The relationship between the U.S. and Saudi Arabia is both extraordinarily important and complex at the same time. The relationship between both nations goes back to the early 1930s. Before that, the U.S. did not even recognize Saudi Arabia as a state, nor did it have any reason to have diplomatic relations with the country.
In 1931, the U.S. officially recognized Saudi Arabia and had full diplomatic relations with the Arab nation. 1933 was an important year for Saudi Arabia, but shockingly, it was not seen as a big deal to American politicians. That year, American politicians and diplomats attempted to make U.S.-Saudi relations existent. This was seen as “a small step to better relations”. In May of 1933, an American oil company, The California-Arabian Standard Oil Company began exploring for oil in the Arabian peninsula. Although, at the time the California-based oil company saw the Saudi deal as a long-shot, it was a way to get the company into the Middle East. Several years later gargantuan amounts of oil were found in Dhahran, Saudi Arabia.
In the early 1940s, the California-Arabian Standard Oil Company changed its name to The Arabian-American Oil Company. Standard Oil of New Jersey, Texaco, and a few others began absorbing small parts of The Arabian-American Oil Company. Later in the 1950s, Saudi government officials wanted some of the profits that The Arabian-American Oil Company earned; this eventually led to The Golden Gimmick. This special deal allowed all American oil companies to receive a significant tax break. It was equivalent to 50% of their profits on oil sales, the other 50% was a royalty awarded to King Ibn Saud. At first, American businessmen and officials were not crazy about the idea, but it gave The Arabian-American Oil Company significant access to Saudi oil. A year later, the Safaniya and Ghawar oil fields were discovered.
Throughout The Cold War, Saudi Arabia was a staunch opponent of communism. Even though Saudi Arabia is a conservative Islamic absolute monarchy, it managed to grow even closer to the U.S. and other Western European countries. In the 1980s, the relationship between both nations became even warmer, even when the Saudi government took total control over The Arabian-American Oil Company.
The American government later decided to have other American oil companies receive contracts in Saudi Arabia. Saudi officials agreed, as long as the U.S. agreed to protect Saudi territory. The Saudis still saw the Soviet Union and anti-Saudi terrorist groups as a direct threat to the Royal Saudi family.
By 1990, the Saudis were growing anxious over Iraq. They believed that Saddam Hussein was agitated and disheartened over the Iran-Iraq war. Iraq had fought so hard and obtained absolutely nothing after years and years of intense fighting. Although Iraqi forces were exhausted, the Saudis did not trust Hussein under any circumstances. The U.S. was forced to respond in 1991, when Saddam Hussein invaded Kuwait. In reality, why did the U.S. respond to an Iraqi invasion of Kuwait? Did it really jeopardize the U.S. in any way?
On January 29, 1991 the unthinkable occurred, Hussein’s forces moved from Kuwait into Saudi Arabia. Iraqi forces were officially on Saudi territory. Hussein believed that the U.S. couldn’t stomach a major ground battle and would let the Saudis fight Iraqi troops by themselves. Hussein made a catastrophic error when American and British forces entered the Battle of Khafji. Iraqi forces managed to take the city for two days and withdrew after U.S. and coalition forces regained the Saudi town.
Saudi forces later collaborated with the American -led coalition by allowing air force bases to be used by the USAF to bomb Iraqi targets. Hussein’s military directly threatened Saudi Arabia, which was a very close U.S. ally. Hussein then ordered Scud-B missiles to be launched at major Saudi cities. Fears aroused that the Scud-B missiles may have contained chemical or biological weapons. By the end of the month, Iraq had been humiliated and was forced to withdraw from Kuwait and surrendered. The U.S.-led coalition was victorious and Saudi officials thanked Pres. George H.W. Bush for saving their country and people from Hussein's brutal aggression.
This event tested the U.S.-Saudi alliance and ultimately made it stronger. The Persian Gulf War taught the Saudis a valuable lesson. Even though they were victorious against Iraq, they realized that their military was still weak compared to other nations and it was seen a serious issue to overall Saudi security. A permanent American military presence and massive Saudi military upgrade were viewed as the solution to the problem.
According to some economists and military experts the Saudis used another secret weapon in 1990. Some believe that the Saudis secretly ramped up oil production in order to temporarily lower the price of oil (Many OPEC nations did in order to lower Iraq's revenues as well). The Soviet Union needed high oil prices in order to pay off their debts and other expenses. Once the price of oil plummeted, the Soviet Union's revenues soon followed. As everyone knows the Soviet Union officially collapsed in 1991. Some economist's are convinced that the U.S. forced the Saudis into doing this. The collapse of the Soviet Union was seen as a positive development for the Saudis.
In regards to permanent military bases being deployed in the Middle East, American officials gladly accepted the deal and viewed it as a positive step towards creating long-term stability in the region. Another issue was the the world reserve currency, which is the United States Dollar (USD). It is the only currency that oil could be purchased in. Suppose that Saudi Arabia decided to sell oil in Euros or Japanese Yen; would the Saudis do that if the American military was in their backyard? Probably not. This deal works fantastic for both the U.S. and Saudi Arabia. Another unintended benefit was how the geographical shape of Saudi Arabia gave the U.S. Navy immense exposure to the Persian Gulf and Red Sea. This new strategy laid the foundation for the U.S. to deploy forces into other Middle Eastern nations.
Following the Persian Gulf War, around 5,000 American troops remained in Saudi military facilities. In 2003, the number soared to around 10,000 personnel. Didn’t Saudi Arabia receive one of the greatest deals in the history of the world? Free military protection and military upgrades just for holding a word superpower's currency and allowing it to drill oil there? Of course they did, but the deal didn’t come without risk. The biggest threat to the deal always was and will be radical Islamic terrorist organizations. These organizations want to overthrow the Royal Saudi family and remove the U.S. from the certain Middle Eastern nations, especially nations with holy Muslim cities, chiefly Mecca and Medina. The U.S. decided to withdraw the bulk of its forces after the September 11, 2001 terrorist attacks. As of today, only one unit remains there.
In 2010, the U.S. State Department decided to engage in one of the largest arms sale in U.S. history. The deal totaled an unprecedented $60 billion. This military upgrade will give the Saudis state-of-the-art military technology and massive upgrade packages to it's air force, army and navy.
People still wonder why isn't Saudi Arabia close allies with China and Russia. Now you know exactly why. Many historians and military experts strongly believe that this special alliance will continue to flourish in the future. So, did Saudi Arabia really help turn the U.S. into a world superpower? You bet it did.