum, who worked in the embassy with me in Riyadh during my time there. They taught me a lot. In fact, I'm tempted to say they taught me all I know. I know there is probably more that I had learned, but I certainly know that they did not teach me all they know. And they are enormous resources.

And I am also delighted to see in the audience today Brian Shukan (ph), who was a political officer in the embassy when I was there and is now the Saudi desk officer. Brian served with great distinction, and was a tremendous asset to our embassy and to our mission in Riyadh.

I want to start by taking a snapshot of a moment in time fairly recently. This was last September. I was sitting in my law office at Baker, Botts in Dallas, and the phone rang. And I answered it. And the voice said, Bob. And I said, yes. And he said this is Jim Oberwetter. Jim is the current U.S. ambassador to Saudi Arabia.

And he said, I am standing in the office of the U.S. trade representative in Washington, D.C., and we are here to sign the U.S.-Saudi bilateral agreement, which will be the last step necessary essentially for the Saudi accession to the WTO. And I know how important this was to you and how hard you worked on it, and so I simply want to pass the phone around the room and let those here present congratulate on what has occurred.

I say this first as a tribute to Ambassador Oberwetter. It tells you what kind of person he is. But I also say this to emphasize how important this step was for a very long period of time. When I arrived in Riyadh right after 9/11, of course we were consumed with bombing in Afghanistan, we were consumed by the aftermath of 9/11. Fifteen of the 19 hijackers were Saudis.

But I was also very concerned about what might have spawned some of this behavior and what could be done to promote reform in the kingdom, not in the Saudi's interest necessarily but in America's interests, strategic interests. And it occurred to me that WTO accession was very good for the United States in our national interests; it was also in the Saudi's best interest.

And so I set about trying to learn what had been going on. And I learned that negotiations had really be interrupted. There had not been a working party meeting apparently since October 2000. Both sides had lost a tremendous amount of momentum in trying to move forward. I decided that if the Saudis really wanted to do this, then we needed to elevate this on the United States end as well.

Now, the Saudis assured me and the crown prince assured me that this was a high-agenda item for them. And so when I was back in Washington I think in December of 2001, I decided to do what I could to see if the United States government had the will to elevate this to a political level and not simply meeting a bunch of checklists and boxes that had to be checked in the USTR office.

I decided to start with the Vice President. I had a meeting already scheduled with him. I went in and made my pitch and he was very enthusiastic about the idea and the reasons for the idea, that it would be an opportunity for the Saudis to reform their economy. It would be transformative; it would lead to greater public participation in their society.

Armed with his tacit concurrence, I then went to see the Secretary of Commerce, Don Evans, and I said that the Vice President had embraced this idea. How did he feel about it? And he was enthusiastic. Secretary of State Powell was enthusiastic.

And then I made my way around to Ambassador Zoellick's office, the U.S. Trade Representative. And I'll have to give them credit. His staff had worked very hard on accession to the WTO. But they had become quite frustrated with the Saudi uncertainties. It was really unclear whether the Saudis had the will to move forward at the time, and so they were very busy; they didn't have a large staff and they were swamped with a lot of demands on their time.

And I felt a little bit of resistance at that moment to moving forward. Well, I said, you know, I think the Vice President supports this - the Secretary of State, the Secretary of Commerce. Bob, how do you feel about it? And he very clearly understood the importance of it. He understood that we were now marshalling the political will of the senior administration to move forward.

And I think this went a long way toward making clear to the Saudis that we cared about it. And very much to his credit, Crown Prince Abdullah continued to press the President about this.

What was happening at this time was there something of a disconnect between the will of the Crown Prince, who was not yet king, and some of the bureaucrats who were charged with making WTO accession happen. I found myself meeting with the Saudi representatives repeatedly and not really getting anywhere. The significant exception to this was Fawaz al Alamy, who has been described as a hero in much of what has unfolded.

We encountered a great deal of resistance among certain segments of the Saudi society. They had the impression that if they joined the WTO, as some did, they would be required to import pork and alcohol. They would be required to allow the establishment of cinemas that would show pornographic materials in their society. They were then worried that they would have to submit draft legislation to the USTR and to the WTO secretariat in order to have it approved before it was implemented, which was, in their view, a great incursion on their sovereignty.

Well, we worked through these issues. We were blessed with a new minister of commerce, Minister Yamani who came in and helped bring things down toward the goal line. And we have now been able I think to really make it clear to the Saudis how much it's in their best interest to do so. But it's also in the United States' best interest.

We now have an opportunity, as has been said, for transparency. We have an opportunity with new insurance laws. We have a new banking law. We have a Saudi stock exchange. We have a foreign investment law. The negative list has been curtailed. We are seeing hopefully the dawn of a new age in Saudi Arabia, in which the Saudis by accession to the WTO have forced themselves to jump through the hoops of economic reform.

Now, what will it lead to? In the grand vision of things, my belief is it will require the Saudis to become more competitive in the world market, to diversify their economy, to improve their educational system so that they can compete. It probably will bring more women into the workforce. Maybe that lowers the birthrate, I don't know, but I think there are some societal factors that really could be in play here over the next couple of generations. We may be really at the beginning of a new stage of history in which the Saudis finally come into at least part of the 21st century.

AMB. FREEMAN: Thank you, Bob. I think your point about competitiveness of the Saudi economy improving radically is vital here. One of the clear objectives on the Saudi side has been to raise the rate of return on investment by achieving such efficiency. The timing is excellent because the example of Dubai in the region and the giant sucking sound that is heard from Dubai have had the effect of stimulating a lot of pressure inside the kingdom for economic and commercial innovation, and the WTO provides the framework for doing that.

Presentations provided in separate SUSRIS IOIs:

• William Clatanoff - Former Deputy U.S. Trade Representative for Labor

• C. Christopher Parlin - Partner, Loeffler Tuggey Pauerstein Rosenthal, LLP

• Robert Jordan - Former U.S. Ambassador to Saudi Arabia

• Charles Kestenbaum - Former Regional Director, U.S. Dept. Of Commerce

• Jean-Francois Seznec - Adjunct Professor, Columbia University's Middle East Institute

• Moderator/Discussant - Chas. W. Freeman, Jr. - President, Middle East Policy Council

• Questions and Answers

Middle East Policy Council

The MEPC, since its formation in 1981, has provided political analysis of issues involving the greater Middle East. Through its programs, publications and Web site, the Council strives to ensure that a full range of U.S. interests and views are considered by policy makers. We challenge the conventional wisdom, ask the difficult questions, encourage a wide spectrum of views, provide forums to stimulate thinking. The Council strives to fulfill these objectives through three major activities:

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• A Capitol Hill Conference Series - forums for members of Congress, their staffs, federal government officials, foreign policy experts and the media.

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KNOWLEDGE, INSIGHT AND PERSPECTIVE - THESE ARE THE PATHS TO UNDERSTANDING. THEY ALSO ARE GOALS OF THE MIDDLE EAST POLICY COUNCIL.

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On SUSRIS

• Crises and Opportunities in U.S.-Saudi Relations - Ambassador Robert Jordan Interview - SUSRIS Interview Series - Sep. 7, 2004

• Robert Jordan's Crucible - By Jim Landers - SUSRIS IOI - Sep. 26, 2004

• Myths and Realities: Saudi Arabia Re-examined - New Republic Symposium on Public Policy - SUSRIS IOI - Nov 18, 2004

• Myths and Realities: Saudi Arabia Re-examined - The New Republic Symposium on Public Policy - [Part 2] Question and Answer Session - SUSRIS IOI - Nov. 18, 2004

WTO Accession:

• Accession of Saudi Arabia to the WTO - SUSRIS

• World Trade Organization Accession - SUSRIS IOI - Nov. 10, 2005

• The Implications of WTO Membership: A View from the Kingdom - SUSRIS IOI - Oct. 30, 2005

• World Trade Organization Accession: Saudi Arabia Gets "Green Light" - SUSRIS IOI - Oct. 28, 2005

• WTO Accession: One Step Closer - SUSRIS IOI - Oct. 12, 2005

Capitol Hill Series:

• 35th in the Capitol Hill Conference Series on U.S. Middle East Policy Conference Panel, January 23, 2004 Saudi Arabia: Enemy or Friend?

• David Aufhauser, Former General Counsel, Department of the Treasury

• Frank Anderson, Former Chief, Near East and South Asia Division, CIA

• David Long, Retired U.S. Foreign Service Officer -- Saudi Arabia, Sudan, Morocco and Jordan

• Nathaniel Kern, President, Foreign Reports, Inc.

• Hussein Shobokshi, President, Shobokshi Development & Trading; Managing Director, Okaz Printing and Publishing