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History, Financial Strength and Military Preparedness

OPEC member countries, tunnel accident, Prince Khalid, Saudi security, Saudi men

In March 1975 King Faisal was assassinated by a nephew and was succeeded by Prince Khalid. Khalid, however, was in poor health and his half brother, Crown Prince Fahd, became the power behind the throne. The country remained conservative, and its influence kept OPEC from raising its prices to the extent most member countries wanted. In 1980 it was announced that the Saudi government had taken full control of Aramco’s assets retroactively from January 1976. Much of the petroleum money that poured into the country was reinvested in the West or spent on arms, but domestic inflation and a barely manageable pace of development were continuing problems.

Saudi Arabia took a dim view of the conciliatory overtures by Egyptian president Anwar al-Sadat to Israel in 1977, and after the signing of a peace treaty between the two countries in 1979, Saudi Arabia cut off financial aid to Egypt and severed diplomatic relations. The Islamic revolution in Iran that year and the subsequent seizure by fundamentalist Muslim guerrillas of the Grand Mosque in Mecca jolted the Saudi government, which afterward placed an increased emphasis on military preparedness and security. To ensure Saudi security, the United States in 1981 agreed to sell several Airborne Warning and Control System (AWACS) planes to the Saudis, an arrangement that provoked heavy opposition from Israel and its friends in the United States, who feared an upset of the military balance in the Middle East.

King Khalid died in June 1982 and was succeeded by Fahd. As king, Fahd sought to maintain Saudi Arabia’s traditional Islamic values, while continuing the process of rapid modernization made possible by the nation’s abundant oil resources. In 1986 he assumed the religious title “Custodian of the Two Holy Mosques” in an effort to safeguard the Western-friendly Saudi regime from opposition by Islamic militants. Nevertheless, King Fahd faced difficulties within and beyond his country. In July 1987 at least 400 people were killed in Mecca when Iranian Shiite pilgrims clashed with Saudi police. More than 1,400 pilgrims died in July 1990 after a bridge and tunnel accident caused a panic.

Iraq’s takeover of Kuwait in August 1990 had significant military, political, and economic consequences for Saudi Arabia. To counter the Iraqi military threat, the Saudi government provided for temporary deployment on its own territory of hundreds of thousands of U.S. and allied troops, and it contributed forces to the multinational coalition that fought Iraq in the Persian Gulf War in early 1991. Through the late 1990s Saudi Arabia continued to serve as the main base for American air patrols over southern Iraq.

After the war, Saudi Arabia increased its oil output to compensate for the loss of petroleum supplies from Iraq and Kuwait. Economic problems became evident, however, in 1993. The United States had insisted that Saudi Arabia pay for the costs of U.S. military protection during the war, costing the country $51 billion. Meanwhile, the Saudi economy was feeling the effects of a budget operating under deficit since 1983. War payments and declining oil prices forced the Saudi government to cut social and defense spending and to take out loans from international banks. Despite these problems, in 1994 Saudi Arabia helped defeat a campaign by Iran and other OPEC member countries to lower OPEC’s overall production ceiling so that limited supply would prompt a rise in prices. As oil prices continued to fall in the late 1990s, Saudi Arabia reversed its position and led an initiative for OPEC to reduce production in order to raise the price of oil. In March 1999 OPEC, along with four independent oil-producing nations, approved a yearlong production cutback. Saudi Arabia committed to the largest cutback, reducing production by 7 percent.

Political reforms decreed by King Fahd in 1992 established a consultative council to serve in an advisory capacity, provided for a bill of rights, and changed the rules of succession. The Consultative Council (Majlis al-Shura) was convened for the first time in December 1993. Social reforms were less evident, however. Saudi men and women still were not permitted to attend public events together, and workplaces remained segregated. Government officials in the United States voiced continuing concern about human rights violations in Saudi Arabia, particularly the abuse of prisoners by guards and police.

King Fahd remained an active sponsor of Islamic causes worldwide in his second decade as Saudi leader. In 1992 he conducted an extensive campaign to end the bloodshed in the former Yugoslav republic of Bosnia and Herzegovina. The same year, Fahd’s government established diplomatic links with the Muslim republics formerly included in the Union of Soviet Socialist Republics: Tajikistan, Turkmenistan, and Uzbekistan. In January 1994, Palestine Liberation Organization chairman Yasir Arafat visited Riyadh to discuss with King Fahd the prospects for Middle East peace. The meeting represented a significant rapprochement between the two leaders, whose relations had been strained since the Persian Gulf War. In March 1991, Fahd chose not to receive Jordan’s King Hussein, who was visiting Mecca for the annual hajj (pilgrimage). Relations between the Arab leaders had been unfriendly due to Jordan’s support for Iraq during its invasion of Kuwait.

In February 1995 the governments of Saudi Arabia and Yemen agreed to negotiate a settlement to their long-standing dispute over their shared border; the agreement followed several months of small-scale fighting in the border region. More than five years later, in June 2000, the two countries finally announced an agreement settling the border dispute. Meanwhile, in 1998 Saudi Arabia began production in an oil field lying in the disputed region of its border with the United Arab Emirates (UAE). Saudi Arabia failed to meet the UAE’s demand for a share of the oil and gas produced from the field. In 1999 the UAE protested by boycotting an oil ministers’ meeting in Saudi Arabia that was to formally inaugurate the field.

Meanwhile, after suffering a stroke in November 1995, Fahd gave control of the country to his half-brother, Crown Prince Abdullah, in January 1996. Fahd reclaimed his authority the following month, but due to the king’s overall poor health, actual power continued to shift to the crown prince. In June 1996 terrorists exploded a bomb at a housing center for U.S. military personnel near Dhahran; at least 19 people were killed, more than 300 people were wounded, and several buildings were heavily damaged.

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