U.S. Middle East Policy

Nixon Administration Ignores Saudi Warnings, Bringing On Oil Boycott

Donald Neff
Washington Report on Middle East Affairs
October/November 1997, Pages 70-72

It was 24 years ago, on Oct. 20, 1973, that Saudi Arabia announced it was imposing a total oil boycott against the United States in retaliation for its support of Israel during the October war. The action caused an economic earthquake around the world.¹ Suddenly Americans and others were forming long lines at gas stations, and the greatest transfer of wealth in world history began. The price of gasoline soared, briefly up tenfold. It was a devastating added cost for governments, corporations and families.

The embargo, Henry A. Kissinger later admitted, had "the most drastic consequences" for the United States, adding, "It increased our unemployment and contributed to the deepest recession we have had in the postwar [World War II] period."² What Kissinger failed to say was that he bore major responsibility for the boycott.

The boycott could not have come as a surprise, as so many U.S. officials of the period have pretended. Since the beginning of 1973, Saudi Arabia's King Faisal ibn Abdul Aziz had been warning the Nixon administration with increasing urgency that he would employ the oil weapon unless Washington forced Israel to return Arab land it had been occupying since 1967. As guardian of Islam's holy sites, Faisal was particularly perturbed that Israel continued to occupy the Haram Al-Sharif with the Al Aqsa and Dome of the Rock mosques in Arab East Jerusalem. Haram Al-Sharif is the third holiest site, after Mecca and Medina, to the world's one billion Muslims.

Faisal, a proud and pious man, knew Egypt and Syria were planning war if Israel did not end its occupation. He thought war might be averted and Arab rights restored if he could influence President Richard Nixon to moderate U.S. support of Israel. In April the king sent one of his top aides, Oil Minister Ahmad Zaki Yamani, to Washington to warn officials of his seriousness about imposing an oil boycott.³

Among other Nixon officials, Yamani met with Kissinger, who at the time was the national security adviser in the White House. Instead of heeding Yamani, however, Kissinger strongly advised the Saudi not to mention the threat of an oil boycott to anyone else because it would make the Saudis look domineering and extreme. Kissinger was outwardly disturbed when Yamani informed him he had already talked with some officials, including Treasury Secretary George P. Shultz.

Nonetheless, Kissinger said, Yamani should not repeat his threat. The Saudi suspected that Kissinger's Jewishness prevented him from being impartial on Middle East matters and believed Kissinger was trying to keep the facts from the American people. Yamani continued to voice the king's message, including granting an interview to The Washington Post. He pointed out to the newspaper that the West was pressing Saudi Arabia to increase its oil production up to 20 million barrels a day from its current 7.2 million. Yamani said: "We'll go out of our way to help you. We expect you to reciprocate."⁴

"You may lose everything. Time is running out."

The Post was no more impressed by the Saudi message than Kissinger. On April 20, the Post editorially criticized the Saudis for threatening an oil boycott and added that "it is to yield to hysteria to take such threats as Saudi Arabia's seriously."⁵

Faisal was so disturbed by the U.S. rejection of his message that he granted for the first time in his life an interview to American TV. He warned: "America's complete support of Zionism against the Arabs makes it extremely difficult for us to continue to supply U.S. petroleum needs and even to maintain friendly relations with America."⁶

Israel was particularly active in encouraging Washington to ignore Faisal. Foreign Minister Abba Eban asserted that there was not "the slightest possibility" of an oil boycott. He added: "The Arab states have no alternative but to sell their oil because they have no other resources at all."⁷

In May, Faisal summoned to his Riyadh palace Frank Jungers, the board chairman of the Arabian American Oil Company. He warned the oilman about the possibility of an oil boycott. Jungers knew the king and believed that "he never acts on a whim. He never breaks his word. When he speaks, he never tells you anything unless he means it." Jungers passed on Faisal's message to both the White House and the State Department. It was ignored.⁸

That same month Faisal also called in four other leading oilmen and warned them that Arab resentment of U.S. support of Israel was rising, adding: "You may lose everything. Time is running out." They tried to relay that message. No one in the White House, the State Department or the Pentagon took it seriously. When they sought to meet with Kissinger, he refused to see them.⁹

Otto N. Miller, the board chairman of Standard Oil of California, tried to make the matter public by discussing it in a company letter to the firm's nearly 300,000 shareholders and employees. He wrote that Americans should foster "the aspirations of the Arab people [and] their efforts toward peace in the Middle East. There is now a feeling in the Arab world that the United States has turned its back on the Arab people."

An Explosion of Protest

Miller made no direct mention of Israel. Yet such was the explosion of protest by Israel's supporters—they threatened a boycott of Standard products—that he was forced to issue a statement saying that, of course, peace had to be based on "the legitimate interests of Israel and its people as well as the interests of all other states in the area."¹⁰

Another oilman, Maurice F. Granville, board chairman of Texaco, also sought to take the issue directly to the American people. He appealed to Americans "to review the actions of their government in regard to the Arab-Israeli dispute and to compare those actions with its stated position of support for peaceful settlement responsive to the concerns of all the countries involved." Such opaque language had no more influence than Granville.¹¹

The warnings by oilmen, Arab leaders and Faisal to the Nixon administration continued throughout the summer. In another rare interview in September, Faisal told Newsweek that "logic requires that our oil production does not exceed the limits that can be absorbed by our economy." He meant that Saudi Arabia was already earning enough money to meet its needs and that to honor the U.S. request to produce more oil would be a favor to the West at the expense of depleting Saudi Arabia's only natural resource. He added that Washington should show its gratitude by disavowing "Zionist expansionist ambitions."¹²

Despite these repeated warnings, the Nixon administration continued to echo the Israeli claim that Saudi Arabia was not serious. George Shultz, who later as secretary of state proved completely incompetent in dealing with the Middle East, dismissed Faisal's warnings as Arab "swaggering."¹³ Nixon himself repeated the Israeli mantra that "oil without a market...does not do a country much good." No one in the Nixon administration, certainly not Kissinger or Shultz, seemed to be willing to consider that America and most of the rest of the industrialized world were so dependent on oil that even its partial denial would be devastating. ¹⁴

That blind attitude prevailed in Washington and Tel Aviv up to, and beyond, the successful attack by Egypt and Syria on Oct. 6 against territories occupied by Israel. It was a traumatic event. The Arabs caught Israel totally unprepared. Egyptian troops successfully crossed the Suez Canal, an amphibious operation thought impossible by Israel and U.S. military experts, and the Syrians captured back most of the Golan Heights in the first hours of the assault.¹⁵

Despite the initial Arab successes, Israel remained optimistic. So, too, did Washington. Even two hours after war had actually broken out, the combined intelligence agencies of the United States still did not believe hostilities were likely or that the Arabs were capable of such coordinated action.¹⁶

The first assumption of Henry Kissinger, who barely two weeks earlier had become secretary of state, was that Israel would quickly prevail. As he complacently said to Alexander Haig, President Nixon's chief of staff, America should let Israel "beat them up for a day or two and that will quiet them down."¹⁷

The reality was that by the second day of fighting the Syrians were threatening the very heartland of the Jewish state from the Golan Heights and the Egyptians were decimating Israel's forces in the Sinai Peninsula. Nonetheless, optimism continued in Tel Aviv and Washington.

During the second day of fighting Prime Minister Golda Meir sent a sedate message to the White House asking for a delay on a cease-fire vote in the U.N. Security Council for at least three or four days, time enough, it was thought, to repel the Arabs. The request was quickly granted. That same day Israel requested a modest amount of emergency supplies, which was also approved.¹⁸

By Oct. 9, it finally became clear to Israel that it was in desperate straits. So great was its fear that it reportedly armed its nuclear weapons.¹⁹ Word of Israel's perilous position reached Israeli Ambassador Simcha Dinitz in Washington early in the morning. He met with Kissinger in the White House within hours and received assurances that Israel's needs would be promptly met. ²⁰

To be sure that Israel could quickly communicate with him, Kissinger ordered installed in Ambassador Dinitz's office at the Israeli Embassy a private, secure telephone line that directly linked the secretary of state with the ambassador, a unique privilege for a foreign country.²¹

Washington's blatant favoring of Israel caused acute fears among oilmen that Saudi Arabia might carry out its threatened boycott. On Oct. 12, the chairmen of Aramco's four parent companies—J.K. Jamieson of Essco, Rawleigh Warner of Mobil, M.F. Granville of Texaco and Otto N. Miller of Socal—sent a joint memorandum to President Nixon expressing their alarm at the possibility of an oil boycott and price rise if the United States continued its coddling of Israel.

Their memo said, in part: "We are convinced of the seriousness of the intentions of the Saudis and Kuwaitis and that any actions of the U.S. Government at this time in terms of increased military aid to Israel will have a critical and adverse effect on our relations with the moderate Arab oil-producing countries." The White House acknowledged receiving the memo but took no action on it.²²

Instead, the next day, Oct. 13, the Nixon administration began a massive airlift of weapons and ammunition to Israel.²³ However, America's European allies, more cautious about provoking a boycott, refused to allow U.S. planes en route to Israel to overfly their airspace. The planes had to use America's leased base at the Portuguese island of Lajes, neither the best nor the cheapest route. ²⁴

Arab Capitals Threatened

By this time, Israeli forces, their morale bolstered by open U.S. support, were slowly gaining the upper hand. They had pushed the Syrians back beyond the 1967 cease-fire line on the Golan Heights and, on Oct. 16, they finally broke through the Egyptian line and a small contingent crossed the Suez Canal into Egypt proper. The Israeli military force was now not only successfully holding onto the Arab land it had captured in 1967 but it was threatening the ancient capitals of Cairo and Damascus.

On the day of the Israeli crossing of the Suez Canal, the Arab oil countries met in Kuwait and raised the price of crude 70 percent, from $3.01 to $5.11 a barrel.²⁵ Despite that dramatic gesture, Kissinger continued to insist that an oil boycott was not likely. He met on Oct. 17 with a delegation of Arab foreign ministers from Algeria, Kuwait, Morocco and Saudi Arabia. Afterwards he somehow concluded that there would not be an Arab oil boycott despite America's open resupplying of Israel. ²⁶

The next day King Faisal sent a stern warning to Washington. He said bluntly that an embargo would be placed on all oil shipments to the United States unless Israel returned to the 1967 lines and the U.S. stopped its arms supply to Israel.²⁷ Despite the Saudi warning, Kissinger decided that a way must be found for Washington "to gain a little more time for Israel's offensive...."²⁸ This implicitly meant that the U.S. supply operation would continue in defiance of Faisal's warning.

Instead of returning to the former lines as the Arabs were demanding, a massive Israeli force crossed the canal on Oct. 18, directly threatening Cairo. The invasion not only stunned the Arabs but the Soviets too. Soviet Chairman Leonid Brezhnev sent an urgent message to Nixon proposing a cease-fire in place and Israeli withdrawal to the 1967 lines. Kissinger stalled to give the Israelis more time to press their counterattack.²⁹

Libya retaliated on the same day by announcing a total cutoff of oil shipments to the United States and a rise in the price of its premium oil to other countries from $4.90 to $8.25 a barrel.³⁰ The final straw for Faisal came the next day. On Oct. 19, President Nixon requested from Congress $2.2 billion in emergency aid to Israel, a huge sum far beyond any previous aid to Israel.³¹

In effect, the United States was now saying to the Arabs that it would finance Israel's fight to retain its illegal occupation of their land. At no time during the war did combat take place inside Israel itself. All the fighting was on Egyptian and Syrian soil.

An explanation for Nixon's reckless action can be found in the fact that in October Nixon was thinking less of foreign relations than of himself. By this time he was deep in the quagmire of the Watergate scandal and the devastating disgrace of his vice president. Spiro Agnew had resigned Oct. 10 after being accused of corruption. Nixon was desperate for political support, leaving Kissinger basically in charge of U.S. foreign policy throughout the October war.³²

The next day Saudi Arabia carried out its longstanding threat. From April to as late as Oct. 18, Faisal had been insistently warning Washington to temper its bias toward Israel. Now he acted. Riyadh announced at 9 p.m. local time on Oct. 20 that it was imposing a total oil boycott against the United States, its closest Western friend. The Saudi action had a domino effect. Abu Dhabi, Algeria, Bahrain, Kuwait and Qatar quickly followed suit, violently disrupting international commerce.³³

As a result of the boycott, the Arabs became enormously wealthy, largely at the expense of the United States and the West. Yet the boycott and the war had little effect on Israel's colonial policies. Even today it retains Syrian and Jordanian land—if not Egypt's, which America essentially bought back from Israel with the Sinai agreements.³⁴ Washington not only continued its close support of the Jewish state but grew closer to it, despite the heavy costs and the fact that Israel's occupation violated international law and America's own policies.

The boycott was lifted on March 18, 1974, leaving economies around the world shattered and many individuals living poorer lives, Kissinger admitted: "I made a mistake."³⁵ Skeptics might wonder whether it was a mistake, or wanton disregard of U.S. interests during a passionate effort to help Israel.

Recommended Reading:

• Cockburn, Andrew and Leslie, Dangerous Liaison: The Inside Story of the U.S.-Israeli Covert Relationship, New York: HarperCollins Publishers, 1991.
• Green, Stephen, Living by the Sword: America and Israel in the Middle East, 1968-87, Brattleboro, VT: Amana Books, 1988.
• Hersh, Seymour M., The Samson Option: Israel's Nuclear Arsenal and American Foreign Policy, New York: Random House, 1991.
• Kalb, Marvin and Bernard, Kissinger, Boston: Little, Brown and Company, 1974.
• Kelly, J.B., Arabia, the Gulf and the West, New York: Basic Books, Inc., Publishers, 1980.
• Kissinger, Henry A., Years of Upheaval, Boston: Little, Brown and Company, 1982.
• Lacey, Robert, The Kingdom, London: Hutchinson & Co. (publishers) Ltd., 1981.
• Neff, Donald, Warriors Against Israel: How Israel Won the Battle to Become America's Ally 1973, Brattleboro, VT: Amana Books, 1988.
• Nixon, Richard M., The Memoirs of Richard Nixon, New York: Grosset & Dunlap, 1978.
• Rubenberg, Cheryl A., Israel and the American National Interest: A Critical Examination, Chicago: University of Illinois Press, 1986.
• Sheehan, Edward R. E., The Arabs, Israelis, and Kissinger: A Secret History of American Diplomacy in the Middle East, New York: Reader's Digest Press, 1976.

1. Lacey, The Kingdom, p. 413; State Department Middle East Task Force, "Situation report #51," 10/21/73, secret; declassified 12/31/81. Also see Neff, Warriors Against Israel, p. 260.
2. Rubenberg, Israel and the American National Interest, p. 173.
3. Lacey, The Kingdom, p. 398; also see Neff, Warriors Against Israel, pp. 110-11.
4. Lacey, The Kingdom, p. 399.
5. Washington Post, 4/20/73.
6. Lacey, The Kingdom, p. 400.
7. Ibid.
8. Sheehan, The Arabs, Israelis, and Kissinger, p. 69.
9. Lacey, The Kingdom, pp. 400-02.
10. Facts on File 1973, p. 654.
11. Ibid., p. 780.
12. Sheehan, The Arabs, Israelis, and Kissinger, p. 67.
13. Ibid., p. 68.
14. Facts on File 1973, p. 741.
15. Neff, Warriors Against Israel, p. 153; Kissinger, Years of Upheaval, p. 458.
16. "Pike Report on the Hearings of the House Select Committee on Intelligence," written in 1976 and published in the Village Voice, 2/16/76. Also see Kissinger, Years of Upheaval, p. 458.
17. Ibid., p. 472.
18. Ibid., p. 477.
19. Hersh, The Samson Option, pp. 223-30. Also see Cockburns, Dangerous Liaison, p. 173; Green, Living by the Sword, pp. 90-92. Time reported the story as early as 1976. None of the principals involved has ever admitted the nuclear arming incident, although former Ambassador to Egypt Herman Eilts says Kissinger years later casually referred to it; see Hersh, The Samson Option, p. 230.
20. Kissinger, Years of Upheaval, pp. 492-96.
21. Kalb and Kalb, Kissinger, p. 467.
22. Kelly, Arabia, the Gulf & the West, p. 396.
23. Kissinger, Years of Upheaval, p. 514.
24. Rubenberg, Israel and the American National Interest, p. 166.
25. Kelly, Arabia, the Gulf & the West, 397; Lacey, The Kingdom, 406.
26. Kissinger, Years of Upheaval, p. 536.
27. Kelly, Arabia, the Gulf & the West, 397.
28. Kissinger, Years of Upheaval, pp. 538, 541.
29. Ibid., pp. 539-40. Also see Neff, Warriors Against Israel, pp. 249-50, 253.
30. Neff, Warriors Against Israel, p. 257.
31. Lacey, The Kingdom, p. 413; Nixon, The Memoirs of Richard Nixon, p. 932. Up to 1973, the largest amount of combined economic and military aid to Israel in one year had been $634.3 million in 1971. Israel's regular aid for 1973 had been budgeted at $492.8 million.
32. Neff, Warriors Against Israel, pp. 218, 261-62.
33. Lacey, The Kingdom, p. 413; State Department Middle East Task Force, "Situation report #51," 10/21/73, secret; declassified 12/31/81.
34. See Donald Neff, Middle East History: It Happened in January, "Unprecedented U.S. Aid to Israel Began under the Sinai Agreements," Washington Report on Middle East Affairs, January 1997.
35. Sheehan, The Arabs, Israelis, and Kissinger, p. 69.