Thank you, Mr. Chairman and members of the Committee, for the opportunity to testify on the U.S. relationship with Saudi Arabia. Since others will be discussing the specifics of Americans held against their will, I will focus on putting this issue within the larger context of U.S.-Saudi relations.

Saudi Arabia is a corrupt totalitarian regime at sharp variance with America's most cherished values, including religious liberty. However, the House of Saud has long leaned towards the West. Saudi Arabia grew out of World War I and the defeat of the Ottoman Empire, an ally of the Central Powers, at the hands of Great Britain and various subject Arab peoples. Saudi Arabia would be unimportant but for the massive oil deposits sitting beneath its seemingly endless deserts. The advent of an activist Organization of Petroleum Exporting Countries (OPEC), led by Saudi Arabia, which supported the oil embargo of 1973-1974 against America a quarter century ago, helped raise oil prices and enrich the Saudi monarchy. Tensions with the West grew--for a time some analysts advocated invading the Persian Gulf to seize the oil. The latest round of worrying about Saudi stability has led some to recycle the idea.

However, most attention focused on defending the Gulf from other potential invaders--the Soviet Union during the Cold War, the Islamic revolutionaries who seized control of Iran in 1979, and finally Iraq's Saddam Hussein. What once seemed to be temporary arrangements in the face of Iraqi aggression now appears to be permanent. America has backed its military units in Turkey and carrier forces in the Persian Gulf with about 5000 air force personnel in Saudi Arabia as part of the Southern Watch command, comprising aircraft ranging from F-15s and F-16s to C-130s and KC-135s. Another 1300 military personnel and civilian contractors worked with Saudi National Guard.

Although the relationship between Riyadh and Washington is close, it has rarely been easy. For American administrations that loudly promote democracy, the alliance with Saudi Arabia has been a deep embarrassment. One aspect, the concern of today's hearing, is the forcible detention of American women and children, essentially treated as property by the Saudi government.

This attitude should come as no surprise, however, given the general Saudi record on human rights. Reports Human Rights Watch:

Freedom of expression and association were nonexistent rights, political parties and independent local media were not permitted, and even peaceful anti-government activities remained virtually unthinkable. Infringements on privacy, institutionalized gender discrimination, harsh restrictions on the exercise of religious freedom, and the use of capital and corporal punishment were also major features of the kingdom's human rights record.

Saudi Arabia is an absolute monarchy, an almost medieval theocracy, with power concentrated in the hands of senior royalty and wealth spread amongst some 7000 Al Saud princes (some estimates number all the royals at 30,000). Political opposition and even criticism are forbidden. In practice there are few procedural protections for anyone arrested or charged by the government; the semi-autonomous religious police, or Mutawaa'in, also intimidate and detain citizens and foreigners alike. The government may invade homes and violate privacy whenever it chooses; travel is limited. Women are covered, cloistered, and confined, much like they were in Taliban-ruled Afghanistan. The Mutawaa'in's apparent refusal to allow schools girls to escape a fire with their heads uncovered led to several deaths.

The regime's apologists, such as Dr. Abdulrahman Al-Zamil, a member of the 120-member Shoura (Advisory) Council, consider the lack of popular accountability to be a virtue, arguing that this ensures selection "unrelated to the influence of special interest groups and financial contributions." But ultimate control rests with the 75,000-man National Guard (run by the Crown Prince), which is as large as the army, not a group of advisers. Command positions are reserved for the royal family.
It is perhaps no surprise that such a regime has an unenviable reputation for corruption, with prison occasionally used to resolve for Western business partners to resolve disputes. Indolence is even more widespread. For years every college graduate could expect a government position that provided a good salary for little work (and many tea breaks). More than a quarter of Saudi Arabia's nearly 23 million people are expatriates, many of whom are domestic workers. During the Gulf War many Saudis similarly expected others to do the dirty work, likening America's presence to hiring mercenaries.

Most ugly, though, is the religious totalitarianism enforced by Riyadh. Non-Muslim worship as well as prosletyzing is prohibited for citizens and foreigners alike. According to former foreign service officer Tim Hunter, fired by the State Department for his criticism of its timidity in dealing with the Saudis, Christian clerics, if discovered, are arrested, beaten and brutalized, and eventually expelled from the country. Conversion means apostasy, which is punishable by death. Private devotion is theoretically allowed, but homes are raided if worshippers gather together. Christians have also been punished for blasphemy. In fact, Saudi Arabia follows much the same policies as did the Taliban (which Riyadh recognized and funded) before its ouster.

Unfortunately, U.S. policies have identified Washington with the Saudi kleptocracy. Americans are now paying for that association, which has made the U.S. a target of terrorists. Obviously, one must take Saudi terrorist Osama bin Laden's pronouncements with some skepticism, but a desire to end America's support for the corrupt regime in Riyadh and expel U.S. forces from the Gulf appears to be one of his main goals.

The Saudi ruling elite is also paying for its repression and links to Washington. With 70 percent of government revenues (and 40 percent of GDP) derived from oil sales, the long-term drop in energy prices has caused economic pain in Saudi Arabia; unemployment is now estimated at 15 percent overall, and 20 percent for those under 30. That has helped generate deep undertones of unrest, but the discontented feel helpless to promote political change. Criticism tends to be expressed through religious leaders. Observes Neil MacFarquhar of the New York Times, "In another country Mr. bin Laden might have become an opposition politician rather than a holy warrior. But Saudi Arabia brooks no dissent."

Senior clerics live well on the government payroll and therefore lack credibility. Radical free-lancers have developed a widespread following: 15 of the 19 hijackers of September 11 were from Saudi Arabia. One Saudi businessman told the Wall Street Journal: "Many young people are disgruntled and disenchanted with our society's openness to the West and U.S. foreign policy. These people are frustrated and have nothing to do. They fall prey to peole with agendas of their own. They are time bombs. They're like the Japanese kamikazi." With roughly half of the population under 15, the potential for further unrest is substantial.

Soaring dissatisfaction with the regime due to slumping revenues and a slowing economy has merged with criticism of America. Many Saudis are angry with U.S. support for the House of Saud; many students irrationally blame America for their economic problems. Additional irritants are Washington's support of Israel, attacks on Iraq, and air strikes in Afghanistan. Admiration for Saudi terrorist Osama bin Laden is evident even among those who dislike his austere Islamic vision.
And Saudi leaders have proved wary of aiding the U.S. despite direct attacks on Americans. The 1996 bomb attack on the Khobar Towers barracks in Dharan killed 19 Americans and wounded another 372. It was the work of radical Islamists, who, like bin Laden, view Riyadh's alliance with America as a defilement of holy lands. However, U.S. efforts to investigate the bombing were hamstrung by the Saudis, who refused to turn over relevant information and or to extradite any of the 13 Saudis indicted by an American grand jury.

In the same year, the Saudis refused, despite U.S. urging, to take custody of bin Laden from Sudan. In 1998 bin Laden and several other extremist Muslim leaders issued a manifesto calling for a holy war to drive the U.S. from Islamic lands. Even so, U.S. officials were unable "to get anything at all from King Fahd" to challenge bin Laden's financial network, charges a recent book by John O'Neill, a former FBI official involved with counter-terrorism who died in the attack on the World Trade Center, where he was security chief.

Riyadh's reluctance to risk popular displeasure by identifying with Washington continues, even after the deaths of three thousand Americans on September 11. Although the administration has publicly proclaimed its satisfaction with Saudi aid, privately White House aides are said to complain that Saudi officials have not been as cooperative as hoped.

Unfortunately, the refusal to aggressively defend cooperation with the West encourages the growth of extremist sentiments. Still, the lack of a public endorsement pales in comparison to Riyadh's support for the very Islamic fundamentalism that threatens to consume the regime in Riyadh as well as to murder more Americans in future terrorist attacks. Riyadh's prime strategy is to use money to buy off everyone. It long subsidized Arab governments and guerrilla movements at war with Israel, and opposed the 1979 peace treaty between Egypt and Israel. The regime was, along with Pakistan, the primary financial backer of the Taliban in Afghanistan, which provided sanctuary for bin Laden and his training camps. It is widely believed that Saudi businessmen have made contributions to bin Laden in an attempt to purchase protection. There are serious charges of financial support from some of the Saudi royal family for bin Laden's al Qaeda network. David Wurmser, a Defense Department consultant, contends that al Qaeda has received support from some factions within the royal family as part of a dynastic struggle.

The problem runs even deeper. The Saudi state, run by royals who often flaunt their libertinism, enforces the extreme Wahhabi form of Islam at home and subsidizes its practice abroad. Within this sect, hostile to modernity and the West, political extremism and support for terrorism have flourished in Saudi Arabia itself. A similar phenomenon is evident in Pakistan, which has provided many foot soldiers for the Taliban and al Qaeda. Saudi subsidies have underwritten the fundamentalist academies known as madrasses in Pakistan, from which many graduates have joined the Taliban or al Qaeda. Wahhabism is even thought to dominate as many as 80 percent of the mosques in America.

Moreover, the threat now reaches beyond the Middle East to Indonesia, Malaysia, and even the Philippines. In all of these countries, fanatical extremism is undermining more tolerant, secular societies. For instance, inter-religious strife, fomented by the radical Laskar Jihad, has turned particularly bloody in Indonesia, with up to 10,000 dead alone in the Molucca islands as a result of Christian-Muslem strife.

At the same time, Riyadh has allowed an exodus of holy warriors abroad. According to a detailed New York Times investigation, activists who fought in other conflicts, ranging from Bosnia to Chechnya, also participated in four terrorist strikes against American targets prior to September 11. Riyadh, it seems, thought it safer for the regime for these people to direct their energies abroad.

Saudi Arabia's belated efforts to curb the clergy and scrutinize the education system are welcome, but insufficient. By any normal assessment, Americans should care little if the House of Saud fell, as have other illegitimate monarchies, such as Iran's Peacock throne. Except for one thing. Saudi Arabia has oil. For this reason Washington has long been hesitant to treat Saudi Arabia the way Washington treats most other nations.

Contrary to popular wisdom, however, the Saudis' trump hand is surprisingly weak. True, with 262 billion barrels in proven reserves, Saudi Arabia has about one quarter of the world's resources and 8.7 times America's supplies. Riyadh is not only the world's leading supplier, but as a low-cost producer can easily augment its daily exports, 9.1 million barrels a day last year.

However, the reserves figure vastly overstates the importance of Middle Eastern oil to the U.S. (and Western) economy. Saudi Arabia accounted for about 12.3 percent of production last year (and so far is closer to ten percent this year); Riyadh plus Kuwait and the various sheikdoms came to 21.3 percent; OPEC produced 41.5 percent of the world's supplies. Were Saudi Arabia to fall, prices would rise substantially only if the conquerer, whether internal or external, held the oil off of the market, especially if the other Gulf states also collapsed. The result then would be severe economic pain in the short-term, though the Strategic Petroleum Reserve, which the President has vowed to fill, would help moderate prices.

Such a policy would, however, defeat the very purpose of conquest, even for a fundamentalist regime. After all, the Iranian revolution did not cause that nation to stop exporting oil; in fact, production increased every year from 1990 to 1998, and rose again in 2000. Even bin Laden has been quoted as calling oil the source of Arab power.

If a new Saudi regime did halt sales, the primary beneficiaries would be other oil producers, who would likely increase exports in response to the higher prices. A targeted boycott against only the U.S. would be ineffective, since oil is a uniform product available around the world. In fact, the embargo of 1973-74 had little impact on production; the global recession of 1975 caused a far more noticeable drop.

A new regime might decide to pump less oil in order to raise prices. Such a strategy would require international cooperation, yet the oil producers have long found it difficult to coordinate prices hikes and limit cheating on agreed-upon quotas. Even if effective, restricting sales would have only a limited impact. A decade ago, when oil was selling for about $20 a barrel, energy economist David Henderson, a professor at the Naval Postgraduate School, figured that the worst case of an Iraqi seizure of the Saudi oil fields would be about a 50 percent price increase, costing the U.S. economy about one half of one percent of GDP. Prices were running in the mid-20s last year, but fell below $20 a barrel because of the slumping economy, before recovering some. Thus, the real price hike of a similar rise today would be lower, and would fall on an economy more than one-quarter larger.

In any case, the economic impact would diminish over time. Already Canada, Mexico, and Venezuela have production comparable to Saudi levels. Countries like Kuwait, Iran, Nigeria, Russia, the United Arab Emirates, and others could pump significantly more oil. As economist Susan Lee puts it, should Riyadh turn off the pumps, "the U.S. would find itself plenty of new best friends."

Sharply higher prices would bring forth new energy supplies elsewhere. Total proven world oil reserves were 660 billion barrels in 1980, 1,009 billion in 1990, and 1,046 billion at the end of 2000. Yet in the last decade alone the world's people consumed 250 billion barrels of oil. A combination of new discoveries and technological advances increased the amount of economically recoverable oil. Reserves rose even as oil prices dropped: between 1980 and 1990, proven oil reserves jumped by 62 percent while prices for Middle Eastern petroleum were falling 43 percent. Prices eventually hit a dramatic low in 1998, down another 41 percent, before rising over the next two years.

America is dotted with high-cost wells that could be unplugged. The nation's outer continental shelf alone is thought to contain more than 30 billion barrels of oil, greater than our current proven reserves; since so little of the OCS, barely six percent, has been leased, those resources have not been proved. Barely 15,000 acres of the 19.6 million acre Arctic National Wildlife Reserve could contain a similar amount of oil (as well as supplies of natural gas). Even the modest estimate of five billion barrels of recoverable reserves at current prices would be a significant addition to current supplies.

Further, some 300 billion barrels of unrecovered oil, ten times our proven reserves and more than known Saudi resources, lie in beds of shale under the United States. They are not counted, however, because they are not currently worth developing. But as prices rise and new techniques are developed, they may become economicaly recoverable. Moreover, energy companies are looking for new oil deposits around the world, including the Caspian Basin, Russia, and West Africa. Estimates of as yet undiscovered potential recoverable oil range from one trillion to six trillion barrels. At current consumption rates the Energy Information Administration estimates that we have enough oil for another 230 years and "unconventional" sources, such as shale, that could last 580 years. And even these figures are based on existing prices and technologies. Higher prices would stimulate exploration, as well as production of alternative fuels and conservation, reducing oil consumption.

In short, an unfriendly Saudi Arabia might hurt America's pocketbook; it would not threaten America's survival. (Control of the Gulf by a hegemonic rival, notably the Soviet Union, would pose a significantly different, and greater, security threat, but that prospect disappeared with the end of the Cold War.)

Mentioning Saudi Arabia's shortcomings or suggesting that the regime's survival is not vital to America makes policymakers in Washington and Riyadh nervous. In particular, the House of Saud doesn't take criticism well. Last fall Crown Prince Abdullah denounced the U.S. media in a speech on state television, charging that it was damaging his nation's reputation and driving a wedge between his government and Washington. In the Arab News he blamed the American media campaign for expressing "its hatred toward the Islamic system." (His government also bought a four-page advertisement in several leading American newspapers extolling the accomplishments of King Fahd, "a doyen of world statesmen." More recently, it hired a new PR firm.)

In fact, published reports, denied by Riyadh, suggest that Saudi policymakers are considering ending America's military presence. In a letter to President Bush after the terrorist attacks, Crown Prince Abdullah suggested: "It is time for the U.S. and Saudi Arabia to look at their separate interests."

The country which should reassess the current Washington-Riyadh axis is the U.S. The American commitment to the Saudi royal family is a moral blemish and a practical danger. It has already drawn the U.S. into one conventional war and has helped make Americans targets of terrorism, which generated far more casualties in one day than did the Gulf War, Kosovo conflict, and Afghanistan campaign (so far) combined.

Over the long-term, the U.S. should reassess its military relationship with, and especially the stationing of American forces in, Saudi Arabia. That, however, is another subject for another hearing. At the very least, Washington should be willing to talk tough about terrorism and human rights, especially when the lives of Americans are at stake. Doing so might sour the U.S.-Saudi political relationship, but the relationship is already, if you'll pardon the expression, built on sand. As for economic ties, most particularly oil sales, they would continue unhindered: contrary to the apparent assumption of many Americans, the Saudis need us at least as much as we need them.

As for Saudi stability, the greatest threat comes from the regime's own failings. It is a ruthless kleptocracy in which an indolent few monopolize economic wealth and political power and allow no legal channel for dissent. Why should anyone support such a regime? Reform that generated support from the Saudi people would be best antidote to fears of revolution. In any case, there's no reason to believe that America's automatic, close embrace increases Saudi stability.

The Americans murdered last September and the Americans currently held in Saudi Arabia against their will provide at least 3000 reasons to change Washington's pusillanimous policy towards Riyadh. It is time to stop treating Saudi Arabia like an indispensable ally and more like a normal country--in this case, a totalitarian state which has routinely subsidized terrorist theologies and violated basic human rights.