U.S.-Saudi Arabia Relations

U.S. President Donald J. Trump walks with Saudi King Salman at a summit in Riyadh. Jonathan Ernst/Reuters

Relations between the two countries, long bound by common interests in oil and security, have strained over what some analysts see as a more assertive Saudi foreign policy.

Last updated December 7, 2018

U.S. President Donald J. Trump walks with Saudi King Salman at a summit in Riyadh. Jonathan Ernst/Reuters
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The U.S.-Saudi Arabia alliance is built on decades of security cooperation and strong business ties dominated by U.S. interests in Saudi oil. The relationship has survived severe challenges, including the 1973 oil embargo and 9/11 attacks, in which fifteen of the nineteen passenger jet hijackers were Saudi citizens. Successive U.S. administrations have held that Saudi Arabia is a critical strategic partner in the region.

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Relations between the two countries have grown especially warm under U.S. President Donald J. Trump and Saudi de facto leader Mohammed bin Salman, who was elevated to crown prince in mid-2017. Both have ramped up efforts to counter Iran, Saudi Arabia’s main regional rival. However, recent actions under the crown prince’s leadership, particularly the killing of journalist Jamal Khashoggi, are posing new strains on the alliance, as many members of the U.S. Congress have called for punishing Riyadh and reassessing the relationship.

Seventy-Year Alliance

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The Kingdom of Saudi Arabia, founded in 1932, traces its roots to an alliance between the Saud family and descendants of religious cleric Sheikh Mohammed Ibn Abdul Wahab, who espoused conservative Sunni jurisprudence. This pact has endured for centuries, influencing the country’s domestic and foreign policy. Saudi authorities enforce religious restrictions, denying women rights they enjoy in Western democracies, and the government promotes its interpretation of sharia, or Islamic law, by funding religious schools around the world. Though it has recently lifted some restrictions, including a ban on women drivers, human rights groups say rights abuses persist.

The United States, first through its oil industry and then through government contacts, established a relationship with Saudi Arabia’s founder, King Abdulaziz Ibn Saud, and his successors that evolved into a close alliance despite a stark clash in values. U.S. businesses have been involved in Saudi Arabia’s oil industry since 1933, when the Standard Oil Company of California (now Chevron) won a sixty-year concession to explore eastern Saudi Arabia. It made its first oil discovery there in 1938.

U.S. President Franklin D. Roosevelt recognized the oil discovery’s strategic nature. His meeting with King Abdulaziz aboard the USS Quincy in Egypt in 1945 solidified the relationship. Saudi Arabia was officially neutral during World War II but allowed the Allies to use its airspace.

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Oil

Standard Oil and the Texas Oil Company (Texaco) formed a partnership in Saudi Arabia in 1936 and together founded the Arabian American Oil Company, or Aramco, in 1944; the consortium later expanded to include what would later become Exxon and Mobil, helping Saudi Arabia become one of the world’s largest oil exporters. (The United States is expected to soon overtake Saudi Arabia as the top exporter.) Saudi Arabia gradually bought out foreign shareholders, and since 1980, the company, now known as Saudi Aramco, has been wholly government owned. U.S. companies Chevron, Dow Chemical, and ExxonMobil still have refining and petrochemical ventures in Saudi Arabia.

Saudi Arabia’s proven crude oil reserves are among the largest in the world. Its oil production averaged 10.7 million barrels a day, of which 7.43 million were exported, in September 2018, according to the Joint Organizations Data Initiative, which compiles information about global energy production. The scale of the kingdom’s oil output and its founding role in the oil cartel Organization of Petroleum Exporting Countries (OPEC) gives it great influence over energy markets; it has played a “central banker” role, adjusting its oil production levels to stabilize global oil prices. Protecting Saudi Arabia and other Persian Gulf producers has been a cornerstone of U.S. foreign policy for decades.

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Saudi Arabia

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OPEC has tried to steer oil markets since its formation in 1961, often directly affecting U.S. consumers. In 1973, Saudi Arabia embargoed sales of its oil to the United States in response to U.S. support for the Israeli military in its war against Arab states. In the 1980s, Saudi Arabia led OPEC in a price war to knock out competition from non-OPEC producers; the kingdom’s ability to quickly boost production caused oil prices to plummet by more than 60 percent over a six-month period. The drop severely hurt the Soviet Union’s oil revenues in the years before its collapse.

Balancing the oil market, or making the price “fair” [PDF] for both producers and consumers, is the stated goal of Riyadh’s energy policy. However, more recently, the kingdom has manipulated oil prices to try to keep U.S. shale from becoming a viable competitor in the global market. In 2014, facing a glut in supply, Saudi Arabia and OPEC once again faced calls to curb production. But the Saudi oil minister at the time, Ali al-Naimi, persuaded OPEC to keep pumping to force high-cost producers—those exploiting shale, oil sands, and deep-sea resources—to reduce their output. Another Saudi aim was to undercut Iran’s economy. The policy also put heightened pressure on Russia, which was sanctioned by the United States and others after its invasion of Crimea.

Oil prices subsequently fell to record lows of around $35 a barrel, and in a late 2016 reversal, Saudi Arabia, along with Russia, pressed OPEC members and other states to collectively curb their production. The six-month agreement, which went into effect in January 2017, was largely honored, defying some analysts’ expectations. OPEC continued to reduce its collective output, and by fall 2018 prices topped $80 a barrel. However, following U.S. pressure, Saudi Arabia boosted its supply toward the end of the year amid declines in exports from Venezuela, suffering an economic crisis, and Iran, hit with new U.S. sanctions.

Defense and Counterterrorism

Providing security for the oil-rich Persian Gulf region has been a U.S. priority since World War II. U.S. companies were responsible for much of the oil produced in the region through the 1970s, and even as Saudi Arabia nationalized its oil industry at the end of that decade, it remained an important U.S. partner in the Cold War. The United States had for many years relied on Iran, under the rule of the shah, as part of a “twin pillar” policy of stabilizing the region. However, Iran’s 1979 Islamic Revolution upended that approach, leaving Saudi Arabia as the primary U.S. ally in the region for nearly four decades.

U.S.-Saudi military cooperation peaked in the first Gulf War, when in 1991 a U.S.-led coalition expelled Iraqi forces from Kuwait. More than half a million U.S. troops flooded into the region, with many based in Saudi Arabia. The presence of U.S. soldiers drew ire from Saudi conservatives and reinforced arguments that the elite was too accommodating to Western and non-Muslim interests.

The United States, Saudi Arabia, and Pakistan supported the resistance to the Soviet occupation of Afghanistan, which lasted from 1979 to 1989. Cash and weapons flowed to the Afghan jihad, which attracted thousands of Sunni Muslims from the Middle East and North Africa. Saudi-born Osama bin Laden, son of the founder of the largest construction company in Saudi Arabia, joined the jihad in the 1980s and recruited Saudi fighters.

Bin Laden returned to Saudi Arabia in 1990 with close links to the kingdom’s intelligence officials. But his opposition to U.S. troops in the Middle East put him at odds with the royal family, which welcomed the U.S. forces that had driven Saddam Hussein’s army out of Kuwait. Bin Laden, who would found al-Qaeda, left the country by early 1992 and was stripped of citizenship in 1994. From his new base in Afghanistan, where he was protected by the new Taliban leadership, bin Laden issued a fatwa against “Americans occupying the land of the two holy mosques” [PDF], referring to the Saudi cities of Mecca and Medina, in 1996.

Following the 9/11 attacks, a wave of popular anti-Saudi sentiment in the United States damaged relations between the countries. The George W. Bush administration’s omission of twenty-eight pages from the 9/11 Commission Report fueled speculation that the U.S. government was covering up evidence that Saudi officials were complicit in the attacks. In 2016, the U.S. Congress passed legislation, over President Barack Obama’s veto and Saudi threats of economic retaliation, that allows the families of 9/11 victims to sue the kingdom, an exception to the principle of sovereign immunity. Some legal scholars, however, say that plaintiffs would likely be unable to collect on any damages.

Saudi Arabia is the top destination for U.S. arms, with U.S. defense sales to the kingdom totaling close to $90 billion since 1950, according to the Pentagon. President Trump has encouraged such deals, arguing that they create half a million American jobs; several major defense firms have made lower projections. During his May 2017 trip to the kingdom, Trump signed a series of arms deals expected to total some $350 billion over a decade. According to the arms researcher SIPRI, Saudi Arabia’s total arms imports were almost eighteen times greater [PDF] in 2017 than they were a decade earlier.

Divergence and Realignment

U.S.-Saudi Arabia relations have never been in complete harmony. Terrorism financing, the export of the kingdom’s interpretation of Islam, human rights abuses, and the lack of democratic representation, as documented annually by the State Department, have all caused friction.

Although historically the United States and Saudi Arabia have had the common objectives of regional stability and containing Iran, they differed on core issues during the Obama administration. Saudi Arabia was dismayed by the lack of U.S. support for ousted Egyptian President Hosni Mubarak and that it was not included in initial negotiations on Iran’s nuclear program, which were conducted in secret in Oman in 2013. Saudi leadership also chafed at President Obama’s vision that the kingdom “share the neighborhood” with Iran.

The Israeli-Palestinian conflict has been a source of contention from early days. During the second intifada (2000–2005), Riyadh proposed the Arab Peace Initiative, under which Arab countries would normalize relations with Israel in exchange for its withdrawal from the occupied Palestinian territories and a “just solution” for Palestinian refugees. Elements of the initiative were adopted by the Bush and Obama administrations. Many Arab states have criticized the Trump administration’s more outright support of Israel. The Saudi royal court denounced the U.S. decision in 2018 to recognize Jerusalem as Israel’s capital. As Israeli-Gulf ties, particularly intelligence cooperation, have strengthened over mutual enmity toward Iran, the Trump administration hopes that Saudi Arabia will push the Palestinians to take part in a U.S.-led peace process.

War in Yemen

Mohammed bin Salman launched an intervention in Yemen’s civil war in 2015, while he served as defense minister, marking a shift to a more aggressive Saudi posture in the region. The Obama administration provided Saudi Arabia with arms, intelligence, and aerial refueling to prosecute the campaign against Houthi rebels, who are supported by Iran, but there were underlying disagreements between U.S. and Saudi policymakers. The Obama administration, in its final months, suspended the sale of precision-guided missiles to Saudi Arabia amid high levels of civilian casualties. The Trump administration has reversed this.

Some U.S. lawmakers have sought to block portions of arms sales and U.S. participation in the war. Congress has required that the secretary of state certify the coalition is taking sufficient action to mitigate harm to civilians to continue military support. At a September 2018 CFR event, Saudi Minister of Foreign Affairs Adel al-Jubeir defended the intervention, saying that “this is a war that was imposed on us.” In November, as congressional pressure mounted, the Trump administration ended refueling operations for coalition aircraft, after consultation with Riyadh.

A New Heir to the Throne

King Salman appointed bin Salman as crown prince in June 2017. Bin Salman had already launched his Vision 2030 initiative, which aims to diversify the Saudi economy and boost foreign investment. The crown prince consolidated his control of military and security agencies, disbanding longstanding patronage networks and quashing potential rivals in the royal family. Within months of his appointment, the heir apparent drew widespread criticism for launching a regional blockade of Qatar and ordering a corruption crackdown in which dozens of Saudi elites were arrested and detained without formal charges. Amid the shake-up, Lebanese Prime Minister Saad Hariri was summoned to Riyadh, where he resigned under apparent pressure. (He withdrew the resignation upon his return to Lebanon.) Arrests of prominent religious and political activists, including dissidents, have prompted human rights advocates to criticize the country’s leadership.

The Trump administration has generally embraced the new Saudi leadership. Saudi actions in 2018, however, brought to the fore questions about U.S. support for the kingdom. Late this year, U.S. lawmakers and human rights groups called on the administration to penalize Riyadh for the murder of Saudi journalist and Washington Post columnist Jamal Khashoggi in Saudi Arabia’s Istanbul consulate. In November, the U.S. Treasury Department levied sanctions against seventeen Saudi officials suspected of being involved. However, President Trump dismissed proposals to cut arms sales to the kingdom and backed bin Salman’s assertions that he did not order the killing, despite the reported conclusions of the CIA.

“The idea that the crown prince himself and Saudi Arabia were assets to the United States was entirely aspirational. In practice, the Saudis have been nothing but a headache,” wrote CFR’s Steven A. Cook in Foreign Policy.

Financial Ties

Saudi government officials and businessmen, both royals and commoners, have deep ties to the United States that extend beyond oil to finance and Silicon Valley. Saudi ministers, including those of finance and petroleum, have degrees from U.S. universities. Prince Alwaleed bin Talal, an alumnus of Syracuse University, is the kingdom’s most famous billionaire investor and owns stakes in Citigroup, Twitter, and Snap. (Bin Talal was detained for nearly three months as part of the 2017 crackdown.) Saudi Arabia’s sovereign wealth fund has stakes in major U.S. tech firms, including Uber and Tesla.

These ties, along with the large number of wealthy families in Saudi Arabia, have long made the country a source of investments in U.S. companies. Many international fundraising “road shows” for private equity firms and hedge funds make stops in Riyadh, or at least visits with the bankers in Dubai who manage money for Saudis. Moreover, many U.S. and European firms have opened or expanded operations in Saudi Arabia since it opened its stock market to foreign investors in 2015. Following Khashoggi’s murder, however, dozens of top business leaders and media sponsors pulled out of a major investment conference for the kingdom. Analysts say that it will be difficult for Saudi Arabia to realize its vision for economic reform without such foreign investment.

Fatimah Alyas contributed to this report.

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Resources

With Saudi Arabia on the verge of a historic leadership change, Bruce Riedel examines the country’s power structures in this Brookings essay.

This Bloomberg Markets article examines Saudi Arabia's oil policy over the past two decades.

This Congressional Research Service report explores U.S.-Saudi relations.

CFR Senior Fellow Philip Gordon outlines the gaps between Saudi Arabia and the United States before the King’s visit to Washington in September 2015.

Defense, trade, energy, education, and environmental ties between the United States and Saudi Arabia are summarized in this White House statement.

 

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