Energy Independence & American National Security:

1. 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

2. 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.

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

4. 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?

5. 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.

6. 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?

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. 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

13. 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.

14. 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

15. 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.

16. 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.

17. 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.

20. U.S. Consumption, Production, and Imports of Oil, 1949–2005 Source: EIA Annual Energy Review 2005.

21. 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

25. 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.

26. 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…

27. 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

28. 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

29. Foreign Investments • Saudi Arabia is encouraging foreign investments • Increasing ownership of foreign assets • Largest shareholder of Citibank is Prince Al Waleed

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

31. 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.

32. 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.

33. 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.