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Energy Independence & American National Security:. Can the United States De-fund the House of Saud? . Joshua Montgomery Chicago-Kent College of Law Spring 2007 joshmontgomery@hotmail.com. Within the title are two assumptions:.

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Energy independence american national security l.jpg

Energy Independence & American National Security:

Can the United States De-fund

the House of Saud?

Joshua Montgomery

Chicago-Kent College of Law

Spring 2007

joshmontgomery@hotmail.com


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Within the title are two assumptions:

  • Assumption 1: American dependency on foreign oil is harmful, particularly, because it threatens the national security of the US.


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Assumption 2: A well-funded Saudi Arabia is a danger to the national security of the United States.


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These assumptions prompt two important questions:

  • Question 1: If the US becomes an energy independent nation, or at least largely so, will Saudi Arabia be substantively de-funded?


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Question 2: Would a de-funded Saudi Arabia be a positive development in the national security of the US?

  • Note: Question 2 is not a corollary to Assumption 2.

  • It is possible that Saudi Arabia is a threat to American national security regardless of whether it is well funded or de-funded.


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Assumption 1: American dependency on foreign oil is harmful, particularly, because it threatens our national security.

What harms stem from a dependency on foreign oil?


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One opinion: There are no harms.

  • Not everyone agrees that it is dependency that causes harm, just the way that the dependency is managed.

  • One proponent of this position is the Reason Foundation, a libertarian think tank.


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Reason Foundation Position

  • “America should become more – not less – ‘dependent’ on foreign oil. In fact, the best way for America to defuse the so-called Middle Eastern oil weapon is by purchasing even more oil from the region.”

  • Our dependence is the flip side of their dependence. We can leverage our oil purchases to control rouge states’ behavior.


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The Majority Opinion: “America is addicted to oil…”

  • Since the 1973 oil embargo, 24 of the 34 State of the Union addresses have proposed solutions to our energy problem.

  • The result? In 1973 the US imported 34.8 percent of its oil. Today it imports just over 60 percent.


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American Energy Security Declaration of Energy Independence

  • It will provide stability at the gas pump.

  • It will protect the environment.

  • It will facilitate industrial development.

  • It will eliminate the trade and budget deficits.

  • It will create more than a million jobs.

  • It will foster new technologies.

  • As of May 2007 this declaration was signed by the governors of 9 states.


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National Security and US Oil Dependency

  • McCain: In many parts of the world where we are dependent upon our oil supply there's either instability or challenges. So I think it is a national-security argument to reduce our dependency on importing oil.

  • Hillary Clinton: Our dependence on foreign oil threatens our economy and hamstrings our national security.


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The Saudi Arabia Connection: It’s how they spend their money

  • “Over the last three decades, Islamic extremism and violence have been funded from two countries, Saudi Arabia and Iran, not coincidentally the world's first and second largest oil exporters.”

    • Newsweek 2005


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Assumption 2: A well-funded Saudi Arabia is a threat to the national security of the US

  • As a core tenet of its foreign policy, Saudi Arabia funds the global propagation of Wahabism.

  • Saudi Arabia has been the single biggest source of funding for fanatical interpretations of Islam, and the embodiment of that interpretation in organizations and schools has created a self-perpetuating institutional basis for promoting fanaticism across the Muslim world.


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Saudi Arabia & Human Trafficking

  • Saudi Arabia is a destination country for workers from Southern Asia who are subjected to conditions that constitute involuntary servitude including being subjected to physical and sexual abuse, non-payment of wages, confinement, and withholding of passports as a restriction on their movement

  • Tier 3 - Saudi Arabia does not fully comply with the minimum standards for the elimination of trafficking and is not making significant efforts to do so


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Saudi Arabia & Women’s Rights

  • Women in Saudi Arabia who walk unaccompanied, or are in the company of a man who is neither their husband nor a close relative, are at risk of arrest on suspicion of prostitution or other "moral" offences.

  • A woman's testimony does not carry the same weight as that of a man. In a Shari'a court, the testimony of one man equals that of two women.

  • Women cannot speak in family law courts.


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Criminal Law in Saudi Arabia

  • The Government executed persons for criminal offenses after closed trials in which forced confessions are common and few procedural safeguards are provided.

  • Sentencing is not uniform…under Shari'a as interpreted and applied in Saudi Arabia, crimes against Muslims receive harsher penalties than those against non-Muslims.


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Question 1: If the US becomes more energy independent will Saudi Arabia be substantively de-funded?

  • Saudi Arabia is the leading oil exporter.

  • The United States is the leading oil consumer.

  • At first glance the answer to this appears to be yes.


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U.S. Consumption, Production, and Imports of Oil, 1949–2005

Source: EIA Annual Energy Review 2005.


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US Petroleum Imports from Saudi Arabia(Thousand Barrels per Day)

  • 1973 Average ........................486

  • 1975 Average ........................715

  • 1980 Average .....................1,261

  • 1985 Average ........................168

  • 1990 Average .....................1,339

  • 1995 Average .....................1,344

  • 1996 Average .....................1,363

  • 1997 Average .....................1,407

  • 1998 Average .....................1,491

  • 1999 Average .....................1,478

  • 2000 Average .....................1,572

  • 2001 Average .....................1,662

  • 2002 Average .....................1,552

  • 2003 Average .....................1,774

  • 2004 Average .....................1,558


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De-funding hardly seems possible.

  • Demand side: Saudi Arabia is a minority share of American market

  • Supply side: American purchases are only a fraction of the Saudi Arabian market

    • Note: This is one reason why the libertarian idea of “consumer control” is ineffective and unrealizable.


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It only gets worse….

  • Dwindling supply

    • US oil production is low

    • Saudi Arabian oil fields may be dwindling

      • New measurements are not being allowed

      • Increasing number of wells are being built and capacity is remaining the same  wells aren’t producing the amounts they were before

        • Running at capacity? No one knows…


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If the supply is dwindling….

  • Scarcity drives up the price

    • No new (easily accessible) fields are being discovered

    • Pessimism about expected supply

      • Companies are less likely to devote huge sums of money to get the oil

      • Race to the oil is unlikely – prohibitive costs are to high

  • The result: Saudi Arabia stays well-funded from its high priced remaining oil supplies


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The other end of the tunnel…?

  • If Saudi Arabia’s supply is not dwindling:

    • Emerging markets

      • China & India

      • Their growth is expected to more than surpass any amount that the US can realistically cut

    • Saudi Arabia can control a majority of the supply side of the world oil market


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Foreign Investments

  • Saudi Arabia is encouraging foreign investments

  • Increasing ownership of foreign assets

    • Largest shareholder of Citibank is Prince Al Waleed


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Question 2: Is a de-funded Saudi Arabia good for US national security?


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Some Pro’s

  • International spread of Wahabist Islam will certainly be decreased.

  • Human trafficking in Saudi Arabia would decrease because the flow of immigrant workers would cease.

  • A bankrupt Monarchy would almost certainly collapse.


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Some Con’s

  • Saudi Arabia could cash in it’s chips – and it has a lot of chips (investments in foreign markets).

  • If the monarchy collapsed a new regime could always be worse…

    • Although it is doubtful that they would wield the same influence as Saudi Arabia does now.

  • America’s Military Industrial complex would suffer.


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Conclusions:

  • America is dependent on foreign oil, but most of this oil does not come from the Middle East.

  • This makes it nearly impossible to de-fund Saudi Arabia directly.

    • But the US should contribute as little as possible to hostile/radical regimes

  • Energy independence is still in US national security interests.

    • Independence means the economy wouldn’t be subject to the whims of foreign governments via the oil market.


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