This is an edited extract from Secret Affairs: Britain’s Collusion with Radical Islam
by Mark Curtis
The armies of Egypt and Syria began a surprise attack on Israel on 6 October 1973, crossing the ceasefire lines in the Golan Heights and the Sinai Peninsula, which Israel had captured during the Six-Day War in 1967. Soon after the attack, the Organisation of Petroleum Exporting Countries (OPEC), led by the Gulf states, announced a rise in the price of oil and a total oil embargo against the US for its support of Israel. After further cuts in oil production, the price soared, more than quadrupling compared to early 1973, creating an international crisis and raising panic in Western countries.
Britain’s ambassador in Jeddah, Hooky Walker, wrote that the 1973 oil price rises represented ‘perhaps the most rapid shift in economic power that the world has ever seen’; the Foreign Office acknowledged that the crisis had propelled Saudi Arabia ‘to a position of world influence’. Britain, both before and after the crisis, was reliant on the Gulf states for 70 per cent of its oil supplies, 30 per cent of which came from Saudi Arabia. ‘The disappearance of cheap oil’, the Foreign Office’s planning staff wrote in February 1974, ‘has transformed the world in which British foreign policy has to operate.’ Whereas in 1972 industrial countries had a trading surplus of $10 billion, in 1974 they were likely to have a deficit of $48 billion, while the oil producers were likely to have accrued a surplus of $69 billion.
The oil price rise occurred alongside a worldwide rise in commodity prices and, in Britain, an ongoing coal dispute between the Conservative government of Edward Heath and the National Union of Mineworkers, which had reduced coal deliveries to power stations. Britain was plunged into energy shortages and the ‘gravest economic crisis since the Second World War’, the Cabinet was told by the chancellor, Tony Barber, announcing in December 1973 the balance of payments forecast for 1974. In response, Heath announced in parliament that the government would introduce a three-day working week to conserve fuel and electricity, that industry’s access to electricity would be limited to five days per week and that television programming would end at 10.30 p.m.
However, the Saudis, under the pro-Western Faisal, began to seek a lifting of the embargo as soon as possible, encouraged by the US decision in early 1974 to step up arms supplies to the regime, and worked with the US to find a face-saving formula to end the impasse between the Arabs and the West. In fact, the Saudis, and also Sheikh Zayed’s regime in Abu Dhabi, provided additional oil supplies to Britain in late 1973 and early 1974, to ease its energy crisis, despite the official restrictions agreed in OPEC at the time. On 15 November 1973, Edward Heath wrote to King Faisal, emphasising the excellent state of British–Saudi relations, and underscoring his personal friendship with Faisal. ‘During the crisis through which we have been passing and the momentous issues which it has raised for us all, I have much valued Your Majesty’s understanding and appreciation of British policy in the Middle East,’ Heath wrote, in apparent recognition of Saudi oil policy towards Britain.
The Saudis formally lifted the embargo in March 1974. In subsequent OPEC meetings, Saudi oil minister Sheikh Yamani consistently called for low oil prices in support of the Western states. At the September 1975 OPEC meeting, the Saudis resisted calls from the other members for a much greater increase in oil prices than the 10 per cent eventually agreed. The British files are full of praise for the Saudis’ ‘moderating role’ in these meetings, and it is clear that Britain actively worked through them to achieve lower prices – a strategy ‘to press Saudi Arabia to use her great strength to blunt the power of OPEC’, as British ambassador to Saudi Arabia, Alan Rothnie, put it.
Flush with oil money, the Saudis stepped up their bankrolling of Islamist organisations and charities around the world. During the 1970s the Saudi-controlled Muslim World League opened a raft of new offices abroad, while its Ministry for Religious Affairs printed and exported millions of Korans free of charge and distributed Wahhabi doctrinal texts among the world’s mosques. The Saudis also instigated a massive building programme that would eventually construct 1,500 mosques worldwide. In Jeddah in 1972, the Saudis added to the international Islamic associations they had founded the previous decade by establishing the World Assembly of Muslim Youth (WAMY), which sought to federate Islamist youth organisations throughout the world; in the 1980s WAMY would become a discreet channel for public and private Saudi donations to hardline organisations accused of supporting terrorist groups.
At the same time, a quiet revolution was occurring in the British economy, involving the sealing of a profound economic alliance with the Saudis, the consequences of which are still evident. This was begun by Conservative ministers in the dying days of the Heath government, and enthusiastically continued by their Labour counterparts in the new Wilson government of 1974. British ministers bent over backwards to forge closer economic relations with Saudi Arabia by seeking to win contracts to participate in its petrodollar-funded economic expansion; moreover, they went out of their way to offer up Britain as an attractive place to invest Saudi oil money.
These British plans had actually begun before the October oil price rises. In January 1973 the Foreign Office had noted that, with Saudi oil wealth and plans for industrialisation in the Kingdom, there was ‘a golden opportunity for British industry and for British banking if they have the energy and imagination to grasp it’. By the following month, it was working on initiatives ‘to nudge Saudi thinking in the direction of sensible investment abroad of their surplus revenues’, and to persuade them ‘of the facilities that the City of London had to offer.’ The Saudis were clearly being seen as potential saviours for Britain, already undergoing a deep economic crisis.
A stream of high-level meetings in Britain and Saudi Arabia began in early 1973. In February, Crown Prince Fahd, the minister of the interior, visited London to meet Edward Heath to discuss Saudi investment in Britain as well as the ‘broad measure of agreement’ between the two countries on foreign policy. In July, Prince Abdullah, the commander of the Saudi National Guard – and another future king – visited London. Amidst the oil crisis in December 1973, Trade Secretary Peter Walker proposed to the prime minister to make ‘a major effort’ to persuade the Arab oil producers ‘to invest part of their large surpluses over the next five or six years in British industry’. He outlined various options for ‘partnership’, with them entailing greater involvement of British industry in Saudi industrial development, especially in exploring new sources of raw materials or energy. By the end of the year, after visits to Saudi Arabia by the governor of the Bank of England and officials in the Department of Trade and Industry, Ambassador Rothnie was noting that Britain and Saudi Arabia ‘had taken the first steps towards the establishment of a new long-term relationship in the linked spheres of development, investment and oil’.
British finance officials were, however, concerned about the possible impact that large Arab investments might have on the international financial system. Even before October 1973, Saudi Arabia had accrued surpluses of $3 billion from oil sales, and the Bank of England’s ‘prime concern was with the volatility of the large reserves which the Arab states would amass from oil revenues’. By October 1974, the Treasury noted that the oil producers had accrued surpluses of $70 billion, of which the Saudis alone accounted for $26 billion, confirming the forecast earlier in the year. The Treasury’s concern was to handle the surpluses in a way so as to ‘not to dislocate international financial mechanisms and aggravate the tendencies towards recession now visible in the world economy.’ A key problem was that the investments were being placed in Western banks at high interest rates, accruing sums for the investors that were out of proportion to the banks’ capital base, threatening to ‘overwhelm’ them, with ‘grave consequences for the entire private financial structure of the West’, the Treasury noted.
The British solution was ‘for a new and reformed system which might serve us in the future as Bretton Woods did in the past’ – referring to the arrangements established in the mid-1940s in which countries pegged their exchange rates to the value of gold, but which collapsed in 1971 following the US’ suspension of the convertibility of dollars to gold. The British now wanted to ensure that the oil producers recycled their surplus petrodollars ‘to reinforce the stability of the system’; at the same time, some of these should ‘come our way’, the Treasury implored.
The British–Saudi meetings continued into late 1974 and 1975. In December 1974, the chancellor, Denis Healey, visited Saudi Arabia to discuss Saudi investment in Britain and the global financial system, and also, as his principal private secretary put it, ‘to establish good personal relationships with the powerful minority who matter in this important country’. In March 1975, Fahd visited London and followed this up with a further visit in October, meeting the queen and various ministers, ‘to inaugurate this happy new era’ between the two countries. The following month, Foreign Secretary James Callaghan paid the first ever visit by a British foreign secretary to Saudi Arabia to build on the ‘tremendous momentum’ of contacts between the two countries and to get more British firms participating in Saudi Arabia’s massive new development projects.
These British visits were exercises in obsequiousness, with Chancellor Healey’s notable in this respect. When Healey met Saudi finance minister, Prince Musa’id, in December 1974, he told the latter that he did not consider the oil-producing countries to have acted immorally in raising oil prices, nor did he consider that the price increase was responsible ‘by any means’ for the difficulties now facing the world. The inflation that the world had experienced in 1973 had ‘nothing to do with the price of oil’, Healey said, adding that it was simply an ‘historical accident’ that the oil price increase had come just when the threat of inflation was being recognised.
By January 1975, the Saudis had invested a massive $9.3 billion in Britain, of which $800 million was in the public sector – a total investment equivalent to around £20 billion today. British nationalised industries’ total borrowing from the oil producers was around $1.4 billion. However, the Treasury noted that ‘because of the sensitivities of the Saudis we have avoided identifying them as the source’ of these loans to Britain. It also stated that the oil producers’ surplus funds were making a major contribution to financing Britain’s current account deficit in 1974 and the first half of 1975. The Saudis were now ‘very substantial holders of sterling’, the second largest holders among the oil producers (after Nigeria). When Harold Wilson met Prince Fahd in London in October 1975, he was briefed by his advisers to tell the future king: ‘Your country now has a major stake in Britain and you will naturally be closely interested in the progress of the British economy.’
Thus, within two years of the October 1973 oil crisis, the Saudis had poured huge quantities of petrodollars into the British economy, taking a sizeable stake in it. The upshot was that Britain was now economically reliant on the Saudi regime and would be in effect tied to aligning its foreign policy to the regime. British planners were perfectly comfortable with, indeed championed, the Saudis’ increasingly influential regional and world role. In November 1974, a Foreign Office brief for Chancellor Healey’s upcoming visit to Saudi Arabia noted the confidence with which Saudi Arabia, flush with petrodollars, was bestriding the world stage, and that it ‘will retain for the foreseeable future a powerful voice in the formulation of Arab policies’. It encouraged Healey to raise the point that ‘Saudi Arabia and Britain have many interests in common, not least in the maintenance of stability in the Arabian Peninsula’. ‘Stability’ of course meant protecting the sub-region from infection by wayward notions of popular, republican or nationalist government. Britain welcomed Saudi Arabia’s pre-eminence in the region, especially after having decided to reduce its own military commitments to the Gulf states a few years earlier.
Both states were bent on maintaining in power the pro-Western feudal sheikhdoms elsewhere in Arabia. This applied firstly in Oman, where the sultan was still fighting nationalist forces in Dhofar province with the aid of British troops and Saudi money; and secondly in North Yemen, created after the British and Saudi-backed covert war and where a pro-Saudi military government now faced a Soviet-backed nationalist regime in neighbouring South Yemen, Britain’s former colony of Aden. British and Saudi officials were especially concerned with South Yemeni backing for the Dhofari rebels and connived throughout 1975 to find ways to counter it. In October that year, James Callaghan and Saudi foreign minister, Prince Saud bin Faisal, jointly agreed that the Saudis would finance North Yemen’s arms imports and that the British would arrange ‘private’ counter-insurgency training for the North Yemeni regime.
Yet Britain did not only support Saudi foreign policy in the Middle East. Crown Prince Fahd’s October 1975 visit to Britain came at a time when the Foreign Office was briefing ministers to regard the Saudis ‘as valuable interlocutors’ for ‘exchanging views … on a wide range of world (as distinct from purely Middle Eastern) problems, including East–West relations and the world economic and monetary situation (with particular reference to a new international economic order)’. This was now a global strategic alliance. And British planners could have had no illusions about just who the Saudis were otherwise supporting in their foreign policy. In the 1970s and early 1980s, Saudi Arabia financed, among others, the Palestinian terrorist group headed by Abu Nidal, Islamic militants opposed to Qadafi in Libya, Uganda’s bloodthirsty dictator Idi Amin, Muslim rebels in the Philippines and the brutal Siad Barre regime in Somalia.
The Kingdom’s links with terrorist groups were known to the US by the early 1970s. In May 1974, for example, the US State Department warned Britain not to go ahead with its reported offer to sell Blowpipe surface-to-air missiles to Saudi Arabia, for fear of ‘seepage of this type of weapon into the hands of terrorists’. The US ambassador to Saudi Arabia told his British counterpart that the US had refused to sell similar equipment, the Redeye, for fear of their ending up in the hands of terrorists and being ‘used against civil aircraft or similar targets’.
The British continued to be responsible for the very survival of the Saudi royal family. In 1970, a British army team had trained members of the Saudi National Guard in ‘special duties in connection with the personal safety of HM the King’. This training team stayed throughout the early 1970s, while the Saudi oil minister, Sheikh Yamani, was protected by a team of former SAS security officers; this training followed the events of December 1975, when a group of terrorists led by Carlos the Jackal had taken OPEC oil ministers hostage at their meeting in Vienna.
In May 1973, Britain signed a £250 million deal with Saudi Arabia to train its air force pilots and service its aircraft. By this time, 2,000 British instructors, engineers and administrators were involved in work on various military projects around the country. British military equipment was being sold to a country whose ‘defence’ policy was, as the then British ambassador, Hooky Walker, noted in February 1975, based on ‘Jihad’. A Saudi press statement of the time stated:
The general principles upon which the Kingdom’s defence policy is founded include the doctrine that Jihad (Holy War) is something that will remain in existence until the Day of Judgment within the limits laid down by God (‘Fight in the cause of God those who fight you, but do not transgress limits, for God loveth not transgressors’, Koran, sura ii) and by the Prophet (‘Whoever fights to raise the high word of God is doing the will of God’). The Kingdom’s defence system is guided by the Shari’a rules of conduct for war that are contained in the Holy Book, the Sunna of the Prophet and the guidelines of the Four Great Caliphs.
This alliance had been formed neither because British planners had any particular love for the House of Saud, nor out of ignorance as to what it was like. In May 1972, just before the deepening of the Anglo–Saudi entente cordiale, outgoing ambassador, Willie Morris, had observed to Alec Douglas-Home, the foreign secretary, that: ‘It is a great tragedy that, with all the world’s needs, Providence should have concentrated so much of a vital resource and so much wealth in the hands of people who need it so little and are so socially irresponsible about the use of it.’ The leading Saudis, Morris added, ‘regard the rest of the world as existing for their convenience’, and they ‘act with unstudied, unconscious indifference to the convenience of others or what others may think of them.’ Morris’ words are revealing in that they describe Whitehall’s closest allies in the region, with whom it had formed a strategic alliance, precisely to oppose more benign forces elsewhere. In short, the British knew exactly with whom they were dealing as the Saudis promoted any cause inside the Kingdom or overseas in the name of Wahhabi extremism and defence of the House of Saud.
The lengths to which British officials went to nurture the relationship were often extraordinary. In October 1975, for example, a Foreign Office brief for the queen in advance of Prince Fahd’s visit to Britain included a section called ‘topics to be avoided’. It noted two – the Arab–Israel issue and ‘recent reports of bribery and corruption in Saudi Arabia’. The British government also provided a ‘large Jaguar and an attractively leggy blonde’ for Mohammed al-Fawzan, the director of foreign broadcasting in the Saudi Ministry of Information, for his visit to London in September 1973. ‘Mohammed seemed in a thoroughly anglophile mood’ with these provisions, the Foreign Office commented.
One senior Saudi with whom Britain also began developing relations was Prince Turki bin Abdul Aziz, an Oxford-educated vice minister of defence who, in 1977, succeeded Kamal Adham as head of the Saudi foreign intelligence service, the General Intelligence Directorate. Turki would reportedly forge close ties to MI6 and the CIA and even offer jobs to retired intelligence officers to be his eyes and ears in London or Washington. Soon after his appointment, in either 1978 or 1979, Turki is believed to have first met Osama Bin Laden, then a student at the University of Jeddah who had begun to associate with Islamic radicals. It is alleged that Turki suggested to Bin Laden that he use his money to aid the Afghan resistance against the Soviets following the latter’s invasion in December 1979.