by Robert Baer
Back in 1997, during my waning months with the CIA, I tried to get some twenty-something staffer on the National Security Council to attend to what I’d seen in the Fergana Valley and Dushanbe and Kokand: The U.S. was closing its eyes while Muslim extremists set up shop in the very places we most needed to stop them - the oil-rich former Soviet states of Central Asia. I was ignored, of course. The only thing the NSC had its eye on was Caspian oil. Big Oil had what amounted to a permanent seat on the NSC in the Clinton administration, and having cut its deals with the Saudis and formed partnerships to exploit the energy resources of Central Asia, it didn’t want my message anywhere within hearing of the White House. I can’t imagine Big Oil’s NSC seat has been any less secure during the tenure of Condi Rice, the former Chevron board member and intimate of the Bush family and its oil-man buddies going back two decades.
What Big Oil wants more than anything else is a stable apple cart. That’s what nearly everyone who counts wants, but this isn’t just about the apple cart. It’s not just about whether Henry Kissinger’s client base takes a beating, or the Carlyle Group partners have to put up in a Holiday Inn in Riyadh instead of a $4.6 billion palace on the outskirts, or Colin Powell can’t go back to hawking Gulfstream jets once his State Department gig is done. It’s not just about the Clinton people, not just about the Bush people. Saudi Arabia is more and more a breathtakingly irrational state - a place that spawns global terrorism even as it succumbs to an ancient and deeply seated isolationism, a kingdom led by a royal family that can’t get out of the way of its own greed. Is this the fulcrum we want the global economy to balance on?
11. Kiss It Good-bye
IF I HAD TO PICK a single day when the wheels started flying off Saudi Arabia, it would be November 29, 1995, when King Fahd suffered his near-fatal stroke. It was clear to those close to him that he would never again rule Saudi Arabia. But since he was clinically alive, Crown Prince ‘Abdallah couldn’t take over.
Without a king, Saudi Arabia drifted into chaos. The proof was everywhere. Royal corruption turned to theft on a scale never seen in Saudi history. Government finances went into a free fall. Wahhabi militants, all adherents of Osama bin Laden’s violent interpretation of Islam, were off the reservation. The government in Riyadh stopped any meaningful cooperation with Washington on terrorism. And Washington did what it always did when it came to Saudi Arabia - pretended nothing was wrong. It even used the opportunity of Fahd’s stroke to extort more money from the kingdom.
AS SOON AS the royal family heard about Fahd’s stroke, it went to battle quarters. From all over Riyadh came the thump-thump of helicopters and the sirens of convoys descending on the hospital where Fahd had been taken. Among the first to arrive was his closest family - his fourth and favorite wife, Jawhara, and Azouzi. Fahd had come to depend on Jawhara, and Azouzi was the apple of his father’s eye. Fahd doted on him and indulged him in everything. Everyone had heard the stories about Azouzi riding a Harley-Davidson around his father’s palace, chasing servants and smashing furniture. Most of the Al Sa’ud found the king’s indulgence strange. Azouzi was pimply, craven, and a bit slow. But Fahd’s favorite soothsayer had reportedly told him that as long as Azouzi was by his side, the king would have a very long, fulfilling life. Azouzi was his father’s good-luck charm.
Next to arrive were Fahd’s full brothers - Defense Minister Sultan, Interior Minister Na’if and Governor of Riyadh Salman. To outsiders, they were a tight bunch. Their mother, who was from the Sudayri clan, had taught them from an early age that they would have to stick together or risk being elbowed out by the other forty or so sons of Ibn Sa’ud. They took the lesson to heart, and although they did not particularly like each other, they always closed ranks when the going got tough. The pillars of Fahd’s rule since he became king in 1982, the brothers all arrived at the hospital about the same time.
Other princes hurried to the hospital, too, from all over the kingdom and the rest of the world. You could see private executive jets lined up at Riyadh’s airport, wingtip to wingtip. They couldn’t get anywhere near Fahd, but by being close, they could pick up more reliable news and, just as important, demonstrate their fealty. Fahd’s health wasn’t a minor question for them. Most of them lived off his largesse - royal stipends, which ran as high as $270,000 a month, to as many as twelve thousand people. The recipients knew they were breaking the treasury. Would Crown Prince ‘Abdallah cut back their funds or even eliminate them? They had to stick around to find out.
As soon as it was clear that Fahd would live, his full brothers were on the phone with doctors in the United States and Europe. Their questions seemed bizarre: What would it take to keep Fahd’s heart beating and his body warm? They didn’t seem to care whether he would recover his mental capacities or what kind of life he would have; they merely wanted to keep him clinically alive, and money wasn’t a problem. If necessary, they told the doctors, they would lease as many Boeing 747 cargo jets as needed to bring in mobile hospitals and medical teams.
The doctors couldn’t understand the desperation to keep Fahd alive, but then again, they didn’t understand the politics of the kingdom. What the family knew and the doctors didn’t was that Crown Prince ‘Abdallah was out there somewhere in the desert, a wolf ready to rip through the flock as soon the shepherd was dead. The only way to keep him at bay was to keep Fahd’s heart beating and his brain waves measurable, however faintly, for as long as possible - even, God willing, until after ‘Abdallah died.
‘Abdallah had always been the odd prince out. For a start, his mother was from the Shammar tribe, traditional rivals of the Al Sa’ud. Ibn Sa’ud married her to cement a truce with the Shammar, but though the Shammar inside Saudi Arabia were now all loyal subjects, ‘Abdallah was still mistrusted by Fahd’s full brothers. Almost alone in the top tier of the royal family, ‘Abdallah had consciously chosen the way of the desert, turning his back on the palatial luxuries of Riyadh, Jeddah, and Ta’if. He never went to Europe on vacation. He preferred, when he could, to spend his time in a tent, drinking camel’s milk and eating dates. He interspersed his conversation with peculiar Bedouin turns of phrase and aphorisms. All of his children were raised according to the customs of the desert, a rough egalitarianism and a vow of poverty. Maybe ‘Abdallah’s worst heresy was to forbid his sons from the fat commissions that so many of the royal offspring were scrambling after.
The Al Sa’ud hated being reminded that they had abandoned their Bedouin roots, but what they hated still more was that ‘Abdallah wanted to cut back royal corruption and perks. ‘Abdallah had made no secret that when he became king, he would put an end to their thieving. It had become completely out of hand. Aping the senior members of the family, the lesser princes had fantastic expectations of the way they should live, and their stipends didn’t cut it. The third-generation princes were getting something like $19,000 a month, a fraction of their needs. It cost $1 million a year to keep even a modest yacht on the French Riviera. What were they supposed to do?
In order to make ends meet, they were getting into nastier and nastier business, from stealing property to stealing state assets, from selling immigrant visas to selling heroin. One trick they’d discovered was borrowing money from a private bank and simply refusing to pay it back. It wasn’t like the Sa’ud had any built-in discipline or sense of shame. There were so many princes that they didn’t even know one another.
For a while it looked as if ‘Abdallah might get his way even before becoming king. In the mid-1990s, when Saudi Arabia was facing catastrophic financial difficulties, he persuaded Fahd to appoint a handful of reformist ministers. ‘Abdallah had them zero in on property seizures. The practice had become so widespread that it was completely alienating Saudi Arabia’s traditional merchant and fledgling middle classes. A prince would walk into a restaurant, see that it was doing well, and then write out a check to buy the place, usually well below market price. There was nothing the owner could do. If he resisted, he’d end up in jail.
; The senior princes used their government positions to do the same thing on a much grander scale. One would pick out a valuable piece of property - maybe a particularly good location for a shopping mall, or a piece of land he knew was needed for a new road - then order a court to condemn it in the name of the state and have the king award it to him. The money involved was staggering, and the practice was becoming more flagrant. Senior princes had started to rely on it to keep up with their bloated personal budgets. So the senior princes united and started to pick off ‘Abdallah’s reformist ministers one by one.
The first to fall was ‘Ali Sha’ir, in 1994. Taking his ministerial duties and ‘Abdallah’s reform campaign seriously, Sha’ir tried to block a deal engineered by Prince Talal, who had arranged for a court to seize a particularly valuable piece of property owned by a prominent businessman. Talal naturally screamed bloody murder and denounced Sha’ir for having deprived him of his “God-given” rights. He immediately enlisted the governor of Riyadh, Salman, and Interior Minister Na’if. Unable to withstand the pressure, Fahd let Talal have his property and sacked Sha’ir.
In 1995 the same thing happened to the minister of municipal and rural affairs, Muhammad ibn ‘Abd-al-‘Aziz Al Shaykh, when he tried to prevent a similar seizure by one of Sultan’s sons. Al Shaykh confided in a friend that “the only land the royal family had not reached to grab was the moon.” Sultan went crazy. He didn’t care so much about his son being out of some money, but he could see how far ‘Abdallah intended to take his reforms. One day it was his son; the next day it would be him. ‘Abdallah lost, and Al Shaykh was fired.
Sultan was absolutely right about being in ‘Abdallah’s sights. For the crown prince, the crooked property deals were a small piece of the tapestry of corruption. The off-budget deals were the bigger pieces, bankrupting the country, and no one was more up to his ears in them than Prince Sultan.
With off-budget spending, revenue from oil sales went directly to special accounts, bypassing the Saudi treasury. The money was then used to pay for pet causes, from defense procurement to construction projects. With no government audits or any sort of accountability, commissions and bribes were enormous.
The most notorious off-budget deal became known as the Yamama project, after the Riyadh palace it was signed in. The deal, which dates back to 1985, called for British Aerospace to trade Saudi Arabia forty-eight Tornado fighter airplanes for six hundred thousand barrels a day of oil, but it was not a onetime deal. Yamama allowed for upgrades of hardware, spare parts, and so on. According to BAE’s publicity flacks, the trade was a good deal all around - British Aerospace had an assured market for its hardware, and Saudi Arabia for its oil. But Yamama was a huge commission-generating machine. British Aerospace overcharged for its hardware and spare parts, with the difference going to commissions. Most of the commissions went to Sultan, his family, and a legion of middlemen. Some estimated the commissions from Yamama went as high as 45 percent.
Needless to say, Fahd received his consideration. Since he didn’t want his hands dirtied by the money, he let Jawhara’s brothers and half brothers handle it for him. The Ibrahims, as they were called, were good at it. They had been raking off commissions unseen for much of the kingdom’s history. Through the 1980s and early 1990s, if you wanted an arms deal, you had to see the Ibrahims. If your construction company was ailing and you needed to be cut in to some government public-works project, you went to see the Ibrahims.
Normally, facts about the Ibrahim deals are hard to come by. But on December 12, 1997, ‘Abd-al-‘Aziz Al Ibrahim brought legal action against Rolls-Royce in London, claiming that the company, which had supplied the engines for the Tornados, had reneged on a commissions agreement with his own firm, Aerospace Engineering Design. Like the Boeing suit, this one makes for fascinating reading if you’re interested in how corruption works in the Middle East.
For ‘Abdallah, the issue wasn’t so much who got what out of Yamama. He just wanted the money - the revenue from the six hundred thousand barrels a day - put back under treasury control so it would be harder for the jackals to get at it. In September 1996 ‘Abdallah thought he had a chance to do that. With all the rake-offs, Yamama had become an intolerable burden on Saudi finances. By early 1996 Saudi Arabia was no longer able to top off the fund from oil revenues, and British Aerospace was forced to borrow $400 million to keep Yamama solvent. Still, Yamama was a bad deal for the Saudis: They were effectively getting a lot less for their oil; and worse, one day they would have to pay back British Aerospace. But they didn’t dare pull out. Doing that would screw up the Challenger 2 tank deal - another British Aerospace package they wanted to slip into the Yamama folder. It was an infernal cycle. No Yamama. No new tank deal. No new commissions. If Yamama was going down, ‘Abdallah would have to muscle it through every step of the way.
Initially, ‘Abdallah signed an order to Saudi Aramco to halve the money going to Yamama. That failed. Then, during a cabinet meeting on September 5, 1996, ‘Abdallah tried to get the ministers to vote Yamama out. Sultan put up a staunch defense. Since he couldn’t argue that hundreds of millions in commissions would be lost - exactly what ‘Abdallah wanted stopped - Sultan defended Yamama by arguing that Saudi forces were too dependent on British hardware to change. Sultan also said that if Yamama was canceled, Saudi Arabia would have to rely even further on the United States for weapons, which was politically unacceptable.
At the end of the day, Sultan got to keep Yamama, and Yamama continued to sap Saudi Arabia’s finances. By June 1997 Sultan was putting pressure on the Saudi International Bank to come up with $473.1 million to top off Yamama once again. His loan application probably didn’t mention that the fund needed help because Sultan was bleeding it dry.
Another off-budget project that ‘Abdallah wanted back under treasury control was the expansion of the Two Holy Mosques project. This sweetheart deal involved tearing down and rebuilding the old Medina and Mecca mosques. As with Yamama, the $25 billion allocated came from the direct sale of oil. The bin Laden family was responsible for construction and took care of bribes paid to royal family members who ensured the funding never stopped; it also took care of the kingdom’s American friends, particularly American construction companies with clout in Washington. York supplied the largest air conditioner in the world for the project.
By the mid- to late 1990s, the total amount of oil going to off-budget programs was about a million barrels a day, a sixth of Saudi Arabia’s exports. At current prices, that meant Saudi Arabia was hemorrhaging something like $30 million a day. With the money out from under Saudi Aramco control, anyone with enough clout could pillage as much as he wanted. That’s what happened with Old Mecca. Key government ministers and their Wahhabi allies would decide that one more part of the historic site needed to be torn down and rebuilt. The government then would order Aramco to put aside, say, $100 million, and the royal family would send a check to the Bakr bin Laden group, commissioning the work. But rather than have the full $100 million go to construction, somewhere on the order of 90 percent went back to the senior princes, charities, and Wahhabi clerics. Everybody walked away a winner. Well, almost everybody. The average schmuck on the street didn’t get a penny, but he could always go to Mecca or the other thousands of Bakr bin Laden-built mosques and pray (for free) for better days. ‘Abdallah wanted to end that. At the very least, he wanted to put some of the Mecca mosque reconstruction money into creating jobs for young, unemployed Saudis so they wouldn’t be spending all their days in the mosques.
Add it all up, and ‘Abdallah was Al Sa’ud’s worst nightmare. Even Fahd had his worries about him. In October 1995 Fahd got it in his head that ‘Abdallah might want to seize control of the country, maybe conspiring with Foreign Minister Sa’ud Al Faysal. Fahd had noticed that every time Sa’ud got into trouble, he went to ‘Abdallah for help. Later, Sultan and Fahd agreed that they could never be out of the country at the same time. Someone had to watch ‘Abdallah.
‘Abdallah was kept out
of the tight circle that formed around Fahd after his stroke. They couldn’t take him out of the line of succession, but they could lie to him about Fahd’s health. Nine months later, when Fahd needed knee surgery, ‘Abdallah wasn’t included in the debate over whether it was better for Fahd to remain bedridden or risk dying under the knife. ‘Abdallah wasn’t even told the names of Fahd’s doctors.
Within the family, bitterness against ‘Abdallah was so deep that he was blamed for Fahd’s stroke. One version had it that Fahd and ‘Abdallah were on the telephone arguing about who would attend a meeting of the Gulf Cooperation Council in Oman; although it was an unimportant decision, relations between the two had become so acidic that a vein popped in Fahd’s head. Another version held that Fahd and ‘Abdallah had been arguing about what they always argued about: the looming financial collapse. There were whispers that ‘Abdallah had intentionally provoked Fahd, knowing his health couldn’t withstand a shouting match. We’ll never know because neither is talking.
A year and a half after Fahd’s stroke, Sultan had come to so despise ‘Abdallah that he stopped attending cabinet meetings chaired by him. The feeling was mutual. In July 1997 ‘Abdallah bypassed the Council of Ministers, which was heavily stacked in favor of the Sudayri, and tried to get Fahd to sign off on decrees and laws that he thought should be passed. Jawhara and Azouzi teamed up to thwart him once more.