"...a unique and unrepeatable fortune has been dissipated into gunsmoke in one desert after another. A few Arab writers have drawn attention to reality, among them the Lebanese Georges Corm , who speaks with eloquence and scorn of 'this oil-fired tyranny, the new scourge of the Arabs', judging the society to be 'sick with oil'. A Kuwaiti professor, Muhammad Ruhaimi, concludes his book Beyond Oil somberly. 'Vested interests' in the Gulf, he says, oppose social justice and efficiency and 'continue to block any rational or open political development ....... the importation of industrial and consumer goods do not contribute to modernization but to deepening outrage and oppression. "
[2] " ...The use of 'national security' to obtain a fabulous tax break occurred in 1949 when King ibn Saud, still living it up and still heavily in debt, demanded that Aramco pump more and increase its royalty payments rate ... Aramco saw a way to overcome these complaints without losing a dime. But again it would need the collusion of the United States Government. Aramco leaked its U.S. income tax records to Saudi officials, who saw that whereas - in return for their precious oil - they had received $38 million in royalties from Aramco in 1949, the U.S. government, in return for no tangible quid at all - had received from Aramco $43 million in taxes.
That didn't seem fair to the Saudis .... to win the hearts of the Saudi princes, the U.S. Treasury Department broke the law. Federal statutes require income taxes to be applied equally and uniformly to all businesses. But the Treasury's Internal Revenue Service ruled that. as of 1951, overseas royalty payments would be considered income taxes, even though this ruling would exclusively benefit oil companies.
They were the only companies paying such royalties. And since U.S. law forbids double taxation, these "taxes" ( royalties) could be deducted, dollar for dollar, from taxes owed at home .... Thus encouraged, the U.S.-based grants began turning away from domestic exploration to develop their lush foreign fields. Why not? After all, an oil company that paid $1,000 in royalties to a landowner in Texas or Louisiana could deduct only $480 as business expenses. But an oil company that paid a foreign government ( and most of the foreign oil lands were owned by governments, not by private persons) $1,000 in "taxes" could deduct the full $1,000 ...... The foreign tax credit was sweet indeed. ( Oil Follies, Robert Sherill , pg. 190)
[3] From the Federation of Atomic Scientists website Country Profile SAUDI ARABIA (Lightly edited):
"Saudi Arabia is America's top customer. Since 1990, the U.S. government, through the Pentagon's arms export program, has arranged for the delivery of more than $39.6 billion in foreign military sales to Saudi Arabia. An additional $394 million worth of arms were delivered to the Saudi regime through the State Department's direct commercial sales program during that same period. ... Oil rich Saudi Arabia is a cash-paying customer. It receives no U.S. military assistance to finance these purchases, although it does demand that about 35 percent of all major contracts be "offset"- that is, economic benefits equaling 35 percent of the arms contract value must be steered back to the Saudi economy.
The United States has very close and long-running military ties to the Saudi regime dating back to 1945. Following the 1990-91 war against Iraq, more than 5,000 U.S. troops and thousands of U.S. military contractors have been continuously based in Saudi Arabia. However, several concerns have been raised about this close military cooperation..... These concerns are: sophisticated arms sales to Saudi Arabia spur regional arms races; high level military expenditures undermine stability; there is opposition to American military presence on Saudi soil; political repression and violations of human rights; border disputes; heightened regional tensions; concerns about proliferation of nuclear weapons and ballistic missiles ; and support for international terrorism. "
[4] "... Diplomats and arms-makers [1976] still argued that the Arabs could not really use the weapons , or present a serious threat to the Israelis. The arsenals in the desert could be seen as another solution to unemployment and over- production in the West: their rapid obsolescence and deterioration might keep Western workers happily employed for decades ahead.. " (Arms Bazaar , Samson, pg. 314).
[5] In the 1970's, the Arab nations exported $1,207.3 x 109 in oil, and bought $604.2xl09 in arms. That is to say, about 50% of the oil revenue currency was returned to the developed world, notably the U.S. which commands 50% of the world's weapons trade. (The Closed Circle, pg. 266)
[6] Scientific American, August 90, Nolan and Wheelon:
" Ballistic missiles and other means of long-range destruction, traditionally limited to a handful of industrialized nations, are fast becoming a fixture in many regional conflicts. The Third World military buildup is perhaps even more worrisome than its First World prototype, for it is far more likely to find expression in war. "
" ...the most depressing arms race was between the countries of the world who could least afford it, who were buying weapons instead of food and welfare; among the developing countries without oil to sell, orders for American arms had gone up from $240 million in 1972 to $2.3 billion in 1976 - a nearly tenfold increase ..... Zaire and Ethiopia, both impoverished countries, followed the arms-buying spree. American sales to Black Africa - nearly all to Zaire, Kenya and Ethiopia - went up by eight hundred Percent in one year. " (Arms Bazaar, pg. 316)
[7] Arms Bazaar, all of Chapter 14: "The Arming Of The Shah" .
[8] Scientific American, op. cit.
[9][ " In Washington [ in 1972 ] the increase in the oil-price had induced a sense of near-panic about the effects on the international economy and America's balance of payments, and William Simon at the treasury was not inclined to discourage orders for arms. The quickest way to recycle oil money or to sop up the surplus', it was said, was to sell arms in exchange - much safer and stabler than having the oil-money 'sloshing around the short-term capital markets of the world ' . ( Arms Bazaar pg. 244)
[10] ". ..The arms companies offered contradictory justifications for their huge sales to Iranians or Arabs; first that they were essential to Western security, secondly that they were not really dangerous, because their customers could not effectively handle them.." (Arms Bazaar pg. 311)
"... Levels of education and technological skill are poor, and the troops have no compensating combat experience. The vast expenditure on arms that almost certainly could not be used outside their stockpiling warehouses is only the latest instance of military modernization as practised by Ottoman and Arab despots; and it refers more to values of honor than to actual preparation for battle... " ( Closed Circle, pg.277)
[11] " ...In November (of 1974), Assistant Defense Secretary Ellsworth and George Vest, then director of the State Department's politico-military bureau, flew to Riyadh with the recommendation that the Saudi government spend billions of dollars over the next ten years on more aircraft, 440 helicopters, 26 new ships, tanks, other armor, and equipment to create a paratrooper brigade. These weapons, said the Pentagon survey, would give the country the capabilities to "deter aggression and defeat an enemy." That year, Arabia ordered 300 improved Hawk missile batteries, for delivery in the 1976-79 period, at a cost of $270 million... " Weapons; pg. 560-61)
" ...We are selling the A model of the Maverick, which cost us under $20,000 apiece, to the Saudis for B model prices, about $46,000 apiece, apparently in order to develop and Process the C model. This type of back door financing avoids the Congressional authorization process and provides the Pentagon with an additional source of revenue. It amounts to an incentive to unload unwanted or unneeded equipment on a country that may not need it but has money to burn... " (Weapons; pg. 563; quote Ben Rosenthal, Congressional hearing, 1976)
" ... Each batch of weapons generated the need for more. By 1976 the Saudis had already bought 110 Northrop Tigers, and they now wanted 2,000 Sidewinder missiles which could be fired from them, together with sixteen batteries of Raytheon Hawk missiles to provide an air defence system across the nation. The Israelis were now worried about these weapons' eventual destination, and the Arms Control and Disarmament Agency in Washington questioned whether the Saudis really needed a five-fold increase in missiles. But the Pentagon insisted that they were necessary in the event of a war with Iraq; and Congress eventually agreed on the deal.
Soon afterwards the Saudis asked for 2,500 Maverick air-to-surface missiles, 1,000 laser-guided bombs and 1,800 wire-guided TOW missiles. The Senate protested, but Kissinger persuaded them to allow 650 missiles, in view of the United States' dependence or. Saudi friendship. The oil was still lubricating sales... " (Arms Bazaar , pg. 310)
".... No oil country could now be seen without modern arms. All down the Persian Gulf the rich sheikdoms, with Iran facing them and Saudi Arabia surrounding them, were buying fighters, tanks and ships to catch up with their neighbors. The richest of these, Kuwait, was determined to balance its purchases, buying Skyhawk planes from America, Mirage F1's from France, and Chieftain tanks from Britain; but what kind of war they visualized was hard to discover.. . " ( Arms Bazaar ,pg. 312 )
[12] " As soon as a technologically advanced weapon system has been purchased for the armed services, a chain of supplementary import demands is induced. To remain operational, modern fighter aircraft, tanks, or naval units require an extensive network of support facilities ..... The chain of demands, generally with a high import content, seems endless. Precise data is not available, of course but a few examples can convey a general impression of the ramifications of arms imports ..... The introduction of jet- fighter aircraft in developing countries requires the construction of additional airports, the extension of existing runways and the installation of navigational and control systems; it also leads to the adoption of a costly air defence system, since the inventory of aircraft has to protected while still on the ground. " ( The World Military Order: The Economic Consequences of the Transfer of Military- oriented Technology, Peter Lock and Herbert Wulf; pg. 213)
[13] " ... At the Hilton Hotel at Anaheim, near Disneyland, I observed a bus delivering a whole load of young Iranians ... I learnt that they were working on a top-secret intelligence project called Ibex (... ) run by the Rockwell Corporation at Anaheim, at an estimated cost of over $500 million ..... Ibex was described as a sophisticated electronic intelligence system to be placed along Iran's frontiers as a protection against impending aggressors: but there were suspicions among some Iranians that it also involved an extensive bugging system Whatever the full scope of the Ibex, it soon began to run into trouble .... At the Anaheim hotel, the young trainees began to have serious psychological disorders as they reached the climax of their course; eventually a psychiatric specialist from the State Department was secretly sent to advise. In Iran, as the equipment began to be installed, there were doubts as to whether it could be made to work at all .... The Shah suspected that he had been sold a dud system, and bitterly complained about the chicanery of Pentagon officials... " (Arms Bazaar , pg. 256)
[14] " Attacking the Americans in this manner obviously had its liabilities. Casualty rates were very heavy. US forces wiped out whole villages as they tried to retaliate effectively. Far more supplies and personnel had-to come from North Vietnam, running the bombing gauntlet all the way. Most seriously, the DRV and NLF ran the risk of seeing the entire conflict remoulded in ways advantageous to US capital- intensive warfare and disadvantageous to people's war, the multi-faceted political and military campaigns in which the NLF excelled ... " ( The World Military Order, pg. 30)
[15] " ...Saudi Arabia, because of its huge orders for military infrastructure -80 percent or more of its arms purchases -had been America's second-best arms customer, but moved into first place in 1978 .... Not surprisingly, in view of Saudi Arabia's importance as an oil supplier and a force for conservative moderation in the area, the decision to build up the Saudi forces was as much American as Saudi Early in 1974, plans were revealed in Washington to sell the Saudis half a billion dollars worth of F-5s and naval equipment. Reporters were told that F-4s had also been offered to replace British Lightnings, but that the Saudis were hesitant about the cost; at that time, no other Arab country had the Phantom. " (Arms Bazaar)