Inside the Mirage: America's Fragile Partnership with Saudi Arabia

• Introduction
• Remarks
• Questions and Answers

Introduction JOANNE MYERS: Good morning. I'm Joanne Myers, Director of Merrill House Programs, and I'd like to thank you for joining us this morning.

For those of you who have been following the news of the latest attacks on foreign residential and office complexes in Saudi Arabia, at a time when global petroleum supplies are becoming increasingly sensitive to any disruption, I'm sure you will agree how timely this morning's discussion will be. Therefore, we are extremely grateful to have as our speaker Thomas Lippman, who will be discussing his recently published book, Inside the Mirage: America's Fragile Partnership with Saudi Arabia, and his book will be available for you to purchase at the end of the program today.

Ever since it became known that 15 of the 19 September 11th hijackers were from Saudi Arabia, questions about the nature of the Saudi Kingdom and its byzantine relationship to the United States have been steadily on the rise. As a country that is home to two of Islam's holiest sites, Mecca and Medina, and is ruled by a family of slightly more than 100 princes who not only control all government functions but its oil wealth as well, one can easily understand that whatever happens to either strengthen or weaken the Kingdom can also have a direct impact on our own nation.

Yet, finding information about this desert kingdom, which remains so much of an enigma, is not easy. However, one place to begin may be by reading Inside the Mirage. This book traces the Saudi-American alliance from its emergence after the birth of the Kingdom in 1932 and the signing a year later of the first oil-prospecting agreement with Standard Oil of California up until the present time, ending with a discussion of the strategic ties that bind the United States and Saudi Arabia.

Thomas Lippman has spent more than 30 years as a reporter, editor, and foreign correspondent for The Washington Post, specializing in Middle Eastern affairs and American foreign policy. He is known for always writing an evenhanded account of events taking place in that part of the world and will provide us with insights that only a skilled journalist such as he is can impart.

He is a former Middle East bureau chief of The Washington Post and also served as that newspaper's oil and energy reporter. Throughout the 1990s he covered foreign policy and national security for the Post, traveling frequently to Saudi Arabia and other countries in the Middle East.

In addition to Inside the Mirage, he has published three books that are worth your reading: Understanding Islam, Egypt After Nasser, and Madeleine Albright and the New American Diplomacy.

In 2003 he was a principal writer about the war in Iraq for washingtonpost.com. He is currently an adjunct scholar at the Middle East Institute in Washington.

Please join me in giving a very warm welcome to our guest, who is eager to discuss not only his book but his recent trip to Saudi Arabia from which he just returned last week, and perhaps will share with us just what the Saudis are doing to prevent terrorism from escalating, and protecting the world's largest oil reserve.

Thank you for joining us.

Remarks

THOMAS LIPPMAN: Good morning, ladies and gentlemen.

I was indeed in Saudi Arabia last week, as I have been off and on now for more than 25 years, and I saw some completely new things. But in order to understand where we are in Saudi Arabia it's useful to talk first about where we've been and how we got to where we are.

You won't be surprised to hear that the genesis of my inquiry into the long-term relationship between the United States and Saudi Arabia lies in the events of 9/11. After the September 11th attacks, like everybody else, I was scratching my head about what had happened and why. So I went back and reread all the iterations that I could find of bin Laden's manifestoes against the United States.

If you think of bin Laden as the prosecutor and those texts as indictments, I went through the bills of particulars looking to see what it was we stood accused of and whether we were guilty. In general it says that we stole their oil, hoodwinked the monarchy, violated the holy places, and undermined Islam.

In the large sense, none of it is true, because the most important thing to remember about the relations between the U.S. and Saudi Arabia is that it was never a colonial relationship. Americans didn't go there at gunpoint and extract oil against the will or over the resistance of the locals. At all times, the Saudis held the ultimate lever of power-namely, the oil concession-and they drove hard bargains, they were tough negotiators, and everything that happened happened with the assent, if not the desire, of the Saudi government.

I went back to reconstruct the relationship and see what I could find about who had done what to whom and what was the nature of the give and take between the United States and the people of Saudi Arabia. Even though I had been going there since 1976, I found many things not only that I wasn't familiar with, but that I had never heard of.

A group of American Christian missionary doctors from the Reformed Church, formerly the Dutch Reformed Church, established a missionary hospital in Bahrain in the early years of the 20th century. Their assignment was to spread the word not by preaching but by doing good works, by bringing medical care to all the Arabs of the Gulf who would receive them. Their range went approximately from Basra in what is now southern Iraq down to Musqat in Oman. That was a part of the world that was desperate for medical care, riddled with chronic, preventable, curable diseases, diseases that we knew how to cure even in 1910 and 1915-trachoma, rickets, tuberculosis, malaria.

Public health conditions were terrible, and these doctors made themselves available. As the strait between Bahrain and the mainland of Saudi Arabia was narrow, and thus traversed constantly by pearl divers and fishermen, word of the good work that these doctors did spread quickly across the strait.

Beginning with some of his own soldiers who were wounded in a gun battle with a rival clan over pearl-diving proceeds, King Abdul Aziz began to avail himself of the services of these missionary doctors who treated him and his people. They were invited into the mainland of Saudi Arabia, and even went to Riyadh, which was then a small, mud-walled village that was totally off limits to foreigners. This was about 1920, before the founding, the unification, of the modern Kingdom of Saudi Arabia in 1932.

In these doctors who treated the king and his people, the king met his first Americans, who turned out to be people who gave without taking. They were never permitted to establish a church, preach, proselytize, or take up residence. They went into the interior of the Arabian Peninsula, they ministered to the people until their medicines ran out, and then they went back to Bahrain.

So when the time came to let the oil concession, the king, who was a very wily observer of human nature, understood 1) that he could do business with Americans, and 2) that the British, because they controlled the oil concessions in Persia and Iraq, already had all the oil they needed; they weren't going to be developing the oil resources of Saudi Arabia, if any, for many years.

The king needed cash right away. The unified Kingdom of Saudi Arabia was created in 1932. It was in debt from the day the flag first went up, and had very limited resources. The principal source of revenue for the Kingdom was a tax on pilgrims going to Mecca. This was 1932. The Depression had begun to take a lot of steam out of the travel business; people were not going to Mecca, and so the Kingdom was broke.

When it came time to let the oil concession, the king, partly through the urging of the legendary Harry St. John Philby, his British Muslim advisor, chose the Americans, and thus began the process of their involvement in Saudi Arabia.

It was only the very beginning of what became an across-the-board American involvement in so many aspects of Saudi Arabian life. It's now fair to say that as a result, Saudi Arabia today is a fully mechanized, computerized, electrified, paved, air-conditioned society; and that there is no aspect of contemporary Saudi life, other than religion, that was not heavily and directly influenced by Americans and by contact with Americans.

The oil concession was signed in 1932, and the first commercial discovery was in 1936 or 1937. The first tanker-load of oil for export was loaded on May 1, 1939, at the port of Ras Tanura, which the oil company had built. It should have opened the door to development and a new era of prosperity for one of the world's poorest countries.

Unfortunately, six months later Germany invaded Poland, World War II began, shipping lanes were shut down, and the oil business, which was just getting started in 1939, retrenched instead of expanding.

Americans had established the community we know today as Dhahran by that time. They had begun to create their "little America" town over there, with its bar and its supermarkets, its commissary, its portable toilets, portable air conditioners, trucks, machinery, all these things which were new to Saudi Arabia at the time. It was a country of no electricity; virtually no roads; no communication, other than face-to-face, no telephones, no radio; and almost universal illiteracy-except for a few Koranic schools, there was virtually no education in Saudi Arabia.

The original oil concessions specified in very clear language that all jobs would be done by Saudi Arabs to the extent possible. In the beginning, the "extent possible" was close to zero. So the training of Saudi Arabs to take over the jobs in the oil business was part of the specified mission of the Arabian-American Oil Company (Aramco) right from the beginning and became a huge part of what they did. They probably imported more teachers than oil drillers.

The king's need for revenue did not diminish with the onset of the war. In fact, the need for revenue increased because the pilgrimage traffic declined. By the middle of World War II, Saudi Arabia was in desperate trouble. There was starvation in the hinterlands.

The oil people, who wanted a stake in the future after the war, persuaded the White House, FDR, to declare Saudi Arabia a strategic ally in World War II, and thereby eligible for lend-lease assistance. This led to direct American involvement in the affairs of the Saudi state.

I have here a silver one-riyal Saudi Arabian coin in a commemorative frame. This coin was minted in 1944 in Philadelphia, because the Saudis had no money. They didn't use paper currency; all transactions were in coin only-and so one of the first things that happened under lend-lease was that the U.S. lent the Saudis enough silver to make 4 million coins, because the king had no other way to distribute largesse around the Kingdom and pay the clans and run the country.

The reason it is in this commemorative frame is that those 4 million coins were loaded aboard a Liberty ship, the S.S. John Barry, dispatched to Saudi Arabia, and the John Barry was torpedoed by a German U-boat in the Gulf of Oman and went to the bottom with all 4 million of these coins. This one is one of some that were brought up 50 years later.

Since the coins didn't arrive, we resent a shipment, thereby tiding the king over one of the most difficult periods.

By the end of the war, the U.S. had begun to think of Saudi Arabia in strategic terms. Before the war, geo-strategy in the Persian Gulf was a function of the British. The Americans had no interest there and there was no resident U.S. Government State Department official in Saudi Arabia until after the war, even though the oil concession had been signed in 1932. The diplomatic representation in Saudi Arabia was a resident representative in Cairo.

By the end of the war, three important interests converged to open the way for a U.S. strategic involvement in Saudi Arabia that went beyond oil. They were as follows:

1) The U.S. military, which during the war wanted an air base in the region to service the Pacific theater from Europe. The British, being the British, wouldn't allow the Americans to put that air base in Bahrain or Kuwait, so they wanted to put it in Saudi Arabia.

2) A gentleman named Howard Hughes, proprietor of what was then known as Transcontinental & Western Airlines, better known as TWA, which had been granted the right to fly the route from Cairo to Bombay. Those were the good old days when airlines went where the government told them they could go. They needed a place to land and refuel and work on their planes in between the two cities.

3) The king, who had discovered aviation. Back in the early days, before the unification of the Kingdom, the king had seen the power of aviation when some of his raiders attacked a police post inside Iraq, which was British territory, and the British sent early warplanes to drive them out of there. That left a lasting impression.

At the king's famous meeting with Franklin Roosevelt at the Suez Canal in early 1945, the President gave the king two gifts. One was the traveling White House's spare wheelchair. The king, by then getting on in years, was a large, bulky man who didn't move around too much.

The second gift was a DC-3, a twin-engine aircraft, then the workhorse of the commercial aviation fleet. There's some interesting reading in the archives about the memos that went back and forth between the State Department and the War Department over whose budget would cover the cost of that plane.

So the king discovered the potential value of aviation. He had a rotating throne installed so he could always face Mecca when he was airborne. In this enormous kingdom, the size of Western Europe, with no roads, people needed to get around. And he wanted to expedite and facilitate the pilgrimage, which you could do by aircraft. He wanted more pilgrims to come, not just for religious but for financial reasons.

So these interests converged in the creation of an American air base in Dhahran, which is still there.

There began a period of American training of Saudi air crews. The king's price for granting the right to put the air base there, specified in the agreement, was the creation and operation of a national airline for Saudi Arabia.

That assignment fell to TWA. So TWA created what is now Saudi Arabian Airlines, and for more than 30 years TWA seconded pilots, mechanics, schedulers, flight crews, ground personnel, directly to Saudi Arabia. They worked in Jeddah on the TWA payroll and ran what is today the largest airline in the Middle East.

I interviewed an American who was the chief pilot for Saudi Arabian Airlines back in the 1970s. The crew scheduler was an American-and it was quite a job to schedule the crews for Saudi Arabian Airlines, partly because they all had religious considerations; and partly because the female cabin attendants were all foreigners - you couldn't use Saudi women-and they had to provide accommodations for them and find those who could speak Arabic. Some of the pilots were Americans, some were Arabs, some were free-lancers from around the world; some were jet-qualified and some were not when the jet age came.

King Abdul Aziz was never able to get a handle on the fiscal chaos that was exemplified by the 4 million silver coins. After the war, when the oil business resumed and expanded and the trans-Arabian pipeline was built by the Bechtel Corporation of San Francisco, bringing more Americans into the Kingdom, when the revenue began to ramp up seriously after the war, the Saudis, through no fault of their own, had no idea how to manage it. They didn't understand the world of modern finance.

The first American Ambassador, J. Rives Childs, noted at the end of his tenure that "the inability to manage money, the profligacy of some of the princes, the squandering of the money, and the conspicuous consumption were threatening to undermine the legitimacy of the House of Saud." This was in 1948 that he was already talking about undermining the legitimacy of the House of Saud.

And so President Truman, under the Point Four Program, dispatched to Saudi Arabia a gentleman named Arthur Young, who during World War II had been the financial advisor to Chiang Kai-Shek and was very experienced in international finance. Arthur Young took up residence in Jeddah and persuaded the king of the need to establish a central bank, for which he wrote the charter. He created what's known as the Saudi Arabian Monetary Agency-created by an American, its first director was an American-which took over the management of the revenue and expenditures for the Saudi state.

It's called the Saudi Arabian Monetary Agency because the crown prince refused to have it called a bank, because "bank" means charging of interest and that's un-Islamic. The Saudi Arabian Monetary Agency today is probably the most influential and respected central bank in the developing world.

The Saudis had no paper money. One of the things that the Americans running the Saudi Arabian Monetary Agency did was to sneak paper money into the Kingdom. They used a dodge. They created a scrip for the pilgrimage.

Life was tough for the pilgrims in those days, because the conditions were harsh, and when they came from Turkey, and changed their national currency into Saudi money, they got heavy bags of coins that they had to lug around with them. So the Americans created a scrip that was theoretically usable only by pilgrims and only during the time of the pilgrimage.

But within a few months it was being used all around the country because of the convenience of paper money. The King finally assented to the creation of an official Saudi currency. If you look up "pilgrimage script" on the Internet, you will find the website of the Currency Museum in Riyadh where you can see examples. It looks just like paper money, because indeed that's what it turned out to be.

Meanwhile, Aramco was growing like mad after the war. It had an entire town, a community of Americans, and everyone who has ever lived there has marveled about how much it was like a small town in California or west Texas. They had Little League, schools that taught English, bridge clubs, amateur theatricals and all the things that you would find in small-town USA. Up until 1952, they even had alcohol. It was only in the last year of his reign that Abdul Aziz banned the importation of alcohol, for reasons that had nothing to do with the Americans.

There was a certain built-in tension, in that the Saudi Arabs, who were living in palm frond huts as they did the work, could see the way the Americans were living, with their co-ed swimming pools, their fancy classrooms and all their equipment, and it took some time before the Americans grasped the potential for agitation among the underprivileged laborers upon whom they so depended. I describe in the book how it finally took a general strike by the Saudi workers to get the Americans to commit themselves to improve their housing and living conditions and salaries.

But, by and large, the Americans could tell themselves that they were doing good while doing well, because they were pumping enormous resources into the education of Saudi youth, who would be the oil workers of the future.

The King took advantage of the oil company by requiring or forcing it to provide all the public services that he couldn't afford or didn't have the resources to provide throughout the eastern part of the Kingdom. The Americans became the providers of health and education and road-building throughout eastern Saudi Arabia. One of the most interesting people I talked to in researching this book was a woman who lives today in west Texas-she's probably about 80-named Mildred Logan, who first went to Saudi Arabia in 1951 as a young wife with a small daughter. She went there because her husband had been hired by the King to manage the royal farms in Al Kharj, southeast of Riyadh. Al Kharj became familiar to Americans in the 1990s as the site of Prince Sultan Air Base, from which we policed the no-fly zone over Iraq.

But back in the 1950s it was an agricultural community. The Saudis had found water in Al Kharj, subterranean fossil water. It's not renewable-just like the oil-but meanwhile there's plenty of it.

The Saudis had agriculture, but it was primitive. They didn't have mechanization, tractors, pumped irrigation, refrigeration, or modern farm equipment such as incubators. Americans brought all that. Teams of Americans went to Al Kharj to manage the farms.

The Saudis and the oil company had a mutual interest in developing as much fresh food as possible. They were all tired of eating lamb that had been on the high seas from Australia for three weeks. They created huge farms.

Today, stimulated by the Americans who taught the Saudis how to do this, agriculture is the second largest component of GDP in Saudi Arabia, after oil, and is by far the largest employment sector. The Saudis are self-sufficient in many basic agricultural commodities. The world's largest integrated dairy farm is at Al Kharj.

As late as the early 1990s, the Saudis were one of the world's largest exporters of wheat. The Americans finally helped to talk them out of doing that because what that's really doing is exporting water, which they can't afford to do.

You now have agriculture and oil-drilling equipment, road-building, health clinics, schools, and now you get something that every community needs, television. The Americans at Aramco, who were accustomed to having all the comforts of home, had television. It was transmitted through the community. But also, to its credit, the oil company saw the wisdom of making the transmission receivable by people in eastern Saudi Arabia, in Al-Khobar and Dammam. Most of them still didn't have electricity, but as they acquired electricity they began to acquire TVs.

They watched American sit-coms, like "The Wackiest Ship in the Army," which were already dubbed into Arabic to be shown in places like Beirut and Cairo. Inside the compound they did the English-language voices on a radio frequency, so you have to listen to it on the radio while you watched the TV.

John F. Kennedy, who, the record shows, is the only American president who put any serious pressure for domestic reform on the Saudis, made Faisal, then crown prince, later king, an offer. Kennedy said, "We'll provide a national television system for you if you'll abolish slavery," which Faisal did shortly after becoming king, and then the U.S. Army corps of Engineers, along with NBC, and RCA, created the Saudi national television system.

One of the first broadcasters Doug Boyd, whom you can talk to today at the University of Kentucky, is an Arabic-speaking American who was one of the first voices of the national television system in Saudi Arabia.

Much of the early programming, besides the sitcoms, was educational, a lot of it in what they used to call "home economics," because it was the only conduit for education for Saudi women in those days. Saudi women were almost entirely bound to their homes and villages and had no access to schooling until the mid-1950s. And so learning how to do things, and even how to read, came to them through the television which had been provided by the Americans.

There was also a military training component that began after the war. The first American military training mission was set up, and there began an era that continues today, of American training of the Saudi armed forces.

I want to fast-forward now to the late spring of 1974. We had just come through the 1973 Middle East war and we had finally persuaded the Saudis to lift the oil embargo. That was the biggest breach in U.S.-Saudi relations that had ever occurred up to that point.

In the crippled twilight of his presidency, Richard Nixon made a "last hurrah" tour of the Middle East. He went to Cairo and Saudi Arabia, where he received a royal welcome, certainly a better welcome than he would have received anywhere in America at that time.

One of the results of that trip was the creation of what was then a unique institution, called the Saudi Arabia-U.S. Joint Economic Commission. This was a hugely ambitious undertaking to train the Saudi Arabians in the basic nuts-and-bolts operation of government. They had chiefs but no Indians; they had ministries but there was nobody in them. The concept of public service was virtually unknown in Saudi Arabia.

The Ford Foundation had a team in the Kingdom throughout the 1960s trying to teach them how to do that, but they were not very successful. They sent the wrong people, and they always had a built-in conflict about using their Foundation resources in a country that had so much money of its own.

Nixon, under the auspices of the Treasury Department, created the Saudi-U.S. Joint Economic Commission, which from 1975 until the end of the Clinton Administration, seconded American civil servants directly into the offices and agencies of the Saudi bureaucracy to work side-by-side in the next chair with their Saudi counterparts, to teach them how to do such things as compiling a consumer price index, computing inflation rates, and using sniffer dogs at Customs. We even sent a team from the U.S. National Parks Service, which created Saudi Arabia's first-and still only-national park in the mountains of the Asir.

While the oil company was working with the Saudis, gradually the Americans were working their way out of jobs in the oil company, out of jobs at the airline and the farms and all the other institutions. The same process was going on in the government, as Americans went in there for more than 25 years.

Many people don't even know about the Joint U.S. Commission because there was no congressional oversight. Congress didn't appropriate any funds. It was all Saudi money.

The only record that I was able to find of any form of congressional inquiry into the operation of the Joint Commission was an inquiry by the General Accounting Office into the question of whether the Commission in the awarding of contracts discriminated against Jews. Rather to my surprise, the answer was no. The fact is that until Kissinger went there as Secretary of State, there was complete discrimination against Jews.

At the time the oil concession was granted, there were 50 non-Muslims in all of Saudi Arabia, namely the handful of diplomats in the European legations at Jeddah, and the Saudis struck a deal with the Americans at Aramco and the air base which could best be described as "don't ask, don't tell." They knew perfectly well that the Americans were Christians, that clergymen were imported disguised as teachers, that the Americans had services.

The Americans even had a Christmas pageant in which the Saudis had to take part because Americans didn't now how to drive the camels; only the Saudis could to that. Dorothy Thompson witnessed it and wrote about it in Ladies Home Journal. It wasn't a secret.

As long as the Christians didn't preach to the Saudis, or proselytize, or take their message off-base so to speak, the king tolerated their presence in Saudi Arabia. There was always a tension, from the first day that the first American geologists arrived wearing Arab headdress, between the country's need and desire to modernize, and the forces of reaction and xenophobia who didn't want the Infidels-they didn't want Infidel oilmen, or television, or paper money, or any of the things the country has today.

In the Saudi Arabian context, the monarchy has been the force for modernization and updating of the society since the beginning, against the same kind of opposition that exists today, only it's better armed now. Truckloads of explosives weren't readily available 30 to 40 years ago.

The relationship between the U.S. and Saudi Arabia in many ways has been beneficial to both countries, and continues to benefit both. The relationship today is under very deep strain for reasons you are familiar with, beginning with 9/11.

There is a standard line of argument in Saudi Arabia, which is articulated in newspaper columns, which goes like this: "We've read everything you Americans said about the prisoner abuses in Iraq. And what did you say? You said that those abuses were committed by a handful of renegades who aren't reflective of American society. Okay. When we say that about the 9/11 hijackers, why don't you believe us?" It's a pretty good argument.

But 9/11 put enormous strain on the relationship, partly because of what the Saudis consider American overreaction. It's hard to think that there could be an overreaction to 9/11. But what the Saudis saw was that people who are, or should be, our friends in Saudi Arabia were tarred with the same brush as everybody else, and people who had been coming here, doing business and going to school throughout their lives and had committed themselves to our way of life suddenly couldn't get visas.

If you go to Saudi Arabia today, the first thing you will hear is about the guy whose daughter couldn't go to Stanford after she got in because she couldn't get a visa. They're angry and unhappy about it, and it is costing business. We will lose part of the next generation of Saudis because they are going to school in Canada and Australia.

If you go back and read Abdul Aziz's correspondence with Roosevelt and Truman, you'll see that he was deeply, profoundly opposed to the creation of a Jewish state in Palestine. He said, "I'm going to put this aside because we'll never agree about it and you're going to do it, and we have too many other things to do together to allow that to fracture the relationship." That's the way the relationship has been ever since, except during the wars.

That's not the case any more, partly because of the power of television and al-Jazeera. Everyone in Saudi Arabia sees film every day of the bulldozing of Palestinian houses. There's almost no distinction in the pictures between large, angry men in uniform kicking down doors in Iraq and large, angry men in uniform kicking down doors in Palestine. They all look like Americans. This has led to great strain, and you see what's happening in Saudi Arabia now.

On my recent trip, our car stopped at a traffic light at an intersection in Riyadh, and we were approached by Saudi women, in full veil, selling bottled water at the intersection. I had never dreamed that such a thing could happen there. I had never seen that. There is now real poverty; there are shantytowns in Saudi Arabia. Remember that per capita GDP in Saudi Arabia is about one-third of what it as 20 years ago because oil prices have been stagnant and the population has exploded.

The sense of entitlement that the young people grew up with is now quite frustrated, and revolutions come from the frustrations of the lower-middle class, not from the peasantry.

Nevertheless, the country is evolving rapidly and becoming more like a normal country in this sense. There is far more openness and willingness now to talk about societal problems, such as child abuse and genetic birth defects caused by intermarriage and inbreeding, issues which were completely taboo in the past. The Saudis always took the attitude that they had the perfect society, in harmony with the will of Allah, and that we, who had crime and premarital sex, shouldn't tell them how to behave.

And it's readily apparent when you go to the institutions that are working with handicapped children for example, that the driving force behind this evolution is the new generation of educated Saudi women, who are carving out places for themselves in the economy and the work force more and more . They are doing it partly by the power of their own education, their own positions and their own ambition, and they are doing it partly because of a collective realization that Saudi Arabia can no longer afford to keep half of its productive work force out of the workplace.

There is a huge problem in Saudi Arabia of all the work being done by foreigners, at every level, but certainly all the menial jobs. There are an estimated 500,000 foreign men in Saudi Arabia who are there for one purpose, to drive the women. Those men are sucking cash out of the Saudi economy and sending it to the Philippines and Pakistan every day, and the Saudis can't afford it anymore.

Driving per se is not the issue for the women. They'll all tell you that they're happy not to drive in that mess in Riyadh and Jeddah, but it's a symbolic issue.

Recently, the new Minister of Labor, Dr. Ghazi Al-Gosaibi, issued a new set of regulations ensuring that there will be an expanded array of places in the workplace available to women. More and more women are taking up positions, and every bank now has two entrances, one for men and the other for the women who manage their own money and run their own businesses.

JOANNE MYERS: I'd like to open the floor to discussion.

Questions and Answers

QUESTION: Given this long history with the U.S., I find it incredible that none of the receptivity to new ideas and new ways of doing things has found its way into the schools in Saudi Arabia, which exports the most virulently anti-American and anti-Western form of Wahhabism.

Didn't they pee on their own feet by not allowing some degree of openness, as they did in the rest of the society?

THOMAS LIPPMAN: I don't accept the premise that there is no innovation or receptivity to new ideas in the educational system. After all, the Saudi technocrats that you meet today, whether they're at the UN or in business or doing investment banking around the world, are products of that system.

But I generally take your point. The best that can be said for the Saudis is that they now understand their own mistake.

You can't answer this question without going back and reviewing the events of 1979, which was the most traumatic year in modern Saudi history.

First, the Iranian revolution brought to power a theocratic Shiite regime across the Gulf that for the first time challenged the Islamic supremacy of Saudi Arabia. For the first time, the House of Saud found itself outflanked on the political right of the religious spectrum. Remember that the House of Saud has and claims no basis of legitimacy other than the propagation of the faith. That's the law in Saudi Arabia. The state exists to promote, protect and promulgate Islam. So after the Iranian revolution, the Saudis found themselves outflanked on the religious right. They had to shore up their religious credentials.

Then came the peace treaty between Egypt and Israel, in which, for reasons of pan-Arab solidarity, the Saudis found themselves in the unhappy company of the Algerians, the Syrians, and other countries of the so-called rejectionist front in opposition to the peace treaty, and found themselves aligned with the radical secular left. Again it became necessary for them to shore up their religious credentials.

Next came the episode of the radical takeover of the Great Mosque in Mecca [1979]. There could be no greater challenge to the credentials of the king, whose title is Custodian of the Two Holy Mosques. It took a couple of weeks of gun battles to end that siege, and again it became necessary for the Kingdom to shore up its religious credentials.

And then, at the end of the year, the Soviet Union invaded Afghanistan, bringing the specter of atheistic communism right into the Muslim heartland, and all the more reinforcing the House of Saud's desire to uphold itself as a pillar of Islam.

While that was happening, King Fahd was preparing himself to become king, as he knew he would in a few years. He had a reputation as a playboy and wastrel in the fleshpots of Beirut that he had to live down, and so it was necessary for Fahd personally to reinforce his Islamic orthodoxy and credentials.

All those forces combined to drive the country into making a bad bargain with the religious conservatives-namely, to give them control of the domestic agenda. It's not all that different from the bargain that the Israeli governments have made with their own religious right.

The Saudi ruler forfeited control of the elementary education agenda, religious education, and university curricula to the forces of reaction that had always been there. The Saudis never used the term "Wahhabism," and I try to keep it out of the discussion, but there is a particularly virulent, retrograde, xenophobic form of religious thinking that is found in large elements of Saudi society even today. Only now, after the onset of domestic terrorism, a collective wake-up call, have the Saudis begun to come to grips with the issue that you just raised.

QUESTION: When I was a graduate student at Oxford, there were several American students there, all graduates of American law schools, who were paid by Aramco to learn Arabic and Islamic law. Does that still go on?

THOMAS LIPPMAN: No, much less now, because Aramco is fully Arabized. Aramco was much more than an oil company. Aramco was oil company, government, public service provider, and embassy. Aramco made it its business to know as much as possible about every aspect of Saudi life because that's where Aramco's business was.

Aramco was a separate corporation, a subsidiary of four American oil companies. Those companies in all other aspects of their business were competitive with each other, but in Aramco they were joined in a mutual interest. Aramco hired people who made Aramco their careers. They weren't seconded by the oil companies; they worked for Aramco, sometimes for as many as 30 years. There are third-generation Americans working at Aramco now.

So Aramco existed only in Saudi Arabia, where the ways that we take for granted of finding out what was going on did not exist. They didn't have congressional hearings or C-SPAN, and there was no directory-the first directory of Saudi government officials was compiled by Aramco. And so they hired and trained Arabists and specialists in Islamic law and people who knew the language, and they had a whole separate cultural affairs department, because knowledge was power.

QUESTION: The Saudis have an expression that "truth is too valuable a commodity to be wasted on strangers." When I hear statements like "Wahhabism can be over-accentuated," I am reminded of national socialism, the excellent labor policies during the Depression, and then over-accentuating the anti-Semitism of national socialism.

Wahhabism is at the core of everything. It was the beginning of the Devil's bargain that created Saudi Arabia so that the Hashemites could be thrown out from their hereditary position as sharifs of Medina and Mecca and the people could be delivered to the Saudi government that exists today.

Will this end up destroying this government? We can see that Jordan is living on a knife's edge, that an assassination in Pakistan can change everything. But it now looks, particularly with the complicity of the Saudi armed forces in getting the assassins out of Khobar, as if there's a lot of complicity within the Saudi security system and the Saudi armed forces. How delicate are things in this plunging economy, this over-teeming group of young, unstable students and others?

THOMAS LIPPMAN: I was in Iran at the height of the revolution, the winter of 1978-79, and I saw an entire society in insurrectionary ferment. Saudi Arabia is very far from that. Saudis are nonviolent people.

It's useful to go to Saudi Arabia, because the atmosphere there, even today, is considerably less overheated than one would think from reading some of the accounts, in the American media. If you go to Al-Khobar and you stay in the Meridian Hotel, and go out for a walk in the early evening, you see that Saudis act just like anyone else. They're going to the mall with their wives and kids and playing in the park. It's not a society in revolutionary ferment.

So far at least, all accounts from Saudis and others indicate that one of the byproducts, or one of the results, of these periodic attacks, is to alienate the population from the extremists and rally the population to the government-not out of love for the government, but out of abhorrence of events such as have occurred.

If you read the Saudi press now, it's quite amazing, and in some ways frightening, to see that every other day there is a security raid on a safe house for the extremists somewhere in which large quantities of explosives and weapons are found. Where is all that weaponry coming from?

There is so far no indication that any of that weaponry is coming from inside the Saudi military. The Saudi National Guard maintains tight discipline.

I don't know yet what we will find about the alleged complicity of the military in the escape of the Khobar attackers, but I can tell you what the fate of those three gentlemen is, the ones who escaped. They're dead. They haven't lain down yet, but they're dead. The Saudis are now in a no-nonsense mood, unconstrained by the Bill of Rights.

QUESTION: Could you say more about the power of Wahhabism in that society? You talked about women trying to carve a different niche, which I would put at the opposite spectrum. How powerful is Wahhabism? And going forward, projecting a few years, where do you see their society going?

THOMAS LIPPMAN: I object to the use of the term "Wahhabism," which the Saudis themselves never use, for the same reason that they don't call their religion "Mohammedanism." Mohammed was a man and Abdul Wahhab was a man. You don't worship or you don't pray to human beings. "Wahhabism" is a term coined by us for lack of a better one.

Saudi Arabia is a unique society. One of the most difficult things to do in Saudi Arabia is to sort out the religious from the cultural and historic. Whatever may be true about the norms of behavior in Saudi Arabia-no alcohol, women can't drive, women cover their faces-is not true in most other Muslim societies, and therefore you could question whether it's a religious or a cultural practice.

The forces in Saudi Arabia that preach and nurture xenophobia and an atechnological view of the world-the ones who in the most virulent form aspire to be the Taliban-represent an important and durable force in Saudi society. There's a constant state of negotiation between the rules and these forces, some of which are represented by the legitimate, above-board religious authorities, like the Grand Mufti, and some of which are underground now and resorting to illegal methods.

What you get in the process of physical modernization of Saudi Arabia has not been matched by what you would call the intellectual modernization. As one young man said to me, "In your society, beginning with the Industrial Revolution, you went from A to B to C to D. We went from A to D." And so you have huge numbers of Ph.D.s and people who are at home in London, but a society that has evolved much less.

I'm always very conscious that people like me who go there tend to encounter Westernized people who are willing to engage in discussion. We don't know what's going on in the back rooms at 3:00 in the morning. Retrograde, almost fascist-like, forces have definitely been permitted to perpetuate themselves in that society.

Those forces will not prevail, because the reaction against them is very strong. The Saudis will say in reflective moments that one reason for the increasing violence against the soft targets in Saudi Arabia is that the violent extremists have not gained any political traction in the society at large. That still appears to be the case.

That doesn't mean that they will sexually integrate the classrooms in the universities anytime soon. If you go to the most modern shopping mall in Saudi Arabia, it looks entirely American, except for the veiled women. If you go to the food court, there's a McDonald's, a Pizza Hut and a Burger King. You come up and order your food. Each of the counters has a divider-men on one side, women and families on the other. It's almost a meaningless distinction because they're face-to-face over this divider, but it maintains an element of the way they want to run their country. To abolish it would be to create a political irritant that the monarch doesn't need to create.

Often if you ask the Saudis or press them to do certain things that are more congenial to us, that's all the more reason for them not to do it, because they can't appear to be doing it at our behest.

QUESTION: King Fahd is very ill, and you have the two princes. One is very much more pro-reactionary, or "Wahhabi," and the other is a Western-oriented prince. Where does the Kingdom go once King Fahd passes?

THOMAS LIPPMAN: King Fahd has effectively not governed since the mid-1990s when he had an incapacitating stroke, and so the crown prince, whose official title is First Deputy Prime Minister, is Abdullah. The next in line is Prince Sultan, the Defense Minister. Prince Sultan is, unlike Abdullah, a full brother of King Fahd, one of the so-called Sudairi Seven.

Both Abdullah and Sultan are now in their eighties, and there is no clear line of succession beyond them. So if you think of Abdullah and Sultan as Andropov and Chernenko, then you ask yourself, "Who is Gorbachev?" We don't know.

Some people think that the next in line of succession would be Prince Salman, the Governor of Riyadh, who is the youngest of the so-called Sudairi Seven, a son of the founding King, a full brother of the current King, but about 15 years younger, so that he presumably could be a bridge to the next generation.

The real question is the next generation. Many of the most senior princes-including King Fahd himself; Abdullah; Sultan; Salman; Prince Nayef, the Interior Minister-have sons who are busy jockeying for position and carving out pieces of the pie for themselves. Abdullah's son, Prince Miteb, for example, is his designated successor as Director of the National Guard.

Remember, though, that the history of the family has been one of shaping up in their joint interest when they had to. It took them ten years to get rid of King Saud, but they did it without bloodshed, to the benefit of the Kingdom.

There are probably only about eight people in the world who know which way this will go, and I'm not one of them.