How Did the 1970s Oil Crisis Affect the US Saudi Relations - Essay Example

? HOW DID THE 1970'S OIL CRISIS AFFECT THE US SAUDI RELATIONS? Introduction The diplomatic relations between the United States and Saudi Arabia is a historic one. Commencing even before the onset of the Second World War, the relationship between the two countries has continued to flourish for decades. This has mostly been attributed to the symbiosis kind of relations between the two countries. During the Second World War and cold war, Saudi Arabia benefitted from the constant supply of latest weapons. In addition to that, it received direct military support from Washington, to guard its territories against any potential external aggression. On her part, the United States was in need of quenching her thirst for oil which Saudi Arabian offered (Frum, 2000,76). However, the relationship between the two countries was not based on equality principles, making the United States refuse to honor some parts of the agreement. This was especially when the congress ordered the government to stop the supply of weapons for fear that they would be used to launch attacks on Israel. This act coupled by direct financial and weapon aid to Israel angered many oil producing countries. The resolution was to punish the United States through the oil embargo. This gave Saudi Arabia an opportunity to demonstrate its competitive advantage over the United States. Though the embargo would later be lifted after negotiations with King Faisal of Saudi Arabia, it brought changes in the way the two countries would relate in future. To the United States, there was need to review the way it related with other nations. The resumption of the relationship with Saudi Arabia was to be based on equality, respect and mutual benefits. The United States would also act as a mediator for peace in the Middle East instead of appearing to foster the aggression against Palestine by Israel. Great personalities such as Yamani, Ahmed Zaki and Ali Al-Naimi were imperative in shaping the relations between US and Saudi Arabia (Robinson, 1989, 87). History of the US-Saudi Arabia relationship and causes of the oil crisis The relationship between the United States and Saudi Arabia is deeply rooted. Its history dates back just before the commencement of the Second World War (Ian, 2004, 87). With the realization that Saudi Arabia had a huge reserve for oil, the United States was willing to do everything possible to cement its relationship with this country. Saudi Arabia had a competitive edge that many countries in the Asian continent did not have due to its resources in oil. Its importance was demonstrated when President Franklin Roosevelt ordered protection of Saudi Arabia (Hammes, 2005, 98). While this could be described as an ulterior motive since the country wanted to benefit from oil, this act assisted in cementing the relationship between the two countries. In addition to that, the United States with its engineers began the construction of military bases, infrastructure and training the Saudi Arabian military. The agreement between the two countries included the supply of the latest weapons to the Saudis in order to protect themselves from the eminent threat of attack from aggressors such as Iraq. On the other hand, the United States would be allow to construct its military bases in Saudi Arabia, while at the same time buying oil which at the time would cost at less than $3 a barrel. This enabled the United States meet the high demand for oil. During the cold war, the relationship between the two countries became even more solid. There was a threat that the Soviet Union would attack Saudi Arabia due to their relations with the United States (Hammes, 2005, 100). While the Soviet Union was spreading the communism ideologies, the United States promoted the capitalism. However, the United States demonstrated its support by defending this country against any threat. This was clear when Iraq had invaded Saudi Arabia, with an aim of destroying its relations with the west. At the time, the United States sent a huge number of troops (about 400,000) to defend the country. This was a demonstration of how strong the relationship between the two countries was. While the government of the United States continued supplying weapons, including aircrafts, the congress and Israel were not impressed (Hammes, 2005, 54). There was a propaganda going on that the Saudi Arabia would later use such weapons to attack Israel (there was still tension between Israel and Arab countries). While this was not substantiated by facts, the congress disallowed the United States to continue its supply of weapons to Saudi Arabia. This put the two countries and their relationship in a dilemma. While the United States wanted to benefit from the oil products, it was withholding weapons. This acts of mistrust, and contravention of an earlier agreement began to weaken the diplomatic relationships between the two countries. Oil embargo The organization of petroleum Exporting Countries (OPEC), especially in the Arab countries was angered by lack of bargaining powers yet they were the main producers of oil (Myers, 2013, 9). At this time, one of the most influential personalities in Saudi Arabia was Ahmed Zaki Yamani (Robinson, 1987, 90). He was one of the brains in the OPEC decision making and development. Apart from this personality, Ali Al-Naimi had become the president of the oil production in the Northern Province. His influence in the support of embargo was therefore huge. While issue of bargaining power was one of the factors that preceded the onset of oil embargo of 1973, there were other factors that aggravated the situation. October 6, 1973 is considered as the worst time in history that led to economic problems and tainted diplomatic relationship between the United States and Arab countries including Saudi Arabia. In this period, surprise attacked was launched on Israel by both Syria and Egypt. Being a close friend of the United States, this prompted a response that saw a covert operation meant to supply weapons to Israel launched. In addition to that, direct aid of approximately $2.2 billion was channeled direct to Israel angering many oil producing countries. However, the United States act was in response to that of Soviet Union supplying weapons to both Egypt and Syria (Barsky, 2004, 97). Nevertheless, a meeting by the OPEC members resolved that it was time to punish the United States due to her aggression towards the Arab countries. This was the birth of the oil crisis that would lead to various economic problems not only on United States but other western countries as well. However, prior to the threat of oil embargo, the United States was confident that Saudi Arabia would not engage in such acts due to their ‘strong’ relationships. However, this was proven wrong when Saudi Arabia joined other oil producing countries in the embargo. The immediate effect was increased cost of oil products due to high demand, coupled by low supply. It is estimated that the cost shot from as low as $3 to about $11 (Ritchie, 2004, 90). With a huge appetite for oil, the United States was in real crisis, making it impossible for its companies relying on oil to run. This was one of the most difficult times for the United States, but also a time that it had focus on its diplomatic relations with other countries. With the looming economic crisis, the United States resumed talks with the Saudi Arabian government for resumption of their relationship. In March 1974, a solution was reached by the two countries, making it possible for them to begin trading with each other. Changed in diplomatic relations after the oil crisis After the crisis, a lot changed including the attitude of the United States towards other nations. Initially, the United States thought that since it had acquired the super power status, it would not involve other countries in negotiations (Yergin, 2004, 76). However, the oil crisis served as a warning of worst phenomena that would occur in future, if its attitude did not change. The situation also demonstrated that every country was important regardless of their economic and sociocultural status. In addition to that, this was a period that prompted many global countries to review their diplomatic relations with other countries. The following are some of the changes that were witnessed after the global crisis. US-Saudi Arabia equal parties’ status One of the main determining factors of a healthy relationship between the countries is the perceived equal status. Initially, the relationship between the United States and Saudi Arabia could not be described as based on equality. This was because the US was not ready to listen to the grievances of Saudi Arabia concerning the relations with Israel. The United States did very little to resolve the conflict existing between the Israel and other Arab countries (Frum, 2000, 54). This was despite the fact that Israel was a close ally of the United States. Secondly, the United States through its congress had the audacity of contravening the agreement on which the relationship between the two countries was based. This was done through refusing to continue supplying weapons for fear that they would be used to fight Israel. While such claims were baseless, the United States frustrated the Saudi government even without engaging in any form of meaningful communication (Frum, 2000, 87). However, all these were happening owing to the fact that the United States did not think that they were equal partners. It did not foresee any threat that the Saudi Arabia would pose in future. This explains why the United States was confident that Saudi Arabia would not join the call for oil embargo. The fact that the Saudis joined against the expectations of the Americans was an indication of the tainted relationship between the two. This was therefore a warning that all countries were equal partners, who needed to be respected. It was after this that the relationship between the two countries has been based on mutual benefit, equality and respect. Saudi-U.S. Joint Commission on Economic Cooperation With the increased oil prices, the main beneficiary was Saudi Arabia. With increased oil resources, its economy was the fastest growing at the time. However, there was a crisis of how such a fast growing economy would be managed by people who were not competent and experienced enough to do so. For the first time ever, since the resumption of relationships, the united states was willing to send her experts to assist and train the Saudis on how to manage, and foster economic growth. This was done through the formation of the Saudi-U.S. Joint Commission on Economic Cooperation (Barsky, 2004, 98). This agreement made it possible for the two governments to work together in the realization of this goal. The United States on the other hand benefitted through payments made for the services rendered. This made Saudi Arabia to become one of the most efficient countries in terms of economic management. The banking sectors began to flourish, which also attracted more investors. This relationship has continued to make the country gain a competitive edge over its main rivals. Currently, the country has one of the most efficient economic controls. The country was able to mitigate the 2008 economic crisis through the experience it has gained all through. In addition to that, the country had ensured automation of its economy as a way of increasing its efficiency. The growth of the information technology is attributed to the mutual relationship that the two countries have continued to enjoy over time. Desalinate and distribute drinking water Being in one of the arid regions on planet, clean water for drinking was a major challenge for Saudis. Salty water was common in many parts of the country, and this was not considered good for consumption. The country also lacked the technology that would be used to address this challenge. The resumption of the relationship between the two countries saw the united states capitalize on this to cement the relationship, and win the favor of the Saudis (George, 1999, 94). Using its expertise, the US was able to assist in desalinating the water making it pleasant to the consumers. Oil and military bases The resumption of the relationship between the United States and Saudi Arabia made it possible for the United States to begin importation of oil. This revived its economy which at the time was in the bleak of collapsing. With the growing population, the demand for oil has continued to increase. Saudi Arabia has continued being one of the main suppliers, feeding the United States economy (Barsky, 2004, 78). For instance, a local newspaper in the United States indicated that the country was importing about more than 7 million barrels of oil in a single day. This is despite the fact that the United States began its own production in various parts of the country. This is a demonstration of how important Saudi Arabian oil is important to the country. However, the 1973 oil crisis brought about many changes that may in future affect Saudi Arabia (George, 1999, 96). For instance, it is estimated that in 2020, the supply of oil in the United States is deemed to decrease by almost 50%. This is based on the fact that the United States is on the process of becoming self-sufficient in terms of energy production. The incidence of 1973 prompted the United States to focus on a number of ways that would cushion it against future challenges. For instance, the shift towards green energy will have a negative impact on Saudi Arabia, considering the fact that the United States is the main importer. Nevertheless, the current relationship between the two countries has made tremendous improvements in the United States industries that rely heavily on oil. It has also enabled the United States stabilize the cost of oil, to protect it consumers. Secondly, the United States did not only need the Saudi Arabia for oil, but its strategic point in the Middle East (Frum, 2000, 48). Saudi Arabia is one of the few countries after Israel that has been able to maintain strong ties with Washington. This is imperative to the United States for the purpose of defeating the terrorist activities within the region. For instance, the United States has been able to construct its military bases within the Saudis boundaries making it possible to operate within the region. The presence of US military base has also assured the Saudis of their protection, and exchange of intelligence necessary to mitigate any form of external aggression (Barsky, 2004, 89). This base has also been used by the used states for the purpose of dispatching its troops in various countries such as Syria, Iraq, and Afghanistan which have been blamed for cruelty against humanity and supporting terrorism activities. Even when the importation of oil reduces, Saudi Arabia remains important to the United States. Without this point of operation, it will become almost impossible for the United States to make influence in the region. This may explain why the US has continued to import high volume of oil despite the fact that it has been able to seek other alternatives. Us-Israel relations As indicated before, the relationship between these two countries was the main cause of the oil embargo. Israel had been criticized for its attacks on Egypt, and also its constant occupation of Palestine (Frum, 2000, 123). The fact that the United States continued to support Israel was a demonstration that it supported the perceived aggression towards other Arab countries. While the relationship between the United States and Israel did not cease even after the resumption of the relationship with Saudis, the situation has changed over time. The United States has been more of a mediator between Israel and other countries, especially its conflict with Palestine (George, 1999, 45). The United States has been able to prevent the attack on Palestine by Israel and calling for dialogue to have an amicable solution. This has been a demonstration of its support for human rights, and peace in Middle East. This kind of relationship, coupled by continuous contact with Saudi Arabia has contributed to the development of their diplomatic relations. Current challenges that may affect the relationship From the above analysis, it appears that the relationship between the Americans and the Saudis was a symbiotic in nature. That is, both sides were benefiting from each other. While the America wanted to satisfy her great appetite for oil and oil products, Saudi Arabia on the other hand was aiming at benefiting from weapons in exchange (George, 1999, 94). However, this is deemed to change in the near future owing to a number of factors that may erode the relationship between the two countries. While the diplomatic relationships are deeply rooted, the decrease in oil production coupled by the attitude of the people towards the Americans and presence for ‘terrorists’ sympathizers may have an effect on the two countries. After the Gulf War for instance, the Saudis were able to purchase arms worth more than $95 billion from the United States. Elated at how they were assisted by the United States, they decided to reciprocate by this huge purchase of weapons to reinforce its military. With time however, the only source of revenue for Saudis has been on the decrease. For instance, the oil revenues are said to have sharply fallen from about $227 billion back in 1981 to less than $35 billion dollars in 1998 (Frum, 2000, 87). This is bad news for the Saudis who could no longer afford to continue purchasing expensive weapons from the United States. While the country offers a strategic location for the United States to monitor the rest of the Arab nations, and specifically terror activities in the region, the decreasing oil may make the country be considered less important. It may not pose the kind of threat that it did back in the 1970s when it joined the oil embargo to punish the United States. Currently, the United States is also working on exploitation of its own reserves in order to become stable in terms of oil. With the past lessons, the country is prepared to mitigate such experiences. Apart from the reduction of oil volume, there has been a perception that a majority of the population have been supporting terrorists through provision of material support (Frum, 2000, 76). In particular, it is said that the people have supported such groups in Afghanistan, which is contrary to the United States policy on treatment of terrorists. Funding such groups only continues to pose threat not only to the United States citizens but also globally. In 1995 and 1996 it is indicated that about 24 Americans were killed in what was said to be a terror act (George, 1999, 102). They were occupying the Riyadh and Khobar Towers when they were targeted by the terrorists. However, what angered the American investigators is not the killing of its citizens by how the Saudi government responded to the situation. From the report, it was indicated that the suspects were beheaded even before the American authorities would have time to have them investigated. It was therefore not clear whether the people said to have been executed were indeed connected to the murder of the United States citizens. The fact that there were terrorists in the country who appeared to have had enough time to prepare for such a heinous act without being noticed by the Saudi authority prompted a number of answered questions (Frum, 2000, 90). It seemed that there were people who were supporting the terror activities in the country. This kind of situation coupled by the changing regimes may continue to weaken the relationship between the United States and Saudi Arabia. Currently, with the falling oil volumes, it means that the country is slowly losing its competitive edge, and it may not pose a lot of threat to the United States like it did back in 1973 (Frum, 2000). For this reason, the diplomatic relationship between the two countries can only be built on trust, and cooperation in solving major threats such as terror activities. Saudi Arabia must be ready to demonstrate its willingness to bring into justice all the perpetrators of terror activities. Using the relationship it has had with the United States, this will include exchanging intelligence with the United States. This kind of cooperation is a demonstration of trust between the two countries. Failure to do this, the relationship between the two countries will continue to deteriorate where both countries will lose. In conclusion, the relationship between the United States and Palestine has continued to thrive despite many challenges between the two countries. The current relations are based on mutual respect, and equality which explains why the two countries have continued to support each other. The United States has benefited from the oil products, while on the other hand Saudi Arabia has borrowed technologies and military experience from the United States. With such deep ties between the two countries, the diplomatic relations are likely to remain firm in future. References Ammann, Daniel 2009. The King of Oil: The Secret Lives of Marc Rich: St. Martin‘s Press. ISBN 978-0-312-57074-3. Barsky, Robert B. & Kilian, Lutz 2004. "Oil and the Macroeconomy since the 1970s". The Journal of Economic Perspectives 18 (4): 115–134 [p. 115]. Frum, David 2000. How We Got Here: The 1970s. New York: Basic Books. pp. 321–322. ISBN 978-0-465-04195-4. George C. Wilson 1999"U.S. Military Sales to Saudis 5 Times Total For Israelis", Washington Post October 11, pg. A24 Hammes, David. and Douglas Wills 2005. "Black Gold: The End of Bretton Woods and the Oil-Price Shocks of the 1970s," The Independent Review, v. IX, n. 4, Spring pp. 501–511. Ian Rutledge 2004 Addicted To Oil: America's Relentless Drive for Energy Security (UK: I.B. Tauris), p. 47 Ritchie Ovendale, 2004. The Origins of the Arab-Israeli Wars. London p. 184-191 and 197 Robinson, Jeffrey. 1989: Yamani the Inside Story. London: Fontana Press. ISBN 0-00-637408-5 Myers, A 2013 the end of OPEC http://www.foreignpolicy.com/articles/2013/10/16/the_end_of_opec_america_energy_oil Yergin, D. 2000 the Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster, p. 609 Read More