King's Ransom: How vulnerable are the Saudi royals?

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FACT
ANNALS OF NATIONAL SECURITY
King's Ransom
How vulnerable are the Saudi royals?
By SEYMOUR M. HERSH
Issue of 2001-10-22
Posted 2001-10-16

Since 1994 or earlier, the National Security Agency has been collecting electronic intercepts of conversations between members of the Saudi Arabian royal family, which is headed by King Fahd. The intercepts depict a regime increasingly corrupt, alienated from the country's religious rank and file, and so weakened and frightened that it has brokered its future by channelling hundreds of millions of dollars in what amounts to protection money to fundamentalist groups that wish to overthrow it.
The intercepts have demonstrated to analysts that by 1996 Saudi money was supporting Osama bin Laden's Al Qaeda and other extremist groups in Afghanistan, Lebanon, Yemen, and Central Asia, and throughout the Persian Gulf region. "Ninety-six is the key year," one American intelligence official told me. "Bin Laden hooked up to all the bad guys-it's like the Grand Alliance- and had a capability for conducting large-scale operations." The Saudi regime, he said, had "gone to the dark side."
In interviews last week, current and former intelligence and military officials portrayed the growing instability of the Saudi regime-and the vulnerability of its oil reserves to terrorist attack-as the most immediate threat to American economic and political interests in the Middle East. The officials also said that the Bush Administration, like the Clinton Administration, is refusing to confront this reality, even in the aftermath of the September 11th terrorist attacks.
The Saudis and the Americans arranged a meeting between Defense Secretary Donald Rumsfeld and King Fahd during a visit by Rumsfeld to Saudi Arabia shortly before the beginning of the air war in Afghanistan, and pictures of the meeting were transmitted around the world. The United States, however, has known that King Fahd has been incapacitated since suffering a severe stroke, in late 1995. A Saudi adviser told me last week that the King, with round-the-clock medical treatment, is able to sit in a chair and open his eyes, but is usually unable to recognize even his oldest friends. Fahd is being kept on the throne, the N.S.A. intercepts indicate, because of a bitter family power struggle. Fahd's nominal successor is Crown Prince Abdullah, his half brother, who is to some extent the de-facto ruler-he and Prince Sultan, the defense minister, were the people Rumsfeld really came to see. But there is infighting about money: Abdullah has been urging his fellow-princes to address the problem of corruption in the kingdom-unsuccessfully, according to the intercepts. "The only reason Fahd's being kept alive is so Abdullah can't become king," a former White House adviser told me.
The American intelligence officials have been particularly angered by the refusal of the Saudis to help the F.B.I. and the C.I.A. run "traces"-that is, name checks and other background information-on the nineteen men, more than half of them believed to be from Saudi Arabia, who took part in the attacks on the World Trade Center and the Pentagon. "They knew that once we started asking for a few traces the list would grow," one former official said. "It's better to shut it down right away." He pointed out that thousands of disaffected Saudis have joined fundamentalist groups throughout the Middle East. Other officials said that there is a growing worry inside the F.B.I. and the C.I.A. that the actual identities of many of those involved in the attacks may not be known definitively for months, if ever. Last week, a senior intelligence official confirmed the lack of Saudi cooperation and told me, angrily, that the Saudis "have only one constant-and it's keeping themselves in power."
The N.S.A. intercepts reveal the hypocrisy of many in the Saudi royal family, and why the family has become increasingly estranged from the vast majority of its subjects. Over the years, unnerved by the growing strength of the fundamentalist movement, it has failed to deal with the underlying issues of severe unemployment and inadequate education, in a country in which half the population is under the age of eighteen. Saudi Arabia's strict interpretation of Islam, known as Wahhabism, and its use of mutawwa'in-religious police-to enforce prayer, is rivalled only by the Taliban's. And yet for years the Saudi princes-there are thousands of them-have kept tabloid newspapers filled with accounts of their drinking binges and partying with prostitutes, while taking billions of dollars from the state budget. The N.S.A. intercepts are more specific. In one call, Prince Nayef, who has served for more than two decades as interior minister, urges a subordinate to withhold from the police evidence of the hiring of prostitutes, presumably by members of the royal family. According to the summary, Nayef said that he didn't want the "client list" released under any circumstances.
The intercepts produced a stream of sometimes humdrum but often riveting intelligence from the telephone calls of several senior members of the royal family, including Abdullah; Nayef; Sultan, whose son Prince Bandar has been the Saudi ambassador to the United States since 1983; and Prince Salman, the governor of Riyadh, Saudi Arabia's capital. There was constant telephoning about King Fahd's health after his stroke, and scrambling to take advantage of the situation. On January 8, 1997, Prince Sultan told Bandar about a flight that he and Salman had shared with the King. Sultan complained that the King "barely spoke to anyone," according to the summary of the intercept, because he was "too medicated." The King, Sultan added, was "a prisoner on the plane."
Sultan's comments became much more significant a few days later, when the N.S.A. intercepted a conversation in which Sultan told Bandar that the King had agreed to a complicated exchange of fighter aircraft with the United States that would bring five F-16s into the Royal Saudi Air Force. Fahd was evidently incapable of making such an agreement, or of preventing anyone from dropping his name in a money-making deal.
In the intercepts, princes talk openly about bilking the state, and even argue about what is an acceptable percentage to take. Other calls indicate that Prince Bandar, while serving as ambassador, was involved in arms deals in London, Yemen, and the Soviet Union that generated millions of dollars in "commissions." In a PBS "Frontline" interview broadcast on October 9th, Bandar, asked about the reports of corruption in the royal family, was almost upbeat in his response. The family had spent nearly four hundred billion dollars to develop Saudi Arabia, he said. "If you tell me that building this whole country . . . we misused or got corrupted with fifty billion, I'll tell you, 'Yes.'. . . So what? We did not invent corruption, nor did those dissidents, who are so genius, discover it."
The intercepts make clear, however, that Crown Prince Abdullah was insistent on stemming the corruption. In November of 1996, for example, he complained about the billions of dollars that were being diverted by royal family members from a huge state-financed project to renovate the mosque in Mecca. He urged the princes to get their off-budget expenses under control; such expenses are known as the hiding place for payoff money. (Despite its oil revenues, Saudi Arabia has been running a budget deficit for more than a decade, and now has a large national debt.) A few months later, according to the intercepts, Abdullah blocked a series of real-estate deals by one of the princes, enraging members of the royal family. Abdullah further alarmed the princes by issuing a decree declaring that his sons would not be permitted to go into partnerships with foreign companies working in the kingdom.
Abdullah is viewed by Sultan and other opponents as a leader who could jeopardize the kingdom's most special foreign relationship-someone who is willing to penalize the United States, and its oil and gas companies, because of Washington's support for Israel. In an intercept dated July 13, 1997, Prince Sultan called Bandar in Washington, and informed him that he had told Abdullah "not to be so confrontational with the United States."
The Fahd regime was a major financial backer of the Reagan Administration's anti-Communist campaign in Latin America and of its successful proxy war in Afghanistan against the Soviet Union. Oil money bought the Saudis enormous political access and leverage in Washington. Working through Prince Bandar, they have contributed hundreds of millions of dollars to charities and educational programs here. American construction and oil companies do billions of dollars' worth of business every year with Saudi Arabia, which is the world's largest oil producer. At the end of last year, Halliburton, the Texas-based oil-supply business formerly headed by Vice-President Dick Cheney, was operating a number of subsidiaries in Saudi Arabia.
In the Clinton era, the White House did business as usual with the Saudis, urging them to buy American goods, like Boeing aircraft. The kingdom was seen as an American advocate among the oil-producing nations of the Middle East. The C.I.A. was discouraged from conducting any risky intelligence operations inside the country and, according to one former official, did little recruiting among the Saudi population, which limited the United States government's knowledge of the growth of the opposition to the royal family.
In 1994, Mohammed al-Khilewi, the first secretary at the Saudi Mission to the United Nations, defected and sought political asylum in the United States. He brought with him, according to his New York lawyer, Michael J. Wildes, some fourteen thousand internal government documents depicting the Saudi royal family's corruption, human-rights abuses, and financial support for terrorists. He claimed to have evidence that the Saudis had given financial and technical support to Hamas, the extremist Islamic group whose target is Israel. There was a meeting at the lawyer's office with two F.B.I. agents and an Assistant United States Attorney. "We gave them a sampling of the documents and put them on the table," Wildes told me last week. "But the agents refused to accept them." He and his client heard nothing further from federal authorities. Al-Khilewi, who was granted asylum, is now living under cover.
The Saudis were also shielded from Washington's foreign-policy bureaucracy. A government expert on Saudi affairs told me that Prince Bandar dealt exclusively with the men at the top, and never met with desk officers and the like. "Only a tiny handful of people inside the government are familiar with U.S.-Saudi relations," he explained. "And that is purposeful."
In the aftermath of the terrorist attacks in New York and Washington, the royal family has repeatedly insisted that Saudi Arabia has made no contributions to radical Islamic groups. When the Saudis were confronted by press reports that some of the substantial funds that the monarchy routinely gives to Islamic charities may actually have gone to Al Qaeda and other terrorist networks, they denied any knowledge of such transfers. The intercepts, however, have led many in the intelligence community to conclude otherwise.
The Bush Administration has chosen not to confront the Saudi leadership over its financial support of terror organizations and its refusal to help in the investigation. "As far as the Saudi Arabians go, they've been nothing but cooperative," President Bush said at a news conference on September 24th. The following day, the Saudis agreed to formally cut off diplomatic relations with the Taliban leadership in Afghanistan. Eight days later, at a news conference in Saudi Arabia with Prince Sultan, the defense minister, Donald Rumsfeld was asked if he had given the Saudis a list of the September 11th terrorist suspects for processing by their intelligence agencies. Rumsfeld, who is admired by many in the press for his bluntness, answered evasively: "I am, as I said, not involved with the Federal Bureau of Investigation that is conducting the investigation. . . . I have every reason to believe that that relationship between our two countries is as close, that any information I am sure has been made available to the Kingdom of Saudi Arabia."
The Saudis gave Rumsfeld something in return-permission for U.S. forces to use a command-and-control center, built before the Gulf War, in the pending air war against the Taliban. Over the past few years, the Saudis have also allowed the United States to use forward bases on Saudi soil for special operations, as long as there was no public mention of the arrangements.

While the intelligence-community members I spoke with praised the Air Force and the Navy for their performance in Afghanistan last week, which did much to boost morale in the military and among the American citizenry, they were crestfallen about an incident that occurred on the first night of the war-an incident that was emblematic, they believe, of the constraints placed by the government on the military's ability to wage war during the last decade.
That night, an unmanned Predator reconnaissance aircraft, under the control of the C.I.A., was surveilling the roads leading out of Kabul. The Predator, which costs forty million dollars and cruises at speeds as slow as eighty miles an hour, is equipped with imaging radar and an array of infrared and television cameras that are capable of beaming high-resolution images to ground stations around the world. The plane was equipped with two powerful Hellfire missiles, designed as antitank weapons. The Predator identified a group of cars and trucks fleeing the capital as a convoy carrying Mullah Omar, the Taliban leader. Under a previously worked-out agreement, one knowledgeable official said, the C.I.A. did not have the authority to "push the button." Nor did the nearby command-and-control suite of the Fifth Fleet, in Bahrain, where many of the war plans had been drawn up. Rather, the decision had to be made by the officers on duty at the headquarters of the United States Central Command, or CENTCOM, at MacDill Air Force Base, in Florida.
The Predator tracked the convoy to a building where Omar, accompanied by a hundred or so guards and soldiers, took cover. The precise sequence of events could not be fully learned, but intelligence officials told me that there was an immediate request for a full-scale assault by fighter bombers. At that point, however, word came from General Tommy R. Franks, the CENTCOM commander, saying, as the officials put it, "My JAG"-Judge Advocate General, a legal officer-"doesn't like this, so we're not going to fire." Instead, the Predator was authorized to fire a missile in front of the building-"bounce it off the front door," one officer said, "and see who comes out, and take a picture." CENTCOM suggested that the Predator then continue to follow Omar. The Hellfire, however, could not target the area in front of the building-in military parlance, it could not "get a signature" on the dirt there-and it was then agreed that the missile would attack a group of cars parked in front, presumably those which had carried Omar and his retinue. The missile was fired, and it "obliterated the cars," an official said. "But no one came out."
It was learned later from an operative on the ground that Omar and his guards had indeed been in the convoy and had assumed at the time that the firing came from rocket-propelled grenades launched by nearby troops from the Northern Alliance. A group of soldiers left the building and looked for the enemy. They found nothing, and Omar and his convoy departed. A short time later, the building was targeted and destroyed by F-18s. Mullah Omar survived.
Days afterward, top Administration officials were still seething about the incident. "If it was a fuckup, I could live with it," one senior official said. "But it's not a fuckup-it's an outrage.This isn't like you're six years old and your mother calls you to come in for lunch and you say, 'Time out.' If anyone thinks otherwise, go look at the World Trade Center or the Pentagon." A senior military officer viewed the failure to strike immediately as a symptom of "a cultural issue"-"a slow degradation of the system due to political correctness: 'We want you to kill the guy, but not the guy next to him.' No collateral damage." Others saw the cultural problem as one of bureaucratic, rather than political, correctness. Either way, the failure to attack has left Defense Secretary Rumsfeld "kicking a lot of glass and breaking doors," the officer said. "But in the end I don't know if it'll mean any changes."
A Pentagon planner also noted that some of the camps the bombers were hitting were empty. In fact, he added, it became evident even before the bombing that troops of the Northern Alliance had moved into many of the unused Taliban camps. The Alliance soldiers came up with a novel way of alerting American planners to their new location, the officer said: "They walked around holding up white sheets so when the satellites came by they're saying, 'Hey, we're the good guys.' "

The American military response has triggered alarm in the international oil community and among intelligence officials who have been briefed on a still secret C.I.A. study, put together in the mid-eighties, of the vulnerability of the Saudi fields to terrorist attack. The report was "so sensitive," a former C.I.A. officer told me, "that it was put on typed paper," and not into the agency's computer system, meaning that distribution was limited to a select few. According to someone who saw the report, it concluded that with only a small amount of explosives terrorists could take the oil fields off line for two years.
The concerns, both in America and in Saudi Arabia, about the security of the fields have become more urgent than ever since September 11th. A former high-level intelligence official depicted the Saudi rulers as nervously "sitting on a keg of dynamite"-that is, the oil reserves. "They're petrified that somebody's going to light the fuse."
"The United States is hostage to the stability of the Saudi system," a prominent Middle Eastern oil man, who did not wish to be cited by name, told me in a recent interview. "It's time to start facing the truth. The war was declared by bin Laden, but there are thousands of bin Ladens. They are setting the game-the agenda. It's a new form of war. This fabulous military machine you have is completely useless." The oil man, who has worked closely with the Saudi leadership for three decades, added, "People like me have been deceiving you. We talk about how you don't understand Islam, but it's a vanilla analysis. We try to please you, but we've been aggrieved for years."
The Saudi regime "will explode in time," he said. "It has been playing a delicate game." As for the terrorists responsible for the September 11th attacks, he said, "Now they decide the timing. If they do a similar operation in Saudi Arabia, the price of oil will go up to one hundred dollars a barrel"-more than four times what it is today.
In the nineteen-eighties, in an effort to relieve political pressure on the regime, the Saudi leadership relinquished some of its authority to the mutawwa'in and permitted them to have a greater role in day-to-day life. One U.S. government Saudi expert complained last week that religious leaders had been allowed to take control of the press and the educational system. "Today, two-thirds of the Saudi Ph.D.s are in Islamic studies," a former Presidential aide told me. There was little attempt over the years by American diplomats or the White House to moderate the increasingly harsh rhetoric about the U.S. "The United States was caught up in private agreements"-with the Saudi princes-"while this shit was spewing in the Saudi press," the former aide said. "That was a huge mistake."
A senior American diplomat who served many years in Saudi Arabia recalled his foreboding upon attending a training exercise at the kingdom's most prestigious military academy, in Riyadh: "It was hot, and I watched the cadets doing drills. The officers were lounging inside a suradiq"-a large pavilion-"with cold drinks, calling out orders on loudspeakers. I thought to myself, How many of these young men would follow and die for these officers?" The diplomat said he came away from his most recent tour in Saudi Arabia convinced that "it wouldn't take too much for a group of twenty or thirty fundamentalist enlisted men to take charge. How would the kingdom deal with the shock of something ruthless, small, highly motivated, and of great velocity?"
There is little that the United States can do now, the diplomat said. "The Saudis have been indulged for so many decades.They are so spoiled. They've always had it their way. There's hardly anything we could say that would impede the 'majestic instancy' of their progress. We're their janissaries." He was referring to the captives who became élite troops of the Ottoman Empire.
"The policy dilemma is this," a senior general told me. "How do we help the Saudis make a transition without throwing them over the side?" Referring to young fundamentalists who have been demonstrating in the Saudi streets, he said, "The kids are bigger than the Daddy."