Wednesday, August 3, 2005

The death of King Fahd bin Abdul Aziz on Monday and the ensuing rally in the oil markets as prices climbed to a record $62.30 per barrel are reminders of the oil market’s vulnerability to any change in Saudi Arabia. Since rising world energy demand already far exceeds the ability of producers to deliver oil to consumers, any political crisis in Saudi Arabia would likely tip world oil markets into mass hysteria.

America has been asking Saudi Arabia to bring price stability to world oil markets for a long time. The most recent summit in April between President Bush and then-Saudi Crown Prince Abdullah, now king, at Mr. Bush’s Crawford ranch is no exception. Pre-summit oil prices of $58 per barrel settled down to $47-$48 per barrel in May, nearly at the $45-per-barrel price objective agreed upon by Mr. Bush and Abdullah. Support for a $45-per-barrel target price was worldwide. OPEC members voiced support, as did world leaders such as Russian President Vladimir Putin and industry leaders such as BP Chairman Sir John Browne.

This U.S. dependency on Saudi oil to bring stability to world oil markets (indeed, the critical global dependence on uninterrupted supplies of crude oil from Saudi Arabia) requires a fresh approach to U.S.-Saudi relations. Saudi Arabia is the single most important player in the energy equation. It is home to more than 25 percent (260 billion barrels) of the world’s 1 trillion barrels of remaining oil reserves. (The U.S. only has 29 billion barrels of reserves.) Therefore, the long-term stability of Saudi Arabia must be a key priority, not just for the United States but also for the entire global community.

A fundamental premise of this new policy should be the repudiation by the Saudi royal family of its alliance with Wahhabi clerics. Historically, the al-Saud family gained legitimacy from its religiosity. This meant giving a blank check or turning a blind eye to ignorant clerics whose puritanical visions of Islam have been anathema to the very teachings of the Koran. In fact, the vast majority of the Saudi people whom I have met share the same dreams, goals and aspirations that essentially are no different from our own. They care about unemployment, corruption, lack of freedom of expression and lack of religious freedom for non-Wahhabi Muslims. They do not care to wage a “holy war” on the West.

Washington should identify and work with those in the Saudi royal family who are committed to an interpretation of religious doctrine that allows for pluralism and does not encourage Wahhabi proselytizing, both within the kingdom and outside. By allying with such individuals and by calling for reform on these issues, the United States could reap significant benefits for itself, Saudi Arabia, world energy security and the war on terror.

Another key aspect of this new approach should be to help promote a transition to a more pluralist and tolerant society by maintaining stability throughout the change. Some in the United States believe Mr. Bush should pressure the Saudi royal family to institute reforms in the political arena. Others believe that better U.S. public diplomacy is needed to win the hearts and minds of ordinary Saudis by talking to them in a language they understand rather than relying on lofty, abstract rhetoric about freedom and democracy. Both approaches to reform are important, but they must be done with an eye toward stability.

Reform cannot be successful unless the reformist elements of the royal family are strengthened by this process. For example, when former President Jimmy Carter naively pushed the Shah of Iran to reform, he did not consider the alternative consequences. The end result was the emergence of a raging Islamic radicalism led by the exiled Ayatollah Khomeini. For the sake of global energy security, the world cannot afford this type of mistake in Saudi Arabia. The United States must work with those prominent Saudis who do promote reform, such as the al-Faisal family and their allies. Also, we must work with the new monarch, King Abdullah, who is personally very popular, and with those members of his family who are respected by the general population.

While some may consider the ouster of the Saudi royal family as a precursor to more pluralism in the energy-rich Middle East, the subsequent oil price shock could lead to a meltdown of the global economy.

S. Rob Sobhani, Ph.D., is president of Caspian Energy Consulting and a member of the Committee on the Present Danger.

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