Jean-Francois Seznec Interview - President Obama Saudi Arabia

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EXCLUSIVE INTERVIEW
June 3, 2009

President Obama's Visit to the
Kingdom - Setting the Scene
A Conversation with Jean-Franï¿½ois Seznec

Editor's Note:

President Barack Obama arrives today for his first official visit to Saudi Arabia with a very full plate of bilateral and regional issues to discuss with King Abdullah. To help us set the scene we talked with Jean-Francois Seznec, a Visiting Professor at Georgetown University. He has over 25 years experience in international finance and banking, including a decade in the Gulf. He regularly shares his expertise on Middle East affairs through numerous articles and television and radio appearances, and his earlier SUSRIS interviews. We are pleased that we were able to talk with Professor Seznec by phone from his Maryland home on May 31, 2009, to share his expertise with you and wish to thank him for his time.

President Obamaï¿½s Visit to the Kingdom ï¿½ Setting the Scene:
A Conversation with Jean-Francois Seznec

SUSRIS: Thank you for taking time to share your insights today on the upcoming visit of President Obama to Saudi Arabia. Before we get to the issues that will likely be on the table what do you make of the fact that the Riyadh leg of the Presidentï¿½s six-day, four-nation trip was added on just last week?

Jean-Francois Seznec: The relationship between the United States and Saudi Arabia is very important and President Obama couldnï¿½t visit the region without including the Kingdom on the itinerary. I am a little surprised that a visit to Saudi Arabia wasnï¿½t announced until the last days before the trip. The Saudis are key to so many issues that Washington has to tackle.

I would say the top two issues for President Obama and King Abdullah are Iran and Middle East peace, not in any particular order, as well as any number of other regional problems.

Among the questions on Iran are whether to impose more sanctions on Iran if Iran decides not to grab the hand thatï¿½s being extended so to speak. The Americans probably wants to discuss the Saudisï¿½ views on the possible outcomes of the Iranian elections. Thereï¿½s a lot they want to work through here.

Of course thereï¿½s the recent visits of Prime Minister Netanyahu, King Abdullah of Jordan and the President of the Palestinian Authority to Washington. They would like to get full support and really understand what the Saudis position is on these issues.

SUSRIS: Let me ask you about the first part, the timing of the Riyadh visit. So you think it occurred to the U.S. side in the eleventh hour that for diplomatic purposes they had to stop first in Saudi Arabia before going to Egypt?

Seznec: Frankly, even though Iï¿½m a supporter of Obama and his Administration in general Iï¿½m not impressed with how they have handled the Saudis so far. They have not named an ambassador to Saudi Arabia yet and thatï¿½s a very major, a very important post for the United States. Saudi Arabia is going to play a key role in negotiations with Syria, the negotiations on Lebanon, the negotiations with Israel and the Palestinians and the negotiations with Iran.

So the fact that we have not put enough emphasis on Saudi Arabia shows. I think that they realized, ï¿½Whoops, we really must make an effort to show that we care and the President must go to Riyadh and not just Egypt.ï¿½ So yes, I think it was a last minute decision suggesting that perhaps the Administration is not paying enough attention.

SUSRIS: Someone dropped the ball?

Seznec: Yep. They have. Why donï¿½t we have an ambassador yet? Itï¿½s been more than four months since they took office.

SUSRIS: Ambassador Ford Fraker, appointed during the Bush Administration, stayed on the job until April but now heï¿½s back in the private sector.

Seznec: Well, thatï¿½s right. I spoke with him not too long ago. He loved the job but you canï¿½t blame him. Itï¿½s not his government, not his Administration. And heï¿½s been there for a while. Heï¿½s done a great job. The Administration needs to put a professional diplomat there who is close to the President and who will be able to talk to the Saudis and they have not done that yet.

SUSRIS: Your top two picks for the visit agenda are on most peopleï¿½s lists: the Middle East peace process and Iran. The Obama-Netanyahu meeting in Washington last month will certainly be important. Whatï¿½s the likely conversation between President Obama and King Abdullah on how Washington sees the road ahead for Middle East peace and Saudi Arabia.

Seznec: I think the Saudis will congratulate Obama for putting a some pressure on Israel on the settlements. They will complain, however, that the pressure should be a lot heavier. At this point the United States has asked that the settlements be stopped. Hillary Clinton made a very strong statement to that effect. The President has made some strong statements but they have not put real pressure on Israel to act. They probably want the U.S. to demand an immediate stop to all settlements. And that may happen.

One of the issues I believe the Administration will push very hard is the question of Israeli possession of nuclear weapons because thatï¿½s linked to Iran as well. If I may jump a little ahead of your question, I think one of the key issues the Saudis want to push these days is the denuclearization of the region to include Iran as well as Israel. Even though they are very worried about Iran becoming a nuclear power they understand that the proliferation challenges will happen over and over again until Israel agrees to stop its nuclear activity.

I have heard from many Saudis that they want the U.S. push for Israel to open up its books, so to speak, to open up its nuclear program and little by little dismantle it. They say thatï¿½s the only way you can get Iran to stop developing as a nuclear power. I think the President will get an earful on that.

SUSRIS: Former Saudi Ambassador to the United States Prince Turki Al Faisal has brought up the question of Israelï¿½s nuclear weapons program at a number of his speaking engagements in the States.

Seznec: Yes, Prince Turki knows exactly what is being said in Riyadh. He is one of the experts in these matters. I think we have to listen to him. I think he represents the views of the top leadership in Saudi Arabia today.

SUSRIS: Letï¿½s refocus on Middle East peace. There are other components besides the settlements. The Arab Peace Initiative has been talked about more in the past six months than it had been in the previous six years.

Seznec: Yes, thatï¿½s right. Since thatï¿½s the brainchild of King Abdullah they are going to push it. As Prince Turki has mentioned is is the view in Saudi Arabia that we have to take advantage of this plan while itï¿½s still on the table and itï¿½s not going to be available forever. People could start losing patience because it is a fair plan --it goes back to the 1967 borders, recognizes Israel fully, etcetera, etcetera.

The Saudis will probably push very hard on the plan and I think they see that President Obama has been listening to the plan to a certain extent. They will congratulate him for listening but they will also push him pretty hard to have the Arab Peace Initiative implemented as soon as possible.

SUSRIS: New governments in Israel and the United States are settling in after a period of marking time in the peace process. Given the new players, how optimistic should we be that there will be progress? Is energy being added to the process because of the Iranian challenges? Could concern about Iran force progress -- Saudi Arabia pushing the Palestinians and the United States pushing Israel?

Seznec: That certainly is the optimistï¿½s view and I would hope thatï¿½s the case. But Iï¿½m not so sure that the Israelis will let themselves be pushed easily. They may start putting an enormous amount of pressure on Congress to get their way, so Iï¿½m not sure that pushing Israel is going to be successful. The Obama Administration is certainly putting more pressure on and will probably keep it up. Will it be successful? I donï¿½t know.

SUSRIS: You already touched on Iran ï¿½ one other major issue on the table for President Obama and King Abdullah. There have been discussions lately about the need for the U.S. to reassure the Saudis and others in the Gulf that the United States would not reach a deal with Iran at their expense.

Seznec: I donï¿½t think the Saudis are too worried about that right now. They are not half as worried about Iran as we think they are. We like to think they are worried because we like to think of Saudi Arabia as 100 percent behind us on these issues.

Saudi Arabia sees Iran as having major economic problems. They see they cannot meet their budget. That even $70 oil is killing them. So while they donï¿½t want to see Iran become like North Korea they are not so worried. Iran is not scaring the Saudis as much as we would like to think.

SUSRIS: Saudi Arabia has been concerned about expanding Iranian influence in the region and seemed to want the United States to do something about it, but on the other hand they didnï¿½t want the U.S. to be too forceful about it.

Seznec: Thatï¿½s right. They are worried that if force was used it would spill over. Everyone is worried that the Iranians would pull the strings among the Shia populations throughout the Gulf. That may or may not be true but everyone is worried about it. Thatï¿½s the problem.

On the other hand, as I mentioned, I think the Saudis have the view that military action is not necessary that the economic pressure will be Iranï¿½s undoing. They are hurting themselves nicely, thank you very much.

SUSRIS: President Obama during his meeting with Prime Minister Netanyahu last month, said that by the end of the year the United States would know whether or not Iran had rejected the hand that had been extended. There were no explicit timelines or actions discussed but actions beyond talking were implied. The reaction from Saudi Arabia to the discussions about Iran has been muted. What do you expect we will see from Riyadh after receiving information from President Obama ï¿½ engagement or watchful waiting?

Seznec: Iï¿½m not sure they will be engaged. I think they will sit tight and wait and pray that we donï¿½t do anything stupid in the near future. They will hope for another president in Iran, which may or may not happen, and that the economic situation collapses totally. That doesnï¿½t mean there would be a change of regime but that would make life for the regime much more difficult.

So I think thatï¿½s the approach the Saudis will take. They donï¿½t mind the U.S. putting pressure on Iran as long as that does not involve the Saudis directly. This way the Iranians continue to get hurt while the Saudis continue to develop. Every day that passes allows Saudi Arabia to be much more further ahead as far as wealth and their economy compared to Iran.

As far as the U.S. talking with Iran the economic situation is a key factor. Iran is really pretty desperate right now but it is playing as if it were rich and healthy and active. But in fact they are really on the brink of bankruptcy but are playing brinksmanship.

SUSRIS: Letï¿½s tick down the list of other challenges for President Obama and King Abdullah to consider. Pakistan, Lebanon, Syria. Where should we start?

Seznec: One thing Iï¿½d like to know is what do the Saudis feel about Pakistanï¿½s major attack on the Taleban. The Saudis at one point were trying to bring together the more moderate Taleban and the Pakistanis and Afghanis to create a modus vivendi in the region. That is not going to happen now that the Pakistanis have really declared war on the Taleban.

It would be interesting to know how this is viewed from the Saudi side. Do they support it or resent it. My gut feeling is that the Saudis supports the Pakistani military because there are so many links between the Saudi military and the Pakistani military but itï¿½s hard to be sure of how that question would be answered.

On Syria we have to see whatï¿½s going to happen with the Hariri issue. Thatï¿½s still not resolved. There are lots of rumors ï¿½ that it was not the Syrians who did it that it was really the Iranians through Hizballah. That talk comes in at a convenient time before the elections in Lebanon. However, the Saudis would very much like to make up with Syria. It would be helpful to push Syria into negotiations with the Israelis -- recovering the Golan Heights and everything else will follow suit, moving in the right direction.

SUSRIS: Other issues on the table?

Seznec: Thereï¿½s an important financial issue of interest to the Obama Administration. I think the U.S. will ask the Saudis to maintain their $500 billion in reserves, in Treasury bills, and not switch them to other currencies or reinvest it in Saudi Arabia. Weï¿½re pretty desperate in funding our various activities ï¿½ saving the banks, and whatnot in this country. So the Saudi reserves are of great importance to the U.S. right now. There might be some exchanges on that issue.

SUSRIS: The conventional wisdom last fall was that Saudi Arabians liked the Bush Administration and they would like to see the same party stay in power. They now have Obama to deal with. King Abdullah and President Obama, met at the G-20 meeting in April. The two men will meet again at the Kingï¿½s farm outside Riyadh. What are the personal dynamics they might find appealing or curious about teach other? Any observations?

Seznec: Itï¿½s very interesting. This 85-year-old man and this young president have, in a way, the same philosophy about life. They are very inclusive in their approach to people. They know that if you do not include people and if you do not show an understanding of other cultures and other religions things can go very badly. I think they will respect that in each other.

The Saudis did not have that in Bush and I think the King sees Obama as a very profound man. I think they will like that very much. I think the relationship will be more than positive. It will be more like father to son, it seems to me.

SUSRIS: President Bush and King Abdullah appeared to get along judging from outward appearances at the two Crawford meetings and Bushï¿½s two visits to the Kingdom last year. Do you think that was, on Bushï¿½s part, superficial?

Seznec: I think it was also superficial on the Kingï¿½s part. The King needed some things at that time. He needed the Presidentï¿½s support for WTO which was vital to the Saudis and he was willing to play the game. The King is very good at playing the diplomatic game of making people feel appreciated. I think with Obama he will be much more genuine.

SUSRIS: Cairo is the second stop for President Obama and there he will be delivering a major address to the Muslim world. What are your thoughts about Obamaï¿½s task?

Seznec. It will be very interesting to see how he presents his views. A likely theme is that, of course, we are all brothers. Every family has the same wishes for their children. We must learn to work together. We have to listen to each other. We must have respect for each other.

It will be very interesting to see how he presents this without apologizing, to present an American point of view which has so much good to offer and without being too demanding.

President Obama is very good at these kind of speeches. I hope it is translated well for the rest of the world. I am sure they will listen very intently on what he has to say.

Iï¿½m sure he will put some pressure on Israel in the speech to show that he understands the concerns of the Arab masses. I think it will be a very exciting speech to hear and it will be very interesting how many Arabs will really understand it, when itï¿½s translated to the Arab people whether they will understand it the way we will.

SUSRIS: Thank you very much for sharing your perspective on this important visit.

About Jean-Franï¿½ois Seznec

Dr. Seznec is a Visiting Associate Professor at Georgetown University. His research centers on the influence of the Arab-Persian Gulf political and social variables on the financial and oil markets in the region. He is focusing on the industrialization of the Gulf and in particular the growth of the petrochemical industry. He holds a MA from Columbia University [1973], a MA and his Ph.D. from Yale University [1994]. He has published and lectured extensively and is interviewed regularly on national TV, radio and newspapers, as well as by the foreign media.

Dr. Seznec has 25 years experience in international banking and finance of which ten years were spent in the Middle East, including six years in Bahrain as a banker. Dr. Seznec is a founding member and Managing Partner of the Lafayette Group LLC, a US based private investment company. He uses his knowledge of business in the Middle East and the United States to further his analysis of the Arab-Persian Gulf.

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