Corporate Meeting

Oil and National Security: U.S.-Middle East Relations

Wednesday, May 29, 2024
David McNew/Getty Images
Speaker

Eni Enrico Mattei Senior Fellow for Middle East and Africa Studies and Director of the International Affairs Fellowship for Tenured International Relations Scholars, Council on Foreign Relations; Author, The End of Ambition: America’s Past, Present, and Future in the Middle East

Presider

Managing Director and Head of Global Commodity Strategy and Middle East and North Africa (MENA) Research, RBC Capital Markets

Corporate Program Virtual Roundtable and Middle East Program

Steven Cook discusses the modern history of U.S. involvement in the Middle East and how economic interests, including secure access to oil reserves, continue to influence U.S. priorities in the region today. In a preview of his forthcoming book The End of Ambition: America’s Past, Present, and Future in the Middle East, he provides his vision for the future of U.S.-Middle East relations and what that could mean for U.S. energy security and global trade.

 

CROFT: Great. Thank you so much. Thank you for joining us for this CFR roundtable on “Oil and National Security.”

We are so thrilled to have Steven Cook with us this morning. Steven, as everyone knows, is the Enrico Mattei senior fellow for Middle East and Africa at the Council on Foreign Relations; author of four books including the fantastic new one, The End of Ambition, the U.S.—America’s Past, Present, and Future in the Middle East. It is out next week.

Steven, we have so much to discuss. I know this is an oil-focused conversation, but I have to go to your central thesis of this book to start with about the delusions that you talk about that have guided U.S. foreign policy in the Middle East for three decades. So could you just, like, briefly go into, like, your thesis about the mistakes and the—you know, all the problem that we’ve had in the Middle East, and what you think the role of the U.S. should actually be in the region?

COOK: Well, thanks very much, Helima. And thanks to everybody who’s joining us this morning. Helima, I really appreciate your time. We’ve been friends for a long time, and I can’t think of anybody better to help guide this conversation.

It’s a—it’s a terrific question, you know, and it gets to where this book comes from. You know, what was the light bulb that went off in my head? And you know, it started with me wondering, you know, why is it that the United States has failed so consistently in the Middle East in recent decades? There had to be some explanation other than the fact that policymakers were ill-informed or stupid or boobs or in the thrall of certain interests.

And as I dug into this question more and more, an intellectual puzzle really emerged. Because as I dug into the history of the U.S. encounter with the Middle East, I discovered that between 1945 and arguably 1991 the United States was actually fairly successful in the Middle East. It was able to advance or defend its interests without a—(off mic)—problem. The kind of catastrophic failures that we’ve seen over the last three decades were absent in that period. Of course there were setbacks—the October 1973 war, the Iranian revolution—but throughout that period our three interests remained intact, and they, in fact, advanced.

And those three interests were: The free flow of energy resources, what in the book I call the prime directive. So throughout 1945 to 1991, the oil flowed.

The second thing that the United States was most concerned with, second core interest of the United States during this period, was helping to ensure Israeli security. That wasn’t something that began, you know, in 1948; it’s something that actually developed slowly over time. The relationship—the contours of the relationship really began with President Kennedy, but took off really after the October 1973 war in terms of the kind of modern military-security relationship that we have with the United States. But a core interest had been helping to ensure Israeli security, and the United States was successful in doing that.

And then the third interest was something kind of sneaky. You know, it was to ensure American primacy in the region so that no country or groups of countries could threat those other two core interests—the free flow of energy resources out of the region or Israeli security.

And like I said, we were largely successful. There were setbacks—as I said, October 1973, where two of those core interests collided; the Iranian revolution. There were a certain set of moral costs associated with supporting regional authoritarians and the United States being complicit in the continued statelessness of the Palestinians. But overall, even despite these setbacks, American interests were secure and even advanced.

Critical year was 1991. And what happened in that—in that period? Well, in February 1991 Saddam Hussein waved the white flag after he had invaded and occupied Kuwait, after the United States conducted basically a hundred-day war. But it was really a hundred-day is a—is an exaggeration. There was a lot of air used, and there was really only a ground campaign for a very few days. And then ten months later the Soviet Union finally collapsed and the United States basically stood alone in the world for the first time with a lot of power. And one of the things that the United States set out to do was to use that power, as I say in the book, to make good things happen.

And here’s the difference. And here’s where we get at my answer to my intellectual puzzle: Why was the United States successful once and a failure thereafter? And between 1945 and 1991, the U.S., its policies were geared towards preventing bad things from happening to our interests. After 1991, we went on this kind of ambition-fueled delusional effort to transform the Middle East in the service of those interests. So we sought Arab-Israeli peace. That’s a good thing. But as part of that, we believed that if we got that peace the authoritarian systems of the region would fall. The post-9/11 freedom agenda, in parallel with the invasion of Iraq, these kinds of things were intended to basically use American power to remake societies. And we failed.

It was a bipartisan effort. The Clinton administration engaged in this. The Bush administration engaged in this. Even the Obama administration got—for all of the president’s sort of realist-tinged worldview, he got very ambitious around the time of the Arab uprisings. And even the JCPOA—the Iran nuclear deal—had a kind of inherent ambition about changing the politics of the region that ultimately failed, not only because President Trump breached the JCPOA but because the Iranians themselves weren’t willing to play ball with that kind of transformative effort that was inherent in the JCPOA.

So that’s really the depths that I plumb in the book. Why were we successful? Why are we now failures? Where does this all come from? Where did our interests come from, and one of those being energy?

CROFT: Well, let’s dive into energy, then, because, Steven, you talk about this being a core U.S. foreign policy for decades to protect the free flow of energy from the region. That really seemed to change, though, on September 14, 2019. We had the Carter doctrine, which you speak a lot about in your book, but then we sort of walked away from that. So, A, you know, talk us through, like, energy and the foreign policy component of the United States. But then, what do you think has led to this pivot in terms of essentially saying, you know what, the Middle East, when it comes to protecting your energy, not a core priority for us anymore.

COOK: Right. Right. I mean, the history is quite long and quite—and fascinating. I mean, you know, every Middle East analyst thinks they know something about energy, but until you write a book that is at least in part about energy you really don’t know about it. And I don’t want to advertise myself as an energy analyst; I’ll leave that to you, Helima. But it was really fascinating how, you know, in the—in the early decades—prior to the early 1970s, America’s interest in oil was commercially based and security in the region was really provided by the Brits. It wasn’t until the 1971 British withdrawal east of Suez that the United States got more deeply involved in providing security in the Gulf.

At the end of that decade of the 1970s, there were a number of setbacks—the Iranian revolution, the hostage crisis, the siege of Mecca, the Soviet invasion of Afghanistan—which led President Carter to articulate the Carter doctrine, which basically said the United States will defend the oilfields of the region from external threats, meaning the Soviet Union. You know, I don’t remember it in as detail as when I read about it, but you know, there was tremendous concern with the Soviets being so close to—in Afghanistan so close to the warm waters of the Gulf that it required the president to articulate what then later became known as the Carter doctrine.

The Carter doctrine then got a corollary to it, and this was an unwritten corollary that was—that was established by the Reagan administration, which was that not only would the United States defend the oilfields of the Gulf from external threats—the Soviet Union—but also internal threats. And it undertook a number of military operations throughout the 1980s, most famously the reflagging operation in Kuwait, which there is an absolutely hilarious story about which—I actually edited it out, but there is this—just this wonderful story about the request coming from the Kuwaiti emir to the Coast Guard office in—the Coast Guard headquarters in Washington, and they mailed him a pamphlet about what it would take for them to reflag. (Laughs.) Just bizarro kind of things. In any event, that’s what—from the time that President Carter articulated the Carter doctrine in January 1980 in his State of the Union address all the way up through September 2019, the Carter doctrine and the Reagan corollary were the basis of American foreign policy in the region in keeping with this core interest of the free flow of energy resources.

And then the Iranians attacked Khurais and Abqaiq, major oil processing facility in Saudi Arabia. Abqaiq you’ve called the mothership.

CROFT: Yes.

COOK: And we didn’t do anything.

CROFT: Right.

COOK: I mean, President Trump said—President Trump basically broke the Carter doctrine. But it wasn’t just President Trump. This was a moment of bipartisan comity in Washington—not comedy ha-ha, comity—C-O-M-I-T-Y—in Washington. The president said, hey, they didn’t attack the United States; they attacked Saudi Arabia. I’m waiting for a call from the Saudis. Democrats said, hey, the Middle East is really not that important any longer. There’s going to be an energy transition, so oil from the oilfields aren’t that important. Oil’s bad, pollutes the environment, We’re having a climate crisis. And we don’t want to defend Crown Prince Mohammed bin Salman. I mean, this was not even a year after the murder of Jamal Khashoggi, and people were all kinds—you know, saying all kinds of things about Mohammed bin Salman; certainly not a nice guy, but not, you know, Saddam Hussein as some people had suggested. And so, together, Republicans and Democrats broke the Carter doctrine. There were a lonely few—myself and two coauthors at least—who said: Aren’t we going to do something about this? This cannot be good to—for something like this to go unanswered. It is only inviting more attacks on oil facilities, on Saudi Arabia, on the region that is potentially disruptive, and we—last we checked—should remain committed to the free flow of energy resources and its twin, the freedom of navigation around the world. And everybody just kind of shrugged their shoulders and moved on from it.

As you have pointed out, the reason why we did that is because the Saudis had a tremendous amount of inventory that they put on world markets almost immediately, so Americans didn’t experience—

CROFT: Didn’t feel it.

COOK: —huge, huge spikes in prices at the gas pump. And that was something that I think we are paying for now. The lesson learned by America’s adversaries in the region was that the United States won’t respond, and that’s precisely what’s happening in the Red Sea, where freedom of navigation—a core global interest of the United States—obviously, lots of energy passes through the Red Sea—is having an impact not necessarily in the United States, but certainly having an impact in Europe. Everything that—and I hate to be right about these things—everything that my two coauthors and I were correct about in that article that we wrote in Foreign Policy magazine saying the president just broke the Carter doctrine, we’re going to all pay for it, has come—has come about.

CROFT: So, Steven, I have two quick follow-ups and then we’re going to open it up to participants. We have so many people on the line, and I know there are going to be a lot of great questions. But I want to ask you as a follow-up to that, like, how much do you think the shale revolution changed the mindset in Washington at the time as well? The fact that the U.S. had become the world’s largest oil and gas producer, how did that shift U.S. foreign policy? The quest for American energy independence or American energy dominance, did that lead people in Washington believe that it really wasn’t necessary to be in the region?

COOK: You know, I sort of nod at that in the book, but I had in a—in a previous version, I recreated a commercial that used to—or two commercials that used to appear on television in Washington. And the reason why I edited it out is I couldn’t find these commercials on YouTube. And I was like, why can’t I find these two commercials? Because they’re, like, bored into my brain. And they’re by two groups, but they’re kind of on opposite ends of the political spectrum. One—and they were basically the same commercial. And they were commercials where, you know, commercial comes in and it’s, like, burning oil derricks in what’s clearly a Middle Eastern—a Middle Eastern setting. And you see, you know, guys in American, you know, desert fatigues, and so on and so forth. And the message is: If we just drill, baby, drill—

CROFT: Yeah.

COOK: —we don’t have to be in the region. And there’s a very similar commercial—and I don’t know; maybe some of the people on the call were behind this or remember this—there was another one that was a very similar kind of take about: Look at the environmental degradation, we don’t have to be there, and so on and so on. So there was this sort of shoehorn thing where people who wanted to drill, baby, drill and people who saw—you know, saw the energy trade as something that was contributing, obviously, to the climate crisis and that we should curtail it, came together and said we shouldn’t be in the Middle East, because being in the Middle East either undermines our—you know, economy and our sovereignty, et cetera, et cetera, because we’re so depended on this unstable region; and the other one says, oh, we’re—you know, we’re polluting the environment as a result.

And so I do think it had an impact on thinking. I think on—people on the Republican side of the aisle said: Hey, we can be energy independent and we don’t need to be in the Middle East. Another anecdote. I remember being on C-SPAN, on Washington Journal one morning, which is probably my favorite television program to do, and we got a call from someone who said, you know: Why do we need to be reliant on Middle Eastern dictators when we have all of this shale in the country? And so that was sort of the argument that people on the right, Republicans were making about it. And then on the left people were saying not drill, baby, drill, but: We don’t need to be in the Middle East. So overall there was this desire to deemphasize the Middle East. And the shale revolution was extraordinarily important in changing the thinking about that, and in fact was—contributed to this idea that the United States can be self-sufficient, can be, you know, separate from the global energy market. And that led to across the board people thinking: Hey, we can deemphasize the Middle East.

I think the aftermath of COVID and the Russian invasion of Ukraine woke people up to the global nature—

CROFT: Right.

COOK: —of the energy markets in ways that I think some of this idea about deemphasizing the Middle East, at least among some of these folks, has diminished.

What I do get at in the book is that sort of both of these arguments and the—and the kind of sunny, rose-colored talk about an energy transition led people to take seriously the idea that we could wean ourselves off of hydrocarbons, which clearly is not going to happen at least in our lifetimes, our children’s lifetimes, our grandchildren’s lifetimes.

CROFT: Hey, Steven, one more thing I wanted to ask you is when we think about, you know, the failure of the U.S. to respond after Abqaiq, like, what lessons did Middle Eastern governments take from that? I remember actually being in Kuwait a couple months after Abqaiq and Kuwaiti officials saying, like, if we were invaded again would you come to our assistance? Like, what was—like, has that led to these countries thinking more about other partnerships like China, like Russia? Like, what has been the impact of that decision?

COOK: Yeah. I mean, thanks for the—thanks for the question because there is a big part of the book about that. And we were both in Saudi Arabia recently and we heard a lot about this, that, you know, Abqaiq and Khurais—as long as—as well as a whole list of other things, going back to the invasion of Iraq, the way the United States responded to the Arab uprisings, the way we responded to the civil war in Yemen and the Saudi intervention there, or not responded to provocations from the Iranians in a variety of theaters but especially their proxies firing on Saudi Arabia and the UAE—have all compelled—but Abqaiq and Khurais loom incredibly large, especially for the Saudis, because they believed the calvary would come. It came in August 1990, but it did not come in September 2019. And they really believed that that was going to happen. And they said: Oh my God, we’re—they’d already been kind of getting this vibe, but here was the proof that the calvary wasn’t coming. And so this has led to hedging with the Russians, hedging with the Chinese that had already been in process, but a kind of deepening of relations among our traditional partners in the region with those two countries.

Now, those are two different countries. I mean, the Russians are malevolent. They are now fully aligned with the Iranians. They have nothing much to offer, other than the fact that—of, you know, weaponry. The Egyptians are buying more weaponry from the Russians than they have since the 1970s. Of course, there’s the Russian—getting back to what we’re talking about—the Russian role in OPEC+, which has, you know, led to a certain amount of cooperation between the Saudis and the Russians on supply, and so on and so forth—although they have diverged.

But the real thing—the real issue here is the Chinese and the Chinese role in the region. And I think that it’s clear from what governments have to say, is that no one believes that the Chinese are going to replace the United States. The Chinese don’t want to replace the United States. They don’t think we’re that—they’re not as stupid as we are. They look at what the United States has done over the course of the last thirty years in the Middle East and they see it as a strategic error, one strategic error after another. But we do share an interest with the Chinese in the free flow of energy resources and freedom of navigation. The problem is we are strategic competitors in other places, and they have sought to undercut us on exactly that, freedom of navigation. Look at what they’ve done in the Red Sea. They haven’t helped. They have secured their own passage while leaving others to the mercies of the Houthis and their Iranian allies.

But nevertheless, the Saudis, the Emiratis, others have sought to exploit the differences been the United States and China to their advantage. The Chinese have things to offer the United States—offer these countries that the United States doesn’t in terms of financing infrastructure development. Now, a lot of that has to do with the fact that state-owned companies in China can offer better terms, but what these governments say is don’t harangue us about our relationship with the Chinese if you don’t have anything to offer us, if you don’t have the technology that we’re getting from the Chinese, if you can’t do the things for us. And certainly don’t harangue us about democracy and change in the region. One of the things they like about the Chinese is that they don’t harangue these governments about it, and we tend to—we tend to do that.

So it’s—our inaction, our—the constant patter about the Middle East not being important, the constant patter about political change, the pivot—quote/unquote, the “pivot to Asia,” the JCPOA, all of these things have compelled our traditional partners in the region to explore their relations with other big powers.

CROFT: OK. We’re going to queue it up for questions. But as people are getting their questions together, very last one for me: What is the status of the U.S.-Saudi negotiations over a grand bargain? Like, we were just in Saudi. They were like, it’s kind of a now-or-never moment.

COOK: Right.

CROFT: Real questions about is there an Israel normalization component. Does this—is there a plan B without Israel normalization? Like, where are we on this U.S.-Saudi deal?

COOK: Yeah. I mean, every week we seem we’re getting, you know—when we were there, the final drafts. That was late April.

CROFT: Yes.

COOK: The final drafts are coming. And then two weeks later, we’re at the semi-final drafts. And so on and so—I mean, this is a very big deal. But it goes back to what we were just talking about, and this is the Biden administration’s effort to outmaneuver the Chinese in the region by securing a relationship with the Saudis that will essentially keep the Chinese at arm’s length. As the Saudis said to both of us, we’re not going to give up our relationship with the Chinese. But this security pact—and it’s a security pact plus. There’s a whole host of things that come with it other than an American security guarantee for Saudi Arabia.

I think that the idea that this would be wrapped around a normalization with Israel, prior to October 7 that made a lot of sense. I’m not sure that it would have—what I say is I—I have lots of questions about it. But if I was sitting next to the president in September 2023 and he asked me do you think we should do that, I was like, it’s a pretty good bet that if you get the Saudis to normalize with the Israelis and you wrap that around a security pact, members of the Senate will hold their noses and go for the security pact. I no longer think that that’s the case. I think that Israel is quite unpopular within the Democratic caucus in the Senate. And I think that for other reasons our plan B, which is to just have a security pact with Saudi Arabia, should be our plan A.

I think inviting Israel into the relationship has distinct disadvantages and will impact negatively the U.S.-Saudi relationship in the same way that the trilateral logic of the bilateral Egypt-U.S. relationship is impacted by the quality of Israel-Egypt relations. And I think that that pattern will play itself out again, even if there are safeguards—even if there are safeguards against it in any of these agreements.

So I think, look, if Saudi Arabia is important, and it is critical for us to outmaneuver the Chinese in the Gulf, and one of the ways to do that is by signing a security pact, then the Biden administration should go and make the case to the Senate. Why have this kind of—you know, let’s have a bilateral agreement. We’re always trying to do these things too—it’s too hard. I call it the iron lotus of agreements. The JCPOA was like that. And the—you have to be a guy my age to understand the reference to the iron lotus. I’ll tell—I’ll tell people offline what that references. Maybe some people get it. And it’s the same thing with the Saudi normalization thing. I think that we will eventually come to an agreement. Whether the Senate goes for it or not really is an open question. I have my doubts whether we’re going to see this before the election.

CROFT: OK. Well, that is a fantastic overview. And I would point everyone to your fantastic Foreign Policy magazine piece on this very issue as well that you wrote about a month ago.

So, moderator, let’s open it up for questions. Do we have a written question or somebody on the line?

OPERATOR: (Gives queuing instructions.)

We will take our first question as a written question: Although this an oil-focused meeting, what do you think the endgame is in Israel? Do you see some sort of resolution within the next year?

COOK: Well, it was so nice to talk about something other than the war in Gaza for a few minutes, Halima. No, no, no, I appreciate the question and I realize it’s—it is very, very important.

This morning, the Israeli national security advisor announced that people should expect that the IDF could be operating at a very significant tempo in Gaza through the end of 2024. This is a(n) Israeli military doctrine-busting event. Israel always—has always planned to fight short, devastating wars on an enemy’s territory, and they are fighting a devastating war on an enemy’s territory but it is a prolonged conflict. They have never fought for eight months, and now they’re saying it’s going to go on for longer than a year.

In terms of a resolution, I think that where the Biden administration is going on this with its day-after plans of a revitalized Palestinian Authority to extends its administration from Ramallah in the West Bank to Gaza in a day-after scenario, and then a credible time-limited process towards a Palestinian state, is actually not learning the lessons of the last thirty years that I point out in the book. I think that the politics are not aligned for any of those things to happen, and the United States is actually pursuing an agenda that is totally unrealistic, is transformative in nature, when it should be looking at the world as it is, not the way we want it to be. And as it is, a real danger right now is that when the Israelis finish those military operations or even before they finish those military operations, that Israelis start to resettle the Gaza Strip.

Almost 23 percent of Israelis polled support resettling the Gaza Strip. That’s a huge number of people. And the right in Israel that opposed withdrawal from the Gaza Strip in 2005 and 2006 now has a more potent argument about resettling the Gaza Strip than they did during the withdrawal. Everything that they predicted in 2005 would happen has actually happened. And what I think the United States should be focused on rather than some airy-fairy two-state solution—which I think is never going to happen—it should work on preventing the ethnic cleansing of the Gaza Strip by the radical right in Israel with the support of a government that is based on and supported by, basically, the settler movement. That’s not a political statement; that’s just a fact. And there are elements within the government who are deeply supportive of it. There was a rally of tens of thousands of Israelis calling for the resettlement in the Gaza Strip, and there were government ministers there. That’s what I think the United States should be doing, not trying to maneuver Mahmoud Abbas to do things that he never wanted to do and never will do.

The other thing is the problem with the two-state solution is that the main political actors in Israel and among the Palestinians—the current Israeli government and the right, and Hamas—are all one-staters. I think we tend to forget all these months later that Hamas attacked Israel under the terms of its 1988 covenant, which was to destroy Israel and kill Jews, one-stater. To liberate—when Yahya Sinwar and Mohammed Deif announced that the goal of Operation Al Aqsa Flood was to end the world’s longest occupation, they weren’t talking about liberating the Gaza Strip and the West Bank; they were talking about liberating Palestine from Kiryat Shmona in the north to Eilat in the south and everything in between.

So are you asking me is there a resolution to this conflict? My answer is one of the things I say in the book is not every conflict has a resolution. That’s a horrible thing. Americans have a really hard time with that. But that may, in fact, be the future of this conflict, and we may be returning to some very ugly version of the status quo ante.

CROFT: Steven, can I ask a follow-on to that in terms of, you know, that scenario you laid out in potential sort of resettlement of the Gaza Strip? Like, what does that mean for the Abraham Accords? Does it survive that reality?

COOK: It’s hard to say. I think, you know, the Emiratis and the—the Emiratis have remained steadfast in their commitment to the Abraham Accords, as have the Bahrainis, although the Bahrainis don’t have an ambassador in Manama. And the Moroccan-Israeli relations were really developing in a number of—in a number of areas before October 7. And the Emiratis have said this is a strategic decision to have this agreement with the Israelis. And I think even for the Saudis, I mean, like, you know, we were there and they kept talking about the importance of normalization with Israel in terms of the integration of the region. And in order to fulfill Mohammed bin Salman’s Vision 2030, that integration has to happen.

I have very serious doubts that those agreement survive should the Israelis start settling in the Gaza Strip again. But those people, particularly the core—the Itamar Ben-Gvirs and the Bezalel Smotriches, who together control fourteen seats in the Knesset, which means they have a fairly sizeable following in Israel—they don’t care about normalization. They’re supremacists. They couldn’t care one lick. They care about annexing what they believe to be the land of Israel. And that’s why this is such a dangerous moment, and that’s why I think the administration focusing on, well, let’s move the Israeli system to a place where they can talk about a two-state solution and let’s do the same with the Palestinians, seems hopelessly and delusionally beside the point.

CROFT: Wow.

COOK: Sorry.

CROFT: Alexis? No, I mean, honestly, what I find remarkable about your book is just it’s breathtaking in terms of the realism and the way you kind of lay out these problems, and basically saying we have to take the problems as-is, not as we want them to be.

COOK: You know, I hate to be the hanging judge on these things, but unless we see things clearly and for what they are rather than telling ourselves certain things, we’re never going to be able to prevent those bad things from happening because we’ll—we just won’t be focused on the right things.

CROFT: Alexis, do we have any more questions on the line?

OPERATOR: We will take our next question as a written question: You spoke about growing Chinese investment in the Middle East, investments without preconditions on human rights. Although China’s not poised to replace the U.S. in the region, can you expand on what path forward you see for the U.S. in countering Chinese influence?

COOK: Yeah. Well, one of them is actually this security pact plus that the United States is negotiating with Saudi Arabia. There’s parts of it that, you know, one in terms of, you know, help with civilian nuclear development is very, very important, and that the United States is stepping up there where the Saudis might turn to the Chinese. The other things that the United States—that’s part of this agreement is basically agreements on AI and a whole variety of other technologies that would basically eliminate the Chinese from the Saudi markets in that—in those areas. We began doing that after beating up the Saudis, the Emiratis, the Egyptians, and others about Huawei. We started developing this thing called ORAN in a consortium that would replace it, and I think that was a precursor to it. But now we’re going to drop the hammer if we get this security-plus deal, which basically outmaneuvers the Chinese not only securitywise, but also in commercial areas as well.

But again, the Saudis are not interested in breaking their relations with the Chinese. They see the Chinese as an important interlocutor and an important—an important source of investment and technology, and that’s not going to end. What we need to do and what I talk about in the book is we need to be more discerning where we get upset about things. I’m not sure we should be upset if the—if the—if Chinese contractors are moving dirt in building Neom. Yeah, they outmaneuver our big companies because they can bid on these projects at, you know, a 40 percent discount. I’m not sure we should really worry about them building large infrastructure projects. But we should worry about them getting close to kind of information technology, undersea cables, those kinds of things. It’s going to be really expensive for those countries to rip out what they already have of the Chinese stuff, so they’re—like I said, there needs to be some—a discerning eye looking at where we should put pressure on them to rip out the stuff we don’t like, and—but we better make sure we have some replacement for them.

CROFT: Alexis, do we have another question on the line or written?

OPERATOR: We will take our next question as a written question: You mentioned—

COOK: Everybody’s so shy. Written questions.

CROFT: (Laughs.)

OPERATOR: You mentioned renewables earlier. As the U.S. very gradually moves towards incorporating renewable sources into our energy portfolio, could you speak to how you see the U.S. relationship with Middle East oil producers evolving? How much influence do you see Middle East oil having on U.S. priorities in the region despite our decreasing reliance on it?

COOK: Yeah. And I speak to you as an EV driver. I’m doing my part.

I think that the—and I owe this to my colleague Meghan O’Sullivan and her—and her coauthor, Jason Bordoff, who’ve written extensively about energy transition and how it’s likely to be jagged. There are going to be moments when the markets are—you know, and Saudi Arabia and other oil producers are much more important than they might otherwise be during this long, drawn-out energy transition.

I will point out that the U.S. intelligence community believes with medium confidence that an energy transition will begin in earnest around 2030. And they’re not really, really confident of it because of politics impinging on it. We see that efforts to—in the state where I live, in Maryland, to outlaw internal combustion engines by a certain date. Same thing in California. California would make a huge difference, but there’s a lot of pushback against that. There’s a lot of pushback in moving away from natural gas, and so on and so on. And then so the politics is really impinging on the energy transition, and that also speaks to the kind of jagged nature of it and why oil producers remain important.

But overall, I think the argument is, is that, as I said at the outset, all things petroleum, all things hydrocarbon are going to be part of our lives and the global economy for as long as we can see. I don’t think that we can point to an end date and say, OK, we’re sort of done with this, we don’t need it. And given the fact that the energy markets are global—and please correct me if I’m wrong, Helima—

CROFT: (Laughs.)

COOK: —is that we have an abiding interest in ensuring the free flow of energy resources, whether it’s domestic production, whether it’s production out of the region, the different mix of energy, in order to ensure a healthy global economy, because that’s good for us as well.

So I don’t think we’re going to be able to completely decarbonize. I don’t think we’re going to ever be able to pivot away from the region and say, hey, this region is no longer important to us because we have a greater energy mix than we did—which is a good thing. Believe me, I’m supportive of it. But if you look at what the demand for energy is likely to be even with the United States undergoing a transition, and the jagged nature of this transition, and the uncertain politics around the climate crisis and the energy transition, it strikes me that for the foreseeable future, however you want to define it, we will still want to pursue the prime directive, which is the free flow of energy resources out of the region and the freedom of navigation in the—in the waters in and around the Middle East.

Helima, correct where I was wrong.

CROFT: Or you could just say as long as it’s an important priority for the White House to ensure that retail gasoline prices are below $4 a gallon, then we will still be making the call—

COOK: OK, that’s in the book, but I wanted to be a little more—I wanted to be politer about it. That is in the book. But, like—

CROFT: Yes. Yes. Every administration’s—

COOK: —the present parochial political interests intersect with national interests on that point.

CROFT: Yes. And I wanted to ask you as a little bit of a follow up, is there a potential path for, you know, greater collaboration with the Middle East as they become more focused on their own diversification strategies? Like, one thing that really strikes me when you go to Saudi Arabia or to the UAE is that they have their own plans where they’re going to continue to invest in traditional hydrocarbons but they are the ones actually doing the all of the above, like Saudi building the largest CCUS—carbon capture—facility, what they’re going in terms of—

COOK: You do get the sense—

CROFT: Yes.

COOK: You do get the sense that Washington’s partners in the region are way ahead of Washington in terms of going down that road and are much more serious about it. And there’s a bit about this in the book. I mean, the Emiratis and the United—and the Biden administration have signed this agreement to, you know—to promote the use of alternative energies, but that’s really here in the United States. You know, what could we do in the region? And mine’s more—my take on this is a little more security-focused. It’s—and I focus on water scarcity and why we should be concerned. And I say, look, in the grand scheme of things the Middle East are not huge emitters of greenhouse gases. The problem is here, the problem is in China, and so on and so forth. But there is an adaptability issue, and that’s where the United States can be—can be helpful.

I do think, though, that collaboration on energy transition and alternative energy is an important thing, and it’s an important commercial thing for American companies and American business to be involved in. I would like to see the United States government more focused on questions of adaptability, especially, as I said before, when it comes to water scarcity, because what is the kind of natural adaptation that people pursue when they perceive their environment—you know, when they’re water scarce, is they move. They migrate. And it’s not so much that climate causes conflict, but that adaptability, that effort to move—to move to Europe and other places—creates conflict and friction, and does really, really weird things to politics in places that we have an abiding interest in the stability, prosperity, and democracy of, like Europe.

I mean, we had an experiment with this in 2015 when Syrian refugees, seeking safety in Europe, where the German government took in about a million Syrians. And that really provided a turbo boost to the AfD in Germany, which are—you know, they’re not like a right-nationalist, they’re, like, straight-up Nazis. And we have an abiding interest in preventing that from happening. And as to the extent that we can help adaptation in the region, we might mitigate some of those problems.

But you’re absolutely spot on, Helima. You know, you go to Abu Dhabi, you go to Dubai, you go to Riyadh, and you see how much—how much innovation is underway and how much thinking there is about this.

CROFT: Right.

COOK: I think we can learn from them. Maybe that’s a new book. We can learn from them about the energy transition and innovation in the alternative energy sphere.

CROFT: Excellent.

Alexis, another question?

OPERATOR: We will take our next question as a written question: In recent years, business leaders have wavered on attending Davos in the Desert, but ultimately it still gets a good turnout. How does this summit and U.S. business investment in Saudi more generally impact U.S.-Saudi government relations? What, if any, repercussions would there be if more CEOs opted out this year?

COOK: Yeah. You know, it’s amazing. You know, in the aftermath of the murder of Jamal Khashoggi, people just stayed away in droves and droves and droves. And people have been certainly coming back to Davos in the Desert over years—over the ensuing years. And I think now it is really not an issue. I think people go. The Saudis have money to invest. They want to invest. They believe they have a good story to tell. And I think that the—I don’t—I’m not entirely convinced that the relationship—the government-to-government relationship moves in correlation with the way in which CEOs view whether it’s good PR for them to be photographed in Riyadh at the Davos of the Desert, which is, you know, a prime event that, you know, MBS shows up for.

We have—certainly, it’s not to suggest that, you know, big business is not influential, and so on and so forth, but I think it’s really an optics issue, not a question of not wanting to do business with Saudi Arabia. Saudi Arabia’s a very important country. And it is emerging as the most important country for the United States in the region as Egypt collapses and turns inward, as, you know, Iraq continues to struggle twenty-some-odd years after the U.S. invasion, the Emiratis are too small. So Saudi Arabia is the—is the most important partner for the United States in the region, and I think that that will continue to be the case regardless of whether Saudi Arabia is—Saudi Arabia’s Davos in the Desert is well attended or not.

I’ll point out that even in the darkest days after the murder of Jamal Khashoggi—after all the, like, really bad decisions that the Saudis made starting in 2017, whether it was the embargo on the Qataris; the shakedowns in the Ritz, where Davos in the Desert is actually held; whether it’s the forced resignation of Saad Hariri, the Lebanese prime minister—throughout all of that—and then, of course, the murder of Jamal Khashoggi—U.S.-Saudi relations never really wavered. Security cooperation continued. Intel cooperation continued. The Trump administration wanted to continue in a variety of ways. And I think that the Biden administration came into office determined to, you know, isolate Mohammed bin Salman, but continued to have tight relations with the Saudis. And then eventually, as the Saudis themselves predicted, the president will need the crown prince at some point, Saudi Arabia’s too important, and that’s precisely what happened. And the president had to go to Saudi Arabia and do the fist bump, something he probably wouldn’t have had to do had he been willing to do some other things ahead of time. So I don’t think one thing is going to have an impact on the other.

CROFT: Steven, I remember being at the FII right after the Saudis made a decision to, you know, do the 2 million barrel a day cut with OPEC that got the White House very up in arms, and they were trying to encourage people not to go. What I found so interesting was all those CEOs that basically said it’s too important for our balance sheet to be in Saudi Arabia, so even if the White House isn’t thrilled with us attending we are going.

COOK: And it was—it was a critical moment because it was October 2022, and the White House and its allies in Congress believed this was—this was calculated to have—excuse me—an impact on the midterm elections, which the Saudis said was not the case. You know, pick who you want to believe. But it was—also, it turned out to be—and, Helima, you can—you’re better positioned to explain this than I am—but it turned out to be really a paper cut. There wasn’t actually anything that adversely affected price at the pump or product coming off of the market as a result.

CROFT: What I thought was interesting, going into that meeting a number of analysts who cover the oil market on Wall Street were actually saying that we’ve had a significant drop in oil prices, and this was really designed to sort of put a floor in for prices—

COOK: Right.

CROFT: —as opposed to, like, send it above a hundred (dollars). And so I felt there was a disconnect between how people in the financial markets were looking at the Saudi action and those in Washington. One viewed it through a market lens, the other through a political lens.

COOK: Well, and that brings me back to something that I hinted at at the beginning of this hour, is that, you know, a lot of Middle East analysts and commentators think that they know a lot about the energy market. But you just articulated a very—the very different ways in which the Saudis—the very different ways in which the Saudi cut or the OPEC cut was viewed. The kind of foreign policy analytic community saw it as a—Saudi’s being punitive towards the administration because they preferred another administration, they were angry about the way the president had treated the crown prince; whereas those in—who analyze the industry said, well, wait a second, the Saudis have very expensive plans to do lots of different things, and the price was below where they wanted it to be, and there were other countries that couldn’t make up their quotas, and so they decided to have this cut.

So I think that’s really important, and it’s one of the things that I’ve been trying to get across, again as a non-energy analyst, is for us not to see these things through these very specific political lens but see what the Saudis are doing—this is not an apologia for them—but to see the totality of what they’re doing. It’s not to say that politics isn’t part of it, but also that this is a strategic commodity. This is Saudi Arabia’s—basically, its only strategic commodity, and so it has to be very, very careful with how it leverages the market.

CROFT: One of—I mean, one of the beauties of this book is I think you actually really do bring the sort of energy and foreign policy world together, so I think it’s an outstanding contribution that—

COOK: I hope so.

CROFT: —energy analysts and foreign policy analysts will love.

But, Steven, we are wrapping up our hour together, but I would be remiss if I did not ask one final question on Iran. The Saudi crown prince has accepted an invitation to visit Iran. A lot of the, you know, reasons behind the sort of U.S. push to do a deal with Saudi Arabia had Iran, you know, as one of the key factors. Like, what do you see are the implications of this visit? Where do we think we stand in terms of Iran’s role in the region? So bring us home with just, you know, a couple of your thoughts on Iran right now.

COOK: Let’s go back to where we started. The attacks on Abqaiq and Khurais in 2019 I think convinced the Saudis, as I said before, the cavalry wasn’t coming, so they would have to manage the Iranian threat in a different way. And the way to—they’ve chosen to manage the Iranian threat in a different way is by reestablishing diplomatic relations with the Iranians and maintaining a dialogue. I think the Saudis were very, very clear about that when we were there in late April; that, you know, their attitude was we told you so about the Iranians, we told you so about the Houthis. Now, even though the Iranians haven’t upheld any aspect of the deal that they made with Saudi Arabia under Chinese auspices on the reestablishment of diplomatic relations, we’re going to maintain a dialogue because we feel that if we get in trouble with the Iranians you’re not going to come to our defense, therefore we have to maintain a robust dialogue with them. And that’s precisely what’s going on.

I don’t believe that—you know, the Saudis will say we’re going to invest in this, we’re going to invest in that, whatever. I don’t really see that. I see this as purely a geopolitical move and purely an effort to maintain a dialogue with the Iranians, who the Saudis are convinced remain a threat, to buy themselves time to prepare for such a time when they can effectively respond to the Iranians or there is a new administration that’s willing to take a more—a more proactive and, from their perspective, effective response to Iranian malevolence. They do believe that the only way to manage the Iranians, at least at this moment with this administration, which is intent on applying pressure but from their perspective not enough pressure, that they then have to maintain this dialogue with the Iranians.

CROFT: Well, Steven, this has been a fantastic conversation. I urge everyone on the line to read the book as soon as it comes out, but also follow everything that you write.

COOK: Thank you.

CROFT: You write a regular column for Foreign Policy magazine. You are a regular contributor. I see you on CNN all the time. So I urge everyone to follow everything that you do because you have been such an exceptional voice on all things Middle East and energy. So thank you, Steven Cook.

COOK: Well, thank you, Helima. It’s very, very generous of you. And thank you all for spending some time this morning talking about all things related to the Middle East and energy and otherwise. And you know, if you read the book, that’s great. I’m open; send me questions, send me critiques, send me comments. It’s available now. Or you can get it through your local library. Just—

CROFT: And there will be a June 12 event at the Council on Foreign Relations for your book.

COOK: Yes. Come one, come all.

CROFT: Thank you.

COOK: Thank you. Have a great day, everyone.

CROFT: Bye.

(END)

Top Stories on CFR

 

NATO (North Atlantic Treaty Organization)

The war in Ukraine marks a new era of instability in Europe. Countering Russia’s efforts will require a stronger, more coordinated NATO.

China

After the rise of Chinese power during the 2010s and failed U.S. policies in the Indo-Pacific, the United States should renew the Pivot to Asia and place the region at the center of its grand strategy.*