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Beyond Containment in the Persian Gulf

Author: Rachel Bronson, Former Adjunct Senior Fellow for Middle East Studies
April 1, 2001


George W. Bush's new administration has been dealt a difficult hand in the Middle East. With fighting in the West Bank and Gaza, volatile oil prices, airline hijackings, terrorist threats and attacks, and provocative Iraqi troop movements, the president can be excused if he believes that he will not find his political fortune in that troubled region. If the elder President Bush's efforts in building the Gulf War coalition in 1990 and President Clinton's in mediating the Israeli-Palestinian conflict have come to naught, why should U.S. leaders waste any more time in this endlessly frustrating area? [1]

What the current Middle East turmoil points to, far more clearly than any pundit or analyst could have argued, is the paucity of the Clinton administration's understanding of containment. Persian Gulf states, exasperated with the U.S. approach, are actually rebuilding relations with Iraq. On October 7, 2000, Saudi Arabia requested from the United Nations an opening of a trade route with Iraq. Kuwait and other Gulf states did not object to Iraq's participation in October's Arab Summit. And at the November meeting of the Organization of the Islamic Conference in Doha, Qatar helped Iraq and Kuwait reduce their tensions. What was it that undermined Washington's containment strategy?

A key problem is that the Clinton administration pursued a strategy in the Gulf that was almost entirely reliant on military-to-military relations and did not articulate any positive social, economic, or political vision for the region. In other words, it failed to create local incentives to support U.S. policy the essence of a successful containment strategy. To make matters worse, this military approach was put forward at a time when Gulf states themselves were desperately seeking social and economic solutions to their growing domestic problems. The narrow implementation of containment has been viewed by the United States' Gulf partners as largely irrelevant to their most pressing concerns. The new administration must therefore adopt a broader approach.

Although the policy of containment took its name from the strategy employed by the United States against the Soviets, the current version differs substantially from the original. There was, of course, a central military component to containing the Soviets, as there is to the containment of Iraq and Iran. But Cold War containment included important social and economic components designed to consolidate the support of U.S. partners. Such alliance-maintenance measures have been largely absent from U.S. efforts in the Gulf, where Washington's narrow approach has made the military the sole instrument of American policy. The terrorist attack on the USS Cole demonstrated not just the military's vulnerability, but the importance of broader regional ties.

Despite ten years of active U.S. military presence, the United States has virtually no public support in the Gulf, and Arab partners have lost faith that Washington will help them solve their most urgent problems, many of which require forms of assistance that the U.S. military cannot provide. [2]

Some analysts argue that containment is dead, but it was actually never attempted. President Bush should consider building a true containment strategy in the Gulf one that strengthens partners and weakens adversaries by shifting the focus away from the military and developing a comprehensive vision that promotes a stronger, more cohesive Gulf. The new administration will quickly realize that long-term U.S. interests require support from the members of the Gulf Cooperation Council (GCC) Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). The force posture of the United States heavily depends on these countries, and their location makes them crucial to all future plans in the region. But at the same time, their deep structural problems burgeoning populations, unpredictable economic growth rates, an unstable oil market, domestic debt, outdated education practices, and immense expatriate labor populations are becoming impossible to ignore and could undermine close security relations.

If socioeconomic concerns are not addressed, two scenarios are possible. Revolutionary change is a small but significant possibility, and it would be nightmarish. Leaders desperate to consolidate domestic support might turn against the U.S. military or, conversely, expect U.S. military forces to come to their defense. Radical new governments could force the withdrawal of American troops or even hold hostage the extensive personnel, matériel, and other assets that the United States maintains in the region.

More likely is a scenario in which the continued fracturing of the Desert Storm coalition leads to increasing constraints on U.S. action. Leaders in the region are already facing intensifying pressure from their populations to distance themselves from Washington's Gulf policy because it offers few perceived benefits at considerable cost. The security benefits the United States provides are not evident on a day-to-day basis, but the growing social and economic problems are. Moreover, thousands of Gulf citizens have participated in protests to show support for the Palestinian intifada, but also to voice criticism of their own governments and the United States. To quell the opposition, some Gulf leaders are now pursuing closer ties with Iraq and Iran and distancing themselves from the United States. For its part, Washington has not condemned the protests, believing them to be a necessary vent in response to the Palestinian-Israeli violence, but it is already facing the consequences: U.S. warships have been moved out to sea for protection and are refraining from using the Suez Canal, and embassies have been temporarily closed for security reasons.

The Current U.S. Approach

Before Desert Storm, the minimal American military presence in the Gulf was devoted primarily to local training. U.S. strategic mobility was limited, and the military lacked the pre-positioned assets required to mount a credible defense. Gulf states, mindful of Washington's unwillingness to send sufficiently armed fighter aircraft to Saudi Arabia during the Iran-Iraq War, questioned the strength of the U.S. commitment.

Over the past decade, the United States has cultivated excellent bilateral military ties with each of its Gulf partners. U.S. military officials meet regularly with senior military and political leaders in the region, and the United States conducts joint training exercises with the militaries of all six GCC states. Moreover, the Gulf partners pick up the tab for much of the U.S. military's incremental costs.[3] Saudi Arabia now hosts significant U.S. air assets, Kuwait maintains U.S. Army and Air Force facilities and equipment, and Bahrain is home to the Commander of U.S. Naval Forces Central Command (COMUSNAVCENT), the only military headquarters component in the region. Qatar supports the largest land-based U.S. pre-positioning site in the world and is negotiating with the U.S. Air Force over access to its new airstrip. Oman pre-positions more than $3 billion worth of equipment at the Hormuz choke point. The UAE has significant naval support facilities, offers the only port in the Persian Gulf that can dock an aircraft carrier, and provides more U.S. troops with liberty than any other port in the world. With 11,000 service personnel on land throughout the region and another 15,000 regularly at sea (see Table 1), the U.S. military is now positioned to deal with both a large threat from Iraq and low-level incursions such as the regular Iraqi violations of the no-fly zone, and can also limit Iran's ability to control the important sea lanes of the Persian Gulf.

Shifting Local Concerns

It is ironic that with the end of the Cold War the United States has come to rely more, rather than less, on the military in the conduct of its foreign policy. But continued reliance on the military alone could weaken Washington's influence throughout the Gulf, because leaders there are facing daunting domestic challenges that will require careful management. Even Saudi Arabia's leadership, usually the slowest to acknowledge domestic problems publicly, has recognized the challenges of "coping with our rapidly growing population, meeting the public's demands for services and becoming more economically efficient." [4] Private discussions at the highest level are under way between the United States and its local partners, and American assistance will no doubt be welcome, but only if it involves diplomatic tools more subtle than the armed forces.

At the heart of many of the problems are young and rapidly growing populations. In Saudi Arabia, at least half of the population is fifteen years old or younger; in Oman the figure is 45 percent; in Kuwait 35 percent; in Bahrain 30 percent; U.A.E. 29 percent; and Qatar 26 percent. Working-age populations are growing by about 5 percent each year, and the local economies are unable to absorb new workers rapidly enough. As a result, unemployment is visible to the average Saudi and Kuwaiti for the first time since the oil boom of the 1970s.[5] A recent study published by King Abdulaziz University in Jeddah estimated the Saudi unemployment rate at 27 percent, which in fact probably understates the problem. [6]

Difficulties are compounded by the instability of the oil markets. When oil prices were low in 1998, GCC economies grew by just 1.2 percent. While the International Monetary Fund (IMF) predicts the global growth rate in 2000 to be 4.8 percent, Saudi Arabia is expected to grow by 3.5 percent, and other studies predict that growth in almost all Gulf states will fall below the world average.[7] Perhaps most tellingly, Saudi Arabia’s per capita gross domestic product dropped from $15,500 in 1980 ($2,500 more than the U.S. figure that year) to $6,600 in 1998 ($25,000 less than in the United States). [8]

Attracting foreign direct investment (FDI) is a priority for all of the GCC states, which need capital to fund crucial infrastructure projects.[9] Over the past twenty-five years, Saudi Arabia has drawn only $5 billion in foreign capital, although $139 billion was available worldwide in 1999 alone. [10] A more transparent economic and legal system would help both to encourage FDI and to end the drain on money kept outside the Gulf. According to the World Bank, GCC nationals hold between $150 billion and $200 billion abroad, while other analysts put this number closer to $500 billion.[11] In addition, the large foreign labor pool remits approximately $20 billion per year.[12] Although Gulf states are now reviewing and redrawing domestic laws governing investment, accounting, and adjudication, experts believe the changes are not happening fast enough. For example, Saudi Arabia is opening its multibillion-dollar energy sector, but is unlikely to hit its year-end target for signing memoranda of understanding with big oil firms.[13] Kuwait's privatization efforts remain mired in parliament.

Beyond the problems of weak growth and a shortage of capital, the training Gulf college graduates currently receive is not keeping up with the needs of business. As a result, although unemployment is increasing, firms in the region are hiring thousands of skilled foreign nationals. Each state is now trying to strike a balance between religious training and professional skills, and between traditional rote methods and creative thinking. The GCC recently began encouraging the development of a labor exchange that links training and educational programs throughout the region, and each state has offered incentives to hire local nationals.[14] Saudi Arabia, for instance, has set up a fund to assist, share costs, and give loans to private firms that train and employ Saudis.[15] But training costs are high, and companies are reluctant to invest time and money in employees who are often poached by rival firms. The difficulties are compounded by cultural expectations that make it difficult for a firm to fire a national. Oman provides a good example of the region's problems: although the total expatriate labor force declined in 1998 by 2.3 percent, the number of Omani citizens employed by the public sector increased by 2.6 percent.[16]

To be sure, Gulf states have taken steps to address some problems. Governments are using the windfalls created by high oil prices to pay down external debt and correct structural weaknesses rather than provide free social services and support inefficient industries, as in the past.[17] But as sluggish economic forecasts and weak job growth indicate, the greatest structural flaw of all has yet to be tackled. The local economies (with the notable exception of the UAE) remain undiversified and excessively vulnerable to fluctuations in the price of oil. Their attractive short-term prospects rely on a tenuous and by most estimates unsustainable revenue stream.

New Opposition

It is difficult to predict exactly how the frustration generated by structural inefficiencies will manifest itself, but Gulf leaders are justifiably worried. Senior Saudi planners and members of the royal family have even identified economic problems as a chief national security problem.[18]

To be sure, by traditional measures the region is more stable than it has been for some time. Leadership succession is no longer the pressing concern it was just a few years ago. The speed with which the Qatari and Bahraini transitions occurred was promising, and Crown Prince Abdallah's assumption of power in Saudi Arabia has occurred in all but name. Saudi Arabia is unlikely to face a succession crisis for a decade or more, when the decision will need to be made on how to pass the mantle of leadership from the sons of Abdel Azziz to his grandsons. In the UAE, power is likely to pass seamlessly from Sheikh Zayed to his oldest son, Khalifa, who will himself determine his successor. The transitions in Kuwait and Oman, however, remain unclear. For its part, Iran is also no longer aggressively trying to export Islamic revolution and, particularly under President Mohammed Khatami, has sought to engage its Arab neighbors rather than threaten them.[19]

On the other hand, domestic concerns are breeding a new kind of discontent that will pose problems for U.S. partners in the region. On October 14, 2000, for instance, two Saudis hijacked a Saudi Airlines flight from Jeddah to London, motivated by a chilling array of grievances. Ayish al-Faridi, one of the hijackers, stated, "Saudi people cannot find work and they [the Saudi government] bring in foreigners to protect us."[20] A hijacker was also quoted as saying, "We are just ordinary people and we are calling for the rights of the Saudi people, such as decent education, decent health and other services."[21] Others have used protests against the Israeli-Palestinian confrontation to express concerns about their own domestic problems. As the editor of al-Quds al-Arabi, Abdelbari Atwan, writes:

The Arab armies are not going to fight Israel, of course. Nor are they going to lead [the] process of change within individual Arab countries and if they do it will be change for the worse. For the Arab armies are corrupt, their generals preoccupied with enriching themselves and their relatives from the public purse. Accordingly, it is the downtrodden young generation which has to take upon itself the task of acting to change the ossified status quo, just as their Romanian, Indonesian and Yugoslav counterparts did . . . the Arab world was not ripe for change then [in the early 1990s] as it is now. [22]

Gulf leaders recognize that clashes about Israel, U.S. military bases, and sanctions imposed on Iraq only exacerbate their more immediate domestic problems. The Middle East political analyst Salim Nasser argues that

the fight for Jerusalem pulls all the Arabs together, but behind the [demonstrations] for the holy city there is an expression of real opposition to the regimes. . . . So far the Arab streets may be controllable. But if protests in Palestine continue, it could become a real problem for governments. [23]

Dr. Hassan Nafaa, the chairman of the political science department at Cairo University, warns bluntly that "the situation is becoming more ripe for political upheaval in the Arab countries."[24]

Social dislocation provides fertile ground for radical religious groups. The Algerian civil war was fueled by young, unemployed men who faced limited opportunities for jobs or economic well-being. The Israeli evacuation of southern Lebanon is also noteworthy because it was perceived as the first time that a strategy of violence sustained by religious commitment directly resulted in a political and military victory. "Most of the Islamic groups have lost a lot of credibility in the last decade," notes Rami Khori of the Jordan Times, "but the Islamic groups have all gotten a bit of a boost from the Hizballah in Lebanon."[25] Other evidence suggests radical Islam is on the rise. Last year, a school girl in Kuwait was beaten for dressing immodestly. In November 2000, two members of the Kuwaiti security apparatus were arrested for associating with elements close to Osama bin Laden and abetting a foiled attack on U.S. military assets in northern Kuwait.

Iraq, having recognized that socioeconomic problems in the region can be exploited to destabilize its neighbors, now poses a threat that extends well beyond the military sphere into the political and economic. The attack on the Cole served as a warning not only to the United States, but also to Gulf states that believe Iraq was involved. A report from an Arab security agency noted that the bombing gave the GCC countries concrete reasons to take more seriously the danger posed by Iraq. "Several Gulf countries have discovered that [Iraqi machinations] have gone beyond verbal threats to infiltration attempts by the Iraqi intelligence and suspicious moves by Iraqi agents or agents linked to Iraq on their territories."[26]

The Reticent Americans

Managing domestic difficulties will be a monumental task for regional leaders, and Washington has not been oblivious to these changes or the worries they engender. One senior U.S. official reflected that "there's a very scared group of Arab leaders out there who see the streets moving beyond their control."[27] Unfortunately, while American policy-makers pay lip service to the needs of the Gulf states, U.S. policy remains fixated on bilateral military ties.

Washington has been reluctant to offer a new approach for three reasons. First, current policy is based on the calculation that U.S. national interests are centered on Iran and Iraq. Therefore, any nonmilitary policy focus at best distracts and at worst antagonizes important partners. Changing focus is viewed as too risky a proposition, since accelerating the pace of economic reform could destabilize governments at a time when the United States needs strong and externally focused partners. This logic is exactly backwards. It will become increasingly difficult for local leaders to formulate coherent external strategies if they are overwhelmed by domestic demands for change. A flurry of diplomatic initiatives toward Iraq from Gulf governments, corresponding directly with street protests against Israel, clearly indicated that leaders will not be able to weather domestic challenges without accommodating their foes abroad. Such accommodation will in turn make it more difficult for those leaders to work alongside Washington, especially if U.S. policy toward Iran and Iraq does not change in the short run. By refusing to alter its course, therefore, Washington is likely to confront exactly what it is trying to avoid, namely, social upheaval. Addressing domestic issues will not distract local leaders from dealing resolutely with Iran and Iraq; it will enable them to do so.

A second reason that Washington has not attempted to pursue a regional socioeconomic strategy is that prior multilateral attempts have failed. The Damascus Declaration that aspired to bring together Egypt, Syria, and the Gulf states ultimately went nowhere. The GCC itself has not even overcome its members' suspicions toward each other, leaving them reluctant to work together. American multilateralism, according to this argument, would put American prestige at risk in pursuit of unrealizable goals. But considering the urgency of their looming problems, Gulf leaders may be ready to engage the United States and each other in new ways. It is notable that when the U.S. military has demonstrated high-level commitment and provided leadership, its regional initiatives in the Persian Gulf have attracted favorable responses. Furthermore, Gulf leaders' cooperation with the IMF and the European Union also suggests that a socioeconomic strategy for the entire region could now be successful.

A third reason Washington has been reluctant to make broad nonmilitary proposals is that it is wary of appearing to be a colonial power. The problems Gulf states face are by and large domestically driven and therefore ostensibly outside the province of traditional foreign policy. Any attempt to influence local politics could stir resentment, as did, for example, a trip to Kuwait by former U.S. congressional staffers in early 1993.[28] However, the U.S. foreign policy establishment has long played an active role in devising frameworks for addressing domestic problems in other strategically important regions. During the Cold War, the socioeconomic challenges faced by allies were considered an important target of U.S. policy. George Kennan, the architect of containment, was fully aware of the need to establish institutions that promoted not only the military, but also the economic and social strength of states threatened by the Soviet Union, and he therefore advocated political, military, and economic union in Western Europe. Washington pressured Great Britain to join the developing European economic union rather than the British-Canadian-U.S. trilateral economic arrangement that London preferred.[29]

The Persian Gulf does not need the same level of economic aid that Europe once did, but the United States has done little to address the changing priorities in the Gulf, although it has not ignored them completely. The Clinton administration tended to wait for regional partners to approach it for assistance and then redirect their requests to non-governmental organizations. When possible, it would call for increased transparency, privatization, and adherence to international regulatory standards, and work on a bilateral basis to help each country achieve those goals. The State Department, for instance, helped to attract commerce to the UAE, championed Saudi Arabia's inclusion in the World Trade Organization, and heralded improvements in women's rights and democratic practices throughout the region when they occurred.

Toward a Multilateral Policy

This limited approach, however, will not suffice to handle the deluge of difficulties on the horizon. By contrast, a comprehensive, multilateral socioeconomic strategy would accomplish several important tasks. It would give the lie to accusations that the United States is intentionally sowing division among the Gulf states and in the Arab world more generally. Secondly, it would provide political cover for Gulf leaders who have been unwilling or unable to make the hard decisions that are now imperative. Thirdly, it would help increase the collective economic might of the Gulf, since almost every state on its own is too small to attract the foreign capital it needs. Fourthly, a multilateral approach would strengthen Gulf states' ability to withstand pressures from Iran and Iraq. Lastly, more extensive contacts between the United States and its Gulf partners would help U.S. policy-makers to identify areas where American efforts would be most productive.

A new Gulf strategy will require numerous changes, but also recognition of some geopolitical constants. One of the latter is the enduring importance of Saudi Arabia, the country with the greatest population, largest market, closest relations with the United States, and the most severe problems, which impact all of its neighbors. As one Kuwaiti observer noted, "[W]e have a leader in this region who refuses to lead."[30] That said, the United States now has crucial ties to every Gulf state, and these must not deteriorate as the result of an emphasis on Saudi Arabia.

Charting a new American strategy will clearly require that U.S. policy-makers give Gulf relations a higher priority than they did during most of the 1990s, and they will have to make their commitment unambiguous. Some observers have suggested that the Clinton administration began to appreciate the need for closer coordination with its partners only after Operation Desert Fox in 1998. In general, however, mixed signals from Washington have left U.S. partners uncertain as to the strength of American commitment, interest, and leadership. The Clinton administration occasionally treated Iraq as its highest priority, but then seemed to ignore it in order to pursue other goals. On trips to the region, Secretary of State Madeleine Albright tended to visit only one country, even though every state is crucial to American plans throughout the Middle East. By contrast, Defense Secretary William Cohen made a point of visiting each Gulf partner on each trip. Bill Richardson's 1999 trip to Saudi Arabia was the first by a secretary of energy in over ten years, initially an encouraging sign of a higher profile for the Gulf. Soon afterward, however, the United States used its term as president of the U.N. Security Council to declare "Africa month" at a time when the body was desperately trying to establish a new inspection regime for Iraq.

In a similar vein, contradictory statements from the U.S. Congress in one week of March 2000 were anything but coherent. On March 23, Representative Benjamin A. Gilman (R¦N.Y.), the chairman of the House International Relations Committee, argued that given the administration's lack of attention to Iraq, "it is no wonder that our allies in the region . . . question whether the administration is really serious about its declared policy of removing Saddam from power."[31] One week earlier, however, that same committee had called for sanctions against Saudi Arabia, Kuwait, Qatar, and the UAE in response to high oil prices, and others in Congress argued against U.S. support for rich Gulf monarchies. Obviously, Congress itself is unclear about the importance of those states to U.S. strategy.

A concerted effort by the new administration will be necessary if the entire U.S. government is to convey the message that strong U.S.-Gulf ties are important to the immediate interests of dealing with Iraq and Iran and the long-term interests of ensuring the free flow of oil, freedom of navigation, and regional stability. Once a high-level commitment is made, the White House should build upon the bilateral relations constructed over the past eight years to create a regional socioeconomic policy framework. To date, the State Department has focused on country-specific proposals such as rationalizing privatization, trademark, copyright, patent, and investment laws. While these initiatives should continue, the White House and State Department should also support bolder programs. For example, having recognized the economic challenges the oil-dependent Gulf states face, the IMF is promoting a new regional cooperation program and the European Union is supporting trade talks with the GCC that have been well received. Significantly, the GCC states are exploring regional cooperation and have committed to establishing a customs union among themselves. Missing from the picture are high-level, multilateral initiatives from Washington other than military programs.

To its credit, the U.S. military has taken steps to address local concerns that the American presence is straining unity in the Persian Gulf and ties throughout the Middle East by, for example, promoting the Cooperative Defense Initiative (CDI) and environmental security projects. The CDI, launched in 1998, seeks to develop a security architecture for the region; enhance ties among Egypt, Jordan, and the GCC; provide the Gulf with sophisticated intelligence once largely reserved for Israel; and help the Gulf states develop indigenous responses to an attack involving weapons of mass destruction. It also offers flexible programs for missile defense, including civilian and military training that is structured in a way that allows countries to choose the level of their participation. Although it has yet to be widely implemented, the CDI is a military response to the political complaints long heard from Arabs concerning America's favoritism toward Israel, lack of trust in regional Arab partners, and lack of vision for integrating Gulf policy into a larger regional strategy. A second Pentagon-led multilateral project was a seminar sponsored in spring 2000 to consider issues of regional environmental security and disaster response. In a noteworthy display of interest, all six Gulf states were represented by the chiefs of staff of their armed forces. Such initiatives are important building blocks for better U.S.-Gulf relations and demonstrate that high-level U.S. involvement can bring about significant progress towards multilateral coordination.

Unfortunately, the State Department has not shown similar interest in regional initiatives. The limitations of the current bilateral approach are well illustrated by a recent example from Bahrain. The State Department worked closely with the government of Bahrain to remove it from a watch list of states whose level of intellectual property rights protection does not meet U.S. standards. Since being removed from the list in 1999, it has enjoyed few benefits because its small economy does not provide investors with sufficient opportunities for profit.[32] Meanwhile, the World Trade Organization (WTO) points to the need for Bahrain to revitalize its sluggish foreign investment and growth.[33] Unless others in the region reform their economies similarly, Bahrain and the United States will have achieved a hollow victory.

Washington's response to the Cole attack was emblematic of the flaw inherent in an approach that ignores nonmilitary aspects of cooperation. Although the attack occurred in Yemen, the problem with U.S. policy there is similar to the shortcomings of the U.S. approach to the GCC states. Warships are serving as virtually the only instrument to engage regional partners. To be sure, the Pentagon argued that its de-mining program was also a constructive part of its ties to Yemen. However, no one in Washington was able to point to any parallel social or economic initiatives to build relationships there.[34] In a region already skeptical about the U.S. military presence, forms of engagement that foster a broader array of ties must underpin the role of the military.

Goals of U.S. Policy

Given the host of problems confronting leaders in the Gulf, Washington should have no trouble identifying specific goals for engagement. Moreover, it can be most effective by collaborating with regional and international organizations. The challenges of the emerging customs union among GCC states, educational reform, and volatility in the oil markets are all ripe for constructive American involvement.

High-level commitment to the "producer-consumer oil dialogue" would help address the strains that volatility in the oil market puts on U.S.-Gulf relations. The United States provided little political support to important Gulf partners whose economies were hard hit by the collapse of energy prices in 1998, and went so far as to charge Saudi Arabia with illegally "dumping" its oil on international markets. When oil prices skyrocketed in 2000, hostile comments and signals from Congress and the Department of Energy significantly undercut carefully constructed U.S.-Gulf relations. The United States has traditionally avoided engaging in the producer-consumer dialogue out of fear of appearing to be intervening in the market. But in November 1998, Secretary Richardson decided that although the United States did not accept the premise that managing the market could help eliminate volatility, the dialogue presented worthwhile opportunities for engagement, improved U.S.-Gulf relations, and face-to-face contact. This dialogue is particularly important because it has the full support of oil producers in the Gulf. As one senior Gulf leader argued, "The U.S. must come to the dialogue. It is the biggest market and it is important that we hear U.S. feedback" on energy issues.[35]

One of the key issues that the dialogue must address is improving the transparency of both supply and demand, with measures that stop short of intervening in the market. Without transparency, social and economic planning will remain difficult in states still heavily reliant on oil income. Oil supply and demand will never be completely predictable, of course, but regularized contacts and better systems to predict supply headed to market and demand would nevertheless help Gulf oil producers, and American consumers anticipate coming challenges. If such a relationship had existed in the mid-1990s, when the Gulf states were trying to weather economic crises, U.S.-Gulf relations would not have suffered to the extent that they did. As it was, the United States was perceived as completely insensitive to the Gulf's problems.

The United States should also pursue multilateral education and training initiatives. In its efforts to address environmental security issues, the military has already demonstrated that regional forums can be successful, and there is little question that education is a high priority. Leaders in the public and private sector throughout the Gulf have expressed concern about the shortage of skilled workers, and Saudi Arabia's five-year plan calls for ten new technical colleges and seventeen secondary technical institutes. An ongoing forum that brought instructors and policymakers from the United States and around the globe to discuss strategies for dealing with training and the global economy would be well received. High-level U.S. involvement would demonstrate American concern about a problem that has become a national priority for every one of its partners. Oman's Sultan Qaboos has stated that "the days of traditional education are over. The whole world is focusing on technical and vocational education to meet the needs of the day."[36]

Washington also needs to continue to address trade issues at the regional level. Its bilateral efforts to attract trade to Bahrain and gain membership for Saudi Arabia in the WTO are worthwhile, but must be supplemented by broader programs.[37] Currently, the U.S.-GCC Economic Dialogue clearly merits U.S. support but has had only equivocal involvement from Washington.[38] The dialogue, which aims to coordinate economic efforts within the GCC, has enjoyed limited success and little support from the State Department, which deemed the exercise unproductive and let it slip from its responsibility to the Department of Commerce. But since economic engagement at the regional level is important for the long-term interests of the Gulf and the United States, such disinterest does not bode well for the future. Multilateral efforts are politically important and must be promoted and improved upon by the Bush administration.

The Risks of Engagement

The risks associated with the policy changes called for here are by no means trivial. One of the primary dangers is that multilateral programs could spark hostility among the Gulf states. Although all of them acknowledge Saudi Arabia's role as leader in the region, most of them fear it. If the United States pushes too hard for initiatives that promote Saudi influence, smaller states might seek a counterbalance by means of improved ties to Iran or Iraq.[39] On the other hand, Saudi Arabia will be unlikely to participate unless it is ensured a dominant role.

Another risk is that a more active U.S. role could cause greater instability and attenuate Washington's political influence, because all socioeconomic change entails power redistribution and is thus inherently prone to conflict. Washington could alienate its friends if it fails to appreciate the local dynamics of the issues or if it is perceived as taking the "wrong" side. In Kuwait, for example, an ongoing battle over the privatization of the upstream oil industry has pitted key members of the royal family against the parliamentary opposition. In essence, the argument concerns the control of oil revenue. Will the royal family rake in most of the benefits of privatization and thus minimize parliamentary control, or will oil wealth be distributed more widely, thus bolstering parliamentary influence? Any perception of U.S. meddling could ultimately undermine Washington's ties to key political actors on one or both sides of the dispute.

While these risks are surely considerable, they are outweighed by the benefits of engagement and furthermore can be mitigated by emphasizing multilateralism and collective interests. As the military has shown, the development of regional contacts has made dispute resolution easier and therefore strengthened, not weakened, stability.

The most convincing argument in favor of expanded U.S. involvement, however, is that the Gulf states are all facing similar problems and have acknowledged them. For that reason, the risks to the United States of not pursuing engagement are now greater than those posed by involvement. Gulf leaders' willingness to address their difficulties their own efforts are far ahead of any originating in Washington, provides a perfect opportunity for a larger and broader role that would improve the standing of the United States with leaders and public alike. The United States is well situated to provide assistance to governments whose survival may depend on their ability to cope with socioeconomic difficulties. But if dissatisfied populations can point to the perceived burdens placed on them by the U.S. military but not to any benefits of their governments' partnership, the result could be vigorous domestic opposition and more frequent terrorist attacks that would severely hamper Washington's ability to conduct foreign policy throughout the Middle East.

If the new administration does not believe it has an interest in broadening Gulf policy, it should consider altering its force posture and moving more of its assets from land to sea because the current force posture, in the absence of an accompanying strategy for political engagement, will leave the military increasingly exposed to local threats. A sea-based posture that relies on pre-positioned ships would in fact have many benefits, including increased operational flexibility and a reduced land-based "footprint." But it would also create serious problems and potentially harm long-term American interests. Costs would rise, and U.S. forces would be more vulnerable to mines and to attack at ports that (though perhaps fewer in number) would still be indispensable. Moreover, a reduction in land-based assets could suggest a waning American commitment to its partners at a time when Washington should be seeking to demonstrate the opposite.

The Virtues of Alliance Maintenance

In the Gulf, the tenor of the debate regarding the U.S. military presence has changed markedly over the last two years. When oil prices were low, Washington was blamed for the region's economic problems because it "forced" expensive arms on the region and "demanded" high payments from local governments for stationing American forces in the region.[40] But the recent increase in oil prices brought with it a decrease in hostility toward the presence of American forces. One senior observer noted that the region is "no longer allergic" to the U.S. presence. This shift in perception, and its correspondence to economic conditions, should serve as a warning of things to come if the region's difficulties are not addressed successfully, because, for all the care the military has devoted to improving its regional profile, its efforts could be undermined for reasons unrelated to military planning.

Relying on the military to secure all U.S. interests in the Gulf is neither sufficient nor desirable. Instead, the new administration should return to the idea of alliance maintenance, a broad concept that was vitally important during the Cold War but has surprisingly little currency today. Crucial to that more balanced approach are nonmilitary efforts that coordinate such activities as technical training, energy projects, and economic reforms. Moreover, the Bush administration should act quickly, because support for U.S. policy has been strained by anger over the Israeli-Palestinian crisis. But at the same time, the negative socioeconomic trends threatening the Gulf states have forced their governments to pursue their own reforms, thereby widening, for the time being, the opportunities for a constructive U.S. role.

Leaders in Washington have been, and will no doubt continue to be, preoccupied with the Palestinian-Israeli conflict, Iraq, and Iran. It is time that U.S. priorities reflect the reality that a flexible strategy throughout the Middle East presupposes support in the Gulf, which cannot and must not be taken for granted.

Rachel Bronson is an Olin Fellow for National Security Studies at the Council on Foreign Relations.


[1]The author thanks members of the study group "U.S. Security Policy in the Persian Gulf" cosponsored by the Council on Foreign Relations and James A. Baker III Institute for Public Policy of Rice University. In particular, Ambassador Edward P. Djerejian, the group's chairman, devoted considerable time and provided important guidance. The author also thanks Negar Katirai for her research assistance on this project.

[2]A rare expression of support was published by the Kuwaiti columnist Khalil Ali Haidar, who argued that "we have no interest in seeing the U.S. position weakened in the Gulf or anywhere else, for that can only enhance the Iraqi threat and the prospect of Kuwait once again being subjected to blackmail." See Mid East Mirror (London), Oct. 20, 2000, reprinted from al-Watan, Oct. 20, 2000.

[3]Incremental costs are "operational costs (including personnel related costs) incurred by an activity that would not have been incurred if the operation had not been executed." Department of Defense, Regulation 7000.14R.

[4]Author's interview with Saudi official, Riyadh, July 2000.

[5]Author's interviews, Kuwait and Doha, Jan. 2000.

[6]"Saudi Workers in Private Sector Falls Short," Gulf News, July 9, 2000.

[7]World Economic Outlook (Washington, D.C.: International Monetary Fund, Sept. l, 2000). Although the Economist Intelligence Unit (EIU) predicts a growth rate for Kuwait of 2.8 percent, Kuwait is projecting a $5 billion deficit in the next fiscal year. See "Kuwait Projects Five Billion Dollar Deficit in the Next Nine Months," Agence France-Presse, June 18, 2000. The EIU forecasts a real change in growth in Saudi Arabia of 2.0 percent, falling to 1.7 percent in 2001. Other analysts predict increases as high as 15.0 percent. "Database: Growth Forecasts," EIU Business Middle East, Apr. 16, 2000. The United Nations also expects Gulf states' real GDP growth of 4.32 percent to be below the average of 4.8 percent for developing economies. Africa is expected to grow by 5.0 percent. Economic and Social Commission for Western Asia, Survey of Economic and Social Developments in the ESCWA Region 1999¦2000 (New York: United Nations, 2000), pp. 4, 5, 41. Actual year-end growth rates for 2000 were unavailable at time of writing.

[8]U.S. Commercial Service, Country Commercial Guides for Saudi Arabia (Washington, D.C.: U.S. Department of Commerce, 2000), p. 2.

[9]Gulf states will need to invest at least $100 billion in their power sectors alone. "Gulf States Need $100 bln for Power over 10 Yrs¤Study," Reuters, Nov. 27, 2000.

[10] Saudi American Bank, Saudi Arabia’s New Foreign Investment Law (Riyadh: Saudi American Bank, Apr. 25, 2000).

[11]World Bank, Claiming the Future (Washington, D.C.: World Bank, 1995).

[12] Middle East Department, Financial Systems and Labor Markets in the Gulf Cooperation Council Countries (Washington, D.C.: International Monetary Fund, 1997), p. 38.

[13] "Saudi Energy Opening Likely to Miss End-Year Target," Reuters, Nov. 9, 2000.

[14] Fayrouz Tawfik and Nissar Hoath, "GCC Labour Panel to Be Formed Soon," Gulf News, June 12, 2000. Each state has prodded the private sector to hire local workers instead of foreigners. But by not focusing on the fundamental problems of poor education and limited growth, the programs risk exporting the problems of unemployment and poor training from the public to the private sector.

[15] "Saudi Arabia to Aid Private Firms Employing More Nationals," Reuters, Aug. 15, 2000.

[16] Survey of Economic and Social Developments, p. 37.

[17] Wheat subsidies, an egregious example of economic inefficiency, have notably been reduced. See Ministry of Planning, Kingdom of Saudi Arabia: Achievements of the Development Plans 1390¦1418 (1970¦1998) (Riyadh: Ministry of Planning, n.d.), vol. 16, p. 99.

[18] Author's interview with Saudi official, Riyadh, July 2000. See also Robin Allen, "More Saudis Finding Fewer Jobs," Financial Times, June 23, 2000.

[19] Tensions between Tehran and Abu Dhabi still run deep over their ongoing island dispute.

[20] Faiza Saleh Ambah, "Saudi Dissidents Want U.S. to Leave," Associated Press, Oct. 17, 2000.

[21] Ewen MacAskil, "Ordinary People in Protest over Saudi Rights Abuses," Guardian, Oct. 16, 2000.

[22] Abdelbari Atwan, "Has the Palestinian Revolt Triggered a Region-Wide Anti-American Backlash?" Mid East Mirror, Oct. 12, 2000, emphasis added.

[23] Roula Khalaf, "Arab Regimes Face Test of Nerve over Troubles," Financial Times, Oct. 11, 2000.

[24] Sudarsan Raghavan, "Arab Anger Could Strengthen Militant Islamic Movements," Knight Ridder/Tribune Service, Oct. 25, 2000.

[25] Ibid.

[26] "Report Cites Sources on Iraq's Responsibility for USS Cole Explosion," Foreign Broadcast Information Service¤Near East and South Asia, from al-Watan al-Arabi, Oct. 27, 2000, pp. 16-19.

[27] Robin Wright, "Mideast Crisis Reflects Arabs' Rising Aspirations," Los Angeles Times, Oct. 17, 2000.

[28] Although the visit was not by an official American delegation, it caused enough of a stir that Kuwaitis were still discussing it in 1999. The trip was resented because Kuwait prides itself on being the most democratic country in the region, boasting the only democratically elected parliament in the Gulf. The former staffers seemed unaware of this fact and pushed hard for increased parliamentary powers.

[29] Policy Planning Staff document 23, "Review of Current Trends: U.S. Foreign Policy," Feb. 24, 1948, in Containment: Documents on American Policy and Strategy, 1945¦1950, ed. Thomas H. Etzold and John Lewis Gaddis (New York: Columbia University Press, 1978), p. 114.

[30] Author's interview with Kuwaiti political analyst, Kuwait, Jan. 2000.

[31] Hearing of the House International Relations Committee on U.S. Policy toward Iraq, Federal News Service, Mar. 23, 2000.

[32] Author's interview with a State Department official, Washington, D.C., Apr. 2000. The UAE was also removed from the list (known as USTR 301) in May 2000. Rasha Owais, "U.S. Takes UAE off Piracy Watchlist," Gulf News, May 3, 2000.

[33] "WTO Says Bahrain Needs Fast Reform to Boost Growth," Reuters, Oct. 13, 2000.

[34] The president of Yemen did visit the White House, and First Lady Hillary Rodham Clinton had a trip to Yemen canceled because of security concerns. But no sustained political or economic engagement strategy exists.

[35] Author's interview with Saudi official, Riyadh, Jan. 2000.

[36] Arif Ali, "Qaboos Puts Emphasis on Jobs for Omanis," Gulf News, Nov. 8, 2000.

[37] For a good discussion of the U.S. need to support Saudi WTO admission, see F. Gregory Gause III, "Saudi Arabia Over a Barrel," Foreign Affairs, May/June 2000.

[38] On Oct. 24, 2000, the tenth session of the U.S.-GCC Economic Dialogue was held in Washington, D.C.

[39] Saudi Arabia's dominance has led other Gulf leaders to argue for closer ties between the GCC and Yemen, whose population of 17 million could serve as a counterbalance to Riyadh.

[40] Author's interviews, Mar. 1999 and Jan. 2000.

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