Sleeping With The Devil (27 page)

    Undeterred by the fact that its lead consultant on the Saudia deal was
under indictment, unable to visit the United States for fear of arrest or to move his assets
out of or around the country, and deeply embroiled in a global financial scandal, Boeing
renewed the consulting agreement in May 1993 and continued to renew it annually for four more
years. Clearly, the Boeing commission, if it was ever to be paid, wouldn’t be based on time
spent on the job. Just as clearly, Boeing knew what it had hired bin Mahfouz for.

    In December 1993 Mahfouz paid about $225 million to settle U.S. claims
against him and another $245 million to settle a similar set of problems in Europe. In both
instances, he was not required to admit any wrongdoing. By then he had other issues to worry
about. According to Bawazir’s suit, a senior member of the Saudi royal family had begun
pressuring Mahfouz in the spring of 1993 to withdraw from the deal so that another member of
the royal family could take his place - and the commission after the deal went through. Bawazir
contends in his suit that he, not Mahfouz, crafted the strategy that held off the royal
interloper; he, not Mahfouz, did virtually all the work; he, not Mahfouz, kept the whole deal
alive.

    All of that is easy to believe. Khalid bin Mahfouz would have been busy
enough with his own vast holdings, even without the BCCI albatross around his neck; and Saudi
royals are famous for swooping in on commoners’ business when the pickings get rich. Whether
Mahfouz stiffed Tahir Bawazir out of his fair share of the commission once the Saudia deal went
through - that’s the basis of Bawazir’s suit - is unclear. The Superior Court of Washington
refused to rule on the merits of Bawazir’s case, noting simply that Washington didn’t have
jurisdiction to decide the matter. What the records do show is that by the time the matter made
it to court, Boeing had sent Mahfouz over $15 million in commissions, his share of the earnest
money the Saudis sealed the deal with. What seems almost certain is that much more was to
follow. I’ve seen the figure $700 million bandied about, but rumor in both America and Saudi
Arabia has it that royal Saudi fixers along with bin Mahfouz pocketed a cool $1 billion on the
deal.

    Boeing, in any event, was happy with the services rendered. When Khalid
bin Mahfouz flew to Seattle on May 24, 1994 - after he was able to enter the U.S. legally again
- he landed at Boeing Field, where he was met by CEO Frank Shrontz and others and taken on a
tour of the company’s 777 factory. The politicians were happy, too. Tom Foley, then a
congressman from Spokane and speaker of the House, hailed the Saudia sale as “a great day for
the country.” Clinton touted the domestic jobs the deal would support. Indeed, there was only
one small problem with the whole rosy arrangement: The Saudis couldn’t afford it.

    ON NOVEMBER 13, 1995, eighteen days after the Boeing-Saudia pact was
inked at the White House, a car-bomb explosion outside a U.S. training facility in Riyadh
killed seven people, including five Americans, and injured forty-two. The explosion ripped the
front from a building where nearly four hundred Americans had been training the Saudi National
Guard to use weapons purchased from U.S. manufacturers. A group calling itself the Islamic
Movement for Change took credit for the attack. Subsequently, the Saudis arrested dozens of
suspects. On May 31, 1996, it executed four of them, although there remained some doubt about
their guilt. Amnesty International accused Saudi Arabia of taking advantage of the bombing to
get rid of political opponents. The FBI had wanted to talk to the four before they were
executed, but the Saudis said no. Without a thorough, unbiased investigation, no one could be
sure Osama bin Laden was not behind the attack.

    The chances are close to zero that the bombing had anything to do with
the Boeing pact, but the timing of the two didn’t go unremarked. Bin Laden was motivated by
such contracts. He accused the royal family of sacrificing Islam - the sanctity of Saudi
Arabia, the home of Islam’s two holy cities - for money, bribes, dirty deals. If bin Laden
wasn’t behind the bombing, he still applauded it.

    Saudi Arabia operates the world’s most advanced welfare state, a kind
of anti-Marxist nonworkers’ paradise. Saudis get free health care and interest-free home and
business loans. College education is free within the kingdom and heavily subsidized for those
who study abroad. In one of the world’s driest spots, water is almost free. Electricity,
domestic air travel, gasoline, and telephone service are all available at far below cost. For
citizens of a basically third-world country, Saudis travel first class - so first class that
many of the kingdom’s brightest, the best educated, and in theory most prepared for the work
world are reluctant to do any work.

    About a quarter of Saudi Arabia’s population, and over a third of all
those aged fifteen to sixty-four, are foreign nationals, allowed into the kingdom to do the
dirty work in the oil fields, to be domestics, but also to program computers and manage the
refineries. Seven in ten of all jobs in Saudi Arabia - and closer to 90 percent of all
private-sector jobs - are filled by foreign laborers simply because the Saudis won’t do them,
or are otherwise trained and inclined.

    Among males, the Saudis have an admirably high literacy rate,
especially for a country that was inhabited mostly by nomadic tribesmen only three generations
back. About 85 percent of Saudi men age fifteen and older can read and write, as opposed to
fewer than 70 percent of Saudi women of the same age. But because so much of the Saudi
education system has been entrusted to Wahhabi fundamentalists, its products are generally
ill-prepared to compete in a technological age or a global economy. Reportedly two out of every
three doctorates earned in Saudi Arabia are in Islamic studies. Domestic doctorates in computer
science, engineering, and other secular skills are rarer than hens’ teeth.

    That’s problem one. Younger Saudis are being educated to take part in a
world that will exist only if the Wahhabi jihadists and their Muslim Brother allies can succeed
in turning back the clock a few centuries. In an increasingly open world, rank-and-file Saudis
see events through an increasingly narrow lens. Western news is censored and often simply
banned. The Saudis have pioneered the use of Internet filters and blocks. Most Saudis are
limited to local newspapers and TV like al-Jazeera, through which Osama bin Laden has chosen to
distribute his communiqués.

    Problem two is common to developing nations: demographics. There are
way too many young Saudis with nothing better to fill their hours than sitting around the
mosque or watching al-Jazeera. Saudi Arabia possibly has one of the highest birth rates in the
world outside Africa - approximately 37.25 births for every thousand citizens in 2002, almost
exactly twice the birth rate in archenemy Israel. Almost one in ten Israelis is sixty-five or
older; 97 percent of all Saudis are sixty-four or younger, and half the population is under
eighteen. Leave aside the implications for regional security in those numbers (and for the
Israelis, they are vast, since the Saudi birth rate and age distribution are mirrored in
Palestine and elsewhere); the presence of so many people of working age, and especially so many
ready to enter the workforce, places enormous pressure on an economy that is no longer capable
of absorbing those who want to work while providing sustenance for those who would rather
contemplate original intent in the Qur’an. Middle classes stabilize society. Saudi Arabia’s is
falling apart at the very moment it should be forming and solidifying. “Something unexpected
happened,” a former Western diplomat who had served in Riyadh told
Time
magazine.
“Instead of this wonderful utopia, where young men were attracted to academia to learn about
Islam, you got thousands of religious graduates who couldn’t find jobs.”

    That gets us to problem three: The world’s most advanced welfare state
is predicated on the oil prices of the mid- and late 1970s and early 1980s, when the system was
instituted, not on the oil prices that have prevailed since the mid-1980s and beyond. In 1981,
when the entire kingdom was in effect put on the dole, oil was selling at nearly $40 a barrel,
and per capita income was $26,000. A decade later, just before Iraq invaded Kuwait, refiners
were able to buy oil for about $15 a barrel. The Gulf War spiked prices back up to about $33 a
barrel, but by 1994, when Bill Clinton was leaning on Riyadh to do business with Boeing, oil
was selling for $12.50 a barrel. As of 2001, a barrel of oil fetched in the very low twenties,
and per capita income had sunk to below $10,000 just as the Saudi baby boom was beginning to
achieve its majority - a classically disastrous combination for social harmony.

    Because roughly 85 percent of Saudi Arabia’s total revenues are
oil-based, every dollar decline in the price of a barrel of oil translates to about a $3
billion loss to the Saudi treasury. From there, the math is easy. In the early 1980s the
kingdom boasted a cash reserve on the order of $120 billion. By 1994 the reserve had shrunk to
about $15 billion. (Cash reserves as of the start of 2003 are estimated to be about $21
billion.) A year earlier, Saudi Arabia had secured a $4.5 billion line of credit from J. P.
Morgan to help cover its share of the cost for Operation Desert Storm. As Clinton was working
overtime to get the kingdom to commit to the airline deal with Boeing, the Saudis were
stretching out payments to Boeing McDonnell Douglas and others for military jets and equipment.

    For Bill Clinton, as for virtually every other American politician
dependent on keeping the Saudi cookie jar filled to the brim, Riyadh’s necessary course of
action seemed obvious: PMO, pump more oil. To ease the burden, the U.S. Export-Import Bank
agreed to guarantee low-interest loans of over $6 billion. (The Ex-Im Bank sometimes seems to
exist solely to provide bridge loans for oil nations so that American corporations can be paid
in a timely fashion.) But robbing Peter to pay Paul wasn’t as easy as it looked because there
was yet another demographic issue to contend with: the population explosion in the House of
Sa’ud.

    The royal family kept growing by leaps and bounds - a prince will have
multiple wives and sire forty to seventy children during a lifetime of healthy copulation -
while the resources to support that growing population were shrinking. Young royals were
pushing up from below, chafing against a leadership that was slipping into its high seventies
and eighties. The incapacitated King Fahd turned seventy-nine in 2002; Crown
Prince ‘Abdallah was seventy-eight. Many of the most active court intriguers were in their
seventies. That, too, is a formula for social instability, though at a higher level of society.

    Absent the survival skills their great-grandfathers had grown up with
in the desert, far more familiar with camel’s-hair coats than with camels, the younger
generation of princes, princelets, princelings, and other royals occupied itself increasingly
with dissipation and fringe criminal activities, muscling in on honest shopkeepers and hoping
for a shot at the big time. Locked in an increasingly fin de siecle mentality - this game can’t
last forever! - the older royals grabbed for everything they could get from a steadily
shrinking pie. Everything we heard in Washington portrayed a royal family obsessed with
gambling, alcohol, prostitution, parties, and the “commissions” and other considerations to
afford their vices.

    Meanwhile, the numbers game sat out there like some huge Islamic
buzzard staring hungrily into the window of the royal palace. Already, the House of Sa’ud stood
at thirty thousand members. Simple math and average screwing suggested that number would double
in another twenty or thirty years, maybe much more. What would the barrel price of oil have to
be in the year 2025 to support even the most basic privileges Saudi royals had come to enjoy?
Once there were sixty or a hundred thousand royals, would there be a free seat left on Saudia
Airlines for a mere commoner who wanted to fly out of Riyadh or Jedda? Reformers among the
royal family talk about cutting back the perks, but that’s a hard package to sell.