US embassy cable - 96RIYADH1338

C O N F I D E N T I A L SECTION 01 OF 03 RIYADH 001338 
 
 
LONDON FOR TUELLER; PARIS FOR ALLEGRONE 
 
E.O.12958: DECL:  OADR 1.6X6 
TAGS:  PGOV, ECON, PINR, SA 
SUBJECT:  SAUDI ARABIA: THE CROWN PRINCE'S VIEWS ON 
          REFORM, GULF WAR SPENDING, ISRAEL AND IRAN 
 
REF: A. RIYADH 0023, B. RIYADH 0029 
 
1.  (U)  CLASSIFIED BY DCM THEODORE KATTOUF: 1.5 B,D. 
 
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SUMMARY 
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2.  (C)  A SELF-CONFIDENT CROWN PRINCE, OBVIOUSLY AT 
HOME WITH HIS EXPANDED AUTHORITY, SEPARATELY LECTURED 
FORMER U.S. AMBASSADORS TO SAUDI ARABIA, A/S RICHARD 
MURPHY AND CHAS FREEMAN, ON THE UNFAIR FINANCIAL BURDEN 
THE U.S. PLACED ON SAUDI ARABIA DURING THE GULF WAR. 
ECHOING SENTIMENTS EXPRESSED MORE FORCEFULLY BY MERCHANT 
FAMILIES AND OTHER COMMONERS, ABDULLAH STATED THAT THE 
SAG SPENT "FAR TOO MUCH" AND QUESTIONED U.S. MOTIVES IN 
EXACTING THE FINANCIAL TOLL.  INDICATING THAT MORE 
BELT-TIGHTENING WAS IN ORDER, THE CROWN PRINCE ALLUDED 
TO THE NEED TO "UNIFY" THE SAUDI BUDGET, WHICH FREEMAN 
INTERPRETED TO MEAN BRINGING ON-BUDGET THE MAMMOTH 
OFF-BUDGET MONIES DEVOTED TO THE MOSQUE RECONSTRUCTION, 
AL-YAMAMAH WEAPONS DEAL, AND THE STRATEGIC (OIL) STORAGE 
PROJECT.  ABDULLAH QUESTIONED U.S. ALLEGATIONS OF A 
LIBYAN CHEMICAL CAPABILITY, PARTICULARLY IN LIGHT OF USG 
SILENCE ON ISRAEL'S NUCLEAR WEAPONS PROGRAM.  FINALLY, 
ABDULLAH URGED THAT THE U.S. FIND COMMON GROUND ON WHICH 
TO CONSTRUCTIVELY, OR AT LEAST COMMERCIALLY, ENGAGE 
IRAN. 
 
3.  (C)  ABDULLAH'S REMARKS, AND WE ASSUME THEY WERE 
CONVEYED ACCURATELY BY THE TWO FORMER AMBASSADORS, SHOW 
THAT THE CROWN PRINCE APPEARS WILLING TO CHALLENGE A 
NUMBER OF BASIC TENETS OF RULE BY THE AL FAHD.  PLACING 
THE OFF-BUDGET ITEMS IN THE GOVERNMENT BUDGET, LONG A 
GOAL OF REFORMERS HERE, WOULD WEAKEN THE ABILITY OF THE 
ROYAL FAMILY TO CARRY OUT THE PERSONAL LARGESSE THAT IT 
HAS OFTEN USED TO ENSURE FAMILY UNITY AND BUY THE 
LOYALTY OF ITS SUBJECTS.  (IT COULD ALSO PROVE 
DETRIMENTAL TO THE PALACE CONSTRUCTION INDUSTRY.) 
OVERALL, THE CROWN PRINCE'S VIEWS REFLECT A SAUDI RULER 
WHO MIGHT TAKE REFORM OF THE OLD REGIME SERIOUSLY, WHO 
LIKELY ENDORSES THE SAG'S LESS RESPONSIVE STANCE TO U.S. 
REQUESTS FOR FINANCIAL SUPPORT FOR FOREIGN POLICY 
INITIATIVES AND COMMERCIAL DEALS, BUT WHO MAY BE MORE IN 
TUNE WITH THE SAUDI POPULACE.  AN IMPORTANT CAVEAT, 
HOWEVER, IS THAT IT IS A LOT EASIER TO ESPOUSE REFORM, 
THAN IT IS TO ACHIEVE IT, PARTICULARLY IN A POLITICAL 
SYSTEM BASED ON FAMILY CONSENSUS AND COMPROMISE.  END 
SUMMARY 
 
4.  (C)  IN THE LAST WEEK, TWO FORMER AMBASSADORS TO 
SAUDI ARABIA, RICHARD MURPHY AND CHAS FREEMAN, VISITED 
RIYADH AND SEPARATELY RELATED TO THE AMBASSADOR AND POL 
COUNSELOR THEIR IMPRESSIONS OF THE POST-GULF WAR SAUDI 
POLITICAL ORDER, BASED ON MEETINGS WITH THE CROWN 
PRINCE, MORE JUNIOR MEMBERS OF THE AL SAUD, AND MERCHANT 
FAMILIES IN RIYADH AND JEDDAH.  MURPHY IS A FREQUENT 
TRAVELLER TO SAUDI ARABIA (THIS TRIP WAS UNDER THE 
AUSPICES OF THE COUNCIL OF FOREIGN RELATIONS), WHILE 
FREEMAN'S VISIT WAS HIS FIRST OPPORTUNITY TO CALL UPON 
THE CROWN PRINCE SINCE HIS DEPARTURE IN AUGUST 1992. 
 
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ABDULLAH ASCENDANT 
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5.  (C)  FREEMAN DESCRIBED A RELAXED, YOUNGER-LOOKING, 
AND MORE CONFIDENT CROWN PRINCE WHO, IN THE COURSE OF 
THE HOUR LONG MEETING, DID NOT ONCE STUTTER.  DESPITE 
HIS IMPLICIT ACKNOWLEDGMENT THAT THE CURRENT POLITICAL 
ARRANGEMENT -- WITH THE KING TECHNICALLY BACK IN CHARGE 
BUT, FOR ALL PRACTICAL PURPOSES, ISOLATED IN JEDDAH -- 
IS AWKWARD, ABDULLAH EXUDED SELF-CONFIDENCE AND GREATER 
AUTHORITY. 
 
6.  (C)  MURPHY TOO COMMENTED ON ABDULLAH'S UNUSUALLY 
RELAXED AND RELATIVELY LOQUACIOUS STYLE AND SECONDED 
FREEMAN'S IMPRESSION THAT THE CROWN PRINCE IS ENJOYING 
HIS EXPANDED RESPONSIBILITIES.  MURPHY RELATED THAT 
WHILE ABDULLAH SIMPLY STATED THAT FAHD IS "FINE," A 
CLOSE ARAB FRIEND OF THE KING'S HAD TOLD HIM THAT DURING 
A RECENT PHONE CONVERSATION WITH FAHD, THE KING FALTERED 
AND THEN WAS HEARD ASKING SOMEONE "WHO AM I SPEAKING 
WITH?"  FREEMAN'S REQUEST TO MEET WITH THE KING WAS MET 
WITH SILENCE BY ROYAL PROTOCOL. 
 
7.  (C)  BOTH FORMER AMBASSADORS WERE TOLD BY FAMILIES 
WHO ENJOY BUSINESS RELATIONSHIPS WITH THE AL SAUD THAT 
FAHD'S BROTHERS ARE CONCERNED THAT HE MAY BE TAKEN 
ADVANTAGE OF BY HIS AVARICIOUS IN-LAWS, THE 
AL-IBRAHIMS.  JEDDAH MERCHANT FAMILIES BELIEVE RIYADH 
GOVERNOR PRINCE SALMAN'S CONTINUED PRESENCE IN JEDDAH BY 
THE KING'S SIDE IS REQUIRED IN ORDER TO FEND OFF EFFORTS 
BY AL-JAWHARA (THE KING'S FAVORITE WIFE), HER SON ABD 
AL-AZIZ (THE KING'S FAVORITE SON), AND HER BROTHERS, THE 
AL-IBRAHIMS, TO SECURE A GREATER PORTION OF THE KING'S 
ASSETS.  ACCORDING TO THESE REPORTS, AL-JAWHARA AND ABD 
AL-AZIZ ARE UNEASY WITH THE GRADUAL CEDING OF POLITICAL 
AUTHORITY TO THE CROWN PRINCE. 
 
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PICKING UP THE TAB: THE UNPLEASANT GULF WAR MEMORY 
--------------------------------------------- ----- 
 
8.  (C)  ABDULLAH TOOK BOTH MEN TO TASK FOR WHAT HE 
JUDGED TO BE THE UNFAIR FINANCIAL BURDEN PLACED ON THE 
SAUDI ECONOMY BY THE U.S. DURING DESERT SHIELD/STORM. 
REFERRING TO JIM BAKER'S MEMOIRES, THE CROWN PRINCE TOLD 
FREEMAN HE APPRECIATED HIS EFFORTS DURING THE WAR TO 
CONVINCE THE FORMER SECRETARY OF STATE TO MODERATE HIS 
FINANCIAL DEMANDS.  IN CONTRAST TO THE EMOTIONAL TRIBUTE 
ABDULLAH PAID TO THE U.S. FORCES SIX MONTHS AFTER THE 
WAR, IN THIS MOST RECENT MEETING WITH MURPHY THE CROWN 
PRINCE SPONTANEOUSLY REMARKED, "WE SPENT FAR TOO MUCH ON 
THE GULF WAR," AND QUERIED "WHY DID YOU GET US TO SPEND 
SO MUCH?"  IN RESPONSE, MURPHY STATED THAT AT THE TIME 
WE WERE CONCERNED OVER ENGAGING THE FOURTH LARGEST ARMY 
IN THE WORLD AND THAT OUR INTELLIGENCE ON IRAQ WAS 
ALWAYS WEAK.  ABDULLAH SNAPPED IN RESPONSE, "WHERE WAS 
THE CIA, SLEEPING?...IS IT ANY BETTER NOW?"  THE CROWN 
PRINCE CONCLUDED BY NOTING, "WELL, THE MONEY IS GONE, 
SPENT." 
 
9.  (C)  AMONG THE PRIVATE SECTOR, REACTION TO THE 
FINANCIAL AFTER-SHOCKS OF THE GULF WAR IS "VIOLENT," 
ACCORDING TO FREEMAN.  WHILE CAREFUL TO COUPLE THEIR 
CRITICISMS WITH APPRECIATION FOR THE U.S. MILITARY 
RESPONSE, SAUDI BUSINESSMEN TOLD FREEMAN THAT THE U.S. 
TOOK ADVANTAGE OF AN ALLY IN A TIME OF CRISIS. 
FURTHERMORE, FREEMAN WAS LECTURED, THE PROMOTION OF 
LARGE COMMERCIAL CONTRACTS AFTER THE WAR, SUCH AS THE 
BOEING AIRPLANE DEAL, FURTHER REDUCES THE GOVERNMENT'S 
ABILITY TO MAKE GOOD ON ITS DOMESTIC ARREARS.  BASED ON 
HIS MEETINGS WITH THE MAJOR MERCHANT FAMILIES, FREEMAN 
HAZARDED THAT THE SAG OWES BETWEEN 12-15 BILLION USD IN 
ARREARS.  (NOTE:  EMBASSY ESTIMATES PLACE ARREARS AT 
10-13 BILLION USD.) 
 
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ABDULLAH'S PLATFORM: UNITED BUDGET, LESS CORRUPTION 
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10.  (C)  ABDULLAH INDICATED TO FREEMAN THAT HE WAS 
PREPARED TO TACKLE SAUDI ARABIA'S FINANCIAL DIFFICULTIES 
HEAD-ON.  NOTING THAT MORE ECONOMIC BELT-TIGHTENING 
WOULD HAVE TO BE IMPOSED, THE CROWN PRINCE AGREED THAT 
SOME MEASURE OF AUSTERITY MIGHT PROVIDE A VALUABLE 
LESSON FOR SAUDI YOUTH, WHO, ABDULLAH BELIEVES, HAVE 
BECOME TOO SOFT DURING THE BOOM YEARS. 
 
11.  (C)  IN RESPONSE TO LEADING QUESTIONS FROM 
FREEMAN,  THE CROWN PRINCE OPAQUELY COMMENTED ON THE 
NEED TO "UNIFY" THE SAUDI BUDGET, WHICH FREEMAN READ TO 
MEAN INCORPORATING INTO THE BUDGET THE OFF-BUDGET 
EXPENDITURES RELATED O THE "RECONSTRUCTION" OF THE TWO 
HOLY MOSQUES IN MECCA AND MEDINA, THE SAG-UK AL-YAMAMAH 
WEAPONS PROGRAM, AND THE STRATEGIC STORAGE PROJECT. 
(NOTE: IT IS FROM THESE PROJECTS, WHOSE ESTIMATED 12 
BILLION USD BUDGETS SIDESTEP THE MINISTRY OF FINANCE, 
THAT THE KING AND MINDEF SULTAN ARE BELIEVED TO DIVERT 
GREAT SUMS INTO THEIR PERSONAL ACCOUNTS OR TO COMPANIES 
IN WHICH ROYAL FAMILY MEMBERS HAVE AN INTEREST.)  THE 
CROWN PRINCE NOTED IN GENERAL TERMS THAT SUCH A TASK 
WOULD NOT BE EASY. 
 
12.  (C)  A FURTHER INDICATION THAT THE CROWN PRINCE 
WILL EMBRACE AN ANTI-CORRUPTION DRIVE AS PART OF HIS 
POLITICAL AGENDA, FREEMAN CONTINUED, IS THE TIGHT 
SURVEILLANCE THAT ABDULLAH KEEPS HIS SONS UNDER WHEN IT 
COMES TO PRIVATE BUSINESS DEALS.  (COMMENT: 
NEVERTHELESS, WE ARE AWARE THAT ABDULLAH'S PROGENY, SUCH 
AS DEPUTY SANG COMMANDER PRINCE MITIB, ARE NOT LACKING 
IN AVARICE.) 
 
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ABDULLAH ON ISRAEL AND IRAN 
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13.  (C)  COMING ON THE HEELS OF A TELEPHONE 
CONVERSATION WITH EGYPTIAN PRESIDENT MUBARAK, THE CROWN 
PRINCE QUESTIONED MURPHY CLOSELY ABOUT LIBYAN CHEMICAL 
CAPABILITIES.  ABDULLAH, MURPHY NOTED, REMARKED THAT THE 
U.S. HAS MADE AGAIN ACCUSATIONS OF A COVERT WEAPONS 
PROGRAM AGAINST LIBYA AND PAKISTAN, YET HAS SAID NOTHING 
ABOUT ISRAEL'S NUCLEAR CAPABILITY.  ABDULLAH EMPHASIZED 
THAT ARAFAT CANNOT ACCEPT ANY SETTLEMENT WHICH IS UNJUST 
AND STRONGLY CRITICIZED THE COLLECTIVE PUNISHMENT BEING 
METED OUT BY ISRAEL AGAINST THE PALESTINIANS.  MURPHY 
URGED ABDULLAH NOT TO EXAGGERATE THE HUMANITARIAN 
DIMENSION, WHICH CAN BE REMEDIED QUICKLY, BUT FOCUS ON 
WHAT CAN BE DONE TO SHORE UP THE POLITICAL WILL OF BOTH 
PERES AND ARAFAT TO MOVE THE PEACE PROCESS FORWARD. 
 
14.  (C)  REPEATING COMMENTS WHICH HE FIRST MADE TO 
MURPHY IN NOVEMBER 1995, THE CROWN PRINCE URGED THE 
UNITED STATES TO FIND AN ARENA IN WHICH TO ENGAGE IRAN, 
ESSENTIALLY ENDORSING THE EUROPEAN UNION'S POLICY OF 
CRITICAL DIALOGUE.  ABDULLAH CHARACTERIZED THE TRADE 
EMBARGO AS COUNTERPRODUCTIVE TO THE U.S.'S LONG-TERM 
INTERESTS. 
 
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COMMENT 
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15.  (C)  ABDULLAH'S REMARKS, AS REPORTED BY THE TWO 
AMBASSADORS, REFLECT A RULER WHO TAKES ECONOMIC REFORM 
SERIOUSLY; WHO, AS KING, LIKELY WILL SHARPEN THE PATTERN 
OF THE LAST SEVERAL YEARS UNDER FAHD'S TENURE OF 
DECLINING RECEPTIVITY TO APPEALS BY THE USG FOR DONOR 
AID TO SUPPORT FOREIGN POLICY INITIATIVES; BUT WHO IS 
MORE IN TUNE, ECONOMICALLY AND POLITICALLY, WITH HIS 
SUBJECTS.  WHILE FREEMAN DESCRIBED HIS CONVERSATION WITH 
ABDULLAH ON ECONOMIC REFORM AS PART KABUKI THEATER, HE 
LEFT THE MEETING CONVINCED (AS ABDULLAH'S RIGHT HAND 
MAN, SHAYKH ABD AL-AZIZ AL-TUWAIJRI, HAS OFTEN TRIED TO 
CONVINCE US - REFTELS) THAT ABDULLAH IS SERIOUS ABOUT 
REFORMING BOTH THE SAUDI ECONOMY AND THE ROYAL FAMILY. 
 
16.  (C)  IF HE WERE TO SUCCEED IN "UNIFYING" THE 
BUDGET, WHICH HAS LONG BEEN THE GOAL OF SAUDI ARABIA'S 
TECHNOCRATS, ABDULLAH WOULD REMOVE FROM THE 
DISCRETIONARY SPHERE THE FUNDS WITH WHICH THE AL FAHD 
HAVE USED TO SUPPORT THEIR LAVISH LIFESTYLE, AS WELL AS 
DISTRIBUTING TO THEIR SUPPORTERS.  ABDULLAH'S STATEMENTS 
MAY REFLECT HIS OWN FRUSTRATION AT HAVING THE KINGDOM'S 
DISCRETIONARY FUNDS TIED UP IN OFF-BUDGET, AL 
FAHD-CONTROLLED, PROJECTS.  NEVERTHELESS, IT IS EASIER 
TO ENDORSE REFORM AS A CROWN PRINCE, THAN IT IS TO 
EFFECT IT AS A KING.  REGARDLESS OF ABDULLAH'S 
CREDENTIALS AS A REFORMER, HIS POLITICAL AND ECONOMIC 
AGENDA WILL REQUIRE HIS ACHIEVING A FAMILY CONSENSUS 
THAT WOULD LIKELY INVOLVE COMPROMISES WITH THE VERY 
PRINCES WHOSE LIVELIHOOD HIS REFORMS WOULD THREATEN. 
 
 
MABUS