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U.S. RELATIONS WITH SAUDI ARABIA: OIL,

ANXIETY, AND AMBIVALENCE

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE MIDDLE EAST AND SOUTH ASIA

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

SEPTEMBER 18, 2007

Serial No. 110–133

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/
(II)

COMMITTEE ON FOREIGN AFFAIRS 

TOM LANTOS, California, Chairman 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

BILL DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

RUSS CARNAHAN, Missouri 

JOHN S. TANNER, Tennessee 

GENE GREEN, Texas 

LYNN C. WOOLSEY, California 

SHEILA JACKSON LEE, Texas 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

DAVID WU, Oregon 

BRAD MILLER, North Carolina 

LINDA T. SA ́ NCHEZ, California 

DAVID SCOTT, Georgia 

JIM COSTA, California 

ALBIO SIRES, New Jersey 

GABRIELLE GIFFORDS, Arizona 

RON KLEIN, Florida 

ILEANA ROS-LEHTINEN, Florida 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

BOB INGLIS, South Carolina 

LUIS G. FORTUN ̃ O, Puerto Rico 

GUS BILIRAKIS, Florida 

ROBERT R. KING, Staff Director 

YLEEM POBLETE, Republican Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND SOUTH ASIA

GARY L. ACKERMAN, New York, Chairman 

HOWARD L. BERMAN, California 

DAVID SCOTT, Georgia 

JIM COSTA, California 

RON KLEIN, Florida 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

RUSS CARNAHAN, Missouri 

SHEILA JACKSON LEE, Texas 

MIKE PENCE, Indiana 

STEVE CHABOT, Ohio 

JO ANN DAVIS, Virginia 

JOE WILSON, South Carolina 

J. GRESHAM BARRETT, South Carolina 

JEFF FORTENBERRY, Nebraska 

BOB INGLIS, South Carolina 

CONNIE MACK, Florida 

GUS BILIRAKIS, Florida 

DAVID ADAMS, Subcommittee Staff Director 

HOWARD DIAMOND, Subcommittee Professional Staff Member 

GREGORY MCCARTHY, Republican Professional Staff Member 

DALIS BLUMENFELD, Staff Associate 
(III)

C O N T E N T S 

Page

WITNESSES 

Mr. F. Gregory Gause, III, Associate Professor, Department of Political 

Science, University of Vermont ........................................................................... 8

Mr. Lee S. Wolosky, Partner, Boies, Schiller & Flexner LLP .............................. 16

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Gary L. Ackerman, a Representative in Congress from the 

State of New York, and Chairman, Subcommittee on the Middle East 

and South Asia: Prepared statement ................................................................. 3

Mr. F. Gregory Gause, III: Prepared statement .................................................... 9

Mr. Lee S. Wolosky: Prepared statement .............................................................. 19

APPENDIX 

The Honorable Sheila Jackson Lee, a Representative in Congress from the 

State of Texas: Prepared statement ................................................................... 41

(1)

U.S. RELATIONS WITH SAUDI ARABIA: OIL, 

ANXIETY, AND AMBIVALENCE 

TUESDAY, SEPTEMBER 18, 2007, 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON THE MIDDLE EAST

AND SOUTH ASIA, COMMITTEE ON FOREIGN AFFAIRS, Washington, DC. 

The subcommittee met, pursuant to notice, at 1:34 p.m. in room 

2172, Rayburn House Office Building, Hon. Gary L. Ackerman 

(chairman of the subcommittee) presiding. 

Mr. ACKERMAN. The subcommittee will come to order. 

Mention Saudi Arabia to most Americans and you get a complaint about high oil prices, concern about support for radical 

Islam, and an angry reminder that 15 of the 19 hijackers on 9/11 

were Saudis. 

Mention America to most Saudis, and you get complaints that 

America talks of democracy, but supports repressive regimes; that 

America always seems to be fighting and killing Muslims; and of 

course, that American policies in the region are biased toward 

Israel. 

Experts might dismiss these sentiments as those of people who 

don’t understand the big picture; namely, the strategic bilateral relationship that begin during World War II. 

But a closer examination of that relationship reveals that opinion 

on both the American and Saudi street is not far from some important and uncomfortable truths about the relationship. It has never 

been very deep, nor truly stable, nor founded on a broad agreement 

of world views. 

The United States and Saudi Arabia do share important strategic goals in the Middle East. We both want to restore stability 

in Iraq. We both want to stop Iran’s drive for nuclear weapons, and 

to curb its appetite for regional hegemony. We both want a resolution to the Israeli-Palestinian conflict that involves two states with 

two people living side by side in peace and security. 

But look at each objective a little closer, and significant divisions 

come into sharp focus. 

From our perspective, the current Shi’a-dominated government 

in Baghdad, so long as it can provide some measure of security 

throughout the country and establish a working political consensus 

with other major ethnic groups, would be more than sufficient for 

us to declare victory and leave. 

The Saudis, on the other hand, see the current government of 

Prime Minister al-Maliki as a tool of Tehran, and refer to our pres-
2

ence in Iraq as illegal occupation. Potent code words in the Arab 

world. And we believe the Saudis have been turning a blind eye to 

the movement of Saudi jihadis into Iraq. 

On the question of Iran, the United States is struggling to build 

on an international coalition in favor of tougher sanctions to pressure Iran into abandoning its pursuit of nuclear weapons. But 

there is a limit to American patience, and it is only the failure of 

political means that would compel us to consider other options. 

But while we labor the vineyards of diplomacy, the Saudis, who 

would be among those most threatened by a nuclear Iran, seem 

content to sit back, relax, and wait for the vintage of either our 

success or failure to be poured. 

On the Israeli-Palestinian front, while we both want a two-state 

solution, we insist that the way to get there is to support a reformed Palestinian Authority, and to isolate Hamas in Gaza until 

they accept the three conditions laid down by the quartet: The recognition of Israel, non-violence, and the durability of prior agreements. 

The Saudis, in contrast, until recently seemed willing to stomach 

anything to keep the Palestinians from fighting among themselves, 

even going so far as to put Iran’s terrorist proxy, Hamas, on equal 

footing with President Abbas and the Palestinian Authority. And 

when Hamas refused to sign up for the Saudi-led peace initiative, 

and then perpetrated a coup in Gaza, our Saudi friends seemed to 

blame President Abbas. 

Then there is the issue of terrorism financing. It is no secret that 

large sums of money flow from Saudi Arabia to bad people and organizations all over the world. And as with all things Saudi, the 

picture of government’s response has been mixed. They have signed 

the U.N. International Convention for the Suppression of Financing 

of Terrorism, but haven’t ratified it. They have announced that a 

single-government entity, the Non-Government Commission on Relief and Charity Work Abroad, would be formed to control overseas 

charitable activities, but it hasn’t been established yet. 

They have established new rules and regulations regarding 

money laundering and financial transfers, but they have yet to 

prosecute any prominent Saudis accused of violating these laws, as 

Under Secretary of the Treasury, Stuart Levey, reminded us last 

week. 

So on to this Jackson Pollock-like canvas of strategic convergence. The tactical disagreement, the Bush administration has 

splattered a $20 billion arms deal. Under the best-case scenario, 

this deal has significant merit. But what is the likelihood of the 

best-case scenario? 

To be frank, I view arms deals with a great deal of skepticism. 

The recipient certainly welcomes the arms, but I don’t think they 

love or respect us in the morning after the sale. 

The results of such deals are usually a mixed bag of hoopla, behind-the-scenes cooperation, and ugly public disappointments down 

the road. And I believe that this will be the outcome of the current 

deal currently being proposed. 

The Saudis are not going to change their calculations about important region issues simply because we have allowed the princes, 

at their Defense Ministry, to buy some of our most lethal goodies. 
3

Saudi Arabia will make its own calculations about the region, and 

about its relations with the United States, on the same basis it always has: What is in it for the House of Saud? 

So I think we ask ourselves a similar question: What is in it for 

the house of Uncle Sam? We can’t get Saudi cooperation. If we 

can’t get Saudi cooperation on the international situation in Iraq, 

on stopping the flow of fighters and cutting off money going into 

insurgents there and to other terrorists around the world, then 

why should we believe that they see the War on Terror as we do? 

And why sell them those weapons? 

If we can’t get the Saudis to step up and forthrightly participate 

in a coalition of nations confronting Iran’s nuclear aspirations, then 

why should we believe that they see the Iranian threat as we do? 

And why sell them these weapons? 

If we can’t get the Saudis to even commit to attending the upcoming Regional Conference on the Israeli-Palestinian issue, let 

alone resume active support for the Palestinian Authority and the 

leadership of the Arab world encouraging a two-state solution, then 

why should we believe that their commitment to regional security 

is built on the same foundations as are ours? And why sell them 

these weapons? 

In the end, selling them arms won’t guarantee their cooperation, 

much less their love. I don’t think it would even get us to the point 

where, as the 9–11 Commission recommended, officials from both 

countries would be willing to defend the relationship to their respective publics. 

Maybe the arms sale can be used to help tip the balance in our 

direction on these issues and leave open the possibility of a broader 

reconciliation in the long term. Since it is their $20 billion anyway, 

maybe that is all we can realistically expect. 

I would like to yield now to my good friend, the ranking member 

from Indiana, Mr. Pence. 

[The prepared statement of Mr. Ackerman follows:]

PREPARED STATEMENT OF THE HONORABLE GARY L. ACKERMAN, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NEW YORK, AND CHAIRMAN, SUBCOMMITTEE ON

THE MIDDLE EAST AND SOUTH ASIA

The Subcommittee will come to order. Mention Saudi Arabia to most Americans 

and you get complaints about high oil prices, concern about support for radical 

Islam, and an angry reminder that 15 of the 19 hijackers on 9/11 were Saudis. Mention America to most Saudis and you get complaints that America talks of democracy but supports repressive regimes, that America always seems to be fighting and 

killing Muslims and, of course, that American policies in the region are biased towards Israel. 

Experts might dismiss these sentiments as those of people who don’t understand 

the big picture: namely, the strategic bilateral relationship that began during World 

War II. But a closer examination of that relationship, reveals that opinion on the 

both the American and Saudi ‘‘street’’ is not far from some important and uncomfortable truths about the relationship: it’s never been very deep, nor truly stable, 

nor founded on a broad agreement in world views. 

The United States and Saudi Arabia do share important strategic goals in the 

Middle East: we both want to restore stability to Iraq; we both want to stop Iran’s 

drive for nuclear weapons and curb it’s appetite for regional hegemony; we both 

want a resolution to the Israeli Palestinian conflict that involves two states for two 

peoples, living side by side in peace and security. But look at each objective a little 

closer and significant divisions come into sharp focus. 

From our perspective, the current Shia-dominated government in Baghdad—so 

long as it can provide some measure of security throughout the country and establish a working political consensus with the other major ethnic groups—would be 
4

more than sufficient for us to declare victory and leave. The Saudis, on the other 

hand, see the current government of Prime Minister al-Maliki as a tool of Tehran, 

have referred to our presence in Iraq as illegal occupation—potent code-words in the 

Arab world—and we believe the Saudis have been turning a blind eye to the movement of Saudi jihadis into Iraq. 

On the question of Iran, the United States is struggling to build an international 

coalition in favor of tougher sanctions to pressure Iran into abandoning its pursuit 

of nuclear weapons. But there is a limit to American patience, and it is only the 

failure of political means that would compel us to consider other options. But while 

we labor in the vineyards of diplomacy, the Saudis, who would be among those most 

threatened by a nuclear Iran, seem content to sit back, relax and wait for the vintage of either our success or failure, to be poured. 

On the Israeli-Palestinian front, while we both want a two state solution, we insist that the way to get there is to support a reformed Palestinian Authority, and 

to isolate Hamas in Gaza until they accept the three conditions laid down by the 

Quartet: recognition of Israel, non-violence, and the durability of prior agreements. 

The Saudis, in contrast, until recently, seemed willing to stomach anything to keep 

the Palestinians from fighting amongst themselves, even going so far as to put 

Iran’s terrorist proxy, Hamas, on equal footing with President Abbas and the Palestinian Authority. And when Hamas refused to sign-up for the Saudi-led Arab peace 

initiative, and then perpetrated a coup in Gaza, our Saudi friends seemed to blame 

President Abbas. 

And then there is the issue of terrorism financing. It’s no secret that large sums 

of money flow from Saudi Arabia to bad people and organizations all over the world. 

And as with all things Saudi, the picture of the government’s response has been 

mixed. They have signed the U.N. International Convention for the Suppression of 

the Financing of Terrorism, but haven’t ratified it. They’ve announced that a single 

government entity, the ‘‘Non-governmental Commission on Relief and Charity Work 

Abroad,’’ would be formed to control overseas charitable activities, but it hasn’t been 

established yet. They’ve established new rules and regulations regarding money 

laundering and financial transfers, but they’ve yet to prosecute any prominent 

Saudis accused of violating these laws, as Undersecretary of the Treasury Stuart 

Levy reminded us last week. 

So onto this Jackson Pollock-like canvas of strategic convergence, and tactical dis- agreement, the Bush Administration has splattered a $20 billion arms deal. Under 

the best case scenario, this deal has significant merit. But what’s the likelihood of 

the best case scenario? 

To be frank, I view arms deals with a great deal of skepticism. The recipients certainly welcome the arms, but I don’t think that they love or respect us the morning 

after the sale. The results of such deals are usually a mixed bag of hoopla, limited 

behind-the-scenes cooperation and ugly public disappointments down the road, and 

I believe this will be the outcome of the deal currently being proposed. 

The Saudis are not going to change their calculations about important regional 

issues simply because we allowed the princes at their defense ministry to buy some 

of our most lethal goodies. Saudi Arabia will make its own calculations about the 

region and about its relations with the United States on the same basis it always 

has: What’s in it for the House of Saud? 

So, I think it’s time we asked ourselves a similar question: What’s in it for the 

USA? If we can’t get Saudi cooperation on the internal situation in Iraq, on stopping 

the flow of fighters and cutting off money going to insurgents there and to other 

terrorists around the world, then why should we believe that they see the war on 

terror as we do, and why sell them these weapons? 

If we can’t get the Saudis to step up, and forthrightly participate in a coalition 

of nations confronting Iran’s nuclear aspirations, then why should we believe that 

they see the Iranian threat as we do, and why sell them these weapons? 

If we can’t get the Saudis to even commit to attending the upcoming regional conference on the Israeli-Palestinian issue, let alone resume active support for the PA, 

and leadership in the Arab world encouraging a two state solution, then why should 

we believe that their commitment to regional security is built on the same foundations as are ours, and why sell them these weapons? 

In the end, selling them arms won’t guarantee their cooperation, much less their 

love. I don’t think it would even get us to the point where, as the 9/11 Commission 

recommended, officials from both countries would be willing to defend the relationship to their respective publics. But maybe the arms sale can be used to help tip 

the balance in our direction on these issues, and leave open the possibility of a 

broader reconciliation in the long-term. Since it’s their $20 billion anyway, maybe 

that’s all we can realistically expect. 

I yield now to my friend from Indiana the Ranking Member, Mr. Pence.
5

Mr. PENCE. Thank you, Chairman Ackerman. And thanks to our 

distinguished witnesses and my colleagues who have taken time for 

this important hearing. 

Because of its natural resources and strategic location, Saudi 

Arabia has been an important country to this one since our inception, or at least more than the last century. During the Cold War 

and through the Gulf War, our interests and efforts merged frequently. But the 9–11 Commission correctly called Saudi Arabia, in 

my judgment, ‘‘a problematic ally.’’

Today Saudi Arabia poses hard questions for us. Is it hatred’s 

kingdom, as it has been labeled? Just yesterday, Nina Shea, Director of the Hudson Institute Center for Religious Freedom, wrote in 

National Review Online:

‘‘Saudi Arabia now supplies jihad fighters for conflicts near and 

far, often in numbers far disproportionate to its size. As new 

statistics become available, one thing becomes ever clear: The 

Saudi kingdom is the world’s leading exporter of suicide bombers and terrorists.’’

Sadly, the specifics are even more troubling. Everyone knows, as 

the chairman mentioned, the nationality of 15 of the 19 hijackers 

on 9/11. But as Ms. Shea reports, a Saudi was the mastermind of 

the terror in Chechnya; Saudis played a prominent role in recent 

suicide attacks against Spanish tourists in Yemen. A Saudi doctor 

was one of the leaders in the recent airport attack in Glasgow. 

Saudis also comprise the second-largest contingent of prisoners in 

Guantanamo Bay, behind only Afghanistan. 

Further, the Los Angeles Times reported in July that Saudis constitute the largest number of foreign fighters and suicide bombers 

in Iraq. 

I should point out that none of this implicates the Government 

of Saudi Arabia directly. But, Mr. Chairman, some Middle Eastern 

governments oppose jihad only so far as it threatens their own selfpreservation. Given the goals and reach of global terror, this is 

simply not enough. 

Six years after 9/11, it is time to ask if Saudi Arabia is helping 

in taking the oxygen out of jihad. There is a popular new movie in 

theaters as we speak, starring Jamie Fox, entitled, The Kingdom. 

It depicts an extraordinary partnership between American law enforcement personnel and Saudi Arabian law enforcement personnel. 

The question before this hearing and before policymakers is: Is 

there any fact to that particular version of Hollywood fantasy? Are 

they lessening the appeal of those who attack civilians? Are they 

marginalizing its advocates? Is their strategy of educating and reintegrating first-offense jihadists really wise? 

In short, are they really an ally in the War on Terror? And if so, 

are they too afraid to be overt about it? 

Our State Department reassured us as recently as this morning 

that Saudi Arabia’s assistance on the counterterrorism front is substantial and robust, but publicly Saudi Arabia prefers to keep its 

distance, often playing an unhelpful role, attempting to prop up 

Hamas in the Palestinian territory, and even recently labeling our 

presence in Iraq as a ‘‘illegal foreign occupation.’’ All the while, as 

Professor Gause points out, fretting that we will leave. 
6

So is their counterterrorism system something that they are 

ashamed of, or is it a light under a bushel? Is Wahabism still a pillar of Saudi foreign policy, as Mr. Wolosky’s testimony suggests? 

Although our approaches differ greatly, one area of agreement 

with Saudi Arabia is its concern about the threat that Iran poses 

in the region and in the world. In this light, the administration’s 

proposed weapons sale I think merits consideration, but vigorous 

oversight. I am not automatically opposed to it, but I am biased to 

be opposed to it. But if it can be a part of encouraging Saudi Arabia to play a role in deterring Iranian aggression, then it ought to 

be considered. But it should not be viewed as a blank check to the 

Saudi regime, given their record. 

I applaud the efforts of Stuart Levey, Under Secretary of Treasury for Terrorism and Financial Intelligence, and his yeoman efforts in cutting off terrorist financing wherever it is found. As our 

witness, Mr. Wolosky, points out, Secretary Levey has said, ‘‘If I 

could somehow snap my fingers and cut off the funding to one 

country, it would be Saudi Arabia.’’

And I think the administration also deserves credit for encouraging modest reforms in Saudi Arabia. How we interact with an ostensible ally is a critical question in the years ahead. 

Mr. Chairman, to yourself and my colleagues, I look forward to 

our discussion. And I again commend you for calling a hearing on 

this critical and vital strategic issue of our relationship with Saudi 

Arabia. 

Mr. ACKERMAN. Mr. Wilson. 

Mr. WILSON. Thank you, Mr. Chairman. And Mr. Chairman, I 

want to acknowledge, I am going to be leaving in a minute. I have 

got an Education Work Force Committee meeting across the hall 

that I am ranking, but I will be looking at the testimony. 

I want to thank you for being here today. I do have the perspective that indeed Osama bin Laden, in 1988 he declared war on 

America and its allies. But he additionally certainly has declared 

war on the House of Saud in Saudi Arabia. And so I indeed look 

forward to reading, and I appreciate the chairman having the subcommittee meeting today. 

I yield back the balance of my time. 

Mr. ACKERMAN. The chair thanks you. We are happy to have Mr. 

Rohrabacher sit in with our subcommittee today, and he is welcome to make any opening statement he would like. 

Mr. ROHRABACHER. Thank you very much, Mr. Chairman. And 

although I am not a member of the subcommittee, I of course have 

been very close to your efforts over the years. And Saudi Arabia 

has played a role that goes far beyond just simply a Middle Eastern power. 

Your remarks were intentioned to the fact that 15 of the 19 hijackers that slaughtered 3,000 Americans on 9/11 were Saudis. And 

we retaliated heavily against the Saudis by invading Afghanistan. 

Something is wrong there. I mean, something is terribly wrong 

with that formula. 

Let us note, Mr. Chairman, that I have been deeply involved 

with Afghanistan for three decades. And it should not be forgotten, 

those 15 of the 19 hijackers should not be forgotten. Who financed 

those hijackers should not be forgotten. 
7

You know, this was a conspiracy that went on for several years 

with large numbers of people, and who financed this? My guess is 

that we—and I will be asking that question of the panel—is, was 

it Saudi financing that financed 9/11. 

Let us also note that Prince Tirki, who is just formerly the Ambassador here, just recently left, also the head of the intelligence 

operation in Saudi Arabia for several decades, was the creator of 

the Taliban. He was also responsible for bin Laden going to Afghanistan once the Saudis had ensured that the Taliban took over 

Afghanistan for more moderate, over more moderate alternatives. 

These things, coupled with what has happened since, our liberation of Iraq and the Saudi complicity with financing and also providing the personnel for the insurgency that has killed thousands 

of American troops in Iraq, is unconscionable. The bottom line is, 

we want to know if this administration is watching out for America’s interests in dealing with Saudi Arabia. 

Something is obviously wrong, Mr. Chairman. We want to know 

if the administration is doing its job protecting our people over 

there, and the United States. Thank you very much. 

Mr. ACKERMAN. Thank you. Mr. Scott. 

[No response.] 

Mr. ACKERMAN. Mr. Costa. 

[No response.] 

Mr. ACKERMAN. There being no further members who wish to 

make opening statements, we will—Mr. Inglis? 

Mr. INGLIS. No, thank you, Mr. Chairman. 

Mr. ACKERMAN. We will proceed directly to hearing from our distinguished panel. 

F. Gregory Gause, III, is an associate professor of political 

science at the University of Vermont, and director of the University’s Middle East studies program. He was previously on the faculty of Columbia University, and was a fellow for Arab and Islamic 

studies of the Council for Foreign Relations in New York. 

He has published two books: Oil Monarchies, Domestic and Security Challenges in the Arab Gulf States; and Saudi-Yemeni Relations: Domestic Structures and Foreign Influence. His articles have 

appeared in Foreign Affairs, Foreign Policy, Middle East journals, 

Security Studies, and the Washington Quarterlies. He has also held 

research positions at the RAND Corporation and the Brookings Institution. 

He received his Ph.D. in political science from Harvard University, his B.A. from St. Joseph’s University. 

Lee S. Wolosky is a partner at Boies, Schiller & Flexner. Mr. 

Wolosky joined the firm in 2001 from the White House, where he 

served as Director of Trans-National Threats on the National Security Council, under Presidents Clinton and George W. Bush. 

During his tenure with the Office of Trans-National Threats, Mr. 

Wolosky coordinated U.S. Government policy relating to terrorism, 

domestic preparedness, critical infrastructure protection, corruption, and international crime. Among other responsibilities, Mr. 

Wolosky coordinated the response of the U.S. Government to elicit 

finance affecting national security. 

He served as lead White House official on matters pertaining to 

money laundering and foreign official corruption. From 2002 to 
8

2004, Mr. Wolosky served as co-director of the Council on Foreign 

Relations Task Force on Terrorism Financing. 

We welcome both of you. Your complete statements will be put 

in the record as presented. And, Professor Gause, we will begin 

with you. 

STATEMENT OF MR. F. GREGORY GAUSE, III, ASSOCIATE PROFESSOR, DEPARTMENT OF POLITICAL SCIENCE, UNIVERSITY OF VERMONT 

Mr. GAUSE. Thank you, Mr. Chairman, members of the committee, for this opportunity. 

I would like to give you my views, in a very abbreviated fashion, 

on a number of questions which have arisen in past debates on 

Saudi arms deals, which are important in consideration of this 

sale. 

First, is the Saudi Government unstable? Are we selling arms to 

a regime that will shortly fall? And will we see those arms fall into 

the hands of a hostile government, on the model of Iran in the 

1970s? 

I think not. We tend to exaggerate the weakness of the Saudi regime. Every generation of American Middle East expert since 

World War II has forecast the demise of the Saudi monarchy. They 

have all been wrong. 

The Saudi regime has weathered numerous storms in the past. 

With oil prices at or above $80 a barrel, it has plenty of money to 

maintain its patronage networks. Its security forces have been able 

to contain the challenge to regime security presented by the local 

affiliates of al-Qaeda. They remain a security risk, but cannot bring 

down the regime. 

Second, how much would this arms sale affect security issues in 

the region? Not that much, I think. The Saudis are not disposed 

to use their armed forces outside their borders. They are too cautious; their armed forces are not that good. 

It is also unlikely that this increase in Saudi conventional armaments would spark a regional arms race. We are already arming 

Israel and Egypt. The Iraq situation is such a mess that the focus 

of all Iraqi actors for some time will be on their own internal struggles. 

Iran began its nuclear program in response to threats and circumstances that have nothing to do with Saudi armament levels. 

It is possible that the Iranians will try to increase their conventional capabilities in response, but they are limited by their own 

budgetary problems. 

The bottom line is that this arms sale will not have that much 

effect, either positive or negative, from the American perspective, 

on the region. 

Third, why would the Saudis want these arms, if they are not 

going to have that much of an effect? For two reasons. 

First, the Saudis do see themselves in a contest for regional influence with Iran, and see Iran growing in regional power. While 

this contest is not primarily military, being seen as keeping up 

with Iran militarily is part of the Saudi effort to contest Iranian 

influence. 
9

A restatement of American military support for the country, 

which is how the arms sale would be seen regionally, would 

strengthen Saudi Arabia in its regional contest with Iran. 

Second, there are, of course, domestic drivers in Saudi Arabia of 

this arms policy, as well. The Defense Ministry wants its share, if 

not more than its share, of the oil windfall which has accrued to 

Saudi Arabia in recent years. Important individuals also benefit 

from these deals. 

Fourth, in selling arms to Saudi Arabia, are we supporting a government that contributes to Islamist radicalism? Here the balance 

sheet is mixed. There is no question that in the 1980s and 1990s 

the Saudi Arabian Government first encouraged, and then allowed, 

radical jihadist interpretations of Islam to grow, both within the 

kingdom and in the international Muslim organizations which the 

Saudis finance. This phenomenon grew out of the Afghani jihad 

against the Soviet Union in the 1980s. 

It is only since 9/11, and more directly since the al-Qaeda attacks 

in Saudi Arabia itself, which began in 2003, that the Saudi Government has tried to deal with local manifestations of radical 

jihadism. 

It has taken some effective steps, but it is clear that there remain large parts of Saudi society susceptible to the appeal of radical Islamism in terms of recruitment to al-Qaeda cells in Saudi 

Arabia itself, in terms of volunteers for jihadist activity in Iraq, in 

terms of money to such groups. 

The Saudi record here is not as bad as some have charged. The 

Saudi elite do realize the threat that these groups and ideas pose 

to them, but they are also cautious about confronting important 

elements of their domestic constituency: The religious establishment and Islamist activists. Implementation does not always live 

up to policymakers’ statements. 

Fifth, and finally, is there any reason for us to sell these arms? 

There is a simple economic argument in favor of making the sale. 

The Saudis have the money and will buy arms from someone. If not 

us, it will be the French or the Russians or someone else. 

Aside from that forthrightly mercenary reason, there might be 

one strategic advantage to making the sale. If Iran does acquire 

nuclear weapons down the line, there will be strong pressures on 

Saudi Arabia to try to do likewise. If the Saudi leadership is confident of its security relationship with the United States, that confidence could give us the leverage necessary to convince the Saudis 

not to follow the Iranian example. 

In the absence of Saudi confidence in their security relationship 

with us, their incentives to go nuclear themselves increase markedly. That non-proliferation argument, admittedly speculative, 

might be the best strategic reason to support the arms sale. 

Thank you. 

[The prepared statement of Mr. Gause follows:]

PREPARED STATEMENT OF MR. F. GREGORY GAUSE, III, ASSOCIATE PROFESSOR, 

DEPARTMENT OF POLITICAL SCIENCE, UNIVERSITY OF VERMONT

The desire of the government of Saudi Arabia to purchase billions of dollars in 

advanced weaponry from the United States is driven by two factors: 1) the Saudi 

perception of the threats facing it in its regional environment, specifically the 

growth of Iranian power in recent years; and 2) internal Saudi political and bureau-
10

cratic dynamics, with the Defense Ministry looking to get its share (if not more) of 

the oil windfall accruing to the Saudi government over the last few years. 

Despite the huge dollar amount of the proposed sale, it is unlikely to have much 

effect on the security situation in the region. Saudi Arabia is most unlikely to use 

its forces outside its borders. It has never done so on its own in the history of the 

modern Saudi state. While a Saudi arms build-up might increase its deterrent 

strength against Iran, the likelihood of a direct Iranian military attack on Saudi 

Arabia is very low, with or without the new arms. It is also unlikely that this arms 

sale will spark a regional arms race. Egypt and Israel are receiving large arms deals 

from the United States already. Iran initiated its nuclear program years ago, driven 

by perceived threats that have nothing to do with the level of Saudi armament. 

While Iran might try to increase its own conventional capabilities in response to the 

Saudi arms deal, it will be constrained by its own budgetary limitations. The real 

effect of the arms deal will be to reassure the Saudi leadership about the American 

commitment to its security and stability. That reassurance might give Washington 

the leverage it needs to dissuade Riyadh from contemplating its own acquisition of 

nuclear weapons should Iran succeed in a nuclear breakout. 

This background paper will treat four issues related to the proposed arms sale to 

Saudi Arabia: 1) the Saudi Arabian view of the regional security situation, 2) internal drivers of Saudi Arabian politics, 3) the current state of the Saudi-American relationship, and 4) possible regional effects of the arms sale itself. 

SAUDI ARABIA AND THE MIDDLE EAST REGIONAL SECURITY SITUATION

The Saudi government views the regional landscape essentially through a classic 

balance of power lens. It is preoccupied now with the growth of Iranian regional 

power, reflected in the expansion of Iranian influence in Iraq, Lebanon (through 

Hizballah) and among Palestinians (through Hamas). It is also concerned about the 

Iranian nuclear program. However, it has only been in the past 12 months or so 

that Riyadh has begun to take concerted action to block what it sees as Iranian influence in the Arab world. Before then, the Saudi leadership seemed somewhat paralyzed on the regional front, particularly on Iraq. It was caught in a difficult place. 

It was very reluctant to back the Maliki government (or the Jaafari government before that), because it saw them as extensions of Iran. However, it was leery about 

the Sunni insurgency for two reasons: 1) the al-Qaeda influence in it; and 2) it was 

killing Americans in Iraq, and backing it would create problems in the Saudi-American relationship. As long as the U.S. was in Iraq, the worst outcome for Riyadh—

an Iraq completely dominated by Teheran—would be avoided without the Saudis 

doing very much. 

It appears that the debate over the Iraq Study Group report in the U.S., in late 

2006, galvanized a more active Saudi policy. The Saudis were clearly worried that 

the ISG report might lead to an American withdrawal from Iraq, leaving the field 

open for the Iranians. High level Saudi officials urged Washington to avoid doing 

anything precipitously, while hinting that the kingdom might have to intervene directly in Iraqi politics if the U.S. left. Even though the ISG report did not lead to 

withdrawal, it seems that the debate around it convinced Riyadh that, eventually, 

the U.S. would be leaving Iraq. It was then that Saudi diplomacy became more activist. On Iraq itself, one sign of that activism was King Abdallah’s declaration at 

the Arab summit in March 2007 that the foreign presence in Iraq is ‘‘illegitimate.’’ 

This can be seen as the entry price to dealing with Sunni groups in Iraq, which 

have consistently opposed the American presence in the country (even while some 

of those groups are now making tactical alliances with our forces there). While there 

is no evidence in public sources about Saudi government ties to Sunni tribes and 

groups, one can draw an interesting connection between the signs of Saudi activism 

in Iraq from late 2006 and the beginnings of the turn among many Sunni groups 

and tribes against al-Qaeda in Iraq’s influence. There is more circumstantial evidence of active Saudi support for efforts by opponents of Iraqi Prime Minister 

Maliki, led by former Prime Minister Allawi, to form an alternative parliamentary 

coalition to oust Maliki from office. 

The new Saudi activism on Iraq is paralleled by the Saudi initiative in February 

2007 to try to bring Hamas and Fatah together in a coalition government in the 

Palestinian territories. While that initiative was a failure, it was inspired by Saudi 

fears that the split between the two Palestinian parties would drive Hamas further 

into the Iranian camp. Saudi support for the Lebanese government of Prime Minister Fouad Siniora, in the face of pressure from Hizballah and Syria, predates this 

spate of new diplomatic activism, but it is driven by the same factor. Hizballah is 

Iran’s closest ally in Lebanese politics; Syria is the Arab state with the closest rela-
11

tionship with Iran. Blocking an increase in their influence in Lebanon is part of the 

Saudi strategy to limit Iran’s reach in the region. 

The Saudi effort to contain and, if possible, roll back Iranian influence in the Arab 

world is being pursued subtly. Riyadh does not seek a direct confrontation with Teheran. King Abdallah has received a number of high-ranking Iranian officials, including President Ahmadinejad, during 2007. The Saudis have publicly acknowledged that they are consulting with Iran about a solution to the Lebanese political 

stand-off. The King even received a delegation of Hizballah leaders in early 2007. 

The Saudis fear the consequences of an open confrontation with Iran. They lived 

through that during the 1980’s, with Ayatallah Khomeini castigating them as ‘‘unIslamic’’ puppets of the United States and Iran supporting Shi’a opposition groups 

throughout the Gulf. They did not like it then and would prefer to avoid it now. 

They know that, in any direct American-Iranian confrontation, Iranian responses 

would most likely be directed at U.S. allies in the Gulf. They seek to block Iran’s 

efforts to expand its influence in the Arab world more indirectly, but that is their 

goal. 

There has been much speculation that Saudi policy is driven more by sectarian 

than balance of power concerns—that the Saudis are looking to contain Shi’a influence, not Iranian influence. It is admittedly difficult to separate the issues. Iran 

tends to extend its influence in the Arab world through relations with Shi’a groups 

(though not exclusively—Hamas). With Iraqi politics now defined in sectarian terms, 

‘‘blocking Iran’’ means ‘‘blocking Iran’s Shi’a Iraqi allies’’ by supporting Sunni Arab 

and more secular Iraqi groups. There have been a number of very high-profile Saudi 

clerics and salafi activists who have explicitly framed the Iraq issue as a sectarian 

fight, calling for Sunnis to rally to support their co-religionists and condemning the 

Shi’a as non-Muslims. However, the balance of the evidence indicates that the Saudi 

leadership is animated more by the fear of Iranian power than by sectarian animus 

against the Shi’a. I come to that conclusion based on two major factors. 

First, the Saudi government itself has not played the sectarian card in the recent 

crises. On the contrary, Saudi writers who normally reflect elite opinion in the kingdom have gone out of their way to emphasize that it is Iranian power, not ‘‘Shi’a 

power,’’ that is of concern. The Saudis sponsored a meeting in Mecca in October 

2006 in which Sunni and Shi’a clerics from Iraq issued a statement condemning sectarian violence. King Abdallah himself told an interviewer in January 2007 that he 

thought Sunni-Shi’a tensions were ‘‘a matter of concern, not a matter of danger,’’ 

and that if handled correctly those tensions would not become dangerous. When 

asked in the same interview about allegations of Shi’a efforts to convert Sunnis in 

Arab countries, the King said that such efforts would fail, but quickly changed the 

subject to the support the kingdom gives to conferences aimed at bridging SunniShi’a differences. 

Second, the Saudi government has been on a minor, but in the Saudi context significant, charm offensive toward its own Shi’a minority for a number of years. The 

Saudi Shi’a leader Hassan al-Safar was very publicly invited to participate in the 

King’s ‘‘National Dialogue’’ initiative which began in 2003, and was photographed 

with Abdallah at the first meeting of the Dialogue. Municipal council elections in 

2005 allowed Saudi Shi’a to elect representatives for the first time in decades to 

help manage their cities (though the elected members comprise only half of the 

members of these councils, and the councils themselves do not have much power). 

Perhaps most importantly from a symbolic standpoint, Saudi Shi’a for the past three 

years have been able to commemorate the Shi’a feast of Ashura publicly. Such public commemorations had been banned for decades, and are particularly offensive to 

hard-line salafis from the Wahhabi tradition. While Saudi Shi’a certainly feel the 

effects of rising sectarian tensions, I did not hear in my conversations with a number of Shi’a leaders during a visit to the Shi’a city of Qatif in early January 2007 

that they felt that the Saudi government was reversing its tentative policies of outreach to their community. If Riyadh were viewing the rise of Iranian regional power 

primarily through a sectarian lens, the first place that it would react would be 

against its own Shi’a population, as it has done in the past. 

That being said, the leaders of Saudi Arabia and the other Sunni Arab states worried about Iranian power are willing to play to the baser instincts of their own constituencies in allowing anti-Shia rhetoric to develop. The Saudi government could 

have cracked down on the salafi activists who issued anti-Shi’a statements in late 

2006 and early 2007, but did not, at least in any public way. From our own experience in the U.S., we know that mobilizing public support for a foreign policy based 

on cold, realist, balance of power considerations is a tough sell. It would be an even 

harder sell for these Arab leaders, whose populations basically like the idea of Iran 

developing a nuclear program and cheered Hizballah in its confrontation with Israel 

in the summer of 2006. The Saudi leaders cannot sell the policy on the basis of bal-
12

ancing Iran, so they sell it (or allow it to be sold) on a sectarian basis. The danger 

in this kind of cynical manipulation is that sectarian tensions might escape the control of these governments. In the Saudi case, the escalation of sectarian tensions 

could both complicate, if not reverse, King Abdallah’s efforts to reach out to the 

Saudi Shi’a minority and make it more difficult for Riyadh to pursue a nuanced policy toward Iran and the Shi’a-dominated Iraqi government. Playing with the sectarian issue is playing with fire. The Saudi government clearly believes that it can 

keep the fire under control. Whether it can remains to be seen. 

There has also been speculation that the Saudi focus on containing Iranian influence might lead to a new willingness to deal with Israel. It is true that nothing 

brings countries together like a common enemy. It seems that a high-ranking Saudi 

official (speculation centers on Prince Bandar bin Sultan, the former ambassador to 

the U.S. and current national security adviser) met with a senior Israeli official 

(speculated to be Prime Minister Olmert) to discuss common interests in 2006. We 

should not, however, expect too much movement on this issue from the Saudi side. 

The Saudis feel constrained by their own public opinion, which remains decidedly 

anti-Israeli and pro-Palestinian. The Saudi government is not a democracy and frequently acts against its public opinion, but only when it sees some immediate benefit. In the case of the Arab-Israeli peace process, the Saudis would demand up-front 

guarantees that their engagement with Israel would lead almost immediately to a 

Palestinian state on the West Bank and Gaza before they would take the significant 

step of publicly engaging the Israeli government in any serious way. Foreign Minister Prince Saud Al Faysal’s recent statements about Saudi conditions to attend the 

U.S.-proposed peace meeting confirm this view. The Saudis will not stand in the 

way of others in the Arab world dealing with Israel. They got the Arab League summit in March 2007 to reiterate its support for King Abdallah’s earlier offer to recognize Israel in exchange for Israeli withdrawal to the 1967 borders. For Riyadh, this 

diplomatic gambit, a number of steps behind where Israeli and Palestinian negotiators actually were in 2000, is going out on a limb. It is wishful thinking to believe 

that the Saudis will take the lead on this issue. 

SAUDI DOMESTIC POLITICS

In past debates over proposed arms sales to Saudi Arabia, one of the major concerns has been the stability of the Saudi government. Since the fall of the Shah of 

Iran in 1979, there has always been the fear that sophisticated American weaponry 

sold to a friendly regime could end up in the hands of people who wish us ill. Given 

current indicators, however, there is no reason to fear that the Saudi regime will 

fall any time soon. It is awash in oil money. For a regime built on a sophisticated 

and wide-spread system of patronage, both through formal channels of government 

and through more informal, personal relationships, high oil prices make life much 

easier. The Saudi security forces have wrested the initiative away from their most 

serious domestic opponents, al-Qaeda in the Arabian Peninsula (QAP). In 2003 and 

2004, QAP was able to launch a number of high-profile attacks throughout the kingdom. Since that time, the Saudi security forces have, for the most part, been the 

ones taking the initiative: killing or capturing QAP leaders, attacking QAP hideouts and weapons stores, making pre-emptive arrests. QAP elements are still active 

in the country and can mount attacks. But they have not been able to mobilize large 

sectors of the Saudi public to their cause. They are a security threat, but they are 

not a threat to overthrow the regime. 

While King Abdallah and his brothers are old, succession in the near term will 

not destabilize the system. Prince Sultan, the crown prince, will definitely follow 

Abdallah to the throne, if he outlives the king. There are other brothers available 

to follow Sultan, most prominently Prince Salman, the governor of Riyadh, who just 

turned 70 and seems to be in good health. Succession could be an important and 

difficult issue for the Al Saud when it comes time to transfer rule from the sons 

who have governed since the death of the founding king, Abd al-Aziz (Ibn Saud) in 

1953, to the next generation, the grandsons of the founder. But that generational 

transfer will not happen for some time. 

While the Saudi regime is stable and the oil money continues to flow in, it faces 

important domestic challenges which are of great concern to the United States. The 

foremost of these is the continuing appeal of radical jihadist ideas among the Saudi 

population. Since September 11, 2001, and more urgently since the QAP campaign 

against the regime began at home in May 2003, the Saudi government and the official clergy have preached (literally and figuratively) against extremism. They have 

condemned Usama bin Laden and his ideology. Saudi-funded international Muslim 

organizations have propounded interpretations of jihad that are almost parallel to 

Christian just war theories. The Saudi state has undertaken an extensive campaign 
13

to re-educate those among its citizens who have been arrested for involvement in 

radical activities. The official clergy has publicly discouraged Saudis from going to 

Iraq to fight. The Saudi media has condemned and ridiculed the radicals and given 

large amounts of airtime and print space to those who have recanted such views. 

And yet, Saudis make up one of the largest, if not the largest, contingent of foreign fighters in Iraq. QAP continues to be able to recruit sympathizers in the country. Just this year, in April and then in August, Saudi police made two series of 

arrests against suspected QAP cells. In each case over 100 people were arrested. No 

less a figure than the Saudi Interior Minister, Prince Nayif, the chief policeman in 

the country, upbraided Saudi religious scholars in May 2007 over their laxity in 

combating extremist ideas. The same forces that produced Usama bin Laden and 

15 of the 19 9/11 hijackers continue to be at work in Saudi Arabia, despite government efforts to extirpate them in recent years. 

It is difficult in a few years to delegitimate intellectual trends that date back decades. The celebration of jihad in the Saudi Islamic context dates back to the Saudi 

(and American) supported jihad in Afghanistan against the Soviet Union in the 

1980’s. This celebration of jihad was encouraged by the government in the 1980’s. 

During the 1990’s, rather than confront it at home, the Saudi rulers turned a blind 

eye to it. They confronted those among their citizens who challenged their own rule 

(including bin Laden), but did not take on the larger issue of radicalism itself. This 

violent and activist jihadi ideological current, combined with the bedrock intolerance 

and narrowness of Wahhabi Islam, are important sources (though not the only 

sources) of what became al-Qaeda and the radical salafi jihadist movement. While 

the government and the official clergy have now taken on the task that they chose 

to avoid in the 1990’s, it is clear that the salafi jihadist strain is embedded in elements of Saudi society. 

While the Saudi government now campaigns against this interpretation of Islam 

and brutally suppresses those of its citizens who challenge the regime on the basis 

of this interpretation, it treads much more lightly around those Saudi religious 

scholars who, while not openly opposing the government, encourage intolerant and 

radical interpretations of Islam. A number of prominent Saudi religious activists in 

December 2006 called on Sunnis to go to Iraq to support their co-religionists and 

condemned Shi’a Muslims in the most derogatory terms. Two prominent Saudi religious scholars issued similar judgments in the following weeks. The government 

took no public steps against any of these figures. The religious establishment, in 

both its official and more independent elements, remains an extremely important 

supporter of and constituency for the Saudi leadership. That leadership will not act 

against them unless the men of religion directly challenge the Al Saud’s political 

prerogatives. 

This balancing act, which allows extremist ideas and groups to fester, is clear on 

the issue of terrorist financing. The Saudi government has, since 9/11, adopted a 

number of policies urged upon it by the U.S. government to better control the activities of Muslim charities in the kingdom. Fundraising activities which were permitted, if not encouraged, in the 1980’s and 1990’s (such as soliciting donations in 

mosques and setting up cash boxes for donations outside of mosques) are now forbidden. American officials have regularly praised the steps Riyadh has taken on the 

terrorist financing front. Yet Saudi citizens remain, according to American officials, 

a major source of funding for Sunni extremist groups, whether in Iraq or elsewhere. 

While the Saudi government has enacted much new legislation to monitor and stem 

such financial transactions, it has not publicly prosecuted any of its citizens for terrorist financing. 

Finally, on the domestic political scene, it has to be noted that the very modest 

political reform steps taken in the 2002–2005 period have come to a halt. A number 

of important petitions were circulated among Saudi reform activists, one even received by Abdallah himself, then. Saudis were permitted to test the limits of political speech in newspapers and other media. That more open political atmosphere 

has been curtailed. The municipal councils, half of whose members were elected directly by the Saudi (male) electorate in 2005, have not assumed an important role 

in the country’s politics. While the political atmosphere is not as circumscribed as 

it was in past decades, the promise of continued political liberalization which 

seemed to be in the air in the first half of this decade has not been borne out. 

SAUDI-AMERICAN RELATIONS

The very fact that this large American arms sale to Saudi Arabia has been proposed is evidence that the bilateral relationship has weathered the crisis of 9/11. 

The Saudi leadership still sees the United States as its most important ally and its 

ultimate security guarantor in a dangerous region. Washington still values the rela-
14

tionship with the Saudis, for oil and security reasons. The founding basis of the relationship six decades ago—shared interests on oil and security issues—remains in 

place. With Iraq in shambles and Iran actively hostile to the U.S., Saudi Arabia is 

the only major Gulf state which is a stable American partner. On the big strategic 

questions of the Middle East today, the United States and Saudi Arabia are on the 

same page to a greater extent than at almost any time in their relationship. They 

both worry about increasing Iranian regional influence and the Iranian nuclear program. They both see the Israeli-Palestinian conflict as a suppurating wound that 

needs to be healed. They both worry about the spill-over effect of Iraqi violence. 

They share an opposition to al-Qaeda and its regional affiliates. 

Despite this general agreement, however, there are tensions between the two 

states on how to achieve these goals. Those tensions are such that King Abdallah 

chose to forego an opportunity to visit the U.S. earlier this year. Washington and 

Riyadh have very different tactical approaches on a number of issues:

• Iran: As mentioned above, Riyadh would not support a policy of direct confrontation with Iran. It seeks to contain and roll-back Iranian influence in the 

Arab world through a subtle combination of opposition and engagement. It 

does not want to be on the front lines of an American-Iranian military exchange. As long as the United States continues its current path of using diplomatic pressure, multilateral and U.N. sanctions and indirect military 

threats to push Iran away from the nuclear path, it will have Saudi support. 

However, if the Bush Administration decides that diplomacy has run its 

course and more direct action is needed against Iran, the Saudis will get off 

the train.

• Iraq: While Saudi Arabia attended the Sharm al-Shaykh summit on Iraq in 

May 2007, agreed to forgive the bulk of Iraqi debts incurred under the Saddam Hussein regime to it and recently said it would re-open its embassy in 

Baghdad, it has made clear that it opposes the Maliki government, which it 

sees as an extension of Iranian influence in Iraq. King Abdallah very publicly 

refused to receive Maliki on the latter’s regional trip preceding the Sharm alShaykh summit. It has supported efforts by opponents of Maliki (including 

Iyad Allawi, various Sunni political factions and Maliki’s Shi’a opponents) to 

form a political front to challenge the government’s parliamentary majority. 

Saudi support for Sunni Arab groups, if such support in fact is developing, 

dovetails nicely with the current American strategy of partnering with Sunni 

tribes and groups opposed to al-Qaeda. However, that convergence might not 

last if those Sunni groups end up turning their guns against the Maliki government.

• Arab-Israeli Peace Process: Washington and Riyadh have very different visions of how to approach the issue. The Bush Administration seeks to isolate 

Hamas diplomatically and choke off the economy in Gaza over which Hamas 

now presides. Meanwhile, it hopes to encourage both economic growth and political progress in the Fatah-controlled West Bank, showing Palestinians in 

both locales that their best choice is to abandon Hamas and support 

Mahmoud Abbas. Saudi Arabia, on the other hand, is pushing for a renewal 

of Fatah-Hamas dialogue and a return to the Mecca Agreement on power 

sharing which the Saudis brokered earlier in the year. The Saudi thinking 

revolves around their desire to limit Iranian influence among Palestinians. 

They see an isolated Hamas turning more toward Teheran, and want to use 

their influence to bring Hamas back into an Arab-supported, unified Palestinian front. These tactical differences will become more prominent as the 

Bush Administration seeks to put together a successful peace conference this 

fall, particularly as Washington sees the Saudis playing a major role at the 

conference.

• Oil: With oil prices edging toward $80 per barrel and the 2008 American 

presidential primary season fast approaching, the issue of Saudi Arabia’s role 

in the world oil market will once again become prominent in American politics. While the Saudis took the lead at the most recent OPEC meeting in urging an increase in production, they were also the leaders of the effort in 2006 

to cut production by 1 million barrels per day. It seems clear that, while 

Saudi Arabia does not want prices to go over $80 per barrel, it is very comfortable with prices around $70 per barrel. Whether Washington shares that 

comfort level for the long term remains to be seen.

It must also be noted that public opinion in both countries is not particularly supportive of the close bilateral relationship. In the United States, the strong public 

opinion reaction against Saudi Arabia immediately after 9/11 has dissipated some-
15

what, but that does not mean that there is strong public support for the relationship. Rather, the vast majority of Americans have gone back to not particularly caring about Saudi Arabia. However, the public sense of mistrust about Saudi Arabia 

that 9/11 created can be easily revived if another major crisis in the relationship 

occurs. On the Saudi side, public opinion polling shows disturbingly large majorities 

holding negative views of the United States and its policies in the region. The 

Saudi-American relationship has always operated most smoothly at the elite level. 

The Saudi government is not a democracy. While its foreign policy is affected by its 

public opinion, it is not dictated by it. Nevertheless, the lack of public support on 

both sides for the relationship remains a troubling background issue. 

THE ARMS DEAL ITSELF

There are two primary drivers on the Saudi side of this arms deal. The first is 

simple security. We should not be surprised that leaders of states in conflict-ridden 

areas want to have modern and well-equipped militaries, even if those militaries 

have very poor track records of actually doing anything. The Saudi leadership undoubtedly thinks that the arms deal will contribute to deterrence of possible attacks 

and signal possible opponents (Iran now, but perhaps others down the road) that 

the country has friends internationally which will support it. The Saudis are not 

acting all that unusually in the context of international politics in high-conflict 

areas. 

The second driver is Saudi bureaucratic politics. Without questioning the sincerity 

of the leaders of the Saudi defense establishment in their desire to defend their 

country, they are also players in a domestic political game in which money brings 

power and influence. During the low-oil-price years of the 1990’s, the Defense Ministry had to live without any major new arms deals. Given the huge oil windfall of 

the past years, it was inevitable that the Defense Ministry would want a big chunk 

of it. The only way to justify such large budget allocations is major military purchases. The Defense Ministry is not relying on Washington alone to provide it with 

the goods. It has already announced a major arms deal with Great Britain for fighter aircraft, a follow-up on the huge al-Yamamah-BAE deal signed in the mid-1980’s. 

There is no doubt that other countries stand ready to sell Riyadh whatever it will 

pay for. Again, we should not be shocked that bureaucratic politics and even personal gain play a role in weapons procurement decisions in Saudi Arabia. It is the 

rare country where those factors are absent in such decisions. 

So the Saudi desire for big-ticket arms deals is understandable. However, it is 

hard to imagine that this arms deal will significantly change the security situation 

in the Persian Gulf or Middle Eastern regions much at all. The Saudis have never 

used their army outside of their borders in the modern era, except in much larger 

coalitions (the Gulf War of 1991, a very small number of Saudi forces participating 

in some of the Arab-Israeli wars). The hints that Saudi forces may enter Iraq to try 

to affect events there, dropped in late 2006, are most likely bluff. It is hard to imagine what Saudi units would do once they got into Iraq. Riyadh will more likely try 

to influence Iraqi politics using the tools that it has been successful with in the past: 

money and diplomacy. While the arms deal, it could be argued, will increase Saudi 

deterrence against an Iranian attack, the likelihood of a full-out Iranian attack on 

Saudi Arabia is very low. It might increase the Saudi ability to meet an Iranian 

air attack on Saudi facilities (perhaps in retaliation for an American strike on Iran), 

but only after quite a bit of time for the Saudis to integrate the new weapons into 

their forces. The Iranians are more likely to try to pressure the Saudis through the 

instruments they have used in the past: support for Shi’a opposition in Saudi Arabia 

and the other Gulf states and propaganda. 

The argument that this arms deal will lead to an arms race in the region does 

not hold much water. The United States is already going to supply Israel and Egypt 

with massive new arms packages. Maybe that is an arms race, but it is one that 

we are managing. Syria can hardly keep up technologically in such a race. It has 

no superpower patron and cannot afford to buy sophisticated armaments on its own. 

Iran was already developing the potential for a nuclear weapons program long before this arms deal was announced. It is driven in that pursuit by threats and past 

experiences which have nothing to do with Saudi Arabia. Teheran’s decisions on nuclear questions will be determined by factors other than the amount of conventional 

arms the United States sells to Riyadh. The Iranian leadership has already pointed 

to the arms sale as a justification for its own military programs, but this is more 

propaganda than causality. 

Some critics of the arms deal raise the legitimate point that, by linking Saudi 

Arabia ever closer to the United States, this transaction actually increases the risk 

of domestic opposition to the Saudi monarchy. People who make this argument point 
16

to both the example of the Shah of Iran, whose ties to the United States contributed 

to his unpopularity, and to Usama bin Laden’s indictment of the Saudi regime for 

hosting American forces. These are important points, but exaggerate the impact of 

this particular arms sale. The analogy to the Shah is apt, in that the Saudi regime 

is closely tied to the United States and this is not a popular thing among many in 

Saudi Arabia. However, the Saudi regime’s link to the U.S. is decades old (like the 

Shah’s was), and not dependent on any particular arms deal. It is hard to imagine 

that, if this arms sale was not concluded, the regime’s opponents would think any 

better of it or that they would believe that the Saudi regime’s reliance on the United 

States was diminished. Will bin Laden’s criticism of the regime end if this arms sale 

does not go through? I doubt it. If the U.S. wants to distance itself from Riyadh, 

it will have to do much more than take back one arms deal. If we think we can 

maintain a close relationship with the Saudi government but shield it from the public opinion consequences of that relationship just by holding back one arms sale, we 

are fooling ourselves. It is hard to see how this one arms sale, as large as it is, 

would be the tipping point for popular discontent against a regime that has bought 

lots of American arms in the past and weathered a number of regional and domestic 

crises. 

If this arms sale involved the stationing of American combat units in Saudi Arabia, as was the case between 1990 and 2003, then it could become the kind of lightening rod around which popular opposition could coalesce. We saw that occur in the 

1990’s. However, my understanding of the deal is that it will involve American 

trainers and technicians being in Saudi Arabia, not whole units of combat forces. 

This has been the case in Saudi Arabia for decades, since the first American military deals with Saudi Arabia in the late 1940’s. Those training missions did not excite the kind of domestic opposition that the presence of the American air wing in 

the country during the 1990’s did. While any high-profile American military presence in Saudi Arabia could excite domestic opposition, it does not seem that the 

training missions that would accompany these arms would be that obtrusive. 

So this arms deal would have neither many positive aspects from a regional security perspective nor many negative repercussions for American interests in Saudi 

Arabia or the region more generally. Aside from simple economic interest, to secure 

sales for American companies that would otherwise go elsewhere, is there any reason to support the deal? There might be one, but it is speculative and long-term. 

The arms sale would reassure the Saudi elite of continued American support, in the 

face of growing Iranian power and with the prospect of an American withdrawal, 

sometime down the line, from Iraq. Such reassurance could be an important lever 

of influence with the Saudi regime if, someday, Iran does acquire a nuclear capability. In the face of an Iranian nuclear breakout, the Saudi regime would be faced 

with two choices: a) rely on American promises of support in exchange for not trying 

to match the Iranians by getting their own nuclear forces, or b) try to acquire an 

off-the-shelf nuclear capability from an existing nuclear power. If the Saudis are 

confident in the American commitment, they would be more receptive to American 

pressure not to proliferate themselves. If they are not confident in the American 

commitment to their security, they would be more likely to try to go nuclear themselves.

STATEMENT OF MR. LEE S. WOLOSKY, PARTNER, BOIES, 

SCHILLER & FLEXNER LLP 

Mr. WOLOSKY. Thank you very much. Mr. Chairman, distinguished members of the committee, thank you for affording me the 

opportunity to testify before you today on issues relating to the 

United States-Saudi relationship, particularly as the Congress considers the sale of $20 billion in military hardware to Saudi Arabia. 

That initiative is appropriately considered in the context of the 

broader bilateral relationship, and indeed, in the context for broader strategic considerations in the region. 

I have been asked to provide testimony specifically on issues relating to terrorist financing and Saudi support for extremism, and 

I will focus my remarks accordingly. 

As the 9–11 Commission concluded in its final report, financial 

supporters in the Gulf Region, and particularly in Saudi Arabia, 

have historically posed a particular problem in the financing of al-
17

Qaeda and other Sunni extremist groups. Three years later, although much progress has been made, Saudi financing remains a 

problem. 

As recently as last week, as the chairman alluded to, Stuart 

Levey, who is the Under Secretary of the Treasury Department, 

publicly remarked, ‘‘If I could somehow snap my fingers and cut off 

funding from one country, it would be Saudi Arabia.’’

In recent years, of course, Saudi-based individuals have provided 

support specifically to Sunni extremists in Iraq. Some of that 

money is believed specifically to support opponents of Prime Minister al-Maliki. 

For years the Saudi Government turned a blind eye to the financing of al-Qaeda by prominent Saudi-based religious and business leaders and organizations. Only after al-Qaeda bombed targets within Saudi Arabia in 2003 did the Saudis finally focus on 

the problem, and began a meaningful dialogue with the United 

States to combat it. 

In some cases, the changes in Saudi counterterrorism policy that 

began in 2003, including changes specifically in the financial arena, 

have been profound. Saudi officials started to address the mindset 

that enables and condones acts of terrorism, specifically including 

through government-sanctioned religious messages. 

These measures have included steps toward educational reform, 

and limited measures intended to discipline or re-educate certain 

extremist Islamic clerics, at least those operating within Saudi Arabia. 

Saudi Arabia has taken important actions to disable domestic alQaeda cells, and has increased its tactical law enforcement and intelligence cooperation with the United States. In recent years, Interior Ministry and other Saudi law enforcement and intelligence officials have regularly killed and been killed by and with al-Qaeda 

members and sympathizers in violent confrontations in Saudi 

streets. 

Saudi Arabia has also improved its legal and regulatory regime. 

Indeed, it earned high marks in 2004 from the Financial Action 

Task Force, the inter-governmental, anti-money laundering body, 

for putting in place a relatively comprehensive anti-money laundering regime. 

The Saudi Government also took steps to remove donation boxes 

from mosques and shopping malls, and has established a Financial 

Intelligence Unit to detect, track, and monitor suspicious transactions. That entity became operational, I understand, in September 2005. 

But while passing legislation is one thing, implementation and 

enforcement are another. Certain steps announced to increase oversight over problematic Saudi-based charities, for example, have not 

been fully implemented. And indeed, 6 years after 9/11, it appears 

to be the case that not one significant Saudi financier of al-Qaeda 

has been publicly punished. 

The Saudi National Entity for Charitable Work Abroad, for example, which the chairman alluded to in his opening remarks, was 

first announced by the Saudi Government in February 2004. It was 

described as the ‘‘sole vehicle’’ for distributing private donations 

outside of Saudi Arabia. 
18

According to a January 2007 Congressional Research Report, 

however, this body is still not operational. Similarly, the Saudi 

Government announced the creation of the High Commission for 

Oversight of Charities. As part of that effort, all Saudi charities 

were supposedly audited. That same January 2007 Congressional 

Research Service Report concluded that the results of these audits 

have not been made publicly available. 

On the criminal law enforcement side, Saudi enforcement actions 

have largely avoided prominent financiers. There is no evidence of 

which I am aware that since 9/11, Saudi Arabia has taken public 

punitive actions against individuals for financing terror. Indeed, in 

remarks to ABC News on September 11, 2007, 1 week ago today, 

Under Secretary Levey suggested that none of the individuals identified by the United States as significant Saudi financiers, including some who bear the label specially designated global terrorists, 

have been prosecuted by the Saudis. 

It is unacceptable that since September 11, 2001, not a single 

Saudi donor of funds to terrorist groups has been publicly punished. 

Finally, an arguably greater problem than any particular financier is the global exporting of extremism that takes place 

through the propagation of Wahabism, which serves as a central 

pillar of Saudi foreign policy. 

Wahabism is a brand of Islam that in some instances supports 

militancy by encouraging divisiveness and violent acts against 

Muslims and non-Muslims alike. Through support for madrassas, 

mosques, cultural centers, hospitals, and other institutions, and 

through the training and export of radical clerics to populate these 

outposts, Saudi Arabia has spent what could amount to hundreds 

of millions of dollars around the world. In some circumstances, this 

spending has financed extremism. 

Unregulated and massive spending constitutes a paramount strategic threat, in my judgment, to the United States. Curtailing such 

extremism will need more demonstrable cooperation from Saudi 

Arabia. Although that cooperation has, I believe, begun, we must 

continue to demand greater cooperation from Saudi Arabia in combating the global propagation of extremism. Only by so doing can 

we be assured of winning the war of ideas, and defeat the ideology 

that attracts foot soldiers, supporters, and donors to extremism. 

Thank you. 

[The prepared statement of Mr. Wolosky follows:]
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Mr. ACKERMAN. Thank both of you. First Professor Gause. In 

your statement you say that the Saudis are animated more by Iranian power than by their sectarian animus against Shi’a generally. 

You also note that in Saudi Arabia’s modern history, they have not 

used forces outside of their own territory. 

The question is, in confronting Iran, which is outside of their territory, how far can we expect the Saudis to go? 

Mr. GAUSE. I don’t think that the Saudis are going to use their 

forces against Iran, certainly not outside their own territory. 

I think the way the Saudis have dealt with challenges regionally 

through their history has been to find clients, support those clients 

financially, with arms, and then diplomatically, to try to roll back 

their opponents. Whether that be the Nassarist regime of Egypt in 

the late fifties and early sixties, through the sixties; whether that 

be the Iranians after the Iranian Revolution, when the impulse to 

export the revolution was probably the most great. There the 

Saudis basically confronted their regional opponents by, through 

indirection. 

The Saudis aren’t particularly good at direct confrontation. They 

try to avoid it. Their military forces I think are particularly weak, 

and they don’t seek out that kind of military confrontation. 

I think the way that they are dealing with Iran now is actually 

relatively subtle. It is a mix of support for——

Mr. ACKERMAN. That being said, what are they going to do with $20 billion worth of arms? 

Mr. GAUSE. Well, probably what they have been doing with their 

arms in the past; kind of sitting on them. Hoping that these arms 

can be used as—not used, but they would act as a deterrent 

against Iranian thoughts of attacks on Saudi facilities, particularly 

air attacks. 

And secondly, as a political message that the United States is 

still with Saudi Arabia. 

Mr. ACKERMAN. You seemed to indicate in your testimony that 

if Iran acquired nuclear weapons, that Saudi Arabia might pursue 

the same course. To your knowledge, is there any truth to the speculation that Saudi Arabia has made a deal with Pakistan to provide cheap oil in return for access to Pakistan’s nuclear technology? 

Mr. GAUSE. Certainly there is nothing that I know that confirms 

that, but it is certainly a logical connection. I mean, Saudi Arabia 

and Pakistan have had a longstanding relationship. Saudi Arabia 

has had a very good relationship with various Pakistani Governments financing Pakistani Governments through foreign aid. 

Pakistani forces have been deployed in Saudi Arabia on a number of occasions. And so that would the natural connection, if the 

Saudis were looking for an off-the-shelf nuclear capability, I think 

the first place they would go is Pakistan. Whether there is an existing deal as of right now, certainly nothing on the public record 

about that, and I don’t know. 

Mr. ACKERMAN. If the Saudis acquired an off-the-shelf nuclear weapons system, would you be sanguine about our $20 billion arms 

sale to them, in that case? 

Mr. GAUSE. Well, I don’t think that the arms sales would—sanguine. I think that the arms sales wouldn’t have served one of 

what I would have hoped would have been their most important 
24

purposes, which would be to avoid proliferation. There would have 

been a failure, I think. 

Mr. ACKERMAN. And if they acquire a nuclear weapons system, 

would that also be for the purpose of deterrence? 

Mr. GAUSE. Yeah. I think that the Saudis are not very aggressive 

militarily. And I think that their military acquisitions of conventional weapons over the past decades have basically been for deterrent purposes, because they haven’t used them outside their borders. Aside for the other reasons that they acquire arms: Domestic, 

bureaucratic, and individual interests in acquiring those. 

Mr. ACKERMAN. So we should have no basic real concerns about 

an aggressive posture, or use of $20 billion worth of American 

weaponry and a nuclear bomb system, if the Saudis had one? 

Mr. GAUSE. It would be very uncharacteristic. It would be a big, 

big change in the way the Saudis have dealt with their regional environment. Basically since the creation of the modern——

Mr. ACKERMAN. Acquiring——

Mr. GAUSE [continuing]. Community back in the thirties. 

Mr. ACKERMAN. Acquiring them for deterrence would be 

uncharacteristic, or using them would be uncharacteristic? 

Mr. GAUSE. No, using them would be uncharacteristic. Using 

them outside their borders certainly would be uncharacteristic. 

Mr. ACKERMAN. Well, they certainly wouldn’t be using them inside their borders. 

Mr. GAUSE. Well, conventional arms, maybe. Saudi military 

forces have——

Mr. ACKERMAN. But that is not what we are looking to sell them, 

is it? 

Mr. GAUSE. Presumably. 

Mr. ACKERMAN. Mr. Wolosky, your statements about the Saudi 

failure to follow through on institutional reforms, as well as a failure to publicly prosecute high-profile individuals from within the 

kingdom, you note that, as did I, in your view, what is the best way 

to convince the Saudis to take the necessary steps that we seek? 

Mr. WOLOSKY. Sustained and high-level interest from the United 

States Government. 

Mr. ACKERMAN. Sustained and high-level interest. 

Mr. WOLOSKY. Yes. 

Mr. ACKERMAN. What does that mean? 

Mr. WOLOSKY. That means paying attention to the institutional 

and regulatory framework as it is being developed in Saudi Arabia, 

purportedly. 

Mr. ACKERMAN. But what does paying attention to it mean? Send 

them a note that we noticed you did this? 

Mr. WOLOSKY. Well, I will give you an example. When I co-directed the second task force report of the Council on Foreign Relations on this subject, I had something like 6 months to try to gather up this information about things that were happening or weren’t 

happening in Saudi Arabia. 

Sitting at the Council on Foreign Relations in New York, that is 

not an easy thing to do. It is certainly a very impossible thing to 

do without any measure of Saudi cooperation. 

So my point, Mr. Chairman, is that only by compelling Saudi 

Arabia as a condition of some policy measure that the United 
25

States might be considering, by compelling the Saudis to disclose 

information, make accessible these organizations, these institutions, the enforcement of laws and regulations that are purportedly 

being established, will you have leverage to find out whether or not 

those changes are meaningful. 

Mr. ACKERMAN. Is $20 billion worth of weapons sales leverage? 

Mr. WOLOSKY. Absolutely. 

Mr. ACKERMAN. So we should condition the weapons sales on 

that cooperation? 

Mr. WOLOSKY. Purely on the terrorist financing side, what I 

would encourage this committee to do is to seek a status report in 

respect of the numerous pages of regulatory reforms, institutional 

and structural changes that are described in that second Council 

on Foreign Relations Report issued in 2004. They are very voluminous. 

Sitting here before you, I can’t represent what fully——

Mr. ACKERMAN. The status report from whom? 

Mr. WOLOSKY. From the Saudi Government. 

Mr. ACKERMAN. And should we have a threshold that if they 

don’t meet a certain threshold of prosecution and stopping terrorist 

financing, that there is no arms sale? 

Mr. WOLOSKY. You may wish to do that. 

Mr. ACKERMAN. Well, yes, we may, we may not. I was just asking 

for your suggestion. Would you think that we should condition this 

arms sale not just on them giving us a report of what they are 

doing, but on——

Mr. WOLOSKY. On progress toward certain benchmarks? Yes, sir, 

I do. I find it unacceptable, if you take the view, as I do, that unregulated charitable disbursements abroad by Saudi charities is a 

strategic threat to the United States; and then if you find out that 

a body intended to address that threat was announced and supposedly created in 2004, but as of this year, according to the Congressional Research Service, it is still not operational; I think you 

have some serious questions to ask, and they have some serious answers to provide to you. 

Mr. ACKERMAN. Well, I think we have some serious questions to 

ask even without the arms sale. 

Mr. WOLOSKY. I agree. 

Mr. ACKERMAN. Mr. Rohrabacher. Let me call to the attention of 

the committee, we have about an hour’s worth of votes coming up. 

After Mr. Rohrabacher, we will recess until the call of the chair, 

when the votes will be——

Mr. ROHRABACHER. Okay. Thank you very much, Mr. Chairman. 

Do you really believe that the people, or that the financial resources that are going into the insurgency in Iraq and into the very 

sophisticated global terrorist network are coming from donations 

that go into the box at the mosque? Do you really believe that? Or 

do you believe that the Saudi charities and the other type of charities that we are talking about are nothing more than a front for 

very large financial backers of these terrorist movements and the 

insurgency in Iraq? 

Mr. WOLOSKY. I think it is both. 

Mr. ROHRABACHER. So you think that—I would suggest, and how 

about yourself? 
26

Mr. WOLOSKY. Congressman, I think that in terms of the money 

going into Iraq, what we now anecdotally is that it tends to be 

taken in suitcases by individuals. And so it is not a huge amount 

of money. It can go a long way in a situation like Iraq, but not a 

huge amount of money. 

In terms of the larger-scale charities around the Muslim world, 

I don’t see them as a front for organized interests. I think that 

there are wealthy people in Saudi Arabia who support radical interpretations of Islam. 

Mr. ROHRABACHER. Right. 

Mr. WOLOSKY. And they can get that money there all sorts of 

ways. In the past it might have been through these charities. They 

can also wire money. 

Mr. ROHRABACHER. Or perhaps they could fly a private jet from 

Saudi Arabia to Syria. 

Mr. WOLOSKY. Sure. 

Mr. ROHRABACHER. A private jet, which they own because they 

are billionaires. 

Mr. WOLOSKY. Right. 

Mr. ROHRABACHER. I think we have let the billionaires in Saudi 

Arabia off the hook. And the bottom line is, as these poor people 

who give a few, a pittance to the poor box at the mosque are not 

the people we should be looking at. 

And like you said, none of these high-profile, Mr. Chairman, 

none of the high-profile people that are very substantial, have substantial wealth, have been prosecuted whatsoever in Saudi Arabia. 

Yet we know the long-term relationship that they have had. We 

know that these are the very same people that are providing huge 

amounts of money to set up a madrassas system of education in 

Pakistan, which is teaching young people not how to do mathematics, and not how to live decent lives, but instead how to be fanatics and to give their lives for the cause. 

I would suggest, as you have, Mr. Chairman, that there needs to 

be some very significant actions taken by the Saudi Government 

before we give them the credence of providing them sophisticated, 

new sophisticated weapons systems. They need to do something to 

prove to us that they are not in a secret coalition, or at least turning the other way, while a coalition uses Saudi Arabia, its resources, and its territory to kill Americans, and to try to undermine 

the West by terrorizing it. 

I would just suggest that in Guantanamo, a large number of the 

people in Guantanamo are Saudis. Suicide bombers, a large of 

them in Iraq right now are Saudis. We have captured Saudis; they 

are trying to kill our troops in Iraq. 

We need to interrogate these people and go back up the chain, 

and find out who sent them there. And if the Saudi Government 

doesn’t act, we definitely shouldn’t be providing them weapons. In 

fact, what we should be doing is making sure that they know that 

we are willing to act ourselves if those people are engaged in a conspiracy to kill Americans. 

One last, here is the question. Should the United States, if indeed it becomes evident, which I think it is, that the Saudi Government is either turning a blind eye or is in some way with a secret 

alliance with these terrorists, including the ones who are killing 
27

our troops in Iraq, the insurgency movement, should we be willing 

to work to commit an action, a covert action possibly, to actually 

bring home the point that that will never be accepted by the 

United States? 

Mr. WOLOSKY. I think the answer to your question is yes. I think 

if we have evidence that any government is supporting terrorists 

or trying to kill Americans, we have to take action against them. 

Mr. ROHRABACHER. There you go. And, Mr. Chairman, I would 

suggest that this administration—and I can’t talk about the Clinton administration before him, because I think they suffered the 

same problem. We have not been able to take the actions necessary——

Mr. ACKERMAN. Which Clinton administration? 

Mr. ROHRABACHER. That is right, which one? Who knows what 

may be in the future. But let us hope that we have an administration in the future that will deal with this in a more forceful and 

aggressive and brave defense of America’s interests and the interests of the West, than what the current administration and the 

past Clinton administration has done. 

Thank you very much. 

Mr. ACKERMAN. We will have the panel respond in greater fullness upon our return. The committee stands in recess, subject to 

recall by the chair. 

[Recess.] 

Mr. ACKERMAN. The subcommittee will come to order. We will resume with Mr. Bilirakis. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it very 

much. 

Professor Gause, you state on page 6 of your testimony while the 

Saudi regime is stable, it faces important domestic challenges, such 

as the continuing appeal of radical jihadist ideas among the Saudi 

population. You enumerate a whole variety of actions that the 

kingdom has taken to blunt and curtail the appeal of this jihadist 

mentality, such as condemning Osama bin Laden, or reeducating 

citizens who have been arrested for involvement in radical activities, and using the media to ridicule radical Islamists. 

However, as General Petraeus testified last week, Saudi Arabia 

is the largest country in terms of foreign fighters fighting in Iraq 

against the coalition forces. 

Why is this the case? Is Saudi Arabia not doing enough? If not 

enough, what else should it be doing to ensure that Wahabism will 

be contained? And can the United States assist in helping Saudi 

Arabia stem the flow of fighters into Iraq? 

Mr. GAUSE. Right. I think that, in general, the appeal of radical 

jihadism in Saudi Arabia dates back for a couple of decades. It 

really does stem, I think, from the enormous support, both government and public, that Saudi Arabia gave to the jihad in Afghanistan against the Soviet Union in the 1980s. That is really when 

jihad became cool in Saudi Arabia. 

And the Saudi Government, rather than confronting this ideology 

in the nineties, when it was diverted out of Afghanistan and Bosnia, Chechnya, and other places, basically chose to turn a blind 

eye; chose not to take on the hard political task of confronting an 

ideological movement which it itself had helped to foster. And 
28

frankly, we had helped to foster in the 1980s, when it was against 

the Soviet Union in Afghanistan. 

And really they didn’t start taking this seriously as a political 

threat and a political phenomenon until it came home to them in 

2003. I mean, 9/11 was our wake-up call. For them the wake-up 

call wasn’t until May 2003, when al-Qaeda, in Saudi Arabia, started to attack Saudi targets domestically. 

And so I just don’t think that you can turn back an ideological 

trend that is a couple decades old in 5 years. 

I think the Saudis are doing some important things. I don’t think 

there is that much that we can do to help them. I mean, I think 

that they understand their own society better than we do. 

I think that what we can do is continue to impress upon highlevel Saudi leaders that this is really important to us, and they 

have to keep working at it. You know, for years their domestic politics wasn’t part of our conversation. Now it has to be part of our 

conversation. And if part of that conversation is impressing upon 

them that they have to do things domestically, or continue to do 

things and redouble their efforts domestically, in order for us to 

maintain the kind of relations we had before, including arms sales, 

I think that that is a perfectly legitimate thing. 

I don’t think there is any advice we can give them. I mean, they 

know their society a lot better than we know their society. But I 

do think that this is the new reality; that they have to realize that 

the things that happen domestically in Saudi Arabia are now part 

of the bilateral relationship. 

Mr. BILIRAKIS. Thank you. Thank you. I have one more question 

if it is okay, Mr. Chairman. 

Mr. ACKERMAN. Surely. 

Mr. BILIRAKIS. Mr. Wolosky, thank you for your testimony here 

today and your service to this nation. 

There has been a tendency for us to move away from characterizing the War on Terror for what it really is: A war against radical 

Islam or Islamo-fascism. Some, especially those in major media outlets, believe that those terms only work to incite hatred against 

Islam. 

In your testimony you stated, and I quote:

‘‘Although the United States is not, and should not, be at war 

with any religion or any religious sect, U.S. policy should affirmatively seek to drain the ideological breeding grounds of Islamic extremism, financially and otherwise.’’

Did you believe then that unless the United States entirely vanquishes radical elements of Islam, we can’t hope to win the War 

on Terror? 

Mr. WOLOSKY. I think it is critically important, from the standpoint of our national interests, to shut off the financial sources that 

are supporting the propagation of Islamic extremism. And that it 

is certainly the case that much of that wellspring springs from 

Saudi Arabia. 

That is why, as Professor Gause has said, the elements of what 

is happening internally in Saudi Arabia are critically important to 

our ability to fight and win the War on Terror. 
29

Terrorist financing and the support of extremism are much more 

a, terrorist financing is much more a foreign policy problem than 

it is a domestic problem. There has been a lot of focus in the Congress and in elsewhere on regulations and other steps that we can 

or should, or should not, be taking within our domestic banking 

and regulatory regime. But I would submit to this committee that 

it is vitally much more important what is happening in Saudi Arabia with respect to the funds that are exiting Saudi Arabia to support and to propagate extremism. 

Similarly, what actions the Saudis are or are not taking against 

the people who we and they know are the principal supporters of 

these activities. And to go back to a prior point, there are identified 

specific individuals in Saudi Arabia today, living freely, who are 

much more significant than the people who are going to the 

mosques and dropping their riyals into the box. They are much 

more significant because of the quantity of funding that they are 

providing, and they are much more important because their status 

in Saudi society says a whole lot about where the Saudi Government is, and the messages that it is conveying to its own population. 

So for instance, for the Saudis to allow specific individuals to remain free does not promote a culture of accountability, and it does 

not deter future conduct that we believe must be deterred in order 

for the spigot to be turned off. 

Mr. BILIRAKIS. Thank you very much. Thank you, Mr. Chair. 

Mr. ACKERMAN. Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. Let me first ask you 

about Saudi Arabia and Iran. How would you categorize each of 

these nations and their interactions with each other today? 

Mr. GAUSE. The Saudis and the Iranians are competitors for influence in the Middle East. But at the same time, both of them are 

trying to avoid, it seems to me, a direct confrontation. 

The Saudis are trying to avoid a direct confrontation with Iran, 

because Iran is more powerful than Saudi Arabia. The Iranians are 

trying to avoid a direct confrontation with Saudi Arabia because 

the Iranians know——

Mr. SCOTT. Let me, may I——

Mr. GAUSE. Sure. 

Mr. SCOTT. If you don’t mind. I want you to continue that, but 

how do you come to the conclusion, on what basis do you base Iran 

being more powerful and influential than Saudi Arabia? 

Mr. GAUSE. Much bigger army, much bigger population. Representing an ideology that has some popularity in the Arab world. 

Support for groups like Hezbollah and Hamas. And I think that the 

Iranians feel that, the Iranians are portraying themselves as the 

country that is standing up to the United States in the Middle 

East, and that gets them some amount of support, without a doubt. 

But I think the Iranians are also very leery about a direct confrontation with Saudi Arabia, because Iran is a Shi’a country. And 

while there is a large Shi’a population in the Gulf Region, in the 

vast Muslim world, the Sunnis are the overwhelming majority. 

And if it comes down to a Sunni-versus-Shi’a confrontation, the 

Iranians lose out. You know, the Iranians have never said we are 

a Shi’a revolution. They have also said we are a Muslim, we are 
30

an Islamic revolution. And they would prefer not to have the 

Saudis try to mobilize Sunni Muslims against them. 

So they are competing for influence, avoiding direct confrontation, at least now. I mean, the President of Iran was in Saudi Arabia just earlier this year on a visit. The Iranians and the Saudis 

have consulted on particularly the Lebanese crisis, where the 

Saudis are backing one faction, and the Iranians are backing 

Hezbollah. The Saudis are backing the Lebanese Government of 

Prime Minister Sinyor. 

So I think it is actually a very subtle kind of contest between the 

two. 

Mr. ACKERMAN. If the gentleman would yield and allow me to 

piggyback on his question? 

Mr. SCOTT. Please do. 

Mr. ACKERMAN. How much of this is not wanting to make it a 

Sunni versus Shi’a or Shi’a versus Sunni, but not making it an 

Arab versus Persian? 

Mr. GAUSE. The Saudis can play that card very successfully, and 

the Iranians are afraid of it, all right? The Iranians want this to 

be in the category of Islam. 

If the Saudis—and they have kind of said, the King has said, 

look, there are Arab issues that outsiders shouldn’t interfere with. 

I think that was very much directed at Iranian involvement in the 

Palestinian issue, Iranian involvement in Lebanon. 

And I think the Saudis have both those cards that they kind of 

wave in front of the Iranians. Look, if you guys push too far, we 

will mobilize against you on both Arab-versus-Persian and Sunniversus-Shi’a directions. 

Mr. SCOTT. Just on another line of questioning. It seems to me 

that Saudi Arabia treats, if they capture terrorists, known terrorists, particularly al-Qaeda, that they don’t prosecute them, but they 

allow them to melt back into the population. Is that a true assessment? 

Mr. GAUSE. Well, some amount of them they kill. And quite a 

few of them, quite a few of the al-Qaeda in the Arabian Peninsula, 

opponents of the regime have died in armed conflict with the regime since 2003. 

A number of people who they have arrested, they have tried to 

‘‘reeducate;’’ send them back into society with reformed views of 

Islam. Non-jihadist, if you will. 

That program has had some limited success. But also, just this 

year, the Saudis, in April, arrested 172 people accused of plotting 

to overthrow the regime. And the leader of that group was someone 

who had been through the reeducation process, and had been released. So it is certainly not fool-proof. 

But judicial proceedings in Saudi Arabia are not open, for the 

most part. And a number of these people who have been arrested 

undoubtedly have gone through these judicial proceedings, and 

many of them are still in custody. 

But you are right, Congressman, that the Saudis have this program to try to reeducate and put people back into society. 

Mr. SCOTT. Would you say that is because of the influence of alQaeda in Iraq, and the fertility of the Islamic, the radicalism of 

Islam in that region? I mean, I have always felt that we have never 
31

really looked critically enough, with enough of a jaundiced eye, at 

Saudi Arabia as a major player, as an embryonic feeder of terrorists. Al-Qaeda comes out of there. The lead terrorists, Osama bin 

Laden comes out of there; as a matter of fact, comes out of there 

from a very, very influential family. 

And I am just wondering, is that a part of it? Is that because it 

is such a part of the culture and the fabric there that they go easy 

on them? 

Mr. GAUSE. I don’t think so much that it is they want to go easy 

on al-Qaeda. I mean, the Saudi Government has been explicit that 

they now see al-Qaeda as one of the biggest threats to their own 

security. And I think that they are taking them on to the extent 

that they think is practical. 

I do think that the origins of radical Sunni jihadism in the Middle East today, Saudi Arabia has played an important role in the 

development of that. 

I think it does stem back, as I said earlier, to the glorification 

of the notion of jihad in the eighties, which was encouraged by the 

Saudi Government in Afghanistan. Encouraged by our Government, too. When we were fighting the Soviet Union, we were encouraging Arab volunteers to join the Afghans to fight the Soviet 

Union, under the banner of Islam, in Afghanistan in the 1980s. 

This was an enormously successful political program. There 

hadn’t been a political program in the Arab world to gain a military success in decades. And yet here is a political program that 

not only defeats a superpower, in their own eyes defeats a superpower, it destroys a superpower. In 1991, the Soviet Union collapses. 

So this brand of radical jihadism got a lot of credibility, a lot of 

street cred, in Saudi Arabia. And it became very attractive. And it 

was diverted, these interests were diverted toward Bosnia and 

Chechnya, causes that were very popular in Saudi Arabia in the 

nineties, because they were seen as Muslims being attacked by 

non-Muslims. 

And I think that this got out of control of the Saudi Government. 

And the Saudi Government chose not to confront it because they 

thought it would be politically difficult. And it wasn’t until it really 

came home to them, within Saudi Arabia itself, that they said we 

have to confront this. 

One could argue about the effectiveness of the confrontation. On 

the security side, I think it has been fairly effective. On the ideological side, I think they have a lot more work to do. But they are 

working against over two decades of the development of this viewpoint, this ideology. And I think it is going to take a while to 

delegitimize it. 

Mr. SCOTT. How do you see all of this playing out? I mean, over 

there in the Middle East. I mean, it seems to me you have got a 

basic Shi’a-Sunni-Persian-Arab-based four-legged problem here, a 

variety of different levels going on. 

What is the general feeling within Saudi Arabia, for example, 

with Iran’s march toward acquiring nuclear power? On two levels. 

First, do they actually believe that what Iran is saying is true, 

that it is not for weaponry? Or, two, do they believe it is for weaponry? And should Iran acquire nuclear capacity and a nuclear 
32

weapon? What does that do to the dynamics in the Middle East, 

and particularly within Saudi Arabia? 

Mr. GAUSE. I think, in Saudi Arabia, we have to consider this at 

two levels. 

At the elite level, there is quite a bit of fear about the Iranian 

nuclear program. They don’t believe the Iranian denials that this 

is just for peaceful purposes; they believe the Iranians are trying 

to acquire a nuclear weapon. And I think that at the elite level in 

Saudi Arabia, it is considered a major security issue. 

At the popular level in Saudi Arabia, to be perfectly frank, it is 

not a major issue. And people who do think about it tend to be supportive. They tend to see Iran as another Muslim country. They say 

the Israelis have them, the Indians have them, why shouldn’t the 

Muslim country have them. 

And so you get a real difference, I think, in Saudi Arabia, between the elite level, which is extremely concerned about the Iranian nuclear program, and the popular level, which frankly is, if 

not apathetic, somewhat supportive. 

I think that if the Iranians do go nuclear, if there is a nuclear 

breakout, Saudi decision-makers are faced with a difficult situation. There will be those in Saudi Arabia who will say, ‘‘Look, we 

have got to get these things, if only for deterrent purposes. If we 

are going to maintain our standing in the region, if we are not 

going to let the Iranians dictate to us. If we are going to be able 

to compete on the level of political influence, we have got to get 

them.’’ And they will look to Pakistan. 

I think others will say look, if we do that, our relationship with 

the United States is probably over. And I think that one of the 

issues that will come up is how much——

Mr. SCOTT. Is Saudi Arabia saying that? 

Mr. GAUSE. Yes. Because I assume that we would be extremely 

opposed to nuclear proliferation in Saudi Arabia. And we should be. 

And I think that that debate within the Saudi elite will partially 

rest upon how reliable they think their security relationship with 

us is. If they think they can count on us, maybe they will decide 

that they can forgo these nuclear weapons, and they can count on 

us to support them if they have a confrontation with Iran. 

If they don’t think that we are a reliable partner, then I think 

that the incentives for them to go nuclear themselves go up. 

Mr. SCOTT. Very interesting, very interesting and revealing comments. Very sobering, too. 

Let me ask you, if I may, Mr. Chairman, just a series of questions. Some of these may—I have been in and out. 

On the Gulf security dialogue, the GSD arms sale program, how 

is that going? I mean, are there any problems? Will it move along 

unimpeded? 

Mr. GAUSE. If the Gulf security dialogue is among the Gulf 

States, among the states in the Gulf Cooperation Council—Kuwait 

and Bahrain, you know—those countries talk all the time. Because 

they share all sorts of interests. They share a common form of government. They are in this international organization called the 

Gulf Cooperation Council. 

On the issue of actual integration of their military forces, I think 

it is probably a little less, there is probably less progress than one 
33

might expect, given their common interests. Because the smaller 

states especially, I think, are jealous of their independence. They 

worry, not enormously, but they do worry about Saudi power, and 

they worry about Saudi influence. And they want to keep some distance from Saudi Arabia and maintain their own military forces. 

So if the question is about the ability of Saudi Arabia, Kuwait, 

Oman, Bahrain, Kutir, the United Arab Emirates, all of whom receive American arms, to coordinate their military systems, there 

hasn’t been an enormous amount of progress on that scale. 

Mr. SCOTT. And then the Saudis have their Saudi Naval Expansion program as a part of that. 

Mr. GAUSE. Right. 

Mr. SCOTT. Are you familiar with the literal combat ship within 

that? 

Mr. GAUSE. No, I am not. Sorry. 

Mr. SCOTT. I just wanted to know. It just so happens that that 

is of significant importance to me and my district, since Lockheed 

is there and they make that. So I want to make sure that that is 

moving along in good shape. 

Mr. GAUSE. Right. 

Mr. SCOTT. If you might make a mental note of that——

Mr. GAUSE. Certainly. 

Mr. SCOTT [continuing]. To keep my office apprised, I would like 

to see that move along unimpeded. 

Mr. GAUSE. Certainly. 

Mr. SCOTT. Now, I asked you about that. Where is Saudi Arabia 

now, in terms of its relationship with Israel? 

Mr. GAUSE. Well, the Saudis have reiterated their support for a 

plan that King Abdullah put forward some years ago when he was 

Crown Prince, called, surprisingly enough, the Abdullah Plan. In 

which the Saudis said that basically the Arab world would recognize Israel, if Israel withdrew to the boundaries that it had before 

the 1967 War; before it acquired the West Bank, the Golan 

Heights, and the Gaza Strip. 

This was something of an advance within Saudi policy, but certainly wasn’t an advance on where Arab-Israeli negotiations were. 

I mean, the Palestinians and the Israelis in 2000 got way beyond 

that point, although they weren’t able to, obviously, to find common 

agreement. They were beyond those kinds of generalities, and they 

were negotiating very specific modalities for a Palestinian state. 

Territorial transfer with Israel, all sorts of things like that. 

So the Saudis are a little behind the curve on where Arab-Israeli 

negotiations had been. But in terms of where the Saudis had been, 

they have come quite a ways, to an open acceptance of the idea of 

a diplomatic exchange with Israel. 

A high-ranking Saudi official met with high-ranking Israelis earlier, end of 2006, beginning of 2007. A lot of speculation that that 

was Prince Bandar. They have common interests in Lebanon about 

Hezbollah, to prevent Hezbollah from becoming stronger. They see 

Iran in common as a threat. 

But I don’t think that that is going to convert to the Saudis taking dramatic steps to push the Arab-Israeli peace process forward. 

The Saudis have basically hung back on this most recent initiative 
34

by the administration to try to put together a peace conference in 

November, to bring Arabs and Israelis together. 

The Saudi Foreign Minister just last week said that there have 

to be a number of very specific guarantees, basically, that would 

come out of that conference before Saudi Arabia would participate. 

So I don’t see the Saudis willing to take dramatic steps, say on the 

model of President Sadat of Egypt traveling to Israel. I don’t see 

the Saudis taking dramatic steps to push the Arab-Israeli peace 

process forward. 

Mr. SCOTT. Let me ask you this. May I ask one more question, 

Mr. Chairman, very brief? It will only take 1 second. Yes, I just 

had one more, if I could. 

It was a lead-up to this question, and I ask this. Iran has said 

that they want to attack Israel. And I am just saying, I mean, what 

would be the reaction in Saudi Arabia? Is Saudi Arabia, would you 

say in your opinion, the most influential Sunni nation? 

Mr. GAUSE. One of. 

Mr. SCOTT. Okay. What would be the reaction to that possibility? 

Mr. GAUSE. Of an Iranian attack on Israel. 

Mr. SCOTT. Yes. Or what probably would be more likely would 

be an Iranian-supported attack. 

Mr. GAUSE. I think that at the elite level, the Saudi Government 

would see this as a real problem. Therefore, stability, basically. 

Mr. SCOTT. Would they support Israel? 

Mr. GAUSE. Not publicly. Because at the popular level, I actually 

think in Saudi Arabia, as in unfortunately much of the Muslim 

world, there would be popular support for Iran in a confrontation 

with Israel. 

I think that what the Saudis would fear the most is that in an 

Israeli-Iranian confrontation—it could spill over borders into Lebanon, it could spill over into other parts of the Arab world—that 

there would be Arab public opinion mobilized against Israel. That 

the Iranians would take advantage of that. The Iranians would be 

seen as the leaders of this movement, and that would cut out Saudi 

influence and could help destabilize Saudi influence, and maybe 

even Saudi Arabia domestically. That would be a very dangerous 

thing for the Saudis. 

But they would be, I think, at the elite level, somewhat paralyzed as to what to do. 

Mr. SCOTT. Well, thank you. As the chairman said, we might get 

another round, so I will yield. 

Mr. ACKERMAN. Mr. Bilirakis. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. One question. I recently traveled to the Anbar Province in Iraq. And my question is, 

do you feel that Saudi Arabia has had a positive influence on some 

of these Sunni tribal leaders in fighting against al-Qaeda? 

Mr. GAUSE. At least from the public sources, which is the only 

thing I have access to, Congressman, we don’t have any hard evidence that the Saudis were involved. 

But there is an interesting kind of simultaneity. In a change in 

Saudi policy, in the emergence of these, the salvation councils, like 

the Anbar Salvation Council, the tribal groups that have started to 

cooperate with us fighting against al-Qaeda. 
35

The Saudis had basically been very passive on Iraqi policy from 

the time of the war in 2003; let us say right up until toward the 

end of 2006. And then for a number of reasons, they started to get 

more active, I think largely because they thought that we might be 

leaving, and that they would have to take over, so to speak; that 

our presence there had prevented the worst thing from happening 

from their perspective, which is Iranian domination of Iraq. And 

they thought that maybe we were going to be getting out. 

And so I think that they started, there were some signals that 

they started to be a little bit more active, in terms of their contacts 

with players in the Iraqi game. 

Part of that was supporting politicians who were trying to put together an alternative parliamentary group to Prime Minister 

Maliki, to try to put together a replacement government to pressure al-Maliki out of office. The Saudis were definitely backing 

that. 

But it is interesting to note that these tribal awakenings which 

have occurred almost simultaneously with this change in Saudi policy are very much in accord with a lot of elements of Saudi policy. 

They are the natural kind of client group for Saudi—the natural 

contact for Saudi Arabia would be Sunni Arabs. And particularly 

tribal groups, many of which crossed the border between Saudi 

Arabia and Iraq. 

In other words, you have members of the tribe on one side in 

Saudi, and members of the tribe in Iraq. Some of the big tribes, 

like the Shammar, certainly crossed the border. 

Secondly, these tribal awakenings have been taking on al-Qaeda, 

and Saudi Arabia does see al-Qaeda as a threat to its own domestic 

security and stability. 

So while I don’t see any conclusive evidence that the Saudis are 

pushing this, it is an interesting coincidence that this more activist 

Saudi approach and the emergence of the salvation groups in 

Sunni tribal areas happened roughly at the same time. 

Mr. ACKERMAN. I would like to follow up on a question, if I 

might, on the Israeli side of the Saudi question. 

When the administration first proposed its proposed arms sale, 

they basically announced simultaneously a $30 billion package for 

the Israelis, and a $20 billion package for the Saudis, plus. I am 

not sure who else is in the plus, but part of it is the Saudis, so we 

don’t know that that whole $20 billion is to the Saudis; or that the 

Saudis indeed are looking to buy $20 billion worth, and the rest is 

for some other countries in the area. 

There was an almost orchestrated immediate response from 

Israel, from the Prime Minister, that was not an endorsement of 

the announced Saudi part of the deal. But it certainly was an indication that there was a green light there, that there would be no 

objection. 

Is there a belief that the Israelis were consulted on that? Why 

would or would not the Israelis agree or object? And is it an indication of a possible offering of assistance in fostering a better SaudiIsrael deal on the table down the road? I would like to ask that 

of each of you. Who would like to go first? Mr. Wolosky? 

Mr. WOLOSKY. My speculation, and I would highlight the fact 

that it is pure speculation, is that the Israelis viewed it through 
36

their Iran lens, rather than their Saudi Arabia lens. In other 

words, they viewed and agreed with what I suspect would be the 

administration’s position, that this was part of a proposed sales to 

Saudi, part of a broader initiative to curtail Iranian regional power. 

And if the program were pitched in that way credibly to the 

Israelis, I could see the Israelis, if not supporting, then at least not 

opposing the administration’s proposal. 

Mr. ACKERMAN. Mr. Gause? 

Mr. GAUSE. Lee is absolutely right on this, I think. And we do 

know that there have been contacts between Israelis and Saudis. 

And I think that in Jerusalem there is some hope that, if not a 

common, at least parallel strategic views of Iran might bring Saudi 

Arabia into a more open relationship with Israel. 

That I think is a bit too optimistic. But certainly there is a sense 

in Israel that Iran is the big strategic threat. And if arms deals to 

Saudi Arabia and other Gulf States, other Arab States——

Mr. ACKERMAN. What you are saying is it is not necessarily the 

enemy of my enemy is my friend, but the enemy of my enemy is 

not necessarily my enemy. 

Mr. GAUSE. I think that is about it. 

Mr. ACKERMAN. I guess that does it for that. 

Mr. GAUSE. And maybe we can do business with them down the 

line some time. 

Mr. ACKERMAN. Mr. Wolosky, a lot of money flows out of the 

kingdom to various terrorist organizations around the world. To 

your knowledge, do the Saudis make a distinction about how aggressively they pursue some of the financiers, as opposed to some 

of the others? 

Meaning, are they more concerned, and therefore more aggressive to those who are threats at home than to the outside? Which 

I presume is the case. But less aggressive when it comes to those 

sums of money that flow to al-Qaeda affiliates in the Balkans, out 

to Asia, or elsewhere. Do they make distinctions between those 

other places? 

Mr. WOLOSKY. Sure, I think they certainly do. And I think it is 

certainly the case that they have zero tolerance for activities, financial or otherwise operational, in Saudi Arabia itself. And then certainly with respect to the rest of the world, I think distinctions are 

drawn. 

And just to follow up on the last line of questioning, they have 

certainly drawn important distinctions in recent history with respect to Palestinian rejectionist groups which engage in terrorist 

activities, and which are considered by the United States Government to be terrorist organizations, such as Hamas. 

Earlier this decade, the Saudi Government officially supported 

aspects of the second intifada. And in that case, in that instance, 

certainly drew an important distinction between terrorist organizations operating against Israel and terrorist organizations operating 

against the United States and other countries. They did it quite 

openly. 

Al-Qaeda financing today, and even historically prior to 9/11 was 

somewhat opaque in Saudi Arabia. By contrast, support for the second intifada was very open; was through official Saudi committees, 
37

official governmental Saudi committees. And it was televised on 

telethons, dedicated bank accounts opened up, et cetera, et cetera. 

So certainly there had been distinctions drawn with respect to 

how the Saudis view, and how they sanction, different groups, depending on where in the world they operate. 

Mr. ACKERMAN. You seem to have pretty concise rules with how 

we deal or give in to the demands or desires of other countries, 

such as North Korea, where in order for them to get recognition—

and we will do nothing aside from provide aid or sit down and talk 

with them—they have to do one, two, and three, specific one, two, 

and three. Or the way we deal with Hamas, in saying before we 

deal with you, you have to do specifically one, two, and three, 

which we mentioned before. 

Why is it, if we are proposing to do up to a $20 billion arms sale 

with the Saudis, are we so vague about what we are asking? Why 

will we not say you have to do one, two, and come to the conference 

in November, and not support terrorist organizations? A, B, and C? 

Mr. WOLOSKY. I personally view Hamas as a terrorist organization. The Saudis don’t. And I suspect——

Mr. ACKERMAN. Yes, but we don’t have to ask them to do things 

that they already agreed to. 

Mr. WOLOSKY. Sure. I think that, I mean, certainly both the 

Clinton and Bush administrations have moved to put pressure on 

the Saudis, and even the Europeans, to be frank, to view Hamas 

as a terrorist organization. 

They haven’t really succeeded with the Saudis, and they have 

with the Europeans. Hamas is viewed as a liberation movement 

within Saudi Arabia. 

Mr. ACKERMAN. Well, the whole point of this hearing, I suppose, 

is that indeed there are many areas in which we and the Saudis 

see things differently, and have a completely different perspective. 

And if the idea is that we are trying to get them to see things our 

way, and we are giving $20 billion worth of something that they 

want, why do we then say well, they just don’t see things our way? 

Why don’t we just keep giving them everything, and just keep saying they are never going to see anything our way, because they 

don’t see things our way? 

Shouldn’t we be leveraging it? I mean, you know, I don’t think 

they think we are a terrorist organization, or maybe they do. But 

why won’t they come to the conference in November? Why don’t we 

leverage that? That should be an easy ask. 

Mr. WOLOSKY. I happen to agree with you. 

Mr. ACKERMAN. It seems that we are rather timid with our 

friends in what we ask, and rather generous in what we supply or 

are willing to sell. 

Mr. WOLOSKY. I happen to agree with you. It is a very complicated relationship. We are dependent on their assistance——

Mr. ACKERMAN. It doesn’t seem complicated from their side. It is 

give nothing and get what you can. 

Mr. WOLOSKY. It is complicated to the extent that if United 

States policymakers are offered an opportunity to receive Saudi cooperation on a particular note of financing al-Qaeda, and that cooperation was likely to lead to arrests or other elimination of al-
38

Qaeda nodes or terrorists, then that fact would, I would think, 

have to be seriously considered in the context of balancing equities. 

It is not to say I agree with the Saudi position on Hamas, but 

it is to say that sometimes the decisions that policymakers face are 

complex ones. 

Mr. ACKERMAN. I have a final question. I think it is the final question. If $20 billion worth of desired arms sales doesn’t do it, 

what will it take to get the Saudis to see things our way? How do 

you tip that scale? 

Mr. GAUSE. I don’t think they are ever——

Mr. ACKERMAN. I mean, you know, when the Iraqi Army was 

leaving Kuwait and marching in their direction, you know, they 

fought the war with our soldiers through the Riviera, on the Riviera, I mean. If that wasn’t a winsome move on our part, and they 

weren’t enamored of us and grateful for pulling their royal chestnuts out of the fire, you know, my question is, what does it take 

to tip the balance? 

Mr. GAUSE. I do think that one of the reasons that the relationship is so frustrating is because it is a mix of opposing viewpoints 

and similar viewpoints. And I think we do get things from the 

Saudis. And we do worry that if the Saudis weren’t there, it could 

be worse. 

You know, right now we have a hostile relationship, a directly 

hostile relationship, with Iran. 

Mr. ACKERMAN. A lot of the things we get from them seem to be 

the things that they do in their best interest. Like go fight the terrorists that want to blow them up. 

Mr. GAUSE. Right. A lot of the things they get from us we do in 

our interest. I don’t think that we sent troops to Saudi Arabia in 

1990 because we loved the Saudis. I think we sent troops to the 

Gulf in 1990 because we didn’t want somebody we didn’t like—Saddam Hussein—to control. If he controlled Kuwait, he would have 

20 percent of the world’s oil resources, and maybe be able to intimidate the other 25 percent in Saudi Arabia. 

Mr. ACKERMAN. So I guess we should be grateful to the Saudis 

for enabling us to do that? 

Mr. GAUSE. Not grateful. I think that we should nurture a relationship in which we use our leverage to get what we want. 

I think one of the things that we have a problem with with the 

Saudis is prioritizing what we want, all right? I think that if we 

prioritize things, if everybody who goes out and talks to them is on 

the same page—these are the three most important things that we 

want—and we keep telling them that over and over and over again. 

And we leverage them with things like arms. Then I think that we 

can get what we want. 

Now, if we give them a list of 20 things, we probably can’t get 

all 20, all right? And if we go out and we say this is our most important goal today, but 2 months later somebody else goes out and 

says no, no, no, now this is our most important goal; frankly, they 

won’t take us seriously. 

I think that if we get on, if we prioritize what we want, particularly in terms of terrorist financing, all right? Give them what we 

know and say we want these people; we want you to do something 

about these people. But don’t do it once, do it at every meeting. 
39

Mr. ACKERMAN. Are you suggesting we are not consistent? Is 

that part of the problem? 

Mr. GAUSE. I think that because we want different things at different times, we have a problem doing this. 

Mr. Chairman, you, yourself, mentioned getting the Saudis to 

come to this meeting in November. Well, you know, that wasn’t on 

the agenda a year ago, and maybe a year from now nobody will 

care. 

But if we go out and say boy, the most important thing right now 

for us is you coming to this meeting, then they might come to the 

meeting, but the other things kind of fall down further down the 

list. 

I think that you have got to keep riding them, and you have got 

to keep the pressure on. And you have got to do it consistently. And 

then you use your leverage, as you indicated. And we do have levers with them. But I think it has got to be consistent, and they 

have got to hear it repeatedly to convince them that we are serious. 

Mr. ACKERMAN. Well, it is not the meeting that is the most important thing, but the agenda of the meeting, which was on our list 

a year ago, and remains on our list. And that is the Saudis to use 

whatever consider influence they do have in the region—and it is 

much—to exert the kind of leadership to resolve, or help resolve, 

the situation between the Israelis and the Palestinians in some 

reasonable fashion. Just attending the meeting and not doing anything is not a win for us, and it is totally meaningless. 

Mr. GAUSE. Right. 

Mr. ACKERMAN. But it is basically a tactic to try to get to the 

point that we are looking to get them to. 

Mr. Wolosky? 

Mr. WOLOSKY. Sure. Just to reinforce some of those points. I 

think if you take Stuart Levey’s remarks from last week, for instance, the Under Secretary of the Treasury, and particular individuals who have yet still not been incarcerated or otherwise put 

out of business, I think that Under Secretary Levey has done a remarkably effective job on this issue. And by continually bringing up 

these individuals, is doing a service to our nation. 

However, if, as Greg suggests, that item is not no. 1, no. 2, no. 

3 on our list, and other national priorities such as Saudi cooperation in the Israeli-Palestinian issue are, then frequently you don’t 

get to item 5 and 6 on the agenda. 

And that, in large part, has been the problem with the issue that 

you have asked me to testify today on. The terrorist financing issue 

frequently is not at the top of the agenda, and frequently it is not 

raised at the Presidential level, which is the level which has the 

most resonance with the Saudis. 

Mr. ACKERMAN. I think what we are getting from your collective 

message is that in order to get a more focused response from the 

Saudis, we have to have a more focused ask? 

Mr. WOLOSKY. I agree. 

Mr. ACKERMAN. And sharpen our list of priorities and benchmarks. 

Mr. WOLOSKY. And on the terrorist financing issue, I think that 

there are rather clear benchmarks. Either those benchmarks are 

achieved or they are not achieved. 
40

Mr. ACKERMAN. Well, there being no more questions to ask of no 

more members, let me thank both of you for participating in today’s hearing. It has been very, very helpful to our committee in 

our deliberations in the formulation of policy. 

Thank you very much. 

Mr. GAUSE. Thank you. 

Mr. WOLOSKY. Thank you. 

Mr. ACKERMAN. The hearing is adjourned. 

[Whereupon, at 4:24 p.m., the subcommittee was adjourned.] 
(41)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS

Thank you, Mr. Chairman, for convening today’s important hearing. Our traditional partnership with the government of Saudi Arabia, previously solidified by 

clearly defined shared interests during the Cold War, has become increasingly complicated in recent years by the rise of extremist terrorism. May I also thank the subcommittee’s Ranking Member, and welcome our two distinguished witnesses: Mr. F. 

Gregory Gause, III, Associate Professor, Department of Political Science, University 

of Vermont, and Mr. Lee S. Wolosky, Partner, Boies, Schiller & Flexner LLP. I look 

forward to your informative testimony. 

Mr. Chairman, the traditionally strong U.S.-Saudi Arabia relationship has 

changed since the end of the Cold War. While we cannot deny that increasingly serious questions and disagreements have arisen between our two countries, we also retain many common goals and share a number of significant concerns. I believe that 

we, as a nation, have much to gain through continued constructive engagement with 

Saudi Arabia, even as we emphasize greater protection for human rights and expanded personal and religious freedoms. 

Mr. Chairman, we all share significant concerns about the stability of the Middle 

East. Recent American actions in the region have won us few friends, with reports 

indicating that the invasion of Iraq has only fueled Islamic extremism. Like the 

United States, Saudi Arabia has expressed significant concerns about regional security, sharing our concerns about recent belligerent behavior by the Iranian regime. 

The Saudi government, like many in this Congress, is concerned about the future 

of Iraq, and the ongoing regional instability created by that nation’s descent into 

civil war. 

Through cooperation with the United States, the Kingdom of Saudi Arabia has 

made significant headway in addressing its domestic terrorism problems. According 

to counterterrorism experts, the Al Qaeda in the Arabian Peninsula (AQAP) organization no longer poses a significant threat to the Kingdom’s stability. 

However, terrorism and terrorist financing remains a substantial and legitimate 

concern. In addition to strengthening counterterrorism mechanisms, it remains necessary to address the underlying causes of Saudi terrorism and support for terrorism. Reports, including the State Department’s 2007 International Narcotics Control Strategy Report, have indicated that individuals and businesses based in Saudi 

Arabia have long been the most important funding source for Al Qaeda. While it 

is crucial to note that the 9/11 Commission found that there was ‘‘no evidence that 

the Saudi government as an institution or senior Saudi officials individually funded 

[Al Qaeda],’’ the Commission report also stated that Saudi Arabia ‘‘was a place 

where Al Qaeda raised money directly from individuals and through charities,’’ and 

that ‘‘charities with significant Saudi government sponsorship’’ may have diverted 

funding to Al Qaeda. 

The Saudi government has often verbalized its commitment to cooperating with 

the United States in halting this flow of funds to terrorist groups. While the government openly and financially supports Islamic and Palestinian causes, it also maintains that it does not provide official support to any terrorist organization. I congratulate the Saudi Arabian government for its recent efforts to strengthen laws 

and regulations against terrorist financing and money laundering. Since 2003, the 

Saudi government has created a financial intelligence unit, and has announced 

plans to establish a commission to monitor the activities of internationally active 

Saudi charitable organizations, though the latter has not yet been established. If 
42

these new measures are adequately pursued and enforced, they will represent a significant stride forward in global efforts to combat terrorism. 

However, it remains a cause for significant concern that extremist ideologies have 

been able to garner such support in Saudi Arabia. In the long term, this must be 

the shared goal of both our nations: to address the underlying political and religious 

ideology that has motivated some Saudis to support violent terrorist organizations. 

Another serious issue is the need for reform of madrassas, or Islamic religious 

schools. Since the terrorist attacks of September 11, 2001, foreign policy analysts 

and officials have focused increasing attention on these schools, particularly after 

it was revealed that most members of Afghanistan’s extremist Taliban government 

had attended madrassas in Pakistan, many of which are allegedly funded by Saudi 

money. Critics have levied many serious charges against madrassas, including accusations that they foster Islamic extremism and militancy and are a recruiting 

ground for terrorism. I believe these schools, which supporters argue play a crucial 

role in a number of countries where millions of Muslims live in poverty, and where 

state educational infrastructure is severely lacking, must be comprehensively reformed. 

Recently, the Bush Administration announced its intention to negotiate significant new arms sales agreements with Saudi Arabia. These proposed sales would 

mainly support the Saudi Arabian National Guard. I believe we, as a Congress and 

as a nation, must seriously consider whether such sales are prudent. U.S. and Saudi 

regional policies are in many ways congruent, but outstanding issues of human 

rights and political reform cannot be ignored. I believe such sales require extensive 

consideration and deliberation, and I look forward to hearing the testimony of our 

expert panelists on this crucial issue. 

While we share many similar regional goals with our Saudi friends, I do not believe we can allow this issue to overshadow ongoing human rights issues, which remain of significant concern despite indications of recent progress. The State Department’s 2006 Country Report on Human Rights Practices notes that the overall 

human rights environment remains poor, noting particular abuses including: no 

right to change the government, painful corporal punishments, arbitrary arrest and 

detention, denial of fair public trials, lack of judicial independence, significant restriction of civil liberties, a widespread perception of corruption, societal discrimination (particularly against minority groups), and legal discrimination and violence 

against women. 

In addition, while the State Department’s 2006 Report on International Religious 

Freedom notes recent steps toward addressing U.S. concerns about a lack of religious freedom, the nation remains classified as a ‘‘Country of Particular Concern.’’ 

Some progress has also been noted in the area of political reform, with the country’s 

first nation-wide elections taking place in 2005, despite the ongoing ban on political 

parties and coalitions. Finally, women have made some progress, and were allowed 

to vote and run for office in elections held in the city of Jeddah in 2005, with two 

women winning seats. However, treatment of women remains a cause for significant 

concern, and the path to gender equality must be bolstered and accelerated by our 

efforts. 

Mr. Chairman, I believe that the United States and Saudi Arabia have many 

shared interests and concerns. However, I also believe that the persistence of funding and support by Saudi citizens for terrorist organizations, as well as ongoing 

issues of human rights and religious freedom, remain cause for significant concern. 

I look forward to today’s informative testimony, and to further thoughtful discussion 

of these important issues. 

Thank you, Mr. Chairman, and I yield back the balance of my time.

Æ