CHAPTER 10

Oil, OPEC, and the Overseers

There is no such thing as known world oil reserves. If we're willing to pay $1000 a barrel, even $100 a barrel, then there is more oil in the world than we can ever use. People who speak of known world oil reserves are talking about the stuff extractable at a reasonable, affordable price, and that's when the Middle East comes in, way ahead of everywhere else.' This is how Sam Nakasian, an Armenian-American lawyer who has dealt with Middle East oil for decades explained the world energy situation to me at the height of the oil crisis of the early 1970s.

Oil extractable cheaply, available in huge quantities and sold at a low price is the background to the story told in this book. This story concerns the House of Saud's abuse of the oil wealth and how the Saudi people are denied its full benefits. At present Saudi Arabia is producing oil from only 15 fields of the 60 or so which can produce it. In other words, if the production facilities were in place Saudi Arabia would be capable of producing much more oil, perhaps more than 20 million barrels a day. Saudi Arabia's reserves have increased yearly for over 20 years and in early 1993 there was a little-noticed important announcement of the discovery of a new oilfield 150 miles north of the city of Yanbu, 1100 miles from the Dhahran area, where most of the operating Saudi oil wells are. Some geologists believe that the new find confirms the existence of another important oil reservoir in the western part of the country, which means that Saudi Arabia's oil reserves will continue to increase for the foreseeable future.

Except for greater use of gas, which also comes in large part from the Middle East, all attempts by the industrialized world to find a substitute for oil have so far failed. Even the most dramatic and unexpected discovery of a substitute, and it is not on the cards, would mean a minimum of a 30-year change-over to a new source of energy. Oil is indispensable and only two developments have kept the dependence on it from fulfilling the doomsday prophecies of the late 1970s and producing meteoric price increases and a consequent transfer of wealth from the industrialized world to the oil-producing countries. The first is the progress made in the area of conservation and the second is the emergence of natural gas as an alternative energy source. New cars, planes and power stations consume 40 per cent less oil than before; the heating of buildings and the operating of everything else from refrigerators to hair-dryers are consuming considerably less energy than a few years ago. And gas, cleaner and available in prodigious quantities, is now easier to transport and use and is making slow but serious inroads as a replacement for oil in several areas of consumption. The results of these two developments have balanced the supply-demand situation for over 12 years and the decreasing demand has tipped the scales in favour of the consumers (between 1979 and 1982 the demand decreased by over 4 per cent a year). The predictions of the $100 barrel of oil which everybody made in the late 1970s have not come to pass.

Saudi Arabia has gas - not as much as oil, and not as much as Qatar, Iran or Iraq - but enough to maintain its position as a major energy supplier for over 30 years after the oil is depleted. The switch to gas production and use is gaining momentum and its share of the market is already big enough for the Saudis to undertake some costly development of their resources. The high cost of developing gas fields and converting plant and equipment to use it is among the reasons for its slow progress, but time and environmental considerations point towards an acceleration of this process. For the time being, however, oil is king.

If we accept the premise that oil is behind the importance of Saudi Arabia and that, however unattractive, the House of Saud is Saudi Arabia, then the preceding chapters have correctly addressed themselves to the unwholesome results. This chapter will deal with the history of the oil companies in terms of how they abused oil, and of the oil-producing countries until the emergence of OPEC became inevitable; how the same oil companies contributed to the corruption which developed in Saudi Arabia over the years; and how members of the House of Saud interfere in the marketing of oil.

The House of Saud abuses the country's wealth at its source and subordinates its national oil policy to personal whims and greed. Furthermore, Saudi Arabia's OPEC policy, which began as a genuine expression of the wish of the country to control its only natural resource, has degenerated into a policy aimed at reducing rather than enhancing the power of this organization.

With regard to the interference of members of the House of Saud in the marketing of oil, previous chapters have dealt with the use of money and power derived from oil. This chapter focuses on the interference in the marketing of the oil itself - before it is sold for money. Inevitably, abusing oil income and tampering with its marketing overlap, but the distinction is important. Meddling with the oil as a commodity is solid proof that the House of Saud sees the country and its oil as a piece of private property. It is theft at the source, the ultimate act of corruption.

The 'Seven Sisters' is the generic nickname for the major inter-national oil companies Exxon, Mobil, Chevron, Texaco, Gulf, Shell and British Petroleum. In the West, they are mysterious monoliths and, though the average individual associates them with monopolies, corruption and unethical lobbying and influence peddling, they are also the providers of a much-needed commodity. In the Middle East, their image is deservedly bad, for the Seven Sisters were guilty of seven major sins.

Acting in concert with and backed by their governments, the Seven Sisters have as their sole aim to maximize their profits against the interests of the oil-producing countries. Throughout the Middle East they arrogated to themselves the following rights: where to explore for oil, how much to invest in exploration, how much oil to produce, what price to charge, how to share the proceeds among themselves, how to transport the oil and what political leaders of the oil-producing countries to support or oppose. Given that oil is the primary source of livelihood for most of the oil-producing countries, the extent of influence, indeed control, the Seven Sisters exercised over the destinies of the producing countries was a unique historical situation the like of which the world is unlikely to see again. Indeed, given that in the 1940s and SOs the Seven Sisters controlled Iraq, Iran, Venezuela, Saudi Arabia, Kuwait, Nigeria, Indonesia and other countries, we are entitled to speak of an oil empire.

In the Middle East, it all began with the British oil concession in Iran in 1901. Bahrain and Iraq followed, the latter as an inheritance from Turkey after the First World War. The San Remo Treaty of 1920 recognized oil as a major strategic element and dealt with it in considerable detail. Among other things, Britain and France sought to divide the oil of the Middle East between themselves without involving American companies. The oneness of purpose between the oil companies and their governments was total, and it was the United States Government which successfully opposed this division of the spoils on behalf of Standard Oil of New Jersey. What followed in 1928 was called the Red Line Agreement, a compact between the oil companies to share the oil within a geographical line which included most of the oil-producing countries of the Middle East. This awarded the lion's share to Britain and stipulated the American share at 23.5 per cent, the same as that of France.

Throughout this period there were no consultations whatsoever with the governments of the oil-producing region, not even with independent Iran. The concessionaires made all the decisions as a single, exploitative group with the support of their governments. The American Government, beginning with the Wilson administra-tion, supported the unjust agreements reached by the oil companies with no apparent misgivings. In any case, the agreements were signed with leaders who were appointed, supported and beholden to the victors of the First World War. This amounted to the West signing agreements with itself by proxy. In the case of ARAMCO, it went beyond that and, as will be discussed further later in this chapter, the oil companies had considerable say on how the local governments, or chiefs, used what little money they received.

Saudi Arabia emerged as an oil concession area in the 193 Os, but the one-sided relationships between the oil companies and the local governments did not change until the 1950s. The British lack of interest which allowed the Americans to gain the Saudi concession meant the end of the inter-company Red Line Agreement, but the agreement between Saudi Arabia and ARAMCO subscribed to the companies' ways.

The final agreement signed by a desperately broke Ibn Saud and Lloyd Hamilton of Standard Oil of California provided the United States with a chance to support its claims that it was not a colonial power and to distance itself from Britain and France and their predatory ways. But the opportunity was not taken and the interests of Standard Oil of California superseded the avowed policy of the US Government. It was an uneven agreement signed by one of the largest corporations in the world, backed by a major power, and a destitute local chief. (Ibn Saud had already offered Karl Twitchell 10 per cent of his receipts from any oil agreement he obtained for him and later told Harry St John Philby that he was 'ready to give an oil concession for the whole country for a million pounds'.)

The Saudis who 'negotiated' the agreement, Ibn Saud and 'Minister of Everything' Abdallah Suleiman, knew nothing about international contracts. Furthermore, unlike their opposite numb-ers, the Saudis who gave the concession had little appreciation of the increasing importance of oil internationally, the coming reliance on their reserves or on international politics and agreed to a 60-year concession without asking for a single Saudi appointment to the board of directors. In signing the agreement in a hurry and without questioning any of its provisions, Saudi Arabia ceded part of its sovereignty without knowing it. The implementation articles called for referral in case of disputes to the International Court of Justice in the Hague with no reference to Saudi law. This surrendered Saudi Arabia's right to act to protect its rights in accordance with Saudi law.

Both sides got what they wanted: Ibn Saud used the oil income and US Government and ARAMCO loans to indulge himself, and the Americans controlled the largest oil reservoir in the world. Ibn Saud always wanted more money and he always sent his Minister of Everything to ARAMCO to get it, but he was scarcely concerned whether the money came in the form of royalty payments, grants or loans against future oil production. He felt no need to change the agreement. The Saudi people were not part of the equation; and Ibn Saud saw the agreement with ARAMCO as a personal deal -so much so that he waited until 1950 before creating a Directorate of Petroleum. For the rest of Ibn Saud's life, until 1953, the Saudis did not ask for any changes in the agreement. Even when their income from oil declined from 23.6 cents in barrel in 1940 to 17.3 cents a barrel in 1946, the overall relationship remained unaltered all the while the King's personal needs were met. But while Ibn Saud subscribed to his 'Catholic marriage' to ARAMCO, there was a lot of activity within the American camp and much of it affected America's and ARAMCO's relations with Saudi Arabia.

In 1938 the realization by Standard Oil of California of the vastness of the Saudi oilfields ledit to invite Texaco, Mobil and Standard Oil of New York to take shares in its oil concession. The ARAMCO consortium was created. In addition to the four part-ners sharing the development cost, the new consortium had more marketing outlets and greater leverage with the State Department. Amazingly even this change in ownership did not open Ibn Saud's eyes to what was happening in his own backyard and according to the Saudi writer Tewfik Al Sheikh his response was: 'Good, more companies means more money.

But preoccupation with the more immediate problems of the Second World War kept what was known to oilmen and US Government officials on the back burner. To the rest of the world the size and importance of Saudi oil was a postwar discovery. Suddenly, the United States needed the oil for its European-based armed forces and the navies which supported them, and to rebuild Europe's industry. The need for Saudi oil for domestic American consumption was becoming a reality, the income from the oil was deemed important and controlling Saudi Arabia's colossal oil reserves strengthened America's position as the world's number one international trader and economic power. These vital facts, unrecognized as they were by Ibn Saud, generated much debate within the American camp.

In 1943 US Undersecretary of the Navy William Bullit, sup-ported by none other than Secretary of the Interior Harold Ickes, proposed that the US Government acquire a majority shareholding in ARAMCO. The company, whose annual profits were nearly 200 per cent of its invested capital, rejected the offer through its shareholders. However, the debate as to who should control ARAMCO, anchored as it was in one of the most important postwar developments, produced a compromise solution. The company and the US Government agreed to coordinate their activ-ities. The Government openly undertook to protect the company as the producer of Saudi oil, mostly against other oil companies, and the company took immediate steps to produce oil in sufficient quantities to meet America's strategic needs.

This was when ARAMCO began to behave like a state within a state. Beyond playing middleman between the United States and Saudi Arabia and thus assuming a role in the latter's external affairs, it was ARAMCO which advised the Saudis on what nationals to hire, what clothes to wear and where to dig for water wells. Within the American city of Dhahran there was a lot of booze and women in shorts and the company had its own radio station and golf clubs. Simultaneously, ARAMCO began shipping oil in substantial quantities to meet the needs of the Petroleum Reserve Corporation (PRC) and decided to build TAPLINE, the Trans-Arabian Pipeline, which carried Saudi oil across Jordan and Syria to the Lebanese port of Sidon. As its name suggests, PRC was building up US reserves of oil and TAPLINE, above all, was aimed at keeping the American navy supplied with its fuel needs. It was against this background of convergence of interest that the roles of diplomats, CIA agents and company executives became interchangeable.

The increase in Saudi oil production and ARAMCO's profits in the period following the Second World War created unan-ticipated problems for the company. It was still paying Saudi Arabia one-sixteenth of the selling price of a barrel of crude oil. Neighbouring countries such as Iran were openly demanding a greater share of the receipts of the oil companies. Meanwhile independent oil companies such as Getty, Conoco and Italy's ENI were making approaches to the producing countries and offering them more money. The US Government, somewhat embarrassed by the profits ARAMCO was producing and afraid of anything which might disturb the company's unique position, reacted first. Assistant Secretary of State for Near Eastern Affairs George McGhee foresaw the coming pressures on ARAMCO to pay the Saudis more money and warned its management: 'It's in your interests if you make concessions to the Saudis.' Increasing the royalty paid to the Saudis became inevitable.

In 1949, responding to the pressures for it to share its excess profits, ARAMCO broke with the rest of the oil concessionaires and offered Saudi Arabia a 50-50 agreement. This called for the company to pay the country 50 per cent of the price of a barrel of oil after deducting production and marketing costs. On the surface and compared with what the other oil companies were paying, it was a generous offer, but Saudi oil was so abundant in total and in terms of production per well that ARAMCO's profits between 1949 and 1951 still rose by 300 per cent.

Despite a new royalty agreement which was to the liking of the Saudis and ARAMCO, there were two new influences on the Middle East oil picture in the early 1950s and they both came from the outside. In 1951, in a move which stunned the oil companies and the world, Iranian Prime Minister Muhammad Mossadeq nationalized the Anglo-Iranian Oil Company. Three years later, Egyptian President Nasser, who had assumed power in his country in 1952, began referring to the Saudi oil as 'Arab oil'.

Mossadeq's move exposed the vulnerability of the oil compa-nies as well as their strength. The mere act of nationalizing a Western oil company amounted to reclamation of a country's inalienable sovereign rights, an anti-colonialist revolution, but the oil companies conspired with their governments and paid the CIA and M16 to overthrow Mossadeq in 1953 (Operation Ajax has been documented by several people, including Kim Roosevelt, its controller). This sent the right signal to the producing countries, for it demonstrated the ability of the companies and Western governments to respond to similar moves. Nasser's claim began three years later and it took the form of appealing to the Saudi people to demand a greater share of ARAMCO's income and to share it with fellow Arabs.

The combined effects of Mossadeq and Nasser may have been limited by the results of the Iranian experience, but they still opened the door for the leaders of the oil-producing countries to think of ways to realize more money at the expense of the oil companies. Unfortunately, it was the hapless King Saud who led the way in trying to loosen ARAMCO's control of all aspects of producing and marketing the oil of his country.

Like independent oil companies, tanker-fleet owners were always on the lookout for ways to undermine the monopoly of the oil companies. In 1954 the Greek shipping magnate Aristotle Onassis decided that he had found the right partner to do it. Using secret emissaries and middlemen, he finally convinced King Saud to become his partner in a shipping company that would transport Saudi oil to the international market. The result was the Saudi Maritime Tanker Company and the agreement creating it assigned to the company the exclusive shipping rights hitherto held by ARAMCO.

The deal represented an intelligence failure on the part of the US Government and ARAMCO, since they heard about it only after the fact. But that did not mute their response and ARAMCO, with solid US Government backing which included statements by Secretary of State John Foster Dulles, maintained that it had the right to transport all Saudi oil. When Saud resisted, the US Ambassador to Saudi Arabia, George Wadsworth, bluntly told him that the eventual American response would be to stop extracting Saudi oil, which would break Saudi Arabia financially. Saud gave in, ARAMCO maintained its monopoly on transporting oil and notice was served, as before in Iran, that the oil companies who proved their willingness to pay the producing countries more money were unwilling to cede them any control. The previous statements made by US Government officials, including trouble-shooter General Patrick Hurley's comment that 'US companies don't follow an imperialist government', were shown to be empty, directed mostly against the British. But despite the failure of Saudi Arabia to have its own tanker fleet, Mossadeq and Nasser created a popular atmosphere which was not lost on the leaders and which foreshadowed the emergence of OPEC.

The first move towards the formation of OPEC came in April 1959, appropriately enough in Cairo, where an Arab Petroleum Congress was meeting to discuss the companies' relations with Arab countries. Equally appropriately, the moving spirit behind it was a Saudi, Abdallah Tariki, the newly appointed Oil Minister. By today's standards, what was agreed was modest indeed: essentially the producers had the right to review the contractual arrangements with the companies and to be involved in the pricing of their production. But at that time these were revolutionary demands which went to the heart of the relationship, and the significance of the joint declaration was enhanced by the presence in Cairo, as an observer, of Venezuelan Oil Minister Perez Alfonso.

Alfonso and Tariki met, liked each other and decided to coordinate Middle Eastern and Venezuelan oil production to stop the companies from manipulating the posted price of oil. The problem was to get other oil-producing countries to join them. Kuwait, still under British protection (it became independent in 1961) was happy to settle for coordinating minor aspects of the relationships with the companies. In fact, but for the preoccupation of Saud and Faisal with their personal quarrel, Saudi Arabia might not have joined in any efforts to form a cartel and Tariki himself was treading on thin ice. What the situation needed to move it forward was a dramatic demonstration that the existing contracts with the companies infringed on the rights of the producing countries. Foolishly, the companies which were dismissive of the Cairo conference, gave them a free hand.

With Esso in the lead, and with no prior consultation with the producing countries, in August 1960 the companies decided to reduce the posted price of oil by 7-9 per cent. The decision by itself would have represented a rare piece of stupidity but coming as it did after the Cairo conferees had asked for prior consultation on prices, it amounted to a challenge to their right to make such a request.

Tariki and Alfonso capitalized on the companies move. An oil producers' meeting in Baghdad in September 1961 to discuss cooperation among them was turned into one solidly in favour of creating an organization to oversee this cooperation. It was Alfonso who suggested the name Organization of Petroleum Exporting Countries and it was adopted unanimously. The origi-nal OPEC consisted of Venezuela, Saudi Arabia, Iraq, Iran and Kuwait, with Qatar limiting itself to the role of observer. The organization's first resolution rejected the companies' right to determine prices, proceeded to create specialist departments to deal with the various aspects of the oil monopoly by the Seven Sisters and promised measures to protect the rights of the countries. Even Kuwait, which until then had been counted on to present the companies' point of view, found itself agreeing to the measures wholeheartedly.

The companies' response to the creation of OPEC confirmed that their precipitous price reduction was not an accident but part of a policy which insisted on ignoring the wishes of producing countries. They decided to ignore it and resorted to old techniques to undermine it. In 1961 the New York Times ran a number of stories inspired by CIA agent Bill Eveland which were dismissive of the consortium and predicted it would fall victim to internal squabbling and be short-lived. The companies and the CIA paid newspapers to run stories resurrecting old feuds between the member countries in an attempt to foment trouble and stop them cooperating. They approached individual countries with promises of increasing their production at the expense of others, in particular an attempt to prise Kuwait loose by affording it a greater share of the market at the expense of populous Iraq.

Their efforts failed. Venezuela's Perez Alfonso was a master at educating his less knowledgeable colleagues in the long-term benefits of OPEC; Tariki's presence meant the consortium had the support of the most conservative country of them all; and Nasser's background exhortations created a popular atmosphere within the Arab countries which limited the Arab countries' ability to rescind a popular move. My reporter's notebook of 1960 includes a statement by the late eminent Lebanese oil expert and editor of the Middle East Economic Survey Fuad Ottayem: 'It [the creation of OPEC] is a popular political move, like wanting independence.' Saudi Arabia, a reluctant joiner of any organization, was caught. By the time Faisal became king in 1962, the most he could hope for was to reassert the House of Saud's control over the source of wealth of the country by firing Tariki. Tariki's departure improved relations between Saudi Arabia and ARAMCO. His replacement, Yamani, reflected Faisal's viewpoint and followed rather than led, but OPEC was already a reality and that meant Saudi Arabia had to develop policies to live within it. When that became apparent to the companies they finally recognized the organization, in 1962, three years after its creation.

The period from 1962 until the 1967 Arab-Israeli War was one of consolidation. There were many OPEC meetings which concerned themselves with royalties and production programming; in particular the member countries wanted their 50 per cent share to be in addition to the 'rent' per barrel the companies were paying, but very little happened. The companies would not budge on anything, and OPEC itself still had not mustered the means to force any changes; they were sparring but not fighting. Once again, it was Ottayem who described the situation accurately: 'OPEC isn't businesslike and the industry has shown no signs of imagination and flexibility.'

The outcome of the 1967 War inflamed Arab nationalism and in some cases frustration expressed itself openly, as in 1969, when Colonel Muammer Qaddafi overthrew the Government of Libya. The Arab pressure to use oil as a weapon coincided with an increase in worldwide demand and the situation placed OPEC in an excellent position to realize its demands for greater revenues and greater coordination among the producers. This was when Saudi Arabia showed its true colours and subordinated oil economics to the political interests of the House of Saud.

Because dealing with all the price increases, attempts to take over the companies and the devising of production quotas would mean rehashing all of OPEC's many meetings, outlining some of the major decisions having bearing on these elements is enough. However, it should be pointed out that oil experts are essentially agreed on the meaning of Saudi oil policy. Daniel Yergin, the author of the incomparable study of the history of oil, The Prize, states that there was 'a general meeting of the minds between Riyadh and Washington'. The oil-nationalist and one-time Tariki collaborator Anton Sarkis speaks of Saudi Arabia playing 'Don Quixote to protect US interests, even if it means sacrificing their interests and the rest of OPEC'. Oil affairs expert Pierre Terzian falls between the two and his record of the 1973 oil embargo and how it was thrust on Saudi Arabia, which lifted it first and forced the others to follow, is masterly.

In fact, all the oil experts are making the same point in their own way: since Tariki Saudi Arabia has never done anything except try to control the power of the OPEC cartel to suit the House of Saud and its American protectors. This is why every major OPEC meeting is preceded by Saudi-American contacts at the highest level (Reagan or Bush with Fahd) or a trip to Washington by the Saudi Oil Minister. In 1968 they advocated participation when the rest of the producing countries called for nationalization of the oil companies. It took a share in ARAMCO in 1974, a year after little Kuwait and Qatar had taken the same step and well after Iran, Iraq, Venezuela and Algeria. At one point in the early 1970s, in attempting to keep prices down, Saudi Arabia was selling oil at $14.45 a barrel when it was fetching $35 on the spot market. In 1979 Saudi Arabia lost $23 billion by sticking to its own lower price. And in 1981 Yamani told NBC News that Saudi Arabia 'organized the oil surplus' to decrease prices. Overall, Saudi Arabia gained control over its oil only when it became impossible not to do it.

The issue here is not moderation and I am a strong advocate of dialogue between the oil producers and consumers to arrive at a sensible way to price oil and maintain an economic equilibrium between the two sides. The real issue is the House of Saud's willingness to act contrary to the wishes of its people and the interests of OPEC. The Saudi taxi driver who complains about not benefiting from oil makes a valid point. The Arab who believes he should be considered a more deserving recipient of Saudi largesse makes another. Some OPEC members who cry for an increase in prices to meet their development needs are telling the truth. The House of Saud goes its own unhappy way regardless.

Another major failure of most writers who have claimed to tell the story of Saudi Arabia is exposed by the little space they have devoted to the influence of ARAMCO on Saudi life, in addition to its role as a major component of the oil industry. For four decades ARAMCO's presence affected Saudi governmental and social development in a profound way, as did its attempts to present Saudi Arabia to the world. ARAMCO is now a Saudi company; it was Saudized in 1980 as part of the changing relationship between the oil-producing countries and the oil companies. After Saudization its role changed, but there was a time when it was difficult to determine where the influence of ARAMCO and the oil companies which held all its shares stopped and the jurisdiction of the Saudi Government began.

We have seen how the oil companies prevailed on the US Government during the Second World War to rescue Ibn Saud financially and how the US Government ceded the handling of U~Saudi relations to ARAMCO during the 1950s, something which allowed a corporation driven by narrow self-interest to supervise those relations. I have also reported how the ARAMCO CIA created Islamic fundamentalist cells to counter the threat of Nasser's Arab nationalism and how they sent Saudi students to colleges thinking they were producing pro-American technocrats without much thought about the inevitable need to respond to the natural demands of educated Saudis. But ARAMCO's short-sighted policies went further and the company's influence on Saudi governmental policy, the behaviour of members of the House of Saud and the life of the average Saudi was incredibly pervasive, much greater than that of the oil companies operating in other countries.

In the 1940s and 50’s it was ARAMCO rather than the US Gov-ernment which used its huge resources to keep British and other non-American oil companies out of Saudi Arabia. ARAMCO was the only American presence in Saudi Arabia when Ibn Saud claimed the country's income as his own, and later the US Government found it difficult to divorce itself from the blind policies of the company. Above all, it was ARAMCO's involvement in shady and corrupt practices (direct bribes to government officials and pimping) which represented a pattern of behaviour which became a sordid tradition and contributed to the present sorry state of both Saudi Arabia and relations between the two countries.

ARAMCO's actions were the result of American lack of experi-ence in the Middle East and fear of the British. In fact, ARAMCO's fear of the British was pathological. It behaved like an insecure upstart who believed that the British were plotting to control Saudi oil and that Britain's long experience in the Arab world gave it an advantage. The supposed mysterious British advantage, a long colonial history, was misjudged. In reality, the British were never accepted by the people of the Middle East, only by some of their leaders, and ARAMCO and the Americans missed a chance to fill a void and assume the role of a more attractive presence to the Arab people. Instead, they competed with the British on the latter's own terms and in the process opposed all British moves without analyzing them. The blind opposition led to the use of underhand methods which produced a worse colonialism and undermined US-British relations and the combined Western position in the Middle East.

ARAMCO's desire to please Ibn Saud was behind opposition to the British moves to free the slaves and introduce financial controls in Saudi Arabia. These negative reactions were followed by others which had a disastrous influence on Saudi regional and foreign policy. In 1954 ARAMCO, with US State Department backing, encouraged Saudi Arabia not to join the British-led CENTO alliance of Iraq, Turkey and Iran. It wrongly saw the alliance as a threat to its oil interests, a case of commercial interests coming first, even above strengthening an anti-Soviet pact. In the late 1950s ARAMCO went further and aided and abetted the Saudi claim to the Bureimi Oasis, the disputed oil-rich wedge of land between Saudi Arabia, the United Arab Emirates and Oman. The Saudi claim was questionable, but ARAMCO spent millions of dollars sponsoring historians and researchers who produced improvised documents which it gratuitously supplied to the Saudi Government and released to the Beirut press to fan the flames of crisis between Britain (then the governor of Oman and the Emirates) and Saudi Arabia.

It was a successful effort which led to a break in diplomatic rela-tions between the two countries and indirectly to the strengthening of ARAMCO's position. Also, lest future historians forget, it is worth repeating that ARAMCO backed the Saudi Government's adoption of Islamic fundamentalism without much thought of the future. The same Lebanese, Syrian, Jordanian and Iraqi journalists and spies who promoted Islam attacked Britain. These moves, which corrupted the decision-making process of the country and stopped it from following sensible policies, took place against a background of aiding and abetting the corruption of its kings. Meanwhile Britain was incapable of supplanting the Americans in Saudi Arabia and the British had begrudgingly accepted the American dominance in the country and given up on the oil concession.

These huge policy errors represented the visible part of ARAMCO's policy towards the kingdom, but there was another part which was equally disastrous and that had to do with the company's attitude towards the personal behaviour of the House of Saud and the Saudi people. This was American naivete and bungling at its worst.

ARAMCO developed the plans and supervised the development of the royal experimental farms around the town of Kharj. The purpose of the farms was to grow fresh produce for the royal tables. Water in that area is scarce, more so than in other parts of Saudi Arabia, and it should have been used for more immediate needs. But this did not stop ARAMCO's agriculturalists. The need of water for drinking and sanitation was ignored and using it agriculturally amounted to depleting a precious resource. The growing of fruits and vegetables was essentially uneconomic; it would have been more sensible, given the value of the water, to import them. Furthermore, it was ARAMCO which lent members of the House of Saud huge sums of money to build palaces and kept them in debt when schools were needed. ARAMCO's money allowed King Saud to build 40 palaces when there were fewer schools. Any important prince could borrow money from it for equally wasteful purposes. It was also ARAMCO which initiated the global whoring expeditions which saw groups of princes travel the world, misbehave and give the Arabs a bad name. ARAMCO provided them with companions who facilitated their stupid indulgences and most of the fln~e it picked up the tab.

ARAMCO's stupidity did not stop with their mock-colonialist treatment of the royals, but extended to their overall behaviour. For the most part, the Americans who worked for the American oil consortium in Saudi Arabia during the 1940s, SOs and 60s came from the oil states of Texas, California and Oklahoma. They were 'rednecks' and called their hosts A-rabs. Everything which followed was an extension of this insulting misnomer. These people were primarily technicians who were paid over the odds, two or three times what they received for similar jobs in America. The added enticements included an exclusive, air-conditioned life full of weekend barbecues in a specially built American town, the North Camp or American Compound, part of today's Dhahran.

Little attention was paid to the way the 'natives' lived. Most of them were on hourly wages and lived in shacks and tents, and even the senior staff among them were relegated to cement cubicles with little resistance to the hot days and cold nights of the desert. The so-called 'native quarter', also purpose-built, lacked a refuse-collection service and was provided with less than a fifth the water per capita supplied to its American counterpart. The Saudis who had the competence to perform duties similar to those of some of the Americans got less than a third of their salaries and the furniture and other human comforts provided for the Saudis were considerably inferior to those of the visitors. For the Saudis, the American Compound was a no-go area.

ARAMCO, in line with its anti-British policy, openly criticized colonialism while creating a situation worse than had existed in India and other British colonies decades if not centuries before. The Americans were new to their role and it showed. The rednecks received no counselling in how to behave towards their colonials and ended up adopting a crude, superior attitude which ignored the passage of time and the basics of colonialism's civilizing mission. They did not subscribe to a separateness based on group-think or class, but treated the Saudis the way they treated the blacks in America. They considered them unfit, lazy and inferior and, instead of adopting a constructive attitude towards them, abused them.

Abdallah Tariki was among the first people to suffer from American discrimination and short-sightedness. The man who eventually became Saudi Arabia's first Oil Minister worked for ARAMCO towards the end of the 1940s, after earning a masters degree in petroleum engineering from the University of Texas. Tariki had married an American girl and, along with his college degrees and relatively important position in the company, he felt entitled to live in the American Compound, or at least somewhere comfortable. But ARAMCO's policy-makers thought otherwise and Tariki was cold-bloodedly relegated to the inferior 'native quarter' and a stark cubicle with hard beds and no refrigerator. Tariki was and is a populist and living with his own people did not faze him except for the gross insult of being discriminated against in his own country. The effect of this situation on his American wife was dislocating; denied access to fellow Americans, she found herself with nobody to talk to. Soon the Tarikis divorced and his wife left for Texas with their small son. The incident left Tariki emotionally scarred and bitter.

Tariki got his chance to pay ARAMCO back in 1959, when he was Oil Minister, a favourite of King Saud, a co-founder of OPEC and the darling of the young nationalists in his country. The Ministry in Riyadh had moved across the street to a larger and more lavish building from the first one it had occupied. A group of ARAMCO directors went to the new building to visit Tariki, for an ordinary meeting to discuss matters of mutual interest. Tariki took the opportunity to pay them back. He kept them waiting for 45 minutes, after which they were told that His Excellency would receive them in the old building. When they entered Tariki's old office, he greeted them, saying, 'This is where I receive directors of ARAMCO.' Some of the directors did not know what he was talking about, but others remembered and tried to apologize.

Tariki's treatment by ARAMCO was of course unacceptable, but his case was not unique and it reflected a larger attitude. The oilmen accused Saudi natives of being thieves and made fun of the way they prayed, their native dress and love of dates. Even the blood used for transfusions in the hospitals serving ARAMCO's American employees went through a more stringent inspection process than the blood used for Saudi nationals. Naturally, there were separate cafeterias, cinemas and athletic events, and the sight of an American woman talking to a Saudi, even her driver, amounted to a scandal.

If this was not enough to create instant anti-Americanism, there were hidden forms of this lack of judgement and blatant discrimination which were guaranteed to produce a broader, deeper, longer-lasting resentment. Among them was the way ARAMCO selected its trainees. Training local people cost the company less than importing carpenters, drivers and fitters from other countries. It was a laudable effort and the ARAMCO propaganda machine made much of it, but the selection process was discriminatory and the people chosen were the ones who were deemed 'hip' in American terms. For example, people who observed the Muslim prayer were discriminated against and so were people who were not subservient enough during job interviews or those who liked Nasser. The ARAMCO screening process amounted to an arrogation of a right to 'Americanize' the place. The Saudis who accepted being called 'Mo' got trained, but others who objected to reducing the Prophet's name to a vulgar diminutive did not. A guy who wore jeans stood a better chance than one who wore the native dress (infinitely more comfortable in the heat). Clean-shaven men were given precedence over those with moustaches and beards. Competence counted for less than a willingness to emulate the American way of life. Chewing Wrigley's gum became a local habit.

Some of the trainees became a credit to ARAMCO and to their country, but were they on the whole representative Saudis or a new breed? Even they were representative, there was a built-in, highly questionable insensitivity in the training process. For example, ARAMCO personnel liked Farhan Al Qahtani, so they decided to educate him at their expense. They sent him to school to study English. But the man was an illiterate and he was a Saudi and ARAMCO had the facilities to teach him Arabic. ARAMCO did not care, and Farhan mastered English while remaining illiterate in Arabic. Later he left ARAMCO to become one of their small contractors. He could read company documents and requests, but could not translate them into written Arabic for his suppliers.

Farhan made a lot of money, lost it, made it again and lost it again. The Americans always supported him more than others because they liked his ways. His contacts with ARAMCO and its personnel had enamoured him of American ways and he became fond of shouting 'a darn good idea', 'look me straight in the eye and tell me that', and 'shake it but don't break it'. Farhan was an expression of ARAMCO culture. Eventually he began complaining about his own people and found their company less agreeable than that of Americans. Conversely, the Saudis did not like Farhan any more; he was a synthetic creation - not truly one of them - and sadly for him, he never really belonged to the other side.

The damage caused by ARAMCO's short-sightedness affected the whole community of Arab workers who worked for it. Inevi-tably discrimination produced natural sociological and political reactions. The Saudi workers herded to live in compounds away from their families and tribes developed serious psychological problems of loneliness and depression which led them to turn to drink and drugs. The rate of suicide among them was more than 20 times the rate among the general population. Some of those who escaped these psychological problems and adopted American ways lived out of harmony with their Arab background. They developed commitments to materialism, which led to a belief in the nuclear family rather than the tribal extended family. The dissolution of family and tribal bonds caused many of them to refuse financial help to their parents in their old age.

The discriminatory policies and the sociological and psychologi-cal damage suffered by some workers produced a wider reaction. From November 1953 until 1956, non-acceptance of ARAMCO's methods and their results on occasion took the form of strikes. Rather than do something to remedy the causes of these protests, ARAMCO worked with the local province emir to punish the strikers. On one occasion they provided him with a list of 600 workers who had petitioned them to improve living conditions. The workers were imprisoned; most were tortured and many of them were never seen again. In fact it did not need a strike to eliminate what ARAMCO called troublemakers (taking time for prayer was troublemaking) and individual workers were known to disappear after they questioned their pay or their entitlement to promotion. There is no record of anybody in ARAMCO objecting to the surrender of workers to the merciless sword of Prince bin Jalawi. Perhaps this why this province of Saudi Arabia saw the greatest number of attempted coups against the Government.

It is difficult for a loyal American to admit it, but the British would have never created a Farhan. Nor were they in the business of creating imitation Britons, isolating people from their roots, put-ting their language above Arabic, introducing insulting diminutives or hip phrases or relying on the methods of a bloodthirsty prince. Rightly or wrongly, the British attitude on the governmental, corporate and individual levels consisted of maintaining cultural separateness and a commitment to improve the situation of the people from within the existing cultural context. ARAMCO's application of colonialist behaviour was superficial. It confused separateness with discrimination and ignored the more subtle and complicated parts that amounted to a long-term policy. Among other things, the British would have curbed bin Jalawi and seen to it that the punishment was proportionate to the crime.

The American attitude which allowed the House of Saud to view the country's income as belonging to them was part of a bigger picture which found ARAMCO and the various American contracting companies which worked with it aiding and abetting the march of Saudi corruption in many ways. The country's first Minister of Finance (the 'Minister of Everything') was bribed every time his help was needed, mostly to convince Ibn Saud of something ARAMCO wanted. Other government officials were bribed through being awarded lucrative contracts the execution of which they knew very little about - at a time when more qualified people existed. Says the Saudi writer Tewfik Al Sheikh: 'They bribed every prince, manager, judge, employee and policeman within sight.'

In addition, US efforts in the field of education suffered from misdirection and mism~nagement. Unlike the scholarships the British provided in Iraq and Iran, those provided by ARAMCO always went to the sons of leading families and there was little consideration for competence and the results. I know a former Saudi student, the son of the country's first Minister of Posts and Telegraphs, who spent ten years on an ARAMCO scholarship getting a bachelor's degree, and there were many like him. Most of the time the recipients of ARAMCO scolarships chose fields of specialization which had nothing to do with their country's needs. They went to colleges where the weather was pleasant and took the easiest courses to get any degree. The British oil companies in Iran and Iraq produced engineers and doctors while many of the Saudi students danced with the football bands of the Universities of Miami, Texas and Southern California and spent the rest of their time going to nightclubs.

With the usual exceptions, the lack of supervision of what may have been well-intentioned efforts vitiated or cancelled their effec-tiveness and reduced them to propaganda exercises. Even efforts to promote trade between the USA and Saudi Arabia fell into the same trap. Some of the trade delegations organized by ARAMCO in the 1950s and 60s were dubbed whoring delegations. The Saudi delegates selected by the company were royals or came from good families. ARAMCO could not and would not tell them what to do and they spent their time chasing floozies and drinking champagne from their slippers. ARAMCO went further and paid the debts of gambling princes, bought useless, substandard medical and other equipment from others and indulged in outright pimping. (New York restaurateur J. M. had an ARAMCO retainer and specialized in blondes on the plump side.)

ARAMCO's corruption, when it was still an American con-sortium owned by the American majors, often took the form of serious acts to promote the House of Saud and its governance while undermining real and imaginary enemies and distancing themselves from the Saudi people and their needs. Not only did ARAMCO create a bogus history for the House of Saud which connected its members with the Prophet, but the company's Beirut public relations offices and its sister company TAPLINE, a large operation of over 70 people, aided the Saudi attempt to corrupt the local press by paying Lebanese journalists to write stories favourable to the royal family. The stories told phoney tales of generosity and public concern in which every school opening was the work of a prince and the money came from his personal pocket. To ARAMCO even Muhammad Twin-Evil was worthy of praise; it presented him as the democratic head of a family council. Moreover, there was a negative aspect to its influence on the mercenary Arab press, and during the early days of OPEC, ARAMCO's journalist-spies tried to get compromising pictures and information of members of the delegations of the various countries who worked to create an effective cartel. On one occasion in Beirut in 1960, members of the impecunious Egyptian delegation were given a lavish party by a Lebanese journalist whose sole aim was to get them to drink heavily and misbehave, a ridiculous response to the substantial challenge posed by Nasser.

When most of their blackmail schemes failed, ARAMCO tried old-fashioned bribery. In addition to bribing clerks and hotel chambermaids to get them copies of OPEC delegations' docu-ments, it was another incident concerning former Oil Minister Abdallah Tariki which demonstrated the extent and depth of ARAMCO's determination to corrupt or undermine the oppo-sition. Tariki moved to Beirut after he was fired by King Faisal in 1962. He capitalized on the city's free atmosphere and began writing articles which underlined the injustices of the Saudi oil concession agreement and other ARAMCO practices, including discrimination, extraction methods and lack of adherence to conservation practices. ARAMCO was determined to silence him and very much in character they thought they could bribe him. My journalist father, Abu Said of Time magazine, was a friend of Tariki and of one Joe Ellender, a senior official of ARAMCO's huge Government Relations Department. After a period of testing the water, Ellender asked my father to play intermediary with Tariki and see if he would accept $15 million in return for stopping his attacks on ARAMCO. Tariki, as my father had expected, turned down the bribe, which my father at least had never taken seriously. He went further and began sleeping in different places, just in case ARAMCO's frustration with his activities led them to consider other ways of stopping him. But why would ARAMCO offer him such a colossal bribe? What was it they were doing which deserved such a huge pay-off to a man they had already accused of being a communist, a man they called the Red Sheikh? Did Tariki know more about their misdeeds than I have been able to report? In likelihood, the answer is yes.

ARAMCO's approach reflected the attitude of the oil companies which owned it. Why did Mobil Oil conduct the most extensive business lobbying since the Second World War to promote the House of Saud and why did it oppose the airing of Death of a Princess? Why did the oil companies, according to the testimony of their executives in front of the House subcommittee investi-gating American multinational corporations, admit to paying $5 million to lobbyists? Why did they produce pamphlets, books, documentaries singing the praises of the House of Saud? Why are many American universities with departments of Near or Middle Eastern studies (such as Johns Hopkins University, the Aspen Institute, Duke University and the University of Southern California) receiving funds to re-examine history and in the process negate the purpose for their being? The answer is simple: ARAMCO equated the welfare of the House of Saud with the welfare of the Middle East. This becomes startlingly clear when one examines the closeness of the propaganda of the oil companies to the policies of the House of Saud.

In the 1950s, when the House of Saud was paying lip-service to the Palestinian problem, ARAMCO's propaganda effort addressed itself to advocating an even-handed policy between the Arabs and Israel. Later it switched direction and began promoting King Faisal's brand of Islam. While I am totally in favour of an even-handed American foreign policy on the Arab-Israeli problem, surrendering to the House of Saud and the oil companies all efforts to attain even-handedness produced a questionable approach which alienated many American people and gave the Palestinian problem a dubious Saudi face it did not deserve. The same companies which promoted Islam are now rewriting history and beginning to question the perils of adopting it. Overall, the practices of ARAMCO and the oil companies have represented an unwelcome influence on the Saudi Government and people, the Middle East and the Government and people of the USA. The only concern of the propagators of these practices was money and all else was subordinated to that, in ugly and unacceptable ways.

Until the mid 1960s, when Nasser's propaganda machine publi-cized it to incite the Saudi people against their rulers, the budget of the House of Saud was published and known to all. Except for periods under King Saud when it rose to over 30 per cent, most years it amounted to 15-17 per cent of the national budget. King Faisal changed all that and characteristically found ways to hide his family's colossal theft. Of the 15 people I asked the same question, not a single oil expert, journalist, former diplomat, think-tank member, Saudi merchant or opposition member was willing to discuss the process by which the budget of the House of Saud, the money paid to members of the royal family as salaries and 'benefits', is now determined. When the question was addressed to people who were speaking off the record they fidgeted and reminded me of the rules governing the interview, while the ones who were speaking on the record had a change of heart and asked that their innocent comments be kept off the record. Even with so many known misdeeds of members of the House of Saud staring us in the eye, talking about their direct theft of their country's oil wealth amounted to an uncomfortable, even criminal topic of conversation.

The facts, stitched together from previous published budgets, the brief comments of the interviewees, published records, analysis of the costs of running the royal court and comparison of published, official budget figures with calculations of the oil income based on the country's oil production, are much simpler. The House of Saud's annual budget fluctuates between $4 billion and $7 billion (excluding pay offs from regular non-oil trade and arms deals), most years still around 15 per cent of the national income. But it is no longer a budget - it is closer to a rake-off.

Initially Faisal made the family budget dependent on the level of oil income. He imposed a royal tax of so many cents per barrel of oil, which the family got regardless of the level of oil production. But this system was discarded after a few years because the numbers and needs of the family were disproportionate to the oil income and it became difficult to balance the two. Now the family decides what its needs are and acts accordingly. The greater part of the budget, $3-5 billion, is paid to King Fahd from the oil income before it is recorded as national income. The Oil Minister subtracts money from the country's oil income and transfers it to the King's personal account and declares the rest as national income. Fahd allocates the money he receives between the various members of his family in an improvised manner. The amount of money transferred to Fahd's personal account depends on him; he tells the Oil Minister how much he needs and the minister obeys him. In addition, Petromin, the marketing arm of ARAMCO, which is now a Saudi Government-owned company, augments this rake-off in two ways.

Quantities of oil are given to certain members of the royal family as outright gifts and the recipients sell it on the open market and keep the proceeds. Greater quantities of oil are allocated to some of them to sell as commission agents, to market in accordance with formulas which produce huge profits for them. In the latter case, the royal beneficiaries remit money to Petromin after they subtract their commission, which is often arrived at arbitrarily. While they are always expected to pay back amounts considerably smaller than Petromin would get from selling the oil itself, they have been known to keep more than half the price in commissions. Overall, the commission level is highest when the demand for oil is high; even for commission agents the difference between official prices and spot prices is wider.

These acts of extortion (one tenth of what they receive would still make them the highest-paid royals in the world) may represent the major elements of a foggy picture. But they are not the only ones which lead to the distortion of the Saudi national income, and do not account for why what the country realizes from the sale of oil and the figure of the national budget are not compatible and why these figures change several times during any one year. There are always last-minute developments and decisions which are superimposed on the national budget and which are decided by the King alone and these have the effect of throwing the budget out of balance.

We have already seen that the King, reacting to outside and internal influences in a way aimed at creating a favourable image for himself and his family, sponsors tens of thousands of pilgrims from other countries to perform the Hajj in Mecca. This activity is increasing because Saudi Arabia is competing with Iran and militant Muslim countries and with attempts to win over the people of the Muslim republics of the former Soviet Union. Beyond that, the kingdom is always responding to crises in the Arab and Muslim worlds which affect and occasionally endanger the Saudi image as a pretender to Arab and Muslim leadership - for example, giving aid to the Muslims of Bosnia, paying Pakistan to influence Afghanistan's internal affairs or bribing Syria to continue with the Middle East peace process. In responding to unexpected external crises, King Fahd has been known to order the shipment of free oil to needy countries, on occasion to Bangladesh or Somalia when they promised to follow a Saudi policy line, and at other times he has discounted the price of oil to non-Muslim, pro-Saudi countries such as Greece and Spain. Whether it is an outright gift or discounted, the oil aid is conditional. It goes only to those who support Saudi Arabia and is not allocated on a humanitarian basis. The Sudanese get none and are allowed to starve to death because their government does not accept the Saudi interpretation of Islam.

Furthermore, in Saudi Arabia itself oil has been used to pay for costly projects without the value of the oil bartered showing in the national budget. This happens when the inclusion of these projects in the official budget reflects badly on the originally published cost figures, when there are huge cost overruns as a result of mismanagement of development schemes and when the project is supervised by an important prince who sees it as a monument to his ego (for example, the building of an Olympic-size sports city by Prince Faisal bin Fahd). Of course there are the much simpler cases of favourites of the King needing more 'pocket money'. Between 1991 and 1993 Saudi Arabia produced 200,000-300,000 barrels of oil per day to pay for a massive, questionable and unpopular project to build underground oil-storage facilities, and did something similar to pay for the purchase of unneeded oil tankers from South Korea, where members of the royal family were the commission agents, and for other grandiose but mostly uneconomic projects. The more controversial a project, the more likely it is to be paid for through the barter of oil without the figures showing in the budget, and this leads to confusion and distortion of published budget figures.

What is of most concern, however, is what happens often and on a large enough scale to underscore the House of Saud's attitude to its country's natural wealth: the marketing of oil by members of the family who believe they own it. The massive amounts of oil assigned to members of the family by Petromin are called 'princely allocations', and while the size of these allocations varies, it may well be over a million barrels a day. So, how do members of the family, princes and princesses, deal with their princely shares, who gets oil to sell, why, how much and how do they go about marketing it?

In the late 1970s and early 80s Muhammad Twin-Evil was the leading House of Saud oil seller on the international spot market. He demanded either 300,000 barrels of oil a day as a gift or to play commission agent, and his position as the family's elder statesman and tough guy meant that his demands were always obeyed. Petromin handles the marketing of Saudi oil not committed to the major oil companies, and it always placed Muhammad's requests at the top of its princely list. His use of coarse salesmen who were very like him meant that international oil traders often ignored them. Muhammad not only sold 'his share' on the open market, but when acting as a commission agent he decided his own commission and remitted the rest of the money to Petromin. Regardless of what Muhammad's primitive efforts produced, the management recorded the transactions without comment. (I myself turned down one of Muhammad's oil salesmen who came to me with a dirty piece of paper with his Highness's signature and stamp on it. Because the scribbles on the piece of paper were near-illiterate and I could not believe that someone so basic and unsophisticated would be entrusted with something so vital and substantial, I ignored him.) Muhammad's income from these transactions fluctuated, but it was in the region of $2~ million a day. What he did with this income is anybody's guess, but his descendants are billionaires and most of his cronies became multimillionaires.

Princess Hia, a full sister of King Fahd, lacked Muhammad Twin-Evil's masculine clout, need or greed. But there was an occasion in the early 1980s when she was broke and Fahd did not have enough cash to meet her expenses. So he ordered Petromin to give her a million barrels of oil to tide her over and she sold it on the open market and pocketed the proceeds. Her transaction showed on the official Petromin files; to King Fahd the needs of a spendthrift sister who lives behind the veil were nothing to hide. In trying to determine why Hia needed $30 million, I discovered that she buys clothes from a Lebanese family who get them in Paris and Milan and sell them to her at seven to ten times the original price. She usually buys 50 dresses at a time to give them away as presents.

Princess Moudi bin Abdel Aziz, another full sister of King Fahd, was a real spender and her needs were even greater than her sister's. According to Petromin documents, she got two lots of oil to sell : one consignment of a million barrels and another of half a million. Her ineptness at realizing an easy profit from a floating fortune showed when she entrusted a Lebanese by the name of Mansour Shafique Dhahdoub with the sale of the oil. Rumour has it that he pocketed more than his generous share and this led to trouble and a court case. It is difficult to tell why a woman who lives in seclusion needed whatever money resulted from the sale of all this oil. Perhaps it is because Princess Moudi never travels without an entourage of 20 people who stay with her in the world's most expensive hotels.

Not all members of the House of Saud behave as simply as Prince Muhammad Twin-Evil or Princesses Hia and Moudi, for some are driven by greed to maximize their return in very shady ways. Prince Muhammad bin Fahd, the King's son, governor of the eastern province of the country and his father's candidate to succeed him, was involved in one particular deal which epitomized greed. In May1981, Muhammad bin Fahd, one of his family's big billionaires, obtained his father's approval and claimed a share of Petromin oil on the pretext of selling it to a Japanese company by the name of Petromonde. On the surface, this looked like a straightforward commission transaction similar to what members of the House of Saud do every day and which was meant to produce a huge, one-off profit - like those that Muhammad got from many of the commercial deals in which he had been involved. In reality, the purchaser did not exist and a close investigation by the Wall Street Journal revealed that Petromonde was part of Al Bilad, an international corporation owned by none other than Prince Muhammad himself. His Highness was not content with the commission; he also wanted to control the resale of the oil to make more money, and it was estimated that his income from the deal amounted to $11 million a month for over a year.

Sometimes princely allocations of oil and paying for projects through selling it on the open market without including the receipts in the national budget come together. In the following example, it was not a prince who marketed the oil but a collection of well-placed people who got royal approval to claim part of the Petromin share. They included the son of former Oil Minister Yamani and the Director General of Petromin, Abdel Hadi Taher.

In 1983 Petromin contracted with a company called Petrolia to build the Rhagib refinery and it was agreed that it would pay for most of the multi-billion-dollar contract by selling oil - on the face of it an old-fashioned barter deal. In this convoluted transaction, it was King Fahd's friend John Latsis, the Greek shipping magnate and oil dealer, who controlled Petrolia, and the price of oil used to barter was to be determined on a 'net back' basis (the price of refined oil minus the costs of transporting it, refining it and marketing it). But the oil was not shipped directly to Petrolia and instead was sold on the open market and the money went to the group of influential Saudis who were entrusted with paying Petrolia after claiming a commission. I have seen documents published by Sourakia magazine which show that Fadh personally approved the deal and the unnecessary step of including the Saudi group. The number of people involved and the complicated nature of the deal led to quarrels and legal suits in Paris, Switzerland and elsewhere. For a while, Continental Group Holdings, the company which actually sold the oil on behalf of the Saudi middlemen, was left without its share of over $13 million dollars. Continental sued and was eventually paid; the fear of a scandal led to an out-of-court settlement. Everybody involved got their share. It is an impossible deal to follow, but estimates place the share of all the participants at 30 per cent of the total value of the oil bartered.

Another deal involving Abdel Hadi Taher took place in 1979, when he tried to sell oil to the Italian state-owned company ENI. Using Europe-based intermediaries, Taher offered ENI 100,000 barrels a day for 90 days. The price was $19 a barrel, nearly half of what oil was fetching on the spot market. The deal was signed in Riyadh in the name of a Panamian company, Sophilau Inc. The oil was never delivered. The Italian press got hold of the story and the agreement fell apart because it was difficult for Taher to justify selling oil at such a low price. Meanwhile Taher and his group had been paid $17 million which, because of Saudi Government protection, ENI had no way of recovering. In Saudi Arabia there were no repercussions, for Taher was only doing what members of the House of Saud had been doing on a regular basis and he had received the necessary royal approval for the transaction.

Perhaps the two most dramatic and startling cases of the use of Saudi oil for personal gain involved Minister of Defence Prince Sultan and former Chief of Intelligence and King Faisal's brother-in-law Kamal Adham. The Sultan case was an oil barter deal involving the purchase of 10 Boeing 747s for Saudia Airlines. The size of the deal is enough to make it unique: it called for the sale on the open market of 34.5 million barrels of Saudi oil. But there was more to the deal than its size: it represented a gross manipulation of the source of the country's wealth and the subordination of its oil policy and commitments to OPEC to the whims of an individual prince.

Prince Sultan's full title is Minister of Defence and Civil Aviation and as such he controls the policies and the purchases of Saudia Airlines, the country's flag carrier and the only airline permitted to service its extensive internal routes. In 1984 Saudia, without the usual preliminaries of considering what aircraft it needed, decided to double its fleet of Boeing 747s, from 10 to 20. Nobody but Sultan knows what was behind the decision. Airline experts suggested that the aircraft were not needed, Saudia's load factor reflected the decline in business activity in the country which resulted from the decrease in oil prices and the speedy delivery schedule added to the contradiction and the mystery.

Sultan proceeded to implement the purchase with suspicious haste, and there is no doubt that the whole deal took place against a background of unsuccessful business ventures by the Prince. It has been suggested that he was the leading investor in Adnan Khashoggi's failed Salt Lake City development scheme and that other property investments in France had lost him more money.

The decision to buy the Boeing 747s was unanticipated and there was no allocation for them in the country's oil-production schedule or published budget. So Sultan decided to barter oil through a circuitous route, to pay Boeing and the engine-maker Rolls-Royce.

The two companies had no interest in the mechanics of the deal or how Sultan was manipulating it - just in receiving the agreed price for their products.

Enter Yamani. The Saudi Oil Minister had just reached an agreement with OPEC specifying the Saudi level of oil production and the ministry's income was based on this production level and already allocated. In other words, the 34.5 million barrels Sultan needed would exceed the agreed OPEC production level for Saudi Arabia. Yamani objected to the Boeing deal because a Saudi violation of the quota system would open the floodgates for other OPEC members to do the same. The Oil Minister's reputation was at stake, but his appeals to Sultan went unheeded, as did his complaints to King Fahd. The deal went through, the market was flooded with extra oil and the price of oil tumbled. Other countries followed suit and pushed the price of oil lower. The personal needs of His Highness had undermined the pricing structure of oil throughout the whole world.

The Kamal Adham deal was also startling. Until 1978 Adham headed the dreaded internal security apparatus and his brother-in-law, King Faisal, was a firm believer in its value and Adham's personal contribution. In 1961 Saudi Arabia awarded the concession for oil in the Neutral Zone between Saudi Arabia and Kuwait to a Japanese consortium who proceeded to call themselves the Arabian Oil Company. Adham, whom Faisal had used as an emissary in deals he was loath to entrust to outsiders, represented Saudi Arabia in the negotiations with the Japanese group and Faisal thought it right to reward him for his efforts.

Faisal gave Adham an incredible 2 per cent share of the price of all the oil raised by the new company. Nobody knew the eventual value of the royal gift, but the then Oil Minister, Abdallah Tariki, thought it would be in the billions of dollars. Tariki objected and made known his disapproval in a meeting of the council of ministers. A few months later, Faisal dismissed Tariki.

Adham was also involved in the BCCI scandal. He settled the resulting claims on him by the United States banking regulatory authorities by paying back $115 million in one go. He could well afford it.

Having looked at enough examples of how the Saudi royals abuse their country's wealth through the direct control and sale of oil to meet their expenses or to satisfy their greed, it is only fair to state that it is the one activity in which Crown Prince Abdallah and Foreign Minister Saud Al Faisal have never indulged and the one which has met with considerable resistance from all the people who have held the oil portfolio. Abdallah Tariki, the country's first Oil Minister, made a big issue of it with King Faisal; his stand against the Boeing deal was Yamani's moment of honour and the present incumbent, Hisham Nazer, is totally opposed it it. Perhaps this is because the Saudi people feel strongly about their oil and the oil ministers know this. I remember a Saudi taxi driver telling me: 'It's not their oil, it's my oil, my oil, and I don't get a single barrel.'