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Saudi Arabia: The Sarajevo of the 21st Century

Is Iraq a Diversion from the Real Invasion
or Will Bush Try to Occupy Both Countries at Once?

Allah's Last Laugh

by Michael C. Ruppert

[Copyright 2002, From The Wilderness Publications, All Rights Reserved. May be copied or distributed for non-profit purposes only. MAY NOT be posted on any internet web site in its entirety without express written consent. Contact]

Aug. 21, 2002, 14:00 PDT (FTW) - The global horrors of the First World War - the war to end all wars - began with the assassination of Archduke Francis Ferdinand in Sarajevo in 1914. The apocalyptic war of the 21st century may have begun with a $1 trillion lawsuit filed in the United States by 9-11 victim families against Saudi Arabian banks and members of the Saudi royal family. In what may be the opening salvos of a financial and energy apocalypse, the Financial Times reported yesterday that wealthy Saudi investors had begun a run on their U.S. banking deposits that may have taken as much as $200 billion out of U.S. banks. These massive withdrawals - out of an estimated $750 billion in Saudi U.S. investments - occurred within days of the August 15 filing of the suit. Ironically, the principal attorneys in the suit are all political insiders and, in one case, a member of the Council on Foreign Relations. You might think they would have thought of this beforehand.

There are two basic questions to ask about Saudi Arabia. Why was Saudi Arabia not a focus of U.S. action and serious media attention in the immediate aftermath of Sept. 11 even though there were so many obvious connections? And why now is Saudi Arabia so prominently a focus of what is apparently government-approved U.S. animosity? One thing is obvious. On the eve of a U.S. invasion of Iraq the deployment of U.S. military personnel in the region is also a convenient placement of resources for what may be a one-two punch to take over a tottering kingdom that owns 25 percent of all the oil on the planet at the same time that Saddam Hussein is removed from power in a country that controls another 11 percent. Together, the two countries -- which have not yet peaked in production capacity -- and which are the only two nations capable of an immediate increase in output possess 36 percent of the world's known oil.

The Saudi situation is complicated by the fact that much of Saudi Arabia's wealth is invested in U.S. financial markets and its sudden loss could devastate the U.S. economy. But Bush brinksmanship -- an understatement -- is making possible a scenario where Saudis long-loyal to the U.S. markets cut off their own arm in a coyote-like effort to free themselves from a trap that threatens the stability both of their kingdom and the global economy.

Osama Bin Laden is a Saudi. Fifteen of the 9-11 hijackers were Saudi. There has been an obvious and clear financial trail showing Saudi support for the Al Qaeda. In fact, as has recently been noted by French author and former intelligence officer Jean Charles Brisard in his book, "The Forbidden Truth," the financial support network of Al Qaeda is a virtual cut-and-paste reincarnation of BCCI, a Pakistani bank known for terrorist, drug, and CIA connections in the 1980s. One of BCCI's former executives, Khaled bin Mafouz, remains the banker for the Saudi royal family today and both he and Saudi Arabia's former intelligence chief, Prince Turki (removed just before the 9-11 attacks after 25 years of liaison with bin Laden), have been discussed repeatedly, if obliquely, in both mainstream and independent press stories since the attacks took place.

After months of strenuous and repeated assertions by the Bush Administration that Saudi Arabia was a key ally in the war on terror, that they were loyal and trusted partners in U.S.-led efforts, someone has suddenly turned on the tap for anti-Saudi propaganda and the mainstream media are eating it up.

On June 20 the Jang group of newspapers in Dubai reported that Al Qaeda networks were active in Saudi Arabia. This followed a June 18 announcement that a group linked to Al Qaeda had been arrested inside the kingdom and charged with planning attacks on Saudi government installations.

On July 18 the BBC reported that Saudi Prince Nayef Bin Sultan Bin Fawwaz Al-Shaalan had been indicted by a Miami court on charges of having smuggled 1,980 kilos of cocaine on his private jet in 1999.

On July 28, Britain's The Observer released a story that quickly spread around the world. It was headlined, "Britons left in jail amid fears that Saudi Arabia could fall to al-Q'aeda." The lead paragraphs read, "Saudi Arabia is teetering on the brink of collapse, fuelling foreign office fears of an extremist takeover of one of the West's key allies in the war on terror.

"Anti-government demonstrations have swept the desert kingdom in the past months in protest at the pro-American stance of the de facto ruler, Prince Abdullah.

"At the same time, Whitehall officials are concerned that Abdullah could face a palace coup from elements within the royal family sympathetic to al-Q'aeda.

"Saudi sources said the Pentagon had recently sponsored a secret conference to look at options if the royal family fell..."

The story later mentioned, "Anti-Abdullah elements within the Saudi government are also thought to have colluded in a wave of bomb attacks on Western targets by Islamic terrorists."

After finally mentioning the apparently unimportant subject of the headline -- the fact that several Britons had been jailed on bootlegging charges -- the story concluded by stating that feuding between factions in the Saudi court was going to increase with the death of King Fahd who was unstable in a Swiss hospital.

The story ended by quoting Saudi dissident Dr. Saad al-Fagih who declared, "'There is now an undeclared war between the factions in the Saudi royal family.'"

On the same day a lengthy essay on Saudi Arabia in The Asia Times by Ehsan Ahrari observed, "It is interesting to note that [Prince] Sultan is believed to be a preferred U.S. candidate for the Saudi throne." Abdullah is the crown prince, not Sultan.

On July 29 Stratfor, a global intelligence reporting and analysis service, reported that a feud was brewing between Saudi Arabia and neighboring Qatar over Qatar's willingness to openly support the U.S. invasion of Iraq. Qatar is nearly sinking under the weight of pre-deployed military equipment and has a brand new state-of-the-art U.S. Air Force Base. [See story this issue.]

On July 30, the suggestions that internecine warfare had erupted in Saudi Arabia were given credence by an Agence France Presse report describing the recent deaths of three Saudi princes in eight days. Prince Fahd bin Turki died of thirst in the desert on July 30. Prince Sultan bin Faisal died in a car crash on July 23, and Prince Ahmed bin Salman died the day before of a heart attack.

On Aug. 1, The World Tribune reported that Saudi Arabia, which has been acquiring long range ballistic missiles had also been, according to reports confirmed by U.S. officials, attempting to acquire nuclear weapons from Pakistan which has been well-documented to have heavy concentrations of Al Qaeda supporters within all parts of its government.

On that same day, Saudi dissident Dr. al-Fagih appeared on the Australian Broadcasting Corporation program "Lateline" and offered some startling revelations:

"Prince Abdullah who is supposed to be the next in charge, the next King would not accept to appoint Prince Sultan as Crown Prince and Prince Sultan insists that he should be the next in line for Abdullah to be [king]."

Al-Fagih predicted the imminent death of the ailing King Fahd and noted, "That's why probably the foreign office have [sic] expected some major thing happening in the next few weeks...

"I mean, Prince Abdullah is in charge of the national guard and Prince Sultan is in charge of the army, and either one will use his own force to fight the other to fight for power. Now they will use all elements of the population, of the society... [including a large portion of the population that supports al-Q'aeda and radical Islamic fundamentalism].

Al-Fagih said that there was a psychological barrier in the country because all information is so thoroughly controlled and the regime maintains the appearance of complete control. Almost all Saudis dislike the corrupt regime for a multitude of differing reasons. But, said the medical doctor who once served with Osama bin Laden in the Afghan war against Soviet occupation, "Once this psychological barrier is broken, either by a dispute of the royal family, or by a financial collapse, you would expect a major act by the people against the regime."

Al-Fagih also noted that in general the dislike of the Saudi people for the U.S. was intense because of its unremitting support of Israel and also because the U.S. had maintained a military presence on Saudi soil long after the end of the Gulf War.

Just five days later on Aug. 6 the Washington Post reported that a month earlier on July 10, a top Pentagon advisory group had received a briefing from Rand Corp. analyst Laurent Murawiec describing Saudi Arabia as en enemy of the U.S. and threatening seizure of its oil fields and financial assets if it did not stop supporting terrorism. The Pentagon group which received the briefing, the Defense Policy Board, is headed by renowned hawk Richard Perle. Although high-level Bush administration figures like Colin Powell downplayed the briefing's significance, it received heavy-handed media play for several days. Subsequent reports stated that Vice President Dick Cheney's staff had "embraced" the report.

On Aug. 7 Saudi Arabia made clear and unequivocal public pronouncements that it would not allow its soil to be used for an invasion of Iraq.

On Aug. 14, Reuters reported that King Fahd, who had just been moved to Spain was in failing health and possibly near death.

On Aug. 15 amidst massive daylong publicity, a 15-count, $1 trillion lawsuit was filed against various Saudi interests for liability in the 9-11 attacks. Included among the defendants were the Saudi Bin Laden Group of companies (previously connected through the Carlyle Group to Bush family finances), three Saudi princes, seven banks, eight Islamic foundations, a number of charities and the government of Sudan.

The three Saudi princes are Turki Faisal al Saud (see above), Prince Sultan bin Abdul Aziz (same as above), and Prince Mohamed al-Faisal.

This new suit eclipsed three earlier suits, largely ignored by the major media, filed by victim families charging various degrees of liability and/or complicity by the U.S. government. The key lawyers in the case have a history of close affiliation with the Republican Party, the Bush family and/or the Council on Foreign Relations. Media coverage of the suits continued through the weekend ending Aug. 18.

What gives?


The instability in Saudi Arabia may well be just the end result of internal decay and rot. But the consequences and implications of Saudi Arabia's current crisis are far deeper once one examines the financial threat that Saudi chaos might unleash.

Like the United States, the Saudi economy is in tatters. Like the U.S. economy it needs only one thing to keep it afloat -- cash.

The Saudi government rightly fears a quickly successful U.S. invasion of Iraq. A first inevitable consequence would be serious anti-American protests from the Saudi population. The second inevitable consequence would be an almost immediate increase in Iraqi oil production, which would result in a price reduction that might break the back of OPEC and dramatically reduce oil income. Seeing that the U.S. economy is on the brink of collapse, the Bush Administration, facing congressional elections in November and a potentially disastrous 2004 presidential election, must do whatever it takes to keep itself in power. For this administration, so hugely populated by oil men (and woman), cheap oil is the obvious first choice.

Saudi Arabia seems to have seen this coming for some time. In April, the Saudi government announced that it was considering privatizing parts of Aramco, the Saudi national oil company, and selling off some of Aramco's operations to Exxon, BP-Amoco, Shell and other major companies. Though little has been disclosed since the early announcements, this move would benefit the Saudis in two big ways.

First, it would give Western companies an equity stake in the stability of the monarchy, making it difficult for the U.S. to consider bombing or embargoing operations owned by western companies. Secondly, it would generate large amounts of cash to offset declining economic growth, rising unemployment and declining per capita income, according to Stratfor on April 29.

The oil-based Mexican standoff is mirrored by what is effectively a much more successful financial deterrent -- the Saudis ability to wreck the U.S. financial markets should they see their situation become utterly desperate.


It is impossible to quantify the exact amount of Saudi holdings in the U.S. economy. But anecdotal evidence is utterly compelling.

The New York Times reported on Aug. 11, "An adviser to the Saudi royal family made a telling point about Saudi elites. He said an estimated $600 billion to $700 billion in Saudi money was invested outside the kingdom, a vast majority of it in the United States or in United States-related investments." The BBC has estimated Saudi U.S. investment at $750 billion.

Adnan Khashoggi, perhaps the best-known Saudi billionaire, controls his investments through Ultimate Holdings Ltd. and in Genesis Intermedia, which was reported to have been connected to suspicious stock trades around the time of the Sept. 11 attacks. (No linkage has been made between these trades and the attacks themselves). The rest of his private U.S. holdings are administered through his daughter's name from offices in Tampa, Fla., not far from where many of the hijackers received flight training at both private and U.S. military installations.

Khashoggi is a longtime financial player, deeply connected to the Iran-Contra scandal of the 1980s and also to BCCI. But Khashoggi doesn't even make the Forbes list of the richest people in the world. One Saudi who does is Prince Alwaleed Bin Talal, who ranks as the 11th richest man on the planet with an estimated net worth of $20 billion.

Some of Alwaleed's holdings and recent acquisitions include:

-       The single largest shareholder in Citigroup, the teetering U.S. financial giant, which is reported to have a derivatives bubble of more than $12 trillion and has reportedly sought recent emergency assistance from the Federal Reserve. On July 18 Alwaleed made an additional $500 million purchase of Citigroup stock, raising his estimated shareholding to $10 billion.

-       Alwaleed also owns, according to an August 9 story in The Guardian, three percent of the total shares of Newscorp (Fox), making him the second-largest shareholder behind Rupert Murdoch.

-       Alwaleed's other significant holdings include Apple Computer, Priceline, The Four Seasons Hotels, Planet Hollywood, Saks and Euro Disney.

-       Alwaleed also sits on the board of directors of the infamous (post-9-11) Carlyle Group.

Alwaleed alone is in a position to pull the plug on the U.S. economy. But, of course, he would cost himself billions to do it and this is not a likely scenario because he has long been a pro-democratic U.S. supporter. The remaining investments of the Saudi family, taken as a whole, would undoubtedly paint an even grimmer risk assessment. All of this assumes, of course, the stability of the Saudi monarchy -- an apparent prerequisite for the preservation of their continued financial empire, the stability of the U.S. economy making it the most profitable place for Saudi investment, and the absence of a major and protracted regional conflict. But if the U.S. economy fails?...

The Bush Administration's unilateral and illegal commitment to an Iraqi invasion brings all three essentials into question.

The August 20 report from the Financial Times suggests that the Saudis are, at minimum, firing a clear warning shot across the bow of the U.S.S. Bush.


In his appearance on Australian television Dr. al-Fagih discussed the likelihood of a Balkanization of Saudi Arabia by dividing the kingdom into three separate states and separating the eastern oil provinces from the holy sites in the west. Such a short-term solution might delay what seems to be an inevitable final conflict.

But there is another telling factor that has not been discussed in the major media.

There are signs that major financial power houses are looking into gold hedges, especially mining and actual possession of gold in anticipation of a large gold "bust-out." The head of the California Personnel Employee Retirement System (CALPERS), the largest pension fund in the country, recently announced his resignation to go into the gold sector of the financial markets.

Recent reports starting in 1998 indicate that Saudi Arabia contains enormous quantities of gold. A 1997 Saudi embassy press announcement revealed 800 locations where gold had been discovered. A Nov. 8 report from Ohio State University -- based upon new Global Imaging System technologies, confirmed "2,100 known occurrences of gold, silver, copper, and other metals in the western third of the Saudi peninsula." Saudi Arabia appears to be sitting atop one of the largest gold stores on the planet.

But there is something else in the western third of the country -- the two holiest cities in all of Islam -- Mecca and Medina. And a gold bust-out might well signal the end of the U.S. dollar's reign as the dominant currency in world commerce -- the means by which the U.S. has policed its global financial empire. And Iran has just signaled that it is considering pricing its oil in Euros.

Yet the Bush Administration seems willing to risk everything for a roll of the dice in Iraq and a lawsuit in New York -- moves it may have already committed itself to take and cannot reverse. And still the American people try to ignore the fact that the administration knew about, and could have prevented, the attacks of September 11th.

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Truth And Lies About 9-11