Saudi American Relations

SUNDAY, FEBRUARY 1, 2004 ITEM OF INTEREST

Saudi Arabia: Enemy or Friend?
35th in the Capitol Hill Conference Series on U.S. Middle East Policy
Conference Panel - David Long
Retired U.S. Foreign Service Officer -- Saudi Arabia, Sudan, Morocco and Jordan

[Fourth in a series]

Editor's Note:

The Saudi-U.S. Relations Information Service would like to thank the Middle East Policy Council for permission to share this series with our readers. These presentations were made at the 35th Capitol Hill Conference on U.S. Middle East Policy on January 23, 2004. The conference was hosted by the Middle East Policy Council. This item provides the panel presentation of Mr. David Long who served a distinguished career as a US Foreign Service Officer. Individual transcripts will be provided separately by email and posted on-line -- see links below.

We invite you to participate in a discussion of this issue with other SUSRIS readers and web site visitors. Visit the Discussion Forum to join the dialogue. Also check below for related items published in the Saudi-American Forum and the Saudi-US Relations Information Service.

Middle East Policy Council
35th in the Capitol Hill Conference Series on U.S. Middle East Policy
Saudi Arabia: Enemy or Friend?

Transcript of the paper presented by David Long , Retired U.S. Foreign Service Officer -- Saudi Arabia, Sudan, Morocco and Jordan

CHAS. W. FREEMAN: Let's turn now to the realm of religion, culture and education. In the wake of David Aufhauser's very important discussion of mosque collections, I sort of wonder whether the United States government could prohibit passing the collection plate in Irish Catholic churches in Boston in order to cut off the IRA. If you think of it in those terms, you understand the drastic nature of the political decision that has been made in Saudi Arabia. And here to give us background on that and related issues is David Long.

DAVID LONG: When I was doing anti-terrorism stuff back in the '80s, used to have interminable meetings with the FBI, who wanted to stop the flow of illegal monies to terrorists, the biggest source of which was to the PIRA from Irish-Americans. I didn't think it could be done then and I don't think it can be done now, but I do think that as we are doing, we can limit it and make it harder for it to go. I think it's absolute nonsense to think that we can stop it.

Arthur Young (Photo by Truman Presidential Library & Museum online) I want to make two points about this, and they're inter-related, and they're also inter-related with what Frank said. The first is to just remind people of how far the Saudis have come in managing financial transactions. To start with a show and tell, does anybody other than Saudis and former ambassadors to Saudi Arabia know what this is? It says 10 riyals, and it was issued by SAMA, the Saudi Arabian Monetary Agency. It is not a bank note. Back in the '50s there were no bank notes. They had a gold and silver standard, and gold and silver fluctuated differently, so when gold was high, silver came roaring in, and when gold was low, gold came roaring in and messed up the currency entirely and they realized they had to do something. So they got an American named Arthur Young to come in and help them start a central bank, which they couldn't call bank because they do usury, so they called it the Saudi Arabian Monetary Agency, or SAMA, 1952.

I want to read you a little something about the difficulty they had before that. This is written by - this is Aramco World. It was written about the '50s. It said, "Insistence on hard money had unexpected side effects, particularly for companies like Aramco, which in the 1950s had a payroll running to 500 million riyals a month. With only one denomination of silver coin available for a month's wages for a typical worker, each pay would weigh about 10 pounds. To meet the entire payroll, the company had to transport, store, and guard, and count 60 tons of silver every month." This is 1952. It also had to find extra storage, provide a fleet of trucks, hire dozens of laborers to load this stuff and unload this stuff and a huge staff to sort and count it and give it out.

This was in 1952. And so SAMA, that was not allowed to make bank notes, did a sneaky thing. They created haj receipts. These were for haji's, for the pilgrims. And this thing says, "The Saudi Arabian Monetary Agency holds in its vaults 10 riyals at the disposal of the bearer of this fully negotiable receipt." So you give this to a haji and he can use this and he can go to SAMA and they'll give him 10 real riyals for this piece of paper. And they sent it out and it didn't come back. And then they made a second issue and they had millions of these things running around and they didn't come back, and it became currency. And so finally they printed currency, which this is the first-run riyal note which they printed in 1959, and then they withdrew all these haj receipts and then they had paper currency. And this is in the '60s. And now they don't have any coins any more, so if you want a Saudi coin, you've got to go to an antique store and buy one.

This is all within my memory, too. So when we assume that the Saudis aren't doing enough, I submit that in terms of financial transactions and having oversight and regulation of these transactions, and particularly international, I think it is worth it to look at where they come from.

A bank in Saudi Arabia. (Photo by Patrick W. Ryan) Now, the second point I want to make is that they've come a long way, and it isn't because the United States has in sort of a patronizing way told them to. It's because they're realists, and in financial transactions that are commercial, and government to government, and government to private sector, they had to pull up their socks if they wanted to live in the real world. And they did. They have over the years created a fairly good international monetary policy system, with oversight; not perfect, but then again you can look at the Wall Street Journal if you want to see how perfect we are.

Okay, now why didn't they do this with charities? Chas. mentioned a little bit about it, about putting money in the plate in - in the First Baptist Church in Providence, I'll say, because that was the first Baptist church. Okay, if you're giving a million dollars, you want to know where it goes, but if you're putting 10 bucks in the plate you don't. Your obligation is discharged when you drop it in the plate, right? And this is the same notion, only stronger, in Arabia because charity is one of the four pillars of Islam, zakat. And the obligation is to give; the obligation is not to trace it.

I was with a Saudi friend of mine one time. He was making a speech and these four guys came up and he was a little intimidated and they said, we want to talk to you. He said, what for? Well, it was at a university and they said, we don't have any place to pray and I wondered if you would give us a little donation, a couple hundred dollars, so we could rent a place where we can pray. So he wrote out a check for $15,000 and gave it to them. He didn't ask who they were, he didn't get any sort of due diligence, nothing. He just gave them a check and walked off.

Charity is one of the four pillars of Islam. (Photo by Aramco/PADIA/Brynn Bruijn) This is a tradition that has gone back to the 7th century. Now to all of a sudden change from that, to have to do all of the due diligence and all of the regulations and all of the oversight and all of everything else that we are now demanding them to do, is a pretty tough, tall order. I do not mean to say by that that we shouldn't do this. We should. I do suggest, though, that they're not doing it because we're patronizingly telling them how they ought to pull up their socks. I submit that their wake-up call was not 9/11; their wake-up call was last May and was increased by last November when it became forcibly forced on their psyche what needed to be done for their own problem and the world's problem.

Having said that -- and I'm going to leave the rest of this stuff to Q&A, I would make one other comment, and that is, when I was deputy director for counter-terrorism, I used to be in interminable meetings, of the kind that Chas. intimated, with FBI and with Justice and with Treasury about the money leaving our country to go to terrorist activities, particularly in Northern Ireland. But the PLO came in for its share of the blame too -- not Hamas back then. And in the process I have come to the strong conclusion that we will never stop illegal money flows. We have not done it on drug laundering and we're not going to do it on terrorists' dirtying of money.

Moreover, with terrorism it is too cheap, too available, too tempting ever to eradicate, so anybody who thinks that we're going to eradicate terrorism ought to think again. The best we can do, and we should -- and I'm not saying that we should therefore give up and do nothing -- the best we can do is to bring the problem down to manageable proportions, and that includes trying to stop the money flow, and that we have to do. But I think that we are selling the American public and the Saudis both a bill of goods when we give the impression that we can stop this altogether. Anybody who has ever dealt even commercially in the Middle East knows that there are a million ways in a global economy with open borders and electronic transfers that you can get around any group of restrictions to stop it.

So yes, we should, but I'm going to end with my usual pessimistic outlook on life. Don't count on us getting rid of it. We're going to have to manage it, and the hardest part for Americans is, we are problem solvers. We want to get the problems done, forget it, and go kick back and watch the Super Bowl. I think terrorism is going to be with us for the rest of the century and I think the Saudis have now figured that out too, and because we now have a common interest in it I think we can do a great deal, and we are doing a great deal and we should continue to do a great deal, as long as we don't have unreasonable expectations.

Thank you.

CHAS. W. FREEMAN: Thank you, David. The religious injunction against putting strings on charitable donations, the feeling that the value of the charity, the charitable act is diminished by second-guessing how the donation is used is a very powerful one, and I agree with you, it is not so much a - I'm sure David did a terrific job of persuading the Saudis. I think it is less that we have been persuasive than that circumstances have driven home to the Saudis the requirement in the Saudi national interest to move to impose audits and standards of accountability for the use of charitable contributions.

In this connection, during my visit to Saudi Arabia last week I sat with a very senior member of the government and asked him whether the president's speech on democracy in the Middle East had been helpful or counterproductive in the context of reforms that are very clearly developing in Saudi Arabia. The man treated the question seriously. He thought for a minute and said, really neither. He said, it's certainly not helpful because nobody wants to follow any of your advice any more, Americans. And he said, it really wasn't counter-productive because nobody's listening to you any more. This is, I think, to go back to something again David said at the outset, the fragility of this relationship in terms of popular attitudes on both sides, despite the strong interests we share in cooperation, needs to be recognized and I think addressed.

Click on a speaker's name to read a transcript of the paper that each presented at the 35th Capitol Hill Conference on U.S. Middle East Policy.

Speakers:

David Aufhauser
Former General Counsel, Department of the Treasury
Frank Anderson
Former Chief, Near East and South Asia Division, CIA
David E. 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

ABOUT THE SPEAKER

David E. Long is a consultant on Middle East and Gulf affairs and international terrorism. He served in the U.S. Foreign Service from 1962-1993, with assignments in the Sudan, Morocco, Saudi Arabia and Jordan. His Washington assignments included deputy director of the State Department's Office of Counter Terrorism for Regional Policy, a member of the Secretary of State's Policy Planning Staff, and chief of the Near East Research Division in the Bureau of Intelligence and Research Bureau. He was also detailed to the Institute for National Strategic Studies of the National Defense University in Washington, 1991-92, and to the U.S. Coast Guard Academy, 1989-91, where he served as visiting professor of international relations and in 1990-91 as acting head of the humanities department. He received a B.A. in history from Davidson College, an M.A. in political science from the University of North Carolina, an M.A. in international relations from the Fletcher School of Law and Diplomacy, and a Ph.D. in international relations from the George Washington University.

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