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A look into U.S. efforts to strengthen Saudi Arabia's military defenses.
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00:01Frontline is a presentation of the Documentary Consortium.
00:08In December, on the way to Somalia, George Bush stopped to visit an old friend, King Fahd of Saudi Arabia,
00:16to say goodbye and to stress the importance of the U.S.-Saudi relationship.
00:22The significance of this relationship was underscored just a few weeks later,
00:26when U.S. fighter jets flying out of Saudi bases led some of January's bombing raids inside Iraq.
00:35Next week, the new administration will extend its hand to the King,
00:40when President Clinton's Secretary of State Warren Christopher travels to Saudi Arabia on Sunday.
00:46Tonight on Frontline, the hidden history of the U.S.-Saudi special relationship.
00:51We need their oil, and they at the same time are almost completely dependent on us for their security.
00:58Frontline investigates the 10-year plan that transformed the Desert Kingdom into a desert fortress.
01:05A $200 billion program that's basically put together and nobody's paying attention to it.
01:11It's the ultimate government off the books.
01:13Tonight on Frontline, the arming of Saudi Arabia.
01:24With funding provided by the financial support of viewers like you.
01:30And by the Corporation for Public Broadcasting.
01:34This is Frontline.
01:39This is Frontline.
01:40Frontline investigates the 10-year plan of the U.S. monkey world.
01:41This is Frontline.
01:42This is Frontline.
01:43This is Frontline.
01:45This is Frontline.
01:47This is Frontline.
01:56On August 2nd, 1990, Iraq invaded and occupied Kuwait.
01:59On August 2nd, 1990, Iraq invaded and occupied Kuwait.
02:11Saddam Hussein's soldiers now threatened the vast oil fields of Saudi Arabia.
02:24Four days after the invasion, United States Defense Secretary Dick Cheney arrived in Jeddah,
02:28Saudi Arabia.
02:29The main purpose for my trip was to try to persuade the king to agree to receive U.S. troops
02:37in the kingdom.
02:38We simply had to have access to Saudi Arabia.
02:42Unless we could get access for our forces to Saudi Arabia, there was very little we could
02:46do about Saddam Hussein in Kuwait.
02:51Cheney was taken to the Summer Palace to meet King Fahad.
02:55There he would argue that the time had finally come to activate a plan long in the making.
03:01He had only to overcome some last minute resistance.
03:04At one point, the crown prince said that there still was a Kuwait, that they needed to go
03:11slow and be cautious and prudent here, not rush into anything, to which the king allegedly
03:16responded that, well, there might still be a Kuwait, but all of the Kuwaitis were living
03:21in our Saudi hotel rooms.
03:22And unless they acted decisively, there was a danger to Saudi Arabia itself.
03:28The king did act decisively, agreeing on the spot to receive hundreds of thousands of U.S.
03:36soldiers on Saudi soil.
03:38The largest and fastest mobilization of military equipment and troops in history had begun.
03:59America's ability to respond so quickly and massively to Saddam Hussein's threat impressed
04:12the world.
04:14But as Secretary Cheney and the king were well aware, the operation didn't happen overnight.
04:26It was the result of a special military and economic relationship with Saudi Arabia that
04:30is far deeper and more extensive than most Americans know.
04:41Tonight we'll reveal how Saudi Arabia became one of the most heavily armed countries in
04:45the world.
04:46How years before Desert Storm, billion-dollar state-of-the-art military bases were already
04:52in place, built to U.S. military specifications, ready and waiting for the arrival of American
04:59soldiers.
05:02We'll also show you how, at the same time, the Saudis were actively aiding their eventual
05:07enemy, Iraq, in a massive arms buildup.
05:11And we'll explore evidence that Saudi Arabia may have aided Iraq in its attempt to develop
05:16a nuclear bomb.
05:20This is the story of the U.S.-Saudi special relationship, a relationship so secret and
05:25sensitive that Saudi government officials refuse to be interviewed or to allow our cameras
05:30into their country.
05:40The story of the Saudi military buildup begins more than a decade ago, during the last days
05:45of the Shah of Iran.
05:48This is a great tribute to you, Your Majesty, and to your leadership, and to the respect and
05:57the admiration and love which your people give to you.
06:01The Shah's overthrow took American policymakers by surprise.
06:08When the Shah's enormous arsenal of U.S.-made weapons fell into the hands of Iran's Islamic fundamentalists,
06:25Washington was shaken.
06:26There was real anxiety that this was the beginning of a wave that would sweep across the Gulf and
06:33that Saudi Arabia might be next or at least would be in line.
06:40William Quant served on the National Security Council at the time.
06:44It was bad enough to have Iran in turmoil and with the uncertainty there, but if it had spread
06:51further, it would have really been a disaster.
06:54Secondly, there was a real concern about building some kind of a security structure in and around
06:59the peninsula to make sure that this Iranian revolutionary contagion didn't spread.
07:06And that was difficult because the Saudis were uneasy with the idea of American troops on their territory.
07:12They really weren't prepared for it, but they wanted us nearby.
07:19Zbigniew Brzezinski was national security adviser to President Carter.
07:24Brzezinski called for a massive military build-up in the Gulf region, centered inside Saudi Arabia.
07:31We therefore developed the proposal for the Rapid Deployment Force and for arrangements for the pre-positioning of some facilities, equipment, logistical facilities in the area.
07:46We didn't ask for bases, but we asked for access, which in effect operationally wasn't all that different.
07:55Saudi Arabia was a logical choice to replace Iran.
08:00Located just across the Persian Gulf, its small ruling elite wanted weapons to protect its oil resources.
08:07The oil-dependent United States was naturally eager to help.
08:11We need their oil and therefore we have to make sure that they are friendly and therefore we are engaged in protecting their security.
08:24They at the same time are almost completely dependent on us for their security in a region in which they are very vulnerable and very rich.
08:32So there is a kind of a curious, though asymmetrical, interdependence here.
08:42The decision to sell expensive weaponry to Saudi Arabia coincided with an explosion in Saudi oil income following dramatic price hikes in the 1970s.
08:51By 1981, Saudi annual oil revenues reached $116 billion, part of history's largest transfer of wealth ever.
09:04The Saudi Monetary Agency had the daunting task of investing $16 million in oil revenue every hour, nearly $400 million a day.
09:14Many of the petrodollars flowed to American construction and engineering firms such as Bechtel, which cashed in on Saudi Arabia's rapid modernization.
09:27The petrodollar explosion of the 70s and then again sort of in the early 80s had a tremendous impact on the physical aspect of the country.
09:40All of the big infrastructural developments that one now associates with Saudi Arabia, the fancy hotels, the enormous airports, the fantastic road system, none of that existed 30 years ago.
09:53All of the infrastructure was radically rebuilt. It has physically transformed the landscape. Likewise, all the telecommunications, anything you can think of, has been done.
10:12But the most important purchases for the Saudis were military.
10:20Probably the most sophisticated equipment in the U.S. arsenal is now in the hands of the Saudi government, with very little controls imposed by the United States.
10:30And in fact, Saudi Arabia ultimately became the largest beneficiary of U.S. weapon sales in the entire world.
10:39Stephen Emerson chronicled the Saudi-American relations in his book, The American House of Saud.
10:46After 1985, Saudi Arabia had received more than $70 billion worth of military equipment and construction and items, far exceeding any other country by magnitudes of five, six or seven hundred percent.
11:00The key request came in 1979, when the Saudis asked for AWACS, the most advanced airborne radar system in the world.
11:12We have a possible track bearing one, two, four for 114 nautical miles.
11:18Few people knew at the time that these planes would be the linchpin to an enormous Saudi defense build-up.
11:25AWACS, that ugly duckling airplane with the funny name, is the number one topic in Washington this morning as Congress opens here...
11:34Jimmy Carter had proposed selling the Saudis five AWACS planes, but lost a bid for re-election before he could act.
11:41I, Ronald Reagan, do solemnly swear that I will...
11:45Ronald Reagan's staunch support for the AWACS sale was surprising.
11:49Reagan came into office with a reputation of being very pro-Israeli and really quite skeptical about all of the Arabs.
11:57The only things he had said before coming to office had tended to denigrate the importance of relations with any Arab country.
12:05And yet one of his first decisions was to go ahead with the sale of these five AWACS aircraft with all the associated technology and infrastructure that went with them.
12:16A very big package, $8.5 billion was involved, which of course was one of the reasons he probably said, yes, it was good business.
12:24Has not this administration learnt the lesson of Iran?
12:31The 1981 AWACS debate was essentially a face-off between two very powerful constituencies.
12:37One, domestic American Jewish community, which was fearful that the AWACS would fall in enemy hands against Israel.
12:46And the American corporate community, which was lobbying essentially at the demand and control and direction of the Saudi government.
12:58American corporations with over $500 billion in contracts with Saudi Arabia were told in no uncertain terms that unless they lobbied their congressmen and senators, they would not receive renewals of their contracts.
13:13The Pentagon's point man for the AWACS sale was Air Force General Richard Secord.
13:20The supporters of Israel literally were up in arms over this, and they were fighting us every step of the way, and so it became a classical political wrangle.
13:32The AWACS wrangle made good copy, and the Washington Post assigned one of its best reporters to the story.
13:41Scott Armstrong was puzzled by the huge AWACS price tag.
13:47So I went to the Pentagon, and I said, what does an AWACS plane cost now? It used to cost $100 million.
13:54And they said, oh, it's about $110 million now. It's going up.
13:57And I said, oh, that's it. Five times $110 million must be $5.5 billion.
14:02I said, wait a minute, there's a decimal point missing here.
14:05And I started asking people, and they had no explanation.
14:08They said, well, there's some training and some spares, and there's a little this, a little that.
14:12So I went up to Capitol Hill, and I talked to John Glenn, the senator who was in charge of opposing the sale.
14:18It was very pro-Israel.
14:20And I went through this with Glenn, and I said, you know, five times $110 is $550 million, not $5.5 billion.
14:29And Glenn went, you're right, and turned to his aide and said, what's going on here?
14:35And that was the beginning of kind of unlocking a door.
14:41Concerned about Armstrong's questions, General Secord arranged a Pentagon briefing.
14:46The briefing lasted two days.
14:49The table began to fill up with aides.
14:51And as soon as the table filled up, a ring of chairs around them began to fill up.
14:56Until, finally, we had probably close to 30 to 40 people in the room.
15:01I mean, it was very hard for me to tell.
15:03I would ask a question.
15:05What is the particular facility that the AWACS is going to use in the north of Saudi Arabia?
15:10What's going to be on that base?
15:13And all of a sudden, the answer would come from over my shoulder.
15:16And then I'd say, well, how does that fit into the threat perception that the Saudis have of how they're being threatened in the region?
15:24And the answer would come from another direction.
15:26And I'd say, well, what about the ports that are going to be built?
15:28And the answer would come from another direction.
15:30And I was doing all I could to just keep track of what service, whether it was Army, Navy, Air Force, that these guys were answering from.
15:36Because it was clearly an important show.
15:39I mean, Oliver North was one of the people sitting in the back of the room.
15:42Then obscure Pentagon aide who, right after that, went to the NSC to lobby for the AWACS.
15:48As he listened, Armstrong realized that the story was much bigger than the sale of five planes.
15:54And gradually, this picture began to emerge that we were talking not just about five AWACS planes, but that this was the way to slip in the linchpin to an elaborate electronic communication system that would be the equivalent of the heart of what we have in NATO, for example.
16:12It was creating a new theater of war.
16:14It was something that the Americans would essentially be able to move into and control instantly.
16:18But the key to it was the Saudis were going to pay for it.
16:21The problem was to get through the heart of it, and the heart of it was hidden in the AWACS package.
16:26Four days before the crucial Senate vote, Armstrong prepared an article stating that the proposed AWACS sale was just the beginning of a secret $50 billion plan to build surrogate military bases in Saudi Arabia.
16:43Richard Secord says he pressured Armstrong's editors to delay publication of his story.
16:48It was only days, this article, because it was only days before this vote was coming. It was very close.
16:53Our public affairs people in the Pentagon, as I recall it, called the editorial management of Washington Post and said, you know, this guy's preparing this cockamamie story.
17:03You know, you've got to give us a break on this. This is crazy.
17:06You know, and that's why the story was published after the vote, not before.
17:10There were some last-minute Pentagon briefings they wanted to give me over the weekend.
17:14That stalled it over the weekend.
17:16Then there were some objections raised by lobbyists for the Saudis with the Post editorial folks about the fact that this really wasn't a fair piece.
17:24And the next thing we knew, the story ran the day after the vote.
17:31At the Washington Post, former executive editor Ben Bradley told Frontline he could not recall any Pentagon pressure to delay Armstrong's article.
17:40On the afternoon of October 28th, 1981, the lobbying ended and the Senate AWACS roll call began.
17:50The outcome was still uncertain.
17:52On the preceding Friday, we showed, at best, a tie.
17:58And so the vice president, then George Bush, was prepared to break the tie if it came out that way.
18:03We lucked out.
18:04And in the last minute, a few of the senators switched their votes over.
18:07And so we won it by four votes, which really, if you think about it, is only a two-man swing, 52 to 48.
18:13Big smile, Mr. President.
18:16The AWACS sale was a big victory for Ronald Reagan, who had personally campaigned around the clock for the Saudi deal.
18:23I'm trying to smile with dignity. I don't want to look jubilant.
18:26Scott Armstrong's article finally appeared on the front page of the Washington Post.
18:33Not one, but four days after the AWACS vote.
18:36In it, Armstrong detailed a hidden plan the congressional debate had never confronted.
18:41A grand defense strategy for the Middle East oil fields.
18:45An ambitious plan to build surrogate bases in Saudi Arabia, equipped and waiting for American forces to use.
18:52An unwritten secret understanding lay behind what had been framed as the mere sale of five planes.
19:01The heart of the understanding is this, Armstrong wrote.
19:04If America will sell the Saudis an integrated package of top-of-the-line military technology,
19:10Saudi Arabia will build and pay for a massive network of command, naval and air defense facilities,
19:17large enough to sustain U.S. forces in intensive regional combat.
19:21Armstrong's conclusion that the AWACS sale was the cornerstone of a multi-billion dollar secret defense buildup inside Saudi Arabia
19:30was flatly denied by Secretary of Defense Caspar Weinberger.
19:34In the face of Saudi secrecy and Defense Department denials, Armstrong's article was soon forgotten.
19:44But much of his story has now been confirmed by senior officials of the United States government, including Lawrence Korb, who was Assistant Defense Secretary under Weinberger.
19:56What the Saudis allowed the United States to do over in that part of the world was to set up a de facto infrastructure by purchasing airfields,
20:10by purchasing very modern ports, by purchasing a lot of American equipment theoretically to support their forces,
20:19by buying a lot of American equipment that would use the same type of facilities that our forces needed.
20:26So, in effect, we had a replica of U.S. airfields and ports over in that part of the world paid for by the Saudis to be used by the United States when and if we had to go over there.
20:41Richard Murphy was U.S. ambassador to Saudi Arabia from 1981 to 1983.
20:47I remember U.S. Air Force officers being outright jealous of the Saudis for the money that had been spent to protect the planes under these reinforced hangars in the principal air bases,
21:01stuff that we couldn't have afforded to do in North America, much less in Europe, with NATO.
21:06In many cases, it was almost better than NATO.
21:09With the Saudis, they basically were buying off the shelf from us and replicating an American military facility.
21:18So when we showed up, it was just like being at home. Everything fit, everything worked.
21:28I call it the world's greatest or largest gasoline station, sitting there, able to pump out the jet fuel refined in-country.
21:37And since they were using principally American fighters and the AWACS planes, the fittings, all of the pertinences of the airfields fit in very nicely with the needs of the American Air Force.
21:55Dick Cheney, Caspar Weinberger's successor as defense secretary, now openly acknowledges the Saudi buildup.
22:08During the 80s, there was an increased level of cooperation between the United States and Saudi Arabia, the provision of additional equipment, the AWACS, early warning airborne system, F-15 fighters.
22:22Plus, there was a great deal of work done in terms of building facilities.
22:25The port facilities and the airfields that were so crucial to our ability to be able to deploy the force rapidly and then to conduct combat operations from Saudi Arabia were developed in the 1980s.
22:39Major investment on the part of the Saudis, but major involvement by the United States.
22:44One example of this increased cooperation, King Khalid Military City.
22:51Built in secrecy near the Iraqi border, in the heart of a stark, barren desert, the facility was the ultimate test of the Saudi ability to turn oil money into security.
23:01Called one of the most extraordinary military bases in the world by the publication James Defense Weekly, the military city includes ballistic missile silos and nuclear-proof underground command bunkers.
23:16Constructed with the involvement of the CIA, the National Security Agency, and the Army Corps of Engineers, the total cost of creating King Khalid Military City remains secret.
23:28But James Defense Weekly estimated that nearly $8 billion had been spent by 1984.
23:41A decade after his Washington Post investigation, Scott Armstrong wrote another article about the Saudi arms buildup, this time for the investigative magazine Mother Jones.
23:53By 1992, Armstrong concluded, the cost of the military buildup had risen to $156 billion.
24:02The Saudis have been the principal backers and financers of the largest armament system that the world has ever seen in any region of the world.
24:10That concludes over $95 billion worth of weapons that they bought themselves, includes another $65 billion worth of military infrastructure and ports that they've put in.
24:20We've managed to create an interlocking system that has one master control base, five sub control bases, any one of which is capable of operating the whole thing, that are in hardened bunkers, that are hardwired, that is to say, against nuclear blasts or anything else.
24:36We've created nine major ports that weren't there before, dozens of airfields all over the kingdom.
24:44They have now hundreds of modern American fighter planes and the capability of adding hundreds more.
24:51The Saudis alone have spent $156 billion that I can document line by line, item by item, on weapon systems and infrastructure to support this.
25:05Many in Congress say they are still unaware of the massive U.S.-Saudi defense buildup.
25:10James Jeffords was the ranking Republican on the Senate Near East Subcommittee.
25:15I'm not aware of that buildup.
25:17It was a surprise to recognize how rapidly we could mobilize considering the number of troops and equipment that had to be moved over there.
25:28Senator Howard Metzenbaum.
25:29That information was not made available to me, and I doubt that it was made available to many members of the Congress, if any.
25:38Former Representative Mel Levine.
25:41Most members of Congress were not aware of it, were not aware of it at all, and this is not something that was advertised either to members of Congress or to the American public.
25:50But Lawrence Korb and others in the administration say those in Congress who plead ignorance are disingenuous.
25:58Anybody who looked at what was happening there recognized what was going on.
26:05If you looked at the price that the Saudis were paying for things that they bought from us compared to what other nations, you had to know that there was a logistics tail being built into that.
26:15You know, I've helped brief a lot of these guys.
26:17I know that they knew full well everything that was going on with respect to military construction and military weapon procurement and deployment in Saudi Arabia and the other countries of that region.
26:30Still, Senator Metzenbaum maintains he had insufficient access to information.
26:35The United States deals with Saudi Arabia in a somewhat different manner than it deals with many other countries.
26:41It's a pretty much of a closed relationship between the administration and a few people in the administration, not a lot of them, and Saudi Arabia.
26:50Over the last decade, we've seen individual examples of policy made secretly, secret from Congress, secret from the American people, selling arms to Iran, selling arms to Iraq.
27:01Both of which, by the way, I think are connected to this overall policy with the Saudis, but they're little slices of things that seem to be government off the books.
27:10People not quite authorized to do something.
27:12Why wasn't Congress notified?
27:14Little questions.
27:15Little questions.
27:16Here's something that's huge.
27:17I mean, it's absolutely phenomenal.
27:19A $200 billion program that's basically put together and nobody's paying attention to it.
27:26It's simply not something that Congress can attend to.
27:30It's not something that the press is attending to.
27:32There are very few public interest organizations in town who are usually the real watchdogs that have appointed themselves to look after this.
27:38It's something that's so big, it doesn't slip through the cracks, it slips around the cracks.
27:43It unveils everything.
27:45It is the ultimate government off the books.
27:55Government off the books was characteristic of the Saudi-US relationship throughout the 1980s.
28:01When Soviet troops invaded Afghanistan, the Saudis, always suspicious of Soviet designs on the Gulf, spent billions to help the U.S. finance its covert off-the-book support of Afghanistan's Mujahideen rebels.
28:22The Saudis also helped finance a covert war in the Western Hemisphere.
28:26In the 1980s, when the Congress was cutting off funds for the Contras, I did talk to the Saudis about them possibly adding up some millions to support the Contras during this period because they are tremendously anti-communist in their own philosophies.
28:46It turned out that it was unnecessary, since that would be done at a higher level, and as we all now know, the Saudis did contribute $20 or $30 million at the request of the President of the United States.
28:59But the most expensive covert joint venture for Saudi and U.S. officials was their attempt to contain the revolution in Iran.
29:06We are also concerned about the tragic war between two of Saudi Arabia's neighbors, Iran and Iraq, a conflict that is raging only a few minutes by air from Saudi territory.
29:20Iraq's Saddam Hussein would become the willing instrument of this policy to contain Iran.
29:26Kenneth Timmerman is the author of The Death Lobby, How the West Armed Iraq.
29:31In the summer of 1980, the Iraqis were very eager to get U.S. approval for their invasion of Iran, and they dispatched senior government officials, including their then foreign minister, to Saudi Arabia and to Amman Jordan to consult with American officials to make sure that we would not oppose the invasion of Iran.
29:50Did we oppose it?
29:53We certainly did not.
29:56And on August 5th, 1980, Hussein himself made a state visit to Saudi Arabia.
30:01According to some reports, he informed the Saudis of his intention to go to war.
30:05Six weeks later, Iraqi forces launched attacks deep inside Iran.
30:16The Iraqi government on the stage of massive American imperialism has started immigration on our territories.
30:25The next day, Iran retaliated, and full-scale war broke out.
30:32The Saudis were extremely concerned that Iran would win the war, that it would manage to assume control in Baghdad and establish an Islamic Republic,
30:50and that, through direct or indirect means, it would threaten the kingdom.
30:57Howard Teicher served on the National Security Council from 1982 to 1987.
31:03I discussed this in meetings with King Fahad, Prince Saud, and other Saudis.
31:10This was the most important subject on the Saudi agenda in the 1980s, how to, at a minimum, prevent the war from expanding beyond the Iran-Iraq border area and engaging the Saudis.
31:29Throughout the eight-year Iran-Iraq war, the Saudis, with the knowledge and approval of United States government officials, backed Iraq with money, weapons, and intelligence.
31:40They were providing financial assistance, they provided logistics support, they were providing intelligence information.
31:54They took the information that we provided them about our assessments of the Iranian military and provided it to Iraq.
32:02I believe that some of that information contributed to Saddam Hussein's decision to invade Iran in the first place.
32:12In 1983, U.S. manned AWACS flying out of Saudi Arabia began direct intelligence sharing with Iraq.
32:19We knew the capabilities of the Iranian Air Force, and we knew the value of the real estate and the oil that the Saudis were safeguarding in the eastern province of the kingdom.
32:33And the AWACS provided that critical period of warning of approaching fighter bombers, fighter jets coming out of Iran.
32:43The Saudis also provided tens of billions of billions of dollars to Iraq in cash.
32:51How much Saudi money? Estimates vary.
32:55The gossip in Riyadh was that the government might have been transferring a billion dollars a month.
33:00James Aikens was U.S. Ambassador to Saudi Arabia from 1973 to 1975.
33:13I think Kuwait and Saudi Arabia must have given something to order $60 billion in a ratio of 2 to 1, 40 from Saudi Arabia and 20 from Kuwait.
33:23Saudi Arabia also provided American-made weapons to Iraq, despite congressional restrictions on such transfers.
33:34In February 1986, hundreds of one-ton MK-84 bombs were sent to Iraq by Saudi Arabia.
33:41This illegal Saudi arms transfer was kept secret from the public until April 1992, when the story was broken in the Los Angeles Times by reporter Murray Wass.
33:54The story said the shipment was part of a ten-year covert policy by the Reagan and Bush administrations to arm Iraq.
34:01Working with Frontline, Wass has now uncovered a much larger story.
34:08Wass has learned that in 1990, the U.S. government received intelligence information that the Saudis had aided Iraq's nuclear weapons program.
34:16The text of a still-classified CIA report dated June 1990 and made available to Wass states that analysts had reliable information that Saudi Arabia had provided $5 billion to Iraq's nuclear weapons program.
34:33According to the CIA report, beginning in 1985, some of the money flowed through the Gulf International Bank, which at the time was owned in part by the Saudi and Iraqi governments.
34:46It could not be determined whether subsequent reports further corroborated this intelligence information.
34:54But Frontline has talked to sources in the CIA and at the Pentagon's National Security Agency, who say that they first heard of a Saudi-Iraqi nuclear connection as early as 1986.
35:05Frontline has also learned of a still-classified 1989 intelligence assessment prepared by the Defense Intelligence Agency, which details money flowing from the Saudi Arabian military through an unnamed bank in Bern, Switzerland, to Iraq's secret military procurement network.
35:24Although the assessment does not specify how this Saudi money was used, it does note that the purpose of the procurement network was to develop ballistic missiles and nuclear weapons.
35:39Ambassador Akins believes that Saudi involvement in Iraq's nuclear program began after Israel destroyed a nuclear reactor near Baghdad in 1981.
35:49But after the Israeli attack on Baghdad, and the Israelis, one must remember, flew across Saudi Arabia to get there. The Saudis were extremely upset about this.
36:02Another indication of Israeli aggression against the Arab world.
36:07There was a decision at that point taken to build a nuclear weapon. The only way we're going to be able to stand up against Israel is to build a nuclear weapon.
36:15We're built in Baghdad, and the countries of the peninsula will pay for it.
36:21The Gulf Arabs' desire to assist Iraq's nuclear program may be traced to fears about Israel's nuclear arsenal.
36:29There's no doubt that the Israelis have a nuclear weapon. They probably have well over 200 nuclear bombs, and they have the means of delivering these bombs to every major Arab city.
36:40Certainly every Arab leader thinks that the only way of being able to make sure, to ensure that Israel does not use this bomb against the Arabs is to have a deterrent nuclear force of their own.
36:54On Capitol Hill, those who monitor nuclear proliferation say the Saudi-Iraqi nuclear connection is news to them.
37:05Senator John Glenn.
37:06And if the Saudis were putting money in there in general support of the war-making capability of Iraq at that time, I understand that.
37:15If they specified, though, if there's five billion and it's going in there specifically for nuclear development for an Islamic bomb, that'd be something else again.
37:24But I haven't heard any allegation like that before.
37:30Former Secretary of State James Baker and former CIA head Robert Gates declined comment to Frontline.
37:37When we asked former Defense Secretary Dick Cheney about the intelligence assessments we had reviewed, he would neither confirm nor deny their existence.
37:45If there were such intelligence reports, it's not something I can talk about anyway. It's all classified. And I never speculate one way or the other about what is or isn't in various intelligence reports.
38:00It may be that Cheney never saw the intelligence assessments. Frontline does not know to whom they were circulated.
38:10The Saudis have over the years supported a lot of folks, but the notion that I find it hard to believe that they would have provided five billion dollars to assist the Iraqis in the development of a nuclear weapon.
38:21The Iran-Iraq war ended in a stalemate in 1988, leaving a million casualties. The off-the-books U.S.-Saudi policy toward Iran had ironic results.
38:46Iran was prevented from overrunning Baghdad, yet Saddam Hussein invaded Kuwait two years later, threatening the oil fields of his one-time patron, the Saudis.
39:00Iran was prevented from overrunning the war.
39:01Iran was prevented from overrunning the war.
39:07Oil. It's what makes the special Saudi-U.S. relationship so special.
39:18Without oil, there is no alliance.
39:23alliance.
39:27America would have no interest in defending Saudi Arabia.
39:35Saudi Arabia is America's number one foreign supplier, responsible for one quarter of all
39:40oil imported by the United States.
39:44The price to Saudi oil is important to all Americans, and so is its price.
39:57Throughout the 80s, the Reagan-Bush administration insisted that oil prices should be determined
40:02by market forces.
40:05But most oil analysts say the U.S. and the Saudis entered into unwritten understandings
40:10about the appropriate price for oil, understandings that are still secret.
40:17The pricing of oil may be the most sensitive aspect of the U.S.-Saudi's special relationship.
40:22I believe there are broad understandings on what are acceptable ranges of oil prices.
40:32Energy analyst Charles Ebbinger.
40:33It certainly does.
40:34No one has ever had a definitive view of how Saudi policy was made or what the link is
40:40between Saudi and U.S. government policy in the enunciational oil policy.
40:45I happen to be of the view that, for the most part, the Saudis have priced their oil in
40:50a manner that they thought was commensurate with their interests while certainly taking
40:54U.S. government views under advisement.
40:57But there is a contradictory view implying a much closer relationship.
41:01Well, there's no question that because we're the largest consumer and they're the largest
41:05producer, we influence one another.
41:07Oil market analyst Edward Kraepels.
41:11It would be foolish to say the U.S. government doesn't talk about oil prices.
41:14It always talks about oil prices.
41:16What else is it going to talk to Saudi Arabia about?
41:19For years, the U.S. government has maintained that it never discusses oil prices with the
41:25Saudis.
41:29But in the early 80s, the Reagan administration was faced with high oil prices, which contributed
41:34to a deep recession in the United States.
41:36And the Saudis were losing market share due to high OPEC prices.
41:42We were interested in lower prices, no question.
41:45The Saudis basically were interested in lower prices, not because of the love of American
41:49eyes, but for their own long-term economic interests.
42:03In February 1985, with the Saudi economy suffering, King Fahad paid a state visit to Washington.
42:10It was his first visit to America as king.
42:17Fahad's five-day stay included a White House reception and dinner.
42:20But there's an Arab saying, the sands are blowing.
42:25And I submit to you, King Fahad, that if the sands of time give us any hint of the future,
42:31it is that in the days ahead, the friendship between the Saudi Arabian and American people
42:37will be a strong and vital force in the world.
42:40And that the future...
42:41The king also had a number of meetings with President Reagan.
42:44Much of what transpired during those meetings remained secret.
42:51Edwin Rothschild is the energy policy director of the public interest group Citizen Action.
42:58Rothschild used the Freedom of Information Act to gain access to some previously secret
43:02government files in an attempt to find out what happened during Fahad's visit to Washington.
43:07Here we've got material from the CIA.
43:11Huge blackouts of information they've excised that they don't want the public to see about
43:21what happened to the oil market.
43:24Same thing with the State Department.
43:27Rothschild obtained this secret State Department memo briefing Secretary of State George Schultz
43:32for a meeting he had with Saudi oil minister Zaki Yamani during King Fahad's visit.
43:38The memo prepared by Richard Murphy urges the Saudis to let the free market dictate prices.
43:44They say that pressure was put on the Saudis to lower the oil prices as a way to stimulate
43:51the United States economy.
43:54The only discussions I recall, and I honestly don't recall anything that put it as crudely
43:59as you have just suggested, that we want you to lower the prices, now maybe it was the
44:03same argument.
44:04We want you to avoid politicizing prices.
44:08Let the market, let the market rule.
44:11When someone uses the words market or let the market rule, you have to look beneath that.
44:18That's a code word.
44:20In this case, the market was two governments, the United States and Saudi Arabia.
44:26U.S. policymakers in the Reagan-Bush administration were convinced that lower oil prices were necessary
44:32for U.S. economic growth and for their own continued political success.
44:37More government officials painted a rosy picture for the Saudis about what would happen if the
44:43price of oil fell.
44:45They persuaded the Saudis that their market would increase, that the United States and
44:48Europe would consume more.
44:50The Reagan-Bush administration colluded with the Saudi Arabian government to drive world
44:55oil prices down.
44:58In late 1985, the price of oil began to drop precipitously, plummeting from $27 a barrel to $9 a barrel
45:06in just eight months.
45:12The fall in the price of oil successfully stimulated the overall U.S. economy.
45:17The stock market boomed, and conspicuous consumption became a hallmark of the go-go 80s.
45:22And the Saudis began to gain back market share from their OPEC brothers.
45:32But not everyone agrees that the Saudis and the Americans had colluded, as Rothschild claims.
45:36It's an interesting thesis, and I'm glad Ed has done the work that he's done, because otherwise
45:43there's just too much conventional wisdom about how the oil market works and how it got to
45:48this big change.
45:52Having said that, I think he stretches it too far.
45:56I think the idea that there was a conspiracy between the U.S. government and the Saudi government
46:01stretches it.
46:02There probably was an understanding that it would be nice if oil prices went down.
46:12But the effect of low oil prices on the oil-producing states of the southwest was extremely negative.
46:21Independent oil producer Mike Halbody.
46:23Maybe Rothschild is right.
46:27Maybe there was a collusion.
46:28I don't know.
46:29But all I know, one thing happened.
46:32Oil went down to $9 a barrel when they did.
46:35It devastated the independent petroleum segment in the United States.
46:39A million barrels a day of production in the United States was lost.
46:44Nearly 500,000 jobs were lost.
46:46It also created severe problems in the U.S. banking industry.
46:51And over the long term, we became far more dependent on imported oil, which was costing us
46:56in our balance of payments.
46:58It also undermined investment in alternative fuels, energy conservation, energy efficiency,
47:04and the effort to reduce our energy consumption.
47:08Billions of dollars of S&L losses attributed to the fact that independents were not able to
47:14pay their debts to banks and so forth.
47:17There was a tremendous amount of money lost.
47:20Billions of dollars.
47:22Billions of dollars.
47:23That economy really was shattered.
47:26By the spring of 1986, this domestic collapse moved the Reagan-Bush administration to conclude
47:32that the price of oil had gone too low.
47:37In April, Vice President George Bush prepared to visit Saudi Arabia.
47:43going there on a price-setting mission when we ourselves favor market forces.
47:49Before he left, Bush held a press conference.
47:51I'm glad you raised that because I think it is essential that we talk about stability
47:56and that we not just have a continued freefall like a parachutist jumping out without a parachute.
48:03And that's what essentially has happened to the price of crude oil in recent months.
48:08Our answer is market, market.
48:11Let the market forces work.
48:14It was a lie.
48:17The market was not going to rule.
48:20By no conceivable definition of market was that going to happen.
48:26Like most oil analysts, Melvin Conant says a free oil market does not exist.
48:32There has never been a free market for oil.
48:35It was either dominated by the Rockefeller Trust, which was not my definition of a free market,
48:43or it was dominated over many years by the majors, the American and British oil companies,
48:50and more recently, of course, the attempt by OPEC to dominate it.
48:56But to call oil a free market is a thoroughly misleading.
49:07George Bush arrived in Riyadh on April 5, 1986,
49:11and promptly issued a warning about the implications of low oil prices for the economy of the Southwest.
49:17We're on both sides of a two-edged sword, you might say,
49:22benefiting as the United States from lower energy prices,
49:26and yet severe economic dislocation to some parts of the country.
49:30It's a two-edged sword in a sense.
49:32Bush then met with King Fahad.
49:37Soon after the meeting, the Saudis scaled back production,
49:40and the price of oil doubled within seven months.
49:44But Bush's remarks had created controversy and confusion.
49:49Did the administration want low oil prices, high oil prices, or a free market?
49:55President Reagan did little to clarify the issue at his own press conference.
49:59While we have said we believe that this whole thing with the oil prices
50:03should be settled on the basis of the free market,
50:07the market in oil is not completely free.
50:10There are some major producers of oil who are governments.
50:16Ed Rothschild continues his effort to pry information out of the United States government.
50:22He's brought suit in federal district court in Washington,
50:25challenging the government's decision not to release all the documents he has requested
50:29under the Freedom of Information Act.
50:32And the U.S. State Department did give us some documents,
50:34but most of the important documents, about 300 of them,
50:39they simply said, we're not going to give you.
50:41We consider those documents to be confidential, classified, secret.
50:46Last July, the State Department filed a brief asking the court to withhold the documents,
50:53because making them public would reveal the intricate substance, nature, and extent
50:58of U.S.-Saudi cooperation on oil market issues.
51:03Meanwhile, U.S. reliance on Saudi oil is growing.
51:06In 1985, the U.S. imported 132,000 barrels of Saudi oil every day.
51:14By 1997, America's oil imports from Saudi Arabia are projected to rise to 2.4 million barrels a day.
51:22Such reliance on imported oil threatens our national security,
51:27says independent oilman George Mitchell.
51:30So therefore, if there's any one commodity that we should really work on,
51:34it should be oil and gas, to be more self-sufficient.
51:37We're now importing, you know, nearly half our oil,
51:398 million barrels a day or thereabouts.
51:41And that's, sure, a blueprint for disaster.
51:45The supposedly inexpensive Saudi oil comes with hidden costs, Mitchell says.
51:55Remember this.
51:56They don't factor in the low oil prices at the cost of security.
52:01If I were going to give you a guess on what every barrel of imported oil costs this country,
52:06which costs us $20 a barrel to buy now,
52:08it's probably in the neighborhood of $140 a barrel.
52:10When you're factoring the strategic defense we go through to protect our oil resources.
52:17And as I said, the energy plots we have had is not very good.
52:21It's a go to war.
52:23Go to war.
52:23Go to war.
52:34America's first oil war was a success.
52:37In large part due to the strength of the U.S.-Saudi relationship
52:41and the network of military bases bought with Saudi petrodollars.
52:48But this special relationship may be more fragile than it appeared during Desert Storm.
52:56During the war, the presence of a half million American men and women inside Saudi Arabia
53:01exposed strains within Saudi society.
53:05Tension between pro-Western moderates like King Fahad
53:08and fundamentalist Muslims who dislike the West.
53:12An Islamic fundamentalist backlash against the United States,
53:16similar to that which toppled the Shah of Iran in 1979,
53:20would be a nightmare for U.S. policymakers.
53:22If Saudi Arabia changed governments today, we couldn't afford it.
53:35The Saudi monarchy is the devil we know,
53:38and we definitely want to keep the people we know in power in Saudi Arabia.
53:42I guarantee you there's a reason we have those bases in Saudi Arabia.
53:53We saw one use for them in the war with Kuwait in Iraq.
53:58But they're also there to ensure an active ability of the United States and Allied forces
54:04to defend those oil fields,
54:06and that's not only from external aggression against the kingdom.
54:09There's a new administration in Washington.
54:15Bill Clinton's Saudi policy is yet unknown,
54:18and no representative of the Saudi government would speak to Frontline.
54:23But as long as the U.S. economy depends on Saudi oil,
54:28America's national security will depend on the defense of Saudi Arabia.
54:32The U.S. economy is yet to be a part of the Saudi Arabia.
55:02The U.S. economy
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56:07This is PBS.
56:15In South Africa, there's talk of an election.
56:18Democracy is the government of the people, for the people, by the way!
56:25Now the white government is fighting to keep its share of power.
56:29Apartheid's last stand, next time on Frontline.
56:31For a printed transcript of this or any Frontline program,
56:41please write to this address.
56:42Apartheid's last name.
56:50In South Africa, there's a weapon, and there's a lot ofガffeed to keep its share of power.
56:54But I'll give you another exception if there is a Gospel, by the Wolves.
56:57In South Africa, there's a lot of want to be recognized for the participants for the people,
56:59because the link of the vote has made a lot of templates.
57:01For the sake of giving, please react to it,
57:02for the men who are not involved inimi.
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