Saudi Arabia - Thomas Lippman Interview

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Item of Interest
September 29, 2007

SUSRIS EXCLUSIVE

Political and Economic Developments in Saudi-US Relations
A Conversation With Thomas Lippman

Editor's Note:

When you work about 600 miles outside the Washington, DC Beltway you can spend a lot of time on the road going to conferences and meeting with interview subjects. This week we were fortunate in having home field advantage during the visit of Middle East specialist and former Washington Post Middle East bureau chief Thomas Lippman to Middle Tennessee under the auspices of the Tennessee World Affairs Council's distinguished visiting speaker program. Tom, author of "Inside the Mirage: America's Fragile Relationship with Saudi Arabia," spent four days talking with students at Vanderbilt University, Tennessee Technological University, and area high schools, as well as civic clubs, receptions and discussion groups on a variety of issues related to Saudi Arabia and the United States' role in the Middle East.

SUSRIS caught up with him in Cookeville, Tennessee where he talked about important political and economic news of interest. In coming days we will share his interview about meeting with Saudi students at Tennessee Tech, his presentation to a Rotary club on the foundations of US-Saudi relations and his interview with Nashville Public Radio. Today, we are pleased to share his perspective on the news.

[Audio versions - click here]

Political and Economic Developments in Saudi-US Relations
A Conversation With Thomas Lippman

SUSRIS: We are joined today by Thomas Lippman, Adjunct Scholar from the Middle East Institute, veteran Washington Post correspondent as well as author of a number of books including �Inside the Mirage: America�s Fragile Relationship with Saudi Arabia.� He will talk about current issues in the US-Saudi relationship and developments like the participation of Saudi Arabia in the Middle East Peace Conference, Saudi support for US positions in Iraq and recent economic news like the Dollar-Riyal currency peg. Thanks for joining us today Tom.

Thomas Lippman: My pleasure.

SUSRIS: First lets talk about the prospect for a Middle East peace conference and the prospects of Saudi Arabian participation.

Lippman: Well as you know, President Bush has made it a point, a big point, and staked a lot on the prospect for having a multinational conference that would address the large questions that remain on the Israel Palestinian issue. It is an issue that�s been complicated by the split, the breach between the Palestinians that has split off Gaza under Hamas from the West Bank under the Fatah led by Mahmoud Abbas. The Palestinians are divided themselves.

There has been a big question about whether Syria would be invited to such a conference, I believe that question has now been answered in the affirmative, and also whether the Saudis if invited will participate.

The Saudis have said, Prince Saud al Faisal, the Saudi Foreign Minister has said, Saudi Arabia agrees in principle to participate if the prospect holds the conference will be bringing up and resolving substantive issues -- really making progress on the nuts and bolts of a peace deal, of an agreement between Israel and the Palestinians.

I believe his exact words were, �We don�t want to go to a meeting for the sake of going to a meeting,� I read that as a signal to the United States the Saudis are not going to go there and to possibly jeopardize or undermine their own position among other Arabs just to do Washington a favor. They�re not committed to making peace with Israel on any terms; they are committed to peace with Israel on terms acceptable to the Arabs in general and the Palestinians in particular.

It seems to me that this is a big question because the Saudis are in a tough spot. It would really be a neuralgic decision in Washington if the Saudis were to be invited to such a conference and declined to participate. It�s always important to remember in discussions of the relations between the United States and Saudi Arabia that while strains always arise � differences, sometimes very bitter differences pop up over this issue and that issue -- neither side has ever wanted and neither side wants now any kind of fundamental breach.

The decision by President Bush to undertake a major new sale of military equipment and arms to Saudi Arabia and the other countries of the Gulf was accompanied by many statements of American officials including Secretary Rice and Under Secretary Burns to the effect that these arms sales represented new U.S. commitment to our relationship with Saudi Arabia and other friendly countries in the Arabian Gulf. And I think the Saudis took it in that spirit.

Of course no arms sales have yet been approved by Congress, but the fact that the White House made the announcement in a way that was cast as not being a step against Iran, but a step being an affirmation of our friendship with Saudi Arabia and other friendly states of the Gulf I think was important. Whether under those circumstances the Saudis are going to want to stand up and say, �We were invited, but we�re not coming� I don�t know. The Saudi preference of course would be to say in private, Mr. President that�s not good enough; we can�t do that, and then not get invited. So they wouldn�t have to say no. But this is the most immediate big question mark about the relationship.

SUSRIS: Let�s turn to another question that arises from the visit to Saudi Arabia in August of Secretary Rice and Defense Secretary Gates in which the arms sale and the peace conference were discussed with the King and Prince Saud al Faisal. That was the question of Saudi Arabia�s support for the US position in Iraq, specifically efforts to reduce the number of Saudis who were going to Iraq as foreign fighters and the possibility that Saudi Arabia will reopen its embassy in Baghdad.

Lippman: Well on the first point, three or four months ago several very senior American officials including Defense Secretary Gates were saying in public that Saudi Arabia was not doing enough to help us out in Iraq. And in particular that the transit from Saudi Arabia to Iraq through Syria of whatever you want to call them -- bombers, Jihadis, terrorists, trouble makers going to Iraq -- was continuing and it was a troubling issue.

Last week I had occasion to put this question directly to David Satterfield who is the State Department senior point man on Iraq and his answer was interesting. He was very emphatic in saying that the transit of troublemakers through Damascus is continuing undiminished, but he didn�t say where they were coming from. He had an opportunity to renew the statement that they were coming from Saudi Arabia to a great extent, and that the Saudis were not doing enough to stop them. He didn�t do that. I took this as a sign that we Americans may be making some progress on that front, and that the Saudis may be doing more to help us there.

SUSRIS: Well let�s explore a little bit more the question that not being helpful in regard to Jihadis from Saudi Arabia. In late July, Ambassador Khalilzad was very outspoken but there has been no more comment from him on this subject. Is that an indicator that that was a minor blimp or is there..

Lippman: Well you know frankly the Saudis were quite baffled by Khalilzad�s remarks which I believe he made in an op-ed in the New York Times.

SUSRIS: They were initially in an op-ed but he explained them on a Sunday talk show, meaning specifically Saudi Arabia.

Lippman: Yeah, and I think in my understanding is that the Ambassador went a bit beyond his brief with those remarks. You don�t often see an issue where an Ambassador like that goes beyond what the Secretary of Defense and Secretary of State have been willing to say. There has been no repetition of that, and I take that as a sign that this issue is under active discussion at levels that are not immediately visible to us. I assume that to be the case. Who is actually doing the talking to whom, I do not know. I don�t recall that either General Petreaus or Ambassador Crocker expressed in their extensive appearances in Washington, expressed public criticism of Saudi Arabia on this point. And I took that as a sign that they are making progress. Maybe they did, but I don�t recall that they did.

SUSRIS: Turning to the question of the embassy in Baghdad, what do you see as the status of movement in that area?

Lippman: Well this is an important issue. My understanding is that most Arab countries, perhaps all of them, have refrained from opening or reopening embassies in Baghdad because it was too dangerous. There were attacks on diplomats there. They either can�t afford or don�t want to spend huge amounts of money necessary to provide security for daily life in Iraq.

But the Saudis did send a delegation to Baghdad to explore the possibility of opening an embassy. And they may well do that. Whether it will be staffed by a senior Saudi diplomat with the full rank of Ambassador Extraordinary and Plenipotentiary, I don�t know because the Saudis have not made much secret of the fact that they are not big fans of the Maliki government -- which they regard as essentially an agent of Shiite domination of Iraq. And they may do it in the interests of pleasing Washington and promoting Arab solidarity hoping to achieve something on the Iraqi stability front, but I don�t think anything is imminent.

SUSRIS: Lets shift from regional security and politics to economic developments in the Kingdom. In the backdrop of $82 a barrel oil it was just announced that Saudi Arabia will have a $77 billion surplus. What�s the impact of that on the country?

Lippman: Well you know its actually been a long time since we�ve had a conversation about whether OPEC is gouging Americans and whether the Saudis should be doing more to help us out on this.

We�ve lived with oil at $65 and more for quite some time now and you don�t see the kind of intemperate editorializing about this that you used to see in the past � you know, calls for taking over the oil fields and all that sort of thing. It�s true that Saudi Arabia announced, this week, a budget surplus for their fiscal year, an all time record budget surplus of about $77 billion. And that�s because the money is really flowing in. Saudi Arabia is the world�s largest oil exporter and oil prices are very high. But it�s also true that they traditionally prepare their budget on a basis of the relatively low estimates of what the price of oil is going to be. In this case I don�t know what their budget figure was, what they anticipated the price of oil would be, it certainly wasn�t $80 a barrel. So on one level you could say, �The Saudis have a $77 billion dollar surplus so they ought to do more to bring down the price of oil for the benefit of American consumers.�

Well first the Saudis have committed themselves, more than a year ago, the Saudis committed themselves to an increase in their national production capacity up to more than 12.5 million barrels a day over the next few years. At the recent meeting of OPEC, they led the OPEC countries in a commitment to get another 500,000 barrels a day into the worlds market to try to stabilize prices. The Saudis never want to be in the position where the price of oil is so high that it truly stimulates substantial investment in other forms of energy.

They read the ethanol numbers, they read about bio- diesel and that�s not the way they want to go and they will wish to keep oil at a price that we can afford. But they do not completely control the world oil market. A lot of oil prices are set by people in New York bidding on oil contracts who have other considerations in mind, not just supply and demand but conditions of risk assessment for example, or the possibility of a U.S. confrontation of Iran would interrupt supplies coming out of the Gulf. The so-called �fear premium� is part of the price of oil, the Saudis can�t do much about that.

On the other hand I think you can argue the Saudis are doing Americans a big favor every day by continuing to denominate all international oil price transactions in dollars, in taking only dollars in payment for oil. In effect, this is a subsidy to American consumers of more than thirty percent because of the very low value of the dollar on a lot of world currency markets. To the extent that the Saudis have a contract in, lets say Germany, they�re really getting beaten up by the fact that it now costs a $1.41 to buy a Euro and they have never seriously considered, from my understanding, of breaking away to the often proposed basket of currencies for pricing international oil transactions. They have reaffirmed the link of their own currency to the dollar, even though the Kuwaitis severed that link. I think the Saudis have an interest in fiscal stability here and in maintaining good relations with the United States on this point. And to that extent I think things are on a good plane between the United States and Saudi Arabia.

SUSRIS: Any last remarks on current trends or indicators in the news bearing on US Saudi relations?

Lippman: Well here�s something that I think a lot of people didn�t pay attention to. After the Sharm el Sheik conference a month or so ago, which involved the United States, Egypt, Jordan and Iraq�s neighbors including Saudi Arabia, the participating countries including the United States issued a joint communiqu�. People don�t often pay attention to these documents, but they are prepared and ascribed to after weeks and months of negotiation over their exact language. In there was a real sleeper clause I thought people didn�t pay enough attention to.

All the signatory countries, including the United States, expressed support for what this document called the �universality of the Nuclear Non-Proliferation Treaty in the Middle East.� That is to say that they want everybody to join the Nuclear Non-Proliferation regime set down in the Non-Proliferation Treaty.

There is only one country in the region that isn�t a participant in the Non-Proliferation Treaty regime and that�s Israel. And this was, in my opinion, this was an acceptance by the United States of long standing Saudi policy, which calls for a nuclear free Middle East. And I thought no one paid much attention to this, to me I thought it was a gesture that the United States gave to the Saudis and I think the Saudis probably appreciated it.

SUSRIS: Well thanks for bringing that to our attention and for the discussion of politics and economics relative to Saudi Arabian-U.S. relations.

Lippman: My pleasure.

ABOUT

Thomas W. Lippman is an adjunct scholar at the Middle East Institute in Washington. In four years as the Washington Post's Middle East bureau chief, three years as the Post's oil and energy reporter and a decade as the newspaper's national security and diplomatic correspondent, he traveled extensively to Saudi Arabia. He is the author of Inside the Mirage: America's Fragile Partnership with Saudi Arabia, Madeleine Albright and the New American Diplomacy, Understanding Islam, and Egypt After Nasser. A writer and journalist specializing in U.S. foreign policy and Middle Eastern affairs, he lives in Washington, DC.

[Mr. Lippman was interviewed in the editorial offices of SUSRIS.org in Cookeville, Tennessee on September 27, 2007.]

ABOUT

The Middle East Institute -- "Since 1946 the Middle East Institute has been an important conduit of information between Middle Eastern nations and American policymakers, organizations and the public. We strive to increase knowledge of the Middle East among our own citizens and to promote understanding between the peoples of the Middle East and America. Today we play a vital and unique role in expanding the dialogue beyond Washington, DC, and actively with organizations in the Middle East.."

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