In Addicted to Oil, Elizabeth Shelburne summarizes U.S.-Saudi history before interviewing Robert Baer, a CIA veteran:
The history of U.S. involvement in Saudi Arabia goes back nearly to that nation’s birth. In 1933, a year after the kingdom was declared, the first American oil concession was granted. Over time, U.S. interest in Saudi oil evolved into a company called Aramco, which controlled all of the oil in Saudi Arabia — 25 percent of the world’s total. Aramco was a private company held by four large U.S. oil companies, with immense influence on the U.S. government. (It is now wholly owned by the Saudi government.) Moreover, the relationship between the U.S. and Saudi Arabia extends beyond this private interest — as early as 1943, President Franklin Roosevelt asserted that protecting the kingdom, and its oil, was of vital economic importance to the United States as a whole. The precedent of maintaining a friendly relationship with Saudi Arabia, for both public and private reasons, has remained unchanged in the intervening years.
Baer’s take on Sunni Islam:
We, as a country, not just the CIA, didn’t think that Sunni fundamentalism was all that bad. It helped us defeat Egypt in a large sense, and it helped us in the Yemen civil war in the sixties, and then in Afghanistan. So we were supportive of Sunni fundamentalism, never thinking that once the Russians were run out of Afghanistan the Sunnis would turn on us. It was a failure to see forward to this possibility. It wasn’t just the CIA. It was the CIA, the State Department, the White House, and the American press as well. They all said, “Saudi Arabia is a medieval country, we don’t really need to worry about it, it’s very conservative, it doesn’t change very fast, it’s a mutually beneficial relationship. They pump the oil, they bank our oil, they buy our weapons, it’s all to our advantage.”
U.S.-Saudi relations:
There’s an extremely close relationship between the White House and the king of Saudi Arabia, along with the oil minister and the ambassador. You can call the ambassador up and say, “Look, we’re forecasting a shortage in the world oil market because of speculation. Can you pump more?” In every crisis, the Saudis have come through. Let’s be frank about it — they were our best allies in the Middle East. They banked this oil — 2-3 million barrels — at a very high cost, they never got reimbursed for it, and they were always there. The Iran-Iraq war, they were there. When the Iraqis overran Kuwait, they were there. Strikes in Venezuela, they came through and pumped more oil. They had their own interests, but they also protected our markets as well.
How the royal family divvies up oil money:
It’s all hidden in defense and construction contracts. What has happened is that the price of Saudi oil is really transparent when it’s sold. Aramco has contracts, they sell oil at world prices, and they get reimbursed. It’s part of their budget. Some of their oil is called “political oil” which they give to their allies for free, whether it’s Yemen or Jordan, or at times, Bahrain and even Afghanistan and the Taliban. Where the money is stolen — and I call it stolen; the Saudis might not — is in construction and defense contracts. You pay commissions of 20-40 percent for arms deals. That’s divided among senior princes in the royal family and commission agents. The same thing happens in construction. When they rebuilt Mecca and Medina, they were overpaying for projects and the money went into the royal family, into the bin Laden family, into the bin Mahfouz family. I mean, what’s a commission? If you get 40 percent on a deal, it seems like bribery to me. And the royal family divides these commissions up, which supplements money they get in their allowances.