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Analysis: Saudi Arabia's cash flow problem

By CLAUDE SALHANI   |   Nov. 29, 2002 at 3:47 PM   |   Comments

WASHINGTON, Nov. 29 (UPI) -- Saudi Arabia has a cash flow problem. No, it's not that they are strapped for money, far from it. The desert kingdom is still raking in those petro-dollars by the barrel load, and will continue to do so as long as cars and homes are fueled by oil. And given the current price of that commodity -- around $26 a barrel -- there's hardly a risk of them running into a shortage of funds anytime soon, either.

The Saudi's problem stems from the fact that some of their oil-generated riyals appear to be flowing into the wrong pockets. While Saudi oil was flowing to the West, at the same time Saudi money was flowing East.

Many Saudis, from wealthy individuals to members of the royal family, have been bankrolling Islamist fundamentalists for many years, now. Some of it has been willingly, coming in the form of funds to radical groups, or supporting madrasas and mosques that preach jihad, or holy war against the infidels, the West and the Jews. Others, such as Princess Haifa al Faisal, the wife of Prince Bandar bin Sultan, Saudi Arabia's ambassador to the United States, contributed unknowingly.

Bandar, the doyen of Washington's diplomatic corps, is anything but a fundamentalist. He enjoys his easy life of luxury in the United States, traveling between his Washington residence and his vast estate in Aspen, Colo., where he seems to spend most of his time.

While a group of congressional leaders have called for an FBI investigation into the fact that the princess gave money to two of the Sept. 11 hijackers, there is little doubt that she did so unknowingly. In fact, what she did was provide funds to the needy wife of someone who helped one of the hijackers find lodging in San Diego. Charity is one of the five pillars of Islam.

Saudi money to Islamic fundamentalists in the form of charity is nothing new, either. For years, much of it was carried out with American blessing.

Since Soviet troops rolled into Afghanistan in 1979, hoping to extend the scope of their empire, the Saudis, with enthusiastic support and approval from the CIA, began a systematic campaign aimed at destabilizing the Soviets in Western Asia. Untold millions of dollars began to find their way to a number of Islamic groups who were actively engaged in fighting the Soviet invasion.

At the same time, the Saudis encouraged and facilitated the recruitment of Saudi youths to go fight the communists in Afghanistan, such as those found to be among the ranks of al Qaida when U.S. forces entered Afghanistan last year. Along with Arabs from Yemen and other parts of the Arabian Peninsula, those "jihadis" became known as the "Afghan Arabs." Osama bin Laden, Saudi citizen, was one of them.

When the Taliban militias finally succeeded in ousting the Soviets and took over the war-shattered country following a bitter and devastating civil war, and installed its repressive and medieval-styled regime in Afghanistan, Saudi Arabia, along with Pakistan and the United Arab Emirates, were the only countries to recognize the Taliban regime.

Saudi Arabia's ultra-conservative branch of Wahabi Islam saw in the Taliban a natural ally. But since the Sept. 11 terrorist attacks on New York and Washington, money trails from various Saudi sources have now come to light and are under renewed scrutiny. Under U.S. pressure some have ceased; others have not.

All this, of course, is not helping Saudi's tarnished image in the United States. Since it became apparent that 15 of the 19 Sept. 11 hijackers were citizens of Saudi Arabia, the kingdom has continued to suffer from a negative media blitz. Furthermore, the Saudis have not helped their cause by first going into denial and then not doing much about it.

Officially, both Washington and Riyadh claim to be in full agreement in the war on terrorism. President George W. Bush received Bandar at his Texas ranch a couple of month ago in such fanfare that it was obvious this was done as a public relation stunt and was little more than a White House-orchestrated photo-op. Unofficially, this is far from a reality.

Saudi Arabia can no longer afford to play both sides of the fence and must awake to the harsh realities that change in the kingdom is necessary.

Amid the continuing anti-Saudi frenzy gripping those inside the Washington Beltway, the Princess Haifa affair is certainly blown out of all proportions -- after all, it is quite obvious she would never finance the Sept. 11 hijackers -- this is simply not in her lifestyle. Still, Saudi Arabia must come to grips with reality and conduct a deeper audit of its finances and eradicate certain money trails or face the consequences.

A National Security Council task force is recommending an action plan to the president designed to force Saudi Arabia to crack down on terrorist financiers within 90 days or face unilateral U.S. action.

What that action might be remains vague, but one thing is crystal clear; it will forever alter U.S.-Saudi relations. And it is certainly not going to be for the better.


(Claude Salhani is a senior editor with United Press International in Washington. Comments may be sent to claude@upi.com.)

© 2002 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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