In 1972, with the Vietnam War winding down, President Nixon unveiled his Guam Doctrine.
In a speech on that heavily fortified US-controlled island, Nixon referred to Saudi Arabia and Iran as the Twin Pillars in US foreign policy designs. These two oil-rich Persian Gulf nations, both ruled by undemocratic monarchies who brutally stifled all dissent, would be bolstered by Washington in return for copious amounts of oil awarded the Four Horsemen.
The US would assure the security of these regimes from threats both external and internal, while the Shah and his House of Saud counterparts would recycle petrodollars into Chase Manhattan and Morgan Guaranty respectively, while throwing down for CIA covert operations worldwide. Nixon was enunciating a policy which had been quietly set into motion two decades earlier.
While BP was plotting with Allen Dulles to overthrow the Mossadegh government in Iran in the early 1950’s, US Assistant Secretary of State George McGhee was signing the US/Saudi Security Agreement in Riyadh. US military advisers and aid began streaming into the Kingdom before the ink was even dry on the new agreement. The US Army Corps of Engineers constructed an airbase at Dhahran, less than five miles from ARAMCO headquarters.
The base was a carbon copy of a US Air Force base and big enough to accommodate C-130 military transport planes. Soon the base was home to forward-deployed US nuclear weapons. The oil for arms quid pro quo was being set in motion.
By 1965 the US and Britain had launched the Anglo-American Program in Saudi Arabia. The program yielded $400 million in defense contracts, many earmarked for development of military infrastructure in Saudi, including the construction of a large base at Khamis Mushayt. The Saudis received $176 million in military equipment from US defense contractors from the time McGhee inked the security pact until 1970.
In the 1970’s contractors like Northrup were represented in the Kingdom by Saudi billionaire Adnan Khashoggi, later a major figure in the Iran/Contra scandal. Northrup paid more than $100 million in “commissions” to Khashoggi.
The House of Saud deployed its huge windfall profits generated by the 1973 oil embargo to embark on an unprecedented modernization program, which involved yet more contracts to US multinationals. Just as Richard Secord was arriving in Tehran to peddle arms to the Shah on behalf of US defense giants, the same corporations began doing a brisk business in Riyadh.
Between 1971 and 1975 the Saudis purchased or were given by the Pentagon in the form of military aide $2.5 billion in weaponry, nearly fifteen times the amount they’d received in the entire two decades before 1971.
King Faisal, who ruled Saudi Arabia during the 1973 embargo, was sympathetic to calls by Egyptian President Gamal Abdel Nasser and others for OPEC solidarity and Arab unity when it came to the oil question. He wavered from time to time regarding US plans to militarize Saudi Arabia. In 1975 Faisal was assassinated by his nephew, leaving many Saudis wondering if the CIA had a hand in the popular King’s murder.
His successor King Khalid was much more compliant towards the Pentagon. Soon after he took the throne, the US Army Corps of Engineers spearheaded a $20 billion program to build military bases, communications systems and roads throughout Saudi Arabia.
The most important base was aptly named King Khalid Military City and was built within 100 miles of both the Iraqi and Kuwaiti borders with Saudi. Other military cities were constructed at Asad, al-Batin and Tabuq. The al-Batin base lies halfway between the King Khalid stronghold and the Iraq/Kuwait border. The Tabuq base is just inside the Saudi border with Jordan. The base at Khamis Mushayt is near Saudi’s border with Yemen.
Taken together the bases encircle the ARAMCO oilfields, the raison d’etre for the US military presence in Saudi Arabia. Underscoring the growing importance of Saudi oil, in 1976 the Army Corps of Engineers moved its overseas headquarters from Germany to Saudi Arabia.
During this same period BCCI insider Sheik Kamal Adham, headed both the Saudi General Intelligence Directorate and the Saudi Internal Security Service. Adham led a campaign of terror against dissidents, many of whom were King Faisal loyalists and were outraged at his assassination. It didn’t matter that King Faisal had been Adham’s brother-in-law. Adham’s loyalties were to his CIA counterparts, who saw the simmering Shi’ite unrest in the Kingdom as a threat to ARAMCO oil supplies. Langley grew increasingly nervous as the Saudi protests grew louder and more popular.
It was decided that the Saudi citizenry could no longer be trusted to serve in the Saudi military, whose main mission was, after all, the protection of ARAMCO oil installations. Instead, the US persuaded the new King Khalid to bring in third country nationals (TNCs) to constitute the “Saudi” military, which US spook outfits like TRW, Vinnell, Scientific Applications and BDM then contracted with the House of Saud to train. Thus Bangladeshis, Filipinos and Pakistanis became the TNC “Saudi” troops that to this day protect ARAMCO oil from foreign threats and from the Saudis themselves.
ARAMCO reaped huge profits during the 1973 oil embargo, but the real petrodollar bonanza was yet to come. The oil giants didn’t mind the higher price of oil, even helping to push spot prices up, since at that time the Four Horsemen were involved in actual wellhead production where a high per barrel price is desirable.
Later in the 1980’s, Big Oil moved downstream or away from wellhead production and into refining, marketing, petrochemicals and shipping. Part of the reason for this is that exploration and production involve more risk to capital, so why not leave this to the smaller independent companies.
Another reason for moving downstream was involuntary, since many Third World governments had tired of the exploitation of their energy resources by the Four Horsemen and had created their own nationalized oil companies to explore and develop oilfields. Still, these countries rely heavily on the Four Horsemen in the refining, marketing and transporting of their crude oil.
As the Four Horsemen swam downstream, they naturally began to desire low per barrel crude prices. Thus, throughout the 1980’s and 1990’s wholesale prices remained low. Gasoline pump prices, on the other hand, never returned to their pre-1973 levels and the Horsemen have been pocketing the difference ever since. Exxon, Mobil, Chevron and Texaco owned ARAMCO lock, stock and barrel and were also part of the Iranian Consortium led by BP and Royal Dutch/Shell.
These same Four Horsemen controlled oil production in both Twin Pillars countries. The Shah and the House of Saud were mere porcelain figurines. And Iran and Saudi Arabia were less nation states than oil fiefdoms run by the Four Horsemen and their bankers at Chase Manhattan and Morgan Guaranty.
Dean Henderson is the author of five books:Big Oil & Their Bankers in the Persian Gulf: Four Horsemen, Eight Families & Their Global Intelligence, Narcotics & Terror Network, The Grateful Unrich: Revolution in 50 Countries, Das Kartell der Federal Reserve, Stickin’ it to the Matrix & The Federal Reserve Cartel. You can subscribe free to his weekly Left Hook column @www.hendersonlefthook.wordpress.com