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Enclosure No. I

Jidda A-23

CONFIDENTIAL

INDEX

WAR FOR OIL:

ARMAGEDDON AS FUN CITY

I.            Introduction                                                                 2

II.           The Flaws in the Basic Premise and the Moral Issue        6

III.          The Reactions of Others to Invasion                              10

IV.          The Invasion and Its Costs                                           20

V.           Saudi Actions and Reactions                                         20

VI.          The Length of the Cutoff and the Consequences             25

VII.         The Alternatives to War                                               29

VIII.        Conclusion                                                                  32

James E. Akins - Jidda

March 1, 1975

Revised March 30, 1975

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CONFIDENTIAL Enclosure No. 1 Jidda A~23 Page 2 of 34

CONFIDENTIAL

WAR FOR OIL:

ARMAGEDDON AS FUN CITY

I. Introduction

Secretary of State Henry Kissinger in an interview in January said the United States would react with force if we were being strangled by a cutoff in oil deliveries. The question was hypothetical, but no one could maintain that there could have been any other response than the one he made. To have intimated that we would simply allow ourselves to be “strang1ed” would have called for his immediate impeachment. Secretary Kissinger in a subsequent interview said that he obviously had not meant there could be military action just to bring down oil prices.

The implications of the first remark nonetheless were noted with concern in most of the Organization of Petroleum Exporting tries (OPEC) and in Europe. Many of them condemned the Secretary and the United States for this “provocation.” Saudi Arabia made no public statement and no representations to us. Saudi officials told us in private discussions that they understood what the Secretary meant and they trusted us. In spite of significant differences of opinion and actions on the Middle East problem - they regarded their friendship with us as a cornerstone of their foreign policy. They knew we knew this and they knew Saudi Arabia was too important to the United States and its allies for us to jeopardize this close association.

Enclosure No I Jidda A-23 Page 3 of 34

CONFIDENTIAL

The invasion issue would probably have been quietly forgotten had it not been picked up, embellished, and presented to the world in five separate articles, all of which were widely quoted and discussed in the United States, Europe, and the Midd1e East. The first was in a prominent journal of intellectual opinion - it appeared shortly after Secretary Kissinger’s statement and was reproduced in the Sunday edition of Washington’s morning newspaper. Then there were two articles in widely-circu1ated American newspapers which were based on “sources” inside the Pentagon Then in mid-February, the Sunday edition of another major newspaper carried a detailed account of how many actions could be taken against OPEC short of war but that even war could be carried out if necessary and occupation of Arabia should be easy. Most recently and most provocatively was the lead article in the March issue of a literary magazine. Some of the articles and the related commentary concentrated on military action against all the Arabs, some against the Arabs of the Persian Gulf but a common theme to all of them was the necessity of occupying Saudi Arabia. Some insisted this move be taken immediately as the West was already being “strangled’ by the high oil prices; all five articles agreed this would be done in time of war. And all five agreed that only Saudi Arabia had enough oil to force down world oil prices. The premise, on which all the articles were based, was that the high price of oil is the main problem the world’s economy faces today; that inflation and unemployment are caused by the price of oil and that there is no way we could or should cooperate with the OPEC countries. This being accepted, the authors continued that we have the right to take the oil, that we could take it with a minimum of difficulty, that supplies would be disrupted for only a very short time, that Saudi Arabia and its OPEC allies would be powerless to react, and that the Soviet Union, because Saudi Arabia was a “friend” of the United States, would not intervene or allow its Middle East allies to intervene. Invasion, it was argued, would be simple, cheap and easy. Furthermore, it would be morally justified, in fact, it is a moral imperative for us to take over Saudi Arabia, produce its oil and sell it for almost nothing. The world’s inflation would then be cured; unemployment would end; and we would devote - ourselves to the task of finding new energy sources when the Saudi oil would finally be exhausted.

CONFIDENTIAL

Enclosure No.I Jidda A-23 Page 4 of 34

The losers would clearly be the Saudis. To some, the dispossession of six million Saudis would be regrettable, but - it would be argued - a small price to pay for world happiness. The 200 million living in other CPEC countries - Indonesia, Iran, Venezuela, Nigeria, Algeria, would of course also be hurt but they would not be invaded. Their loss of income would just be one of life’s difficulties to which they would have to adjust.

The January article was answered by I F Stone in the New York Review of Books February 5. In his essay - ‘War for Oil,” Mr. Stone condemned the immorality of the invasion proposal and details how it could lead the world and particularly the United States to disaster. The invasion proposal, as such, was attacked by Terence McCarthy in the March issue of Ramparts. His thesis was that the United States, unable to discipline itself into facing its internal economic problems, would attempt an external solution. It would try to seize the Arab oil fields, restore its own prosperity, and reduce Europe and Japan to vassalage. It would also run the very real risk of a nuclear war in which the Soviet Union, because of its still fairly primitive society, would be the relative winner.

I gave a press interview in Jidda in early March in which I characterized those who call for war as being criminally in-sane. The interview was widely quoted in Saudi Arabia and the Arab world and Prince Fahd, now the Saudi Crown Prince, said this went a long way toward defusing the issue. Secretary Kissinger in Riyadh on March 19 said again that war for economic reasons was impossible, that our policy was “cooperation not confrontation*” His statement was quoted in the Arab world, but was lost in the United States in the flurry over the deterioration of Southeast Asia.

*NOTE: (1) REMEMBER AMBASSADOR AKINS SAYING ABOVE: THAT WHILST HE MAY BE BRAVE HE WAS NOT SUICIDAL: AT THAT TIME, 1975, AMBASSADOR AKINS WAS COMPLETELY UNAWARE THAT IT WAS KISSINGER WHO HAD PROPOSED THE IDEA OF “WAR FOR OIL” AND IT WAS KISSINGER WHO HAD ALSO BRIEFED THE PRESS. (2) AS HE POINTED OUT IN HIS FAX AND E-MAIL LETTERS TO ME IN FEBRUARY 1998. IN SPITE OF IT HAVING “A LOW CLASSIFICATION” IT STILL TOOK 5 YEARS – FROM 1998 TO AUGUST 2003 IN ORDER TO GET A COPY.

Enclosure No 1 Jidda A 23 Page 5 of 34

CONFIDENTIAL

The feeling of unease in the Middle East continued. True, the polls and letters to the editors in the United States strongly condemned the invasion idea, and the articles by Stone and McCarthy were favorably quoted. Yet even those who opposed a war for oil assumed that it was a possibility. Some even publicly expressed their fears that the United States was preparing its people for a new military adventure. This fear, unfortunately, was shared by many in: the Middle East -some even in Saudi Arabia.

There was another flurry of excitement in the Middle East – In particularly in Saudi Arabia - at the time of the death of King Faisal. We were alleged to be alerting the Seventh Fleet, to be preparing our citizens for evacuation, to be spreading the story of disturbances in the Kingdom in order to justify occupation of the oil fields to prevent sabotage. No matter that there had been no disturbances.

The main reason for this continuing fear of war is almost certainly that there has been no strong, detailed condemnation of the invasion concept by a member of the American -Administration, no analysis of why it could bring only disaster to the United States and to the world, and why - it could not be considered for both moral and practical reasons. This is what I intend to do.

CONFIDENTIAL 

Enclosure No 1 Jidda A 23 Page 6 of 34

II. The Flaws in the Basic Premise - and the Moral Issue

There can be no doubt that the sudden rise in oil prices by 400 percent has contributed to the world’s current economic ills. But it is conveniently forgotten that the world faced a serious inflation before the massive oil price increases of 1974; that unemployment was large and growing, that wages were growing faster than productivity;’ in short, that we were living beyond our means. Imported energy helped our economic expansion for over twenty years. ‘It enabled us to escape the consequences of increasing real wages faster than productivity increased. Oil was very cheap. Its price, even in current dollars, declined from 1950 to 1972 and its 1972 price in constant dollars was half that of the early l950’s. The oil producing states increased their incomes only by allowing production to grow faster than real prices declined. All of the oil producers, by 1970, had come to realize that their oil reserves were finite, in some cases quite small; all could see-when their oil’ production would Start to decline and all bad begun to think of how to increase income per barrel. All that is;- except Saudi Arabia which was and is unique. It is a truism to state that oil is a wasting asset, that once used it is gone forever. But most consumers chose to ignore-this; they compared the profit on a barrel of oil with the’ profit on a bushel of wheat and they seemed convinced that the comparison was valid. The oil producers, on their side, believed they must maximize their income, invest their money and prepare to face the post-oil age. With the shortages caused by the Arab oil boycott in late 1973, all OPEC countries saw what the world would pay for oil. The Shah of Iran announced that OPEC would no longer subsidize the industria1ized West. The era of cheap oil, he said, was over forever.

CONFIDENTIAL 

Enclosure No. 1 Jidda A-23 Page 7 of 34

OPEC took advantage of its new knowledge to increase oil prices, some say to intolerable levels. It would surely have been far better if the world had agreed to a gradual increase in oil prices, the consumers before 1973 were not willing to consider such ideas. Our professional soothsayers told us oil prices were low of necessity and would go even lower. We believed them and we did nothing to develop alternative sources of energy. But can it be pretended that the current high cost of oil is the sole source of our economic problems? Or can anyone seriously think that a forced reduction of oil prices could miraculously solve all our problems? To think so is to share the fairytale beliefs of certain academicians newly converted to the dubious pleasures of militarism. Alan Greenspan, the President’s chief economic advisor put (it) very well recently: We had inflation before the oil price increases and we would still have it if oil prices decline. Inflation, he said, is a productivity problem, not a commodity problem. No discussion of price gouging would be complete without some reference to our own role in food exports. The same magazine which in March carried an article calling for the immediate invasion of Saudi Arabia carried in its (1975) February issue an article which, asserted that our monopoly of food exports was more complete than OPEC’s in oil and much more damaging to the underdeveloped countries. Wheat prices go up by 400 percent; rice by 300 percent; soybeans by as much and we speak only of “market forces” of supply and demand” but the effect on the consumer is as brutal as that caused by any cartel. Even if oil prices were as crucial to the world’ s economy as is pretended, and even if food prices or declining productivity were irrelevant, could we seriously propose invasion, an act of international brigandage so contrary to our national traditions and repugnant to our religious heritage?

CONFIDENTIAL

Enclosure No. 1 Jidda A-23 Page 8 of 34

Senator -. James McClure Of Idaho asked in January if our Viet-Nam venture would have been justified in the eyes of the New’ Hawks if we had said we had gone to South Asia to appropriate its rice to feed the world’s poor. To say that we have the right simply to take oil or any commodity because its price is too high, as our authors have suggested, threatens the relatively stable political order the United States has hammered together since the second World War. After a successful seizure of the Arabian oil fields - why not foreign deposits of bauxite, lead, zinc, tin, chrome, and other resources in short supply? Even renewable resources such, as rubber, cotton and food, would seem fair game. To postulate that.- the United States and only the, United States would be allowed dispensation for such imperialistic action wou1d be naive. Yet one who purports to be a “defense consultant” concluded his article calling for invasion of Arabia by asking why we needed to spend $85 billion a year for our Armed Forces if we were not going to try to get something out of them. Presumably he had never heard of Defense or of Deterrence.

There are ample recent historical precedents for aggression of this sort, but they are not ones we should be quick to quote. Japan went to war to establish its “Greater East Asian Co-prosperity Sphere”; that .is, to secure access to land, tin, rubber, rice and oil. Hitler said had a right to Poland because the efficient Germans could use the land more effectively than the “lazy Slavs.” Hitler also found the concentration of wealth in the hands of Jewish merchants an intolerable burden to Aryan pride. While neither the Japanese nor the Nazis pretended to benefit the entire world, the parallels between their actions these new proposals are close enough to be uncomfortable.

CONFIDENTIAL

Enclosure No. 1 Jidda A-23 Page 9 of 34

Senator McClure commented on his amazement at the call for invasion and wonders why it had not been soundly denounced in the United States, particularly by those who deplored our Viet-Nam war. Why, he asked is every newspaper in the country not beseiged with letters decrying the immorality of such an idea’ He and others have commented on the curious transformation of Viet-Nam doves into Middle East hawks. The entire idea of invasion by the United States should be laid to rest solely by the moral argument. There should be a wave of indignation, of outrage that the idea considered and even justified by respected intellectuals. Invasion for economic reasons is something one would expect to read only in standard communist propaganda describing the moral bankruptcy of America. Unfortunately, the idea continues to be discussed; and the conclusion in some parts of the world - at least Europe and the Middle East - is that someone may be trying to soften up the American people for a new war, that American morality - at least as publicly expressed - has been blunted. If such is the case, and I am certain it is not, then it would still be necessary for us to examine carefully how United States interests would be affected by such a war before advocacy of war be translated into policy.

CONFIDENTIAL

Enclosure No. 1 Jidda A-23 Page 10 of 34

III. The Reactions of Others to-Invasion

The plan of the New Hawks is to occupy- the oilfields-of Saudi ‘Arabia. Some include Qatar, Bahrain and Kuwait in their targets, but clearly these states are peripheral. — Saudi Arabia, it is argued,’ would be quite sufficient by itself to satisfy our energy needs. Saudi Arabia after ‘the seizure of its oil fields, might be allowed enough income to pay for its essential imports, but the rest of the revenue from the oil sales would be distributed among the poor of the world. This Robin Hood aspect of aggression allegedly would win us the tacit if not the overt’ support of the under developed world. And the resulting low oil prices would bring us the applause of the developed world ‘from Western Europe to Japan.

To suggest that any nation would applaud invasion because of the conscience money we would pay (from someone-else’s pocket) assumes its inability to draw some obvious conclusions. The Arabs and Iran have been generous in eco-nomic assistance far more so than the U.S. has ever been in per capita terms. In 1974 Saudi Arabia gave to Arabs for arms and reconstruction and to other states more assistance - a total of $3 billion - than did the United States with a GNP 50 times greater. In addition, last year it loaned $2 billion to the World Bank and the International Monetary Fund. In fact, total OPEC assistance has been at least as great as whatever the Less Developed Countries (LDCs) could hope from oil sales at new rock-bottom prices. The direct total OPEC aid, according to an OECD study, has almost precisely offset the current higher oil prices to the LDCs, and the several billions given to the IBRD and the IMF have eased the burden still further on the LDCs. Nonetheless, the aid has not been uniformly distributed and it cannot be denied that the high oil prices have hurt some countries badly. They still expect OPEC to assist them and OPEC would be well advised to implement fully the enlarged aid program it has discussed.

CONFIDENTIAL

Enclosure No. 1 Jidda A-23 Page 11 of 34

After an invasion for oil, the questions every producer of raw materials would have to ask himself would be: (1) How’ much of this new source of petroleum wealth will I get? He might just conclude it would be insignificant; and (2) When will the United States decide my bauxite, cobalt, or copper would justify its appropriation? He could conclude it would be quite soon. In any case the support of the LCD’s for invasion would be minimal; they are too recently freed- of colonial-masters to welcome the emergence of a new colonialism, no matter how elevated it would claim its motives to be. And, as irrational and irritating as it may seem to us, most LDCs really seem to enjoy vicariously the new strength of OPEC; If OPEC does not help them soon with their financial problems they could, however ever, change, their views quite completely.

The opposition of the other Arab states seems to have been ignored in the invasion plans. Many of the many not be-particularly well disposed to Saudi Arabia or its leaders, but it is inconceivable that Syria, Jordan, Egypt, Libya, and Iraq would not do everything they could to frustrate an American invasion of another Arab country. Part of our folklore about the Arabs is that they do not always behave rationally; they sometimes cut off their noses to spite their faces. There is some truth in this. But if our plan is to destroy them, there would be little incentive for them to show any restraint whatsoever. We will come back to this later.

The reaction of other OPEC countries – Indonesia, Venezuela, Nigeria – would be hostile. While they might not be invaded, once the battle for natural resources began, there would be no guarantee of their own immunity from attack. And no OPEC country would react to an invasion of Saudi Arabia by giving away its natural resources merely to curry our favor. A more logical reaction would be for them to sell their oil for whatever they could get $25 - $30 a barrel and then to do everything in their power - to insure that the United States did not flood the world with cheap Saudi oil. To suggest, as do some of our author, that we would get full cooperation from Iran in such a military venture is also extraordinarily naive. The Shah of Iran wishes to restore his country ancient grandeur and he has a good chance of success. But to achieve this goal Iran will need to sell its oil at or near its present level. If the avowed or the implicit purpose of invasion of Saudi Arabia would be to break OPEC, to drive oil prices down to $2 or. $1 a barrel or perhaps even lower, Iran could do nothing but cooperate with the Arabs in opposing the U.S. landings.

One of the most fanciful of the invasion ideas has been the admission that Iran would try to come to Saudi Arabia’s defense and the assertion that the Iranian military forces could be paralyzed simply by allowing key American advisors to go on vacation the day before the landings. This assumes the Iranians would be both too stupid to notice what was happening and too incompetent to act without their American advisors. No one who knows the Iranians - whatever else he may think of them - has ever suggested that they are stupid. While no one pretends that the Iranian Army and Air Force are the most powerful in the world, they are at least capable of mining the Straits of Hormuz and of giving the Saudis support against the landings of American troops - all without their American advisors. The proposal to buy the Shah off by giving him Kuwait is scarcely worth considering. It’s not ours to give; it’s not the Shah’s to take and even if he had it, he would be forced to sell its oil for a’ very, low price - scarcely enough to- maintain a quarter of his current development program.

CONFIDENTIAL

Enclosure No. 3 Jidda A-23 Page 13 of 34

It is assumed that neither the Saudis nor the Iranians would turn to the Soviet Union for assistance. Neither likes the communists; both fear the Soviet Union. But if the United States proved to be not the ally and friend they had counted on, then we must count on an immediate and total reversal of their policy. Both, in order to protect themselves from devastation, would expect the Soviet Union to offer protection. They would, of course, recognize the dangers in accepting it but dealing with the Russians would still give them a chance of survival, whereas the Americans would have demonstrated themselves to be the active enemy.

Can we assume, as our authors do, that Russia would refrain from making an offer? Hardly. The Russians could not afford merely to stand by in Iraq and click their tongues at American perfidy and expect to win the acclaim of the underdeveloped world for their moderation. Their support would have to be visible and effective if they were not to be exposed and ridiculed as paper, tigers. And who is to suppose that they would want to remain uninvolved when the prize of control over Middle East oil or the consolation of depriving the West of its oil would not only be available but. would be proferred to them? Russian support need not be great troops - volunteers - in Saudi Arabia or Iraq to hamper the landings would be easy enough to provide. Delivering a few rockets to guerrillas and laying a few mines in the Straits of Hormuz would be even easier.

One author has suggested that the Russians now look with considerable distaste at the emergence of an anti-communist, conservative, monarchist bloc in the Persian Gulf. They would welcome its destruction by the United States That, in itself, would be sufficient reward for Russian restraint. This, of’ course, brings up the question of why the United States would be interested in destroying this conservative anti-communist bloc. But it is not answered by the author.

CONFIDENTIAL

Enclosure No. 1 Jidda A-23 Page 14 of 34

An interesting aspect of the invasion proposal is that we do not talk about invading any country in the Middle East commonly classed as unfriendly, not Iraq and not even Libya, for that might provoke a Russian retaliation. We consider attacking only one of our closest friends or, as some put it, our “clients.”

The world-wide reaction to the call for invasion of Saudi Arabia, if it is ever taken seriously, would surely be that friendship with the United States is more dangerous than its enmity; that the close relationship between Saudi Arabia and the United States which has proven so profitable to America would not protect Saudi Arabia but would ensure its demise. The Saudis themselves, If they conclude the threat is real, would review their ‘special relationship’ with us. Some Saudis are, in fact, worried. But those who know what they could and would do to frustrate the success of any invasion attempt are more relaxed. These Saudis assume the United States is not yet afflicted with a drive to national suicide, that the inflammatory articles are either designed to advance the interests of the Soviet Union by destroying the influence of the United States with the Middle East, or are inspired by anti-Semitism in its Arab rather than Jewish variation.

Even Australia and New Zealand might question the value of American friendship and move closer to the USSR or. China. Then, of course, there is Canada - our closest friend. We have great economic’ interests there. We have intimate political, social, and military ties with Canada. And there is the famous 3,000-mile undefended frontier. One might paraphrase the professor who wanted to get some good out of the Pentagon by asking why we made the 100-year effort to lull -

CONFIDENTIAL

Enclosure No. I Jidda A-23 Page 15 of 34

the Canadians into a sense of security if we do not ever intend to take advantage of it. The same reasoning that would read us to occupy Saudi Arabia could more logically take us north of our border. Canada a1ready has announced that in three years it will suspend oil exports to the United States. It would then have a considerable shut-in oil production capacity which we could readily use. Its tar sands at Athabasca would a1so add measurably to our petroleum wealth. But it would be Canada’s other resources - water above all which would make its invasion more attractive than invasion of Saudi Arabia.

CONFIDENTIAL

Enclosure No. I Jidda A-23 Page 16 of 34

IV. The Invasion and its Costs

We could not invade Saudi Arabia without having to face unacceptable military and political opposition, and without the oil fields being unacceptably damaged.

Any invasion plan for the Middle East ideally would assume at least minimal cooperation from Europe. But can we seriously believe we could use the Azores or Greece or Italy or Germany to support such an attack now? France, Germany and Japan already have concluded purchase arrangements for Saudi oil. A dozen other countries are preparing to reach similar agreements. All of them could be expected to react adversely to any such American adventure. We would have to expect to be isolated and our invasion would have to be launched directly from the United States; it would have to be carried out by long-range aircraft stopping only in Israel -- our “forward base” in the area.

We have always maintained that Israel was not our colony, could never play the role of America’s agent in the Middle East. Israel has taken precisely the same position. Its support of an attempted invasion by us would end any hope it would have of successful integration with its Arab and Middle Eastern neighbors. Turkey and Iran would surely end their relationships with Israel and its regional isolation would be complete. In return for its support Israel would be justified in exacting the maximum in U.S. support for its own positions. The U.S. commitment to Israel would then be total and permanent. And Israel might be our only ally, as invasion for economic goals would surely leave NATO in shambles.

The basic assumption of the proponents of the invasion is that it could be organized quickly and quietly, before world reaction could be brought to bear against the United States, before there could be any organized resistance and most importantly before there would be extensive sabotage of the oil fields. It is claimed that the occupation of the oi1 fields would be safe end almost instantaneous firing of the oil wells is dismissed as unimportant; we are told all the world’s fire fighters are concentrated in Texas, and could be brought to the spot with no difficulty. Finally, it is confidently asserted, the oil would probably be flowing again in 30 days - or 90 days at the outside. The parallel between Arabia and Geku in Russia or Ploesti in Rumania is considered apt by the proponents of invasion. In fact, it is said the Arabs are less capable of sabotage than the Germans - less capable even than the Russians in destructive talents.

That the United States could mount an invasion as quickly as the would-be agressors pretend is questionable. To gather a force in Germany without its being detected is unlikely even if the Germans permitted it; to organize the invasion in the United States to fly the troops to Israel without their being noted is inconceivable. –

We do have a powerful military machine but our record of secrecy is not good, and long before the operation actually began, the word would get to the Arabs - via the Soviet Union or Iran, pr even the American press, if not through their own intelligence resources. Precautionary measures for the destruction of the oil fields have already been taken in Saudi Arabia, and before the first plane was over the country destruction would have begun. No, the surprise element cannot be taken for granted even less now than before, as a result of the frequent articles and the mere frequent comments in the United States press and television about the invasion.

CONFIDENTIAL

Enclosure No 1. Jidda A-23 Pages 18 & 19 of 34

Some thought is given by the would-be invaders to protecting the American Citizens in the oil city of Dhahran -about 5,000 of them - although their safety surely could not be assured. No mention is made of the other 10,000 Americans in the rest of Saudi Arabia the tens of thousands of American workers, businessmen and tourists in other parts of the Arab world. Arabs, particularly Saudis, are traditionally hospitable and generous to guests; but if an American invasion force were trying to annihilate their country, the lives of a substantial number of these Americans would be lost.

The problem of maintaining the military force and what-ever civilian workers that come to the oil fields would be formidable; they would be surrounded by a thousand miles of desert on all sides but one; they would have to be sustained by planes, flying over air space where Arabs would be advised and assisted by the Russians. Only to the east would be “open sea”; it would not be in the interest of any of the surrounding countries, least of all Iran, to allow it to remain open to our ships. Harassment of ships by land-based planes from Iraq or South Yemen or even by Soviet submarines must be assumed. These factors would not be as negligible as the would-be agressors seem to believe - if indeed they have considered them.

Our academic militarists should know that throughout the Middle East the Arab states - perhaps formally - will be at war with us. Our strategic position in the Mediterranean would be further weakened, Jordan would have to be occupied to assure our air link to Arabia, and our military efforts might be further diffused to defend our flanks. American assets would be nationalized, and the many thousands of Americans in other Arab countries would be in personal danger. Academicians who pretend to military knowledge owe it to their readers, their students and their profession to examine their facts more serious1y before proposing actions which could have disastrous consequences the United States and the world. War is too important to be left to inexperienced social scientists’

CONFIDENTIAL

Enclosure No. I Jidda A-23 Page 20 of 34

V. Saudi Actions and Reactions

Another crucial error in the invasion plan is the assumption that the Saudi Arabs could do nothing to frustrate the occupation even if they conclude that preparations for invasion were under way.

First of all, no competent soldier believes that the landing of American airborne troops would be as easy and cheap as our professors tell us. The Saudis would have more time than the few hours the New Hawks allow them. And the Saudis would ask for and almost certainly would get support from Arab or Soviet planes or pilots operating from Syrian, Iraqi or Jordanian bases and from the Iranian Air Force in easy range from just across the Persian Gulf.

Of some considerable importance, are the air defense missiles which guard the oil installations at the oil center of Dhahran. Effective electronic suppression or blanketing of the area would be difficult, and the Saudis have shown excellent aptitude in maiming and operating the missile sites. While they have not always shown diligence in maintaining them, they are likely to be vigilant once there are signs of an impending invasion.

The new imperialists forget, if they have even known, that the Saudi oil fields are now run by Saudi Arabs -14,000 of them with en average service of 15 years. Far from being unskilled and incompetent, many of them are highly trained in the United States. They are fully aware of every aspect of the operation of the oil fields, fully aware of their vulnerability, and they have precise knowledge of what can be done to put them out of commission. They could do this efficiently and easily.

Oil installations and pipes at sea. for example, are protected from corrosion by mounting on them a slight negative charge. By mistake, these electrical charges were reversed a few years ago and the pipes were made slightly positive. In 16 hours they were put out of commission. This presumably would be done on purpose as soon as an invasion attempt was launched. But it really is not necessary to look at anything as exotic as this.

Pipelines at sea - and on land - are vulnerable enough to mere conventional destruction - simply blowing them up. Every oil field in its normal operation has large quantities of explosives ready and ideally suited to pipe destruction. The lines could be cut in hundreds of spots. To say that the invaders should carry with them large diameter pipe recognizes the problem, but no one says where the pipe would come from, nor can they. There is no large supply of large diameter or even medium diameter pipe available in the world today. Even if there were, the replacement of the pipelines system would-take years. It should be noted that --Saudi Arabia has somewhat more than the few dozen miles of pipe one of the New Hawks asserted: it has 4,000 miles of large diameter pipelines, and over 33,000 miles of smaller diameter connecting pipe.

Then let us look at the refinery which would have to be secured, as our New Hawks tell us. If they knew anything about refinery operation they would know it could be put permanently out of commission in a few hours by running it full blest and cutting off. its oil charge - rather like a tea kettle on a hot fire after all the water has boiled off. In a short time a few hours - it would burn itself out. The 200,000 barrel a day refinery on Bahrain would be shut down almost as an afterthought, as it gets two- thirds of its crude through a submarine pipeline from Saudi Arabia.

CONFIDENTIAL

Enclosure No. I Jidda A-23 Page 22 & 23 of 34

The vital storage tanks and the liquified petroleum gas facilities could be set on fire in a few hours and replacing them, even under ideal circumstances, would take two years. The gas turbine generators - be completely destroyed by an expert in minutes and their replacement would take years.

The 54 gas-oil separation plants (GOSPs), where the pressure on the oil is gradually reduced, releasing its gas and allowing the oil to be shipped, are extraordinarily sensitive and extraordinarily vulnerable. They are now heavily guarded by the Saudi National Guard against possible sabotage but of the National Guard supported sabotage rather than trying to prevent it, these GOSPs could be destroyed and their replacement would take years. They are scattered throughout the oil producing area and securing them would be an impossible task for the invaders.

All Saudi oil is exported through only three long piers which could be destroyed with ease, although if material and workers were at hand they could probably be put back into operation within a year or so and all Saudi oil goes through narrow sea lanes which could be blocked by sinking a few super tankers in them.

Then, there is the question of the wells themselves. They could be fired - and easily. To contend, as several of our authors do, that the fires could be put out just as easily is nonsense mouthed only by those who have never seen an-oil well fire. Fortunately there have rarely been two major oil well fires in the world at one time. The number of fire fighters specialized in this type of blaze is so limited that when there are two, one has to wait while the other is extinguished, Oil well fires frequently burn for months in spite of frantic efforts of the field owners to put them out. A relative unimportant well at Abu Rudeis in Israeli occupied - Sinai was accidentally ignited by an Israeli shell last year, and it took almost three months to extinguish it. What if there were ten fires or a hundred? A hundred fires, burning in the giant Ghawar field and fed by gas pressure of the field itself, could last for years until the field was exhausted putting it back into operation would be difficult if not impossible. Those who seek World War II parallels should know Baku’s production was about one percent of Saudi Arabia’s today and because each well produced so little the field was much less susceptible to sabotage. Ploesti, likewise, was incomparably below the production level of Saudi Arabia’s Eastern Province.

A final apocalyptical measure which the Saudis could easily take would be the destruction of the Berri field - offshore in the Persian Gulf. The field pressure is enormous and keeping it under control can under normal circumstances is one of the oil company’s most pressing concerns. If it were allowed to run freely each of its 35 wells would spew 100,000 barrels of sour, high sulfur oil - a total of 3.5 million barrels or seven Torry Canyons’ every day into the shallow, confined waters of the Persian Gulf every day for at least six months, probably a year and possibly two. preventing its ignition would be impossible and all traffic in the Gulf would be stopped indefinitely. What would happen to Iran and Pakistan, countries lying downwind of this fire, is not known. The carbon monoxide, the sulphur oxides and the heat could make life unpleasant and perhaps impossible in this area.

Given the effectiveness of the other actions that could be taken and the length of tine the oil fields could be kept out of production by less drastic and less permanent actions, the on-shore wells probably would not be fired and the Berri field probably would not be released. Once sanity were restored to the world, the fields could again, after several years, be produced. It would, however, be dangerous for us to assume that the Arabs under all circumstances, would refrain from using ultimate weapon. When they are faced with “strangulation” they too could be expected to take the strongest and most drastic measures: they too would have little mere to lose.

VI. The Length of the Cutoff end the Consequences

The Arab employees of the Arabian American Oil Company (ARAMCO) believe, and their American colleagues concur, that it would be at least two to three years before anything near the present production levels could be resumed after the destruction of the oil field facilities, even if the local population cooperated in the restoration and there were an adequate functioning work force on hand. The shortage of oilfield equipment in the world today is notorious. While it must be assumed that if there were successful occupation of Eastern Arabia the restoration of its fields would get highest priority - higher than U.S. domestic needs and higher than the North Sea - it would be two and probably close to three years before the equipment, much of which would be unique to Saudi Arabia, could be built, brought out and installed. If the invaders withdrew immediately, it might be possible to achieve these ideal conditions. But resumed operation under military occupation would be such mere difficult. The New Hawks assume a docile local work force which could be handled simply by increasing its wages. This again is an incredible assumption; that Arab workers have no patriotism, indeed no interest other than money that they would participate in the destruction of their country merely for an increase in salary. This shows a lack of knowledge of the people who live and work in Saudi Arabia; But perhaps this proposal is mere camouflage, for the alternative solution is always mentioned drive them into the desert. A tactic similar to the one Hitler applied in occupied areas of Poland but not one that should commend itself to late 20th century Americans.

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Enclosure No. 1 Jidda A-23 Page 25/26 of 34

Bringing in American technicians to run the fields in war-time conditions would not be as easy as the Hawks pretend. They would have to be taken from jobs in the United States or e1sewhere - probably by drafting them into service, for it would be war. And they would have to replace the entire Saudi work force. Then there would be the questions of how would they be maintained; where would their food and their water come from and where would they get their equipment! The talk of securing Dhahran and the giant Ghawar field sounds simple but it ignores the fact that oil in Arabia is produced over a large area, from Kuwait - four hundred miles to the south - and all of this would have to be occupied. Ghawar itself is 150 miles long, but by itself it would be insufficient for the demands placed on it. Occupying Kuwait and Qatar as well, as one author suggested, would make matters even more difficult. Concealing guerrillas in this large stretch of open territory is dismissed by the proponents of war as impossible. Again they are wrong. While Eastern Arabia is fairly flat and has few trees, it is far from being featureless there are oases, there are scrub bushes, there are gullies, there are many places where guerrillas can be hidden. And we must assume that they will be given the full support and advice by countries as diverse as North Viet-Nam and Iran.

It should be noted that in Viet—Nam it was frequently impossible for our low-flying aircraft to spot guerrillas hiding in the daylight in open fields and in paddies. In Saudi Arabia the difficulties in finding lost parties in the desert are notorious even with a concerted effort, and with those who are lost exerting every effort to be noticed. No, the invaders would have to consider total expulsion of the million inhabitants, construction, and patrolling of a thousand mile fence from the Persian Gulf near Kuwait around the Saudi oil fields and installations and back to the Gulf, they would have to import their entire labor force and ruthlessly exterminate every Arab who appeared - a process revolting to most Americans.

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Enclosure No. 1 Jidda A-23 Page 26/27/28 of 34

Of course, even if this could be done it would still not shorten the two or three year shut-down. If protection against sabotage were not complete - and it is impossible to believe that it could be - then the shut-down would be even longer. In fact, given the inevitable hostility of the country and its allies it is difficult to believe production could ever be brought back to present levels.

We have spoken about a move against the Arabs if we are being strangled, but what if the world is facing strangulation because of action caused by the United States? What would happen to the economies of Western Europe and Japan - or the United States for that matter - when the world is deprived not only of Saudi oil but of all oil passing through the Straits of Hormuz? Who would ship through the straits in war conditions and how would he accomplish it? Perhaps some high priced Iranian oil would be available (assuming the Saudi off shore fields were not destroyed), but even that could not be counted on in a protracted war situation. And how much oil under these circumstances would be available from Iraq, Abu Dhabi or Qatar? Could we count on any oil from the Arab Mediterranean oil producers? Could Europe or Japan survive without half of their energy and two-thirds of their oil? What would be their prospects of resisting a Russian takeover? Would they want to? American friendship would have proven to be en expensive luxury.

Presumably the International Energy Agency sharing agreement would immediately come into force. But it would not be a case of Europe and Japan diverting their imports to a boycotted United States. The United States with two-thirds of its oil produced at home would be relatively well off. Europe and Japan cou1d demand that we share our oil wealth Unfortunately for them we could not, for there is no way to bring domestic oil to port for export. All we could do is direct the wor1d’s remaining oil - from Venezuela, Nigeria and Indonesia - to them and this would mean an even greater disaster for our eastern seacoast for it would be almost totally deprived of petroleum energy. This is a solution unlikely to promote international or even domestic tranquility Our international isolation would very likely be complete. If we would then accept retreat to our own borders our days as a great nation would end. The alternative, to which we could then find ourselves drawn would be even worse: nuclear war.

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Enclosure No. 1 Jidda A-23 Page 29/30/31 of 34

VII. The Alternatives to War

This Armageddon scenario is postulated because it is alleged there are no alternatives. It is alleged that capital accumulation in the OPEC countries. - will be so enormous the world will not be able to adjust to it. The New Hawks heap scorn on those who say the problem can be handled in the context of normal trade, banking and investment Yet the alternatives to war are in fact straightforward P and not at all esoteric. They would entail some transfer of real wealth, but this would not be the first time in history this had happened, They could entail some temporary leveling off in increasing standards of living, but this need be only of short duration. Charles Schultz, new with the Brookings Institute, wrote in the Washington Post the end of January that “over the Seventies we might have expected real consumption per capita to grow by 30 percent; the higher oil prices, when fully paid for, will reduce this to 27 or 28 percent. Important yes. But worth a Middle East War?” Robert Rocsa, Carroll Wilson and three non-Americans, in an excellent article in the January issue of Foreign Affairs, pointed out that high oil prices are a form of forced saving - a means of capital accumulation - and they suggest how this could be put into productive use in Europe, Japan, and the underdeveloped world. A proposal for an OPEC mutual fund would bring the money into the areas where it was needed, would supply capital for new ventures, would create a new wealth, and we would have a no-lose situation. Professor Richard Cooper of Yale even thinks there is an excellent chance “this second great Arab eruption into Western history will, in the end, leave both the West and the Middle East more sound and secure than ever before.

The Arabs would profit through their investments and the developed world wou1d also profit through a renovation or the expansion of its industry and increased employment. Some of the new American industry might be partially owned by foreigners, but this would not be a new experience in our history. Nor should it be objections: a country which itself has made such massive foreign investments.

The figures of surplus OPEC funds have been grossly exaggerated. We have heard of capital accumulations or unspent money of $1.2 - $1.6 trillion in the next decade. The most recent U.S. Treasury studies indicate it will be more in the order of $300 billion. Some of this will be invested in the United States, some will be invested elsewhere. if we are lucky enough to entice half of it to the United States, i.e., $150 billion, this would amount to less than 4 percent of the $4 trillion of new investment we need in the next decade.

While some OPEC countries night be able to gain positions of influence in a few companies, their accumulated capital scarcely would permit a “take over of American industry.” Some American companies do not find Arab or OPEC capital to be in any way offensive or dangerous and are now trying to get Saudi capital into the States. While relatively little has come yet, there is no doubt it will come unless legal obstacles are placed in its way.

Saudi Arabia has already agreed this year to place enough in Treasury totes and FNMA issues to cover more than half our balance of payment deficit - scarcely action of an enemy country. I would not venture to say how much longer they will continue their investment in view of the provocative statements and articles coming out of the United States. Not very long if the invasion threats are taken seriously. I hope, however, we can end now all speculation that the United States could consider invasion of an oil producer merely to bring down oil prices - or indeed for any other reason than actual “strangulation” in its precise meaning: that is, we are dying and we take desperate action, no matter how dangerous, to save ourselves from death. Scarcely a description of the gasoline shortages of the winter of 1973-74, or of the economic situation in the world today - even if our problems could all be ascribed to high oil prices.

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Enclosure No. I Jidda A-23 Page 32/33/ & 34

VIII. Conclusion

There are several crucial questions which need to be asked about all those who are advocating confrontation economic or military. We need to know their motives. Why are they proposing risking the destruction of the Western alliance, even nuclear war? Why are they advocating a policy in which the only conceivable winners would be the two great communist nations? And neither of them could “win” a nuclear war, any more than could we. Why the concentration on the Arabs as the enemies when other countries in OPEC have been fully as anxious to maximize their income from oil? And why the concentration on Saudi Arabia, one of our closest friends in the Middle East? What interest do the advocates of agression have in damaging relations with the Arabs in general and Saudi Arabia in particular? And why do they so resolutely reject the cooperative approach which has been advocated and described by Secretaries Kissinger and Simon, and by Messrs Roosa, Wilson and Cooper? Is it simply to deprive the Arabs of their “oil weapon,” and remove pressure on Israel? This hardly seems possible, as even Israel could not “win” in such a world catastrophe. Perhaps these New Hawks have no motive at all; their guiding light may be simply malice and stupidity.

If the New Hawks are trying to frighten the OPEC countries into submission or into a dramatic reduction in their oil prices, they have not succeeded. If they are simply trying to disturb or destroy American relations with OPEC, with the Arabs and especially with Saudi Arabia, they have been somewhat more successful - primarily because, until now, there has been no detailed rebuttal of the war call. And they also seem to have put a fright into all these in OPEC as well as the developed world — who know the ultimate victor in such an adventure would be Russian imperialism but nonetheless believe invasion is possible simply because they question America’s sanity.

Fortunately, the world can relax. The arguments for invasion fall of their own weight. Those who understand the difficulty in preparing a major secret operation are appalled at this call to war; they are joined by those who know how an oil field is operated and who know the ease of its destruction end the difficulties in its restoration and by responsible political scientists who know what would happen in a Europe or a Japan deprived of oil for several years. In short, everyone who knows anything of the military, of our system of alliances, of the difficulties in producing oil after oilfield installation has been destroyed, concludes that talk of invasion for economic reason must be one gigantic bluff perpetrated by writers of distorted and immoral imagination, of varied degrees of sanity and with varied motives but with no authority.

The United States is governed by moral man of good will. But “morality” is a subjective characteristic and we cannot expect the world to assume the United States, for moral reasons, would recoil from an imperialistic war. Self-interest is more objective and the world should know that we are governed by rational men who are not bent on committing national suicide.

The American public shows no tendency whatsoever to follow the New Hawks to Armageddon. The initial reaction in January to the invasion proposal seems now, to have been one of pure disbelief. It was this troubling silence to which Senator McClure addressed himself. But as the stories of Invasion continued and enlarged, American outrage has grown. If the provocateurs were launching trial balloons, they must have been surprised at the rapidity with which they were pricked. Let us now put this story to rest. We should not forget it, as it illustrates how fragile peace is; and it illustrates how we could be drawn into another disaster for “noble” motives. This time however, we’ll look more critically at the consequences than we did in Viet-Nam.

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United States Embassy. Jidda. Saudi Arabia. 1975.