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[Congressional Record Volume 141, Number 71 (Tuesday, May 2, 1995)]
[Extensions of Remarks]
[Pages E908-E910]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                UNITED STATES POLICY TOWARD SAUDI ARABIA

                                 ______

                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                          Tuesday, May 2, 1995
  Mr. HAMILTON. Mr. Speaker, for many years Saudi Arabia has been a key 
partner of the united States in the strategic gulf region. Saudi Arabia 
is a major oil supplier and trading partner of the United States, and 
it played an essential role as our coalition ally in the gulf war. 
Since that war, however, there have been a number of credible reports 
that the Saudi economy is in difficulty, whether as a result of low oil 
prices and the cost of supporting the gulf war or as a result of 
mismanagement. There are also questions about the Kingdom's handling of 
domestic political discontent, its human rights record and its 
treatment of some U.S. citizens. I wrote to the Secretary of State on 
January 23, 1995, and on March 28, 1995, I received a reply on these 
issues.
  Given the tremendous importance of Saudi Arabia to United States 
interests, I request that my exchange of letters on Saudi Arabia with 
the Department of State be entered into the Congressional Record:
         House of Representatives, Committee on International 
           Relations,
                                 Washington, DC, January 23, 1995.
     Hon. Warren Christopher,
     Secretary of State,
     U.S. Department of State, Washington, DC.
       Dear Mr. Secretary: I write to seek clarification of U.S. 
     policy toward Saudi Arabia.
       First, it appears to me that Saudi Arabia is not responding 
     effectively to the economic and political challenges it now 
     faces, and I am concerned that U.S. policies may be 
     contributing to Saudi economic difficulties.
       Second, I am concerned about whether the U.S. government 
     has a full appreciation of the internal political dynamics of 
     Saudi Arabia and about whether we are in a position to 
     respond effectively to internal events.
       Third, I am concerned that important U.S. values, such as 
     respect for the human rights of all Saudi citizens and fair 
     treatment of American citizens abroad, are not advanced as 
     effectively as they should be in our relations with Saudi 
     Arabia.
       I would appreciate your responses to the following 
     questions.
       1. Do you see low oil prices and the costs of financing the 
     Gulf War as the cause of Saudi Arabia's current economic 
     difficulties?
       Are these problems compounded by domestic economic 
     mismanagement, including a failure to institute taxes or cut 
     subsidies?
       How do you assess reports of corruption and kickbacks as a 
     source of economic mismanagement and popular discontent?
       How do you assess King Fahd's efforts of the past year to 
     cut spending and address Saudi Arabia's economic problems?
       2. How would you describe the stake of the United States in 
     the Saudi economy?
       Have U.S. efforts to boost sales of advanced weaponry and 
     commercial aircraft to Saudi Arabia contributed to the 
     economic dilemmas the Saudis now face?
       Does the burden of payments for these purchases contribute 
     to anti-American sentiment in the Saudi military and 
     government?
       3. What is current U.S. policy on arms sales to Saudi 
     Arabia, and the status of U.S. efforts to restructure Saudi 
     payments for previous military purchases?
       What is the status of the $6 billion Saudi contract with 
     Boeing and McDonnell-Douglas for the purchase of civilian 
     airliners?
       4. What is the policy of the U.S. embassy in Riyadh with 
     respect to routine political contacts with a broad range of 
     Saudi citizens, and to reporting on the internal situation in 
     that country?
       What limitations, unwritten or written, govern the contacts 
     and reporting of U.S. embassy officers in Saudi Arabia?
       [[Page E909]] Are similar limitations imposed on U.S. 
     diplomats anywhere else?
       What do you see as the strength of the Saudi political 
     opposition, as well as the effectiveness of Saudi authorities 
     in suppressing dissent?
       Do you believe that the long-run political stability of 
     Saudi Arabia is advanced by the government's suppression of 
     any form of dissent and any free exchange of political ideas?
       5. I recognize and appreciate the importance of Saudi 
     Arabia as a strategic partner in the Gulf region, and the 
     differences in our political cultures. Yet it is a matter of 
     concern that we often appear unwilling to assert our own 
     interests when we disagree with Saudi actions or policies.
       Are press reports correct that the State Department 
     spokesperson backed away from a statement last fall that the 
     U.S. has ``serious concerns'' about the human rights 
     situation in Saudi Arabia, even when those concerns are 
     documented in the annual State Department human rights 
     report?
       What is the U.S. doing to promote respect for the basic 
     human rights of Saudi citizens, especially the rights of 
     peaceful assembly and free expression?
       Does the U.S. Embassy press for fair treatment of all 
     Americans working or living in Saudi Arabia?
       Specifically, are you concerned by reports of the 
     mistreatment of American women by Saudi religious police; the 
     alleged detention, mistreatment, and expulsion of American 
     citizens involved in business disputes with Saudi nationals; 
     and reports of a forced separation of a U.S. citizen child 
     from his mother as a result of the political activities of 
     the child's Saudi father?
       What steps do you take when U.S. consular concerns are not 
     addressed?
       I look forward to your early reply.
       With best regards,
           Sincerely,
                                                  Lee H. Hamilton,
     Ranking Democratic Member.
                                                                    ____

                                     U.S. Department of State,

                                                   Washington, DC.
     Hon. Lee Hamilton,
     Committee on International Relations, House of 
         Representatives.
       Dear Mr. Hamilton: Thank you for your recent letter to the 
     Secretary, and for the opportunity it provides to review with 
     you the nature of the U.S.-Saudi relationship and our 
     perspective on developments in Saudi Arabia. The Secretary 
     has asked that I respond on his behalf.
       For fifty years, Saudi Arabia has been a key partner for 
     the U.S. in support of critical regional and global 
     objectives, including security of global energy supplies, 
     Middle East peace, and stability in the Gulf. As part of our 
     dialogue, we have encouraged Saudi Arabia to support broad 
     initiatives, like indefinite extension of the NPT, which 
     contribute directly to enhanced regional security. For our 
     part, the U.S. has worked closely with the Government of 
     Saudi Arabia in support of its security and economic 
     development. We fully expect to continue this close bilateral 
     cooperation into the future.
       In recent years, Saudi Arabia's economic development was 
     slowed by the double impact of the Gulf war and the sharp 
     decline in the world market price of oil. Despite the popular 
     impression of Saudi Arabia as a country of unequalled wealth, 
     the Saudi economy is, by global standards, relatively modest. 
     Thus, its heavy outlays in 1990-91 as a result of Iraq's 
     occupation of Kuwait--which the Saudi government estimates at 
     some $60 billion--clearly burdened the economy. Until that 
     time, the Saudis had begun to control the budget deficits 
     which they had confronted since the mid-1980s as a result of 
     declining oil revenues.
       Despite the recent setbacks which the Saudi government has 
     encountered, we believe that it has been a prudent and 
     responsible manager of the Saudi economy. During the 1970s 
     and early 1980s, the Saudi government was able to cover its 
     investments in infrastructure and economic development, 
     finance the extensive social safety net which it developed at 
     that time, and build its external reserves through revenues 
     derived from the sale of oil. (In a 1993 letter to The New 
     York Times, Saudi Finance Minister Abalkhail valued Saudi 
     infrastructure investments, including soft loans to private 
     sector investors,
      at nearly one trillion dollars.) At the same time, as 
     external reserves have declined, an aging infrastructure 
     and a rapidly-growing population demanding services are 
     now challenging the government for major new capital 
     investments.
       The government has embarked on a two-prong approach to meet 
     this challenge. For the second year in a row, the King has 
     announced significant decreases in government spending which 
     will bring total budget reductions over the two-year period 
     to twenty-five percent. The King also announced this year 
     substantial reductions in popular subsidies, including those 
     on gasoline, electricity, and water. These two moves should, 
     by the Saudi government's estimate, reduce its deficit in SFY 
     95 to approximately $4 billion, down from the double-digit 
     deficits experienced in recent years. More importantly, the 
     moves should stimulate the private-sector-led growth upon 
     which continued prosperity depends. We have encouraged the 
     Saudi government to pursue deeper economic reforms, including 
     restructuring of its inefficient public sector.
       In the short term, however, government cutbacks and 
     reductions in services have clearly affected the majority of 
     Saudis. Tighter government budgets have reduce employment 
     opportunities for young Saudis, frozen wages, and slowed the 
     private sector, which has been heavily dependent on 
     government contracts for its prosperity. This short-term 
     economic downturn has colored popular perceptions of the 
     government's financial management and sharpened the 
     distinctions among the social groups. These economic strains 
     have added to resentment over the advantages enjoyed by the 
     very large Saudi royal family, particularly allegations that 
     family members have traded on their positions and otherwise 
     profited unethically in the society. While it is unclear what 
     impact the activities of the Saudi royal family probably have 
     on the Saudi economy, they will likely continue to engender 
     resentment as long as the benefits of the society appear to 
     be distributed unfairly.
       The United States, of course, has an enormous stake in 
     Saudi stability and economic development. Saudi Arabia is the 
     largest trading partner of the U.S. in the Middle East and 
     our fifteenth largest trading partner in the world. Saudi 
     purchases of U.S. manufactured goods have played an important 
     role in sustaining important sectors of the U.S. economy, 
     such as airframes and the defense industrial base. Close 
     cooperation between the U.S. and the Saudi Embassy here has 
     paid off in our success in resolving nearly all of the 
     longstanding commercial disputes which had complicated our 
     strong economic relationship. Saudi adherence last year to 
     the New York Convention on the arbitration of commercial 
     disputes should prevent a repetition of these disputes in the 
     future.
       Although U.S. companies, with support from the U.S. 
     government, have competed aggressively for Saudi sales, it is 
     the Saudis alone who have defined their import priorities. 
     Thus, it is misleading to suggest that U.S. companies are 
     responsible for Saudi economic problems because they have won 
     international competitions decided by the Saudis to provide 
     major military and civilian items. Indeed, we believe that 
     U.S. companies, as world leaders in both price and quality, 
     have contributed to sound Saudi fiscal management by 
     providing superior products at the lowest prices. 
     Nevertheless, we are aware that the high profile of some U.S. 
     commercial successes has generated criticism of the U.S. in 
     sectors of Saudi society which believe incorrectly that the 
     U.S. has pressed the Saudi government to make unwanted or 
     unneeded purchases.
       One major category of U.S. exports to Saudi Arabia has been 
     in defense goods and services. This relationship reflects 
     decades of close U.S.-Saudi security cooperation, including 
     the major role that the U.S. military has played in working 
     with and advising the Saudi military on its development. 
     Saddam Hussein's occupation of Kuwait triggered a 
     reevaluation in Saudi Arabia of the country's defense 
     requirements and led to the decision to expand and modernize 
     the Saudi armed forces significantly.
       Purchases of U.S.-made equipment and services expanded 
     substantially in the early 1990s but payments in recent years 
     have been hampered by Saudi cash flow problems. U.S. 
     officials have worked closely with their Saudi counterparts 
     in the Ministry of Defense and Aviation since 1993 to 
     restructure the Saudi program in order to reduce annual 
     payments without cancelling procurement programs or 
     diminishing operational readiness. Discussions for managing 
     the SFY'95 program continue. Until such time as these issues 
     are resolved, and Saudi ability to sustain current programs 
     is sound, we and the Saudis have agreed that prudent 
     financial management dictates that there not be purchases of 
     major new military systems. We expect that any sales this 
     year will be limited to support of ongoing programs. Payment 
     levels for U.S. equipment will decline substantially 
     beginning next year.
       Negotiations to conclude the contracts for the purchase of 
     Boeing and McDonnell Douglas airframes have been ongoing 
     since the announcement of Saudi intentions. Those discussions 
     are continuing. Administration support for the two U.S. 
     companies remains very strong and we are in regular contact 
     with company officials here and in Riyadh to coordinate our 
     efforts to finalize the sale.
       The U.S. Mission in Saudi Arabia maintains contact with a 
     broad range of Saudis, both officials and private citizens. 
     There are no limits on such contacts. On the basis of these,
      it is our view that the large majority of Saudis supports 
     the leadership of the Al Saud. Even among those who are 
     critical of elements of their leadership, we are not aware 
     of significant sentiment in favor of changing the nature 
     of the Saudi government or its leaders. The Committee for 
     the Defense of Legitimate Rights (CDLR) is based in London 
     although they keep in regular contact with the U.S. 
     government through phone, and fax, and mail.
       As a matter of principle, the U.S. government believes that 
     societies are strengthened and are more stable if they are 
     broad-based and permit popular participation in decision-
     making. This would include freedom of expression and peaceful 
     assembly. We have encouraged the Government of Saudi Arabia 
     to take steps toward democratization and we have welcomed its 
     efforts, like the inauguration of the Majlis al-Shura, which 
     might advance those objectives.
       Despite some gains, there has been no effort to conceal the 
     fact that the U.S. has serious concerns about the human 
     rights situation in Saudi Arabia. As your letter notes, 
     [[Page E910]] the State Department's annual report on human 
     rights contains extensive discussion of these issues in Saudi 
     Arabia and catalogs U.S. concerns, which include issues 
     involving the rights of women and religious minorities as 
     well as incidents of arbitrary arrest and mistreatment at the 
     hands of the authorities.
       Protection of the rights of U.S. citizens abroad is a 
     matter of international dimensions with some aspects, like 
     child custody cases, occupying particularly the attention of 
     the Department and our posts overseas. In Saudi Arabia, we 
     take any allegation of mistreatment of U.S. citizens 
     seriously and investigate it thoroughly. As needed, we have 
     aggressively raised these allegations to the highest levels 
     of the Saudi government. Saudi authorities are committed to 
     administer their society in accordance with their traditions, 
     religion, and legal framework. This has on occasion led to 
     differences between the U.S. and Saudi Arabia, particularly 
     in regard to matters affecting dual nationals living and 
     working in Saudi Arabia. But we believe that the U.S. Mission 
     has been extremely effective in its role of providing 
     American citizen services. Overall, the number of problems 
     involving the tens of thousands of Americans who live and 
     work in, or visit, Saudi Arabia each year has been few.
       I hope you find this information helpful. If you would like 
     to discuss these issues at greater length, we would be happy 
     to arrange for appropriate officials to meet with you at your 
     convenience.
           Sincerely,

                                             Wendy R. Sherman,

                                              Assistant Secretary,
                                              Legislative Affairs.
     

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