Another Perspective

When a President Comes to Visit

The case of the Saudis' 300,000 additional barrels.

By 5.20.08

About six months ago Saudi oil authorities, sensing pressure developing for them to increase production, began once again to warn of their fears of over-pressed extraction schedules. Increased pumping operations, they complained, would place a stress on their existing marketable reserves. A purely minor concern, it would seem, for surely they have more than enough reserves and production capacity.

This same argument was dutifully repeated to President George W. Bush during his meetings last Friday with his "good friend," King Abdullah ibn Abd-el Azziz al Saud. In recent weeks this theme has attained the character of a mantra aimed at deflecting U.S. and other nations' desire for lower oil prices. The Saudis have been repeatedly reminded of their claim last year that they would be increasing their production capability 40 percent by 2009.

While the American oil industry speaks glowingly of the growth of technical competence of Saudi managers, the political world knows only the conspicuous consistency of the Saudi Royal Family's insatiable hunger for wealth. Accompanying this, however, is the royals' fear that their sole natural resource is being too rapidly diminished -- despite the fact that Saudi Arabia's known oil reserves are by far the largest in the world.

King Abdullah thirty years ago, when he was in his 50s and commander of the tribal-based Saudi National Guard, maneuvered against his half-brother Crown Prince Fahd to maintain the essentially feudal nature of rule rather than proceed with the stronger parliamentary structure then under consideration.

In spite of Fahd's royal precedence, Abdullah was successful in the long run in modernizing yet essentially maintaining the traditional indirect, but effective, method of monarchial governance. In simple terms, the tribal sheiks continue to be supported in their historical leadership role through carefully calculated royal allowances and gifts. It's the Royal Family's ultimate control of national wealth that makes this system possible, hence the insecurity over future oil and gas reserves.

Abdullah had never been the international bon vivant that Fahd was. Nonetheless, he was far more assiduous in cultivating and maintaining relations with other Arab leaders, even when their national politics did not dovetail with those of the Saudis. His close and friendly relationship with the late president of Syria, Hafez al Assad, is a good example of his special sense of Arab solidarity that marks Abdullah's approach to foreign affairs.

CERTAINLY THE WHITE HOUSE well knew of these and other proclivities of the Abdullah regime when the president's visit was scheduled. Ostensibly this was a visit to balance Bush's trip to Israel. What President Bush wanted, however, was a definitive gesture by the Saudis in respect to increasing oil production. Either on purpose or by accident, the gesture of Abdullah toward his friend George was mishandled.

Initial reports by the American media indicated that the U.S. desires had been rejected by the Saudi oil minister. The following day a new announcement was made that, just before the Bush party arrived, the Saudis had pushed up production approximately 300,000 barrels per day as a gesture of hospitality. This would place Saudi production at a new total of 9.45 bpd by June. Not much of an increase, but an increase nonetheless.

The perplexing part of all this has been the contradictory statements of Oil Minister Ali Naimi: He originally had gone into some detail how all the Saudi customers were without complaint regarding the ready availability of Saudi products, and therefore no increase was necessary.

The Bush team displayed a diplomatic non-reaction to this news. The altered positive positioning the following day was accepted as if nothing had happened. It's amazing how 300,000 barrels daily can smooth over some rough patches. Press coverage was confused, but this time it had reason to be.

THE BOTTOM LINE is that an internal Saudi conflict between the country's oil minister and foreign minister was worked out. The highly experienced Prince Saud bin Faisal, long time foreign minister, maneuvered a success from a near disaster -- something for which his late father King Faisal was famous.

The Saudis now own more U.S. dollars than they have ever known. The swelled numbered accounts in Switzerland and elsewhere of the many members of the Royal Family are being recycled back into the investment world at current bargain prices.

All the Saudis have to worry about is whether and when the Iranians decide their Sunni Arab neighbors (with their large eastern province Shia population) have become too enticing a target. King Abdullah and his relatives count on the oil-hungry Americans always being there to bail them out. That's Washington's well-worn ace-in-the-hole. Unfortunately that leverage doesn't seem to be working too well.

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About the Author
George H. Wittman writes a weekly column on international affairs for The American Spectator online. He was the founding chairman of the National Institute for Public Policy.