In part one and part two of this series, I outlined a few core points in Objectivist Peter Schwartz’s new book, The Foreign Policy of Self-Interest: A Moral Ideal for America. After discussing inadequacies in Schwartz’s analysis of the U.N. and U.S. foreign aid policy, I now turn to his examination of the problem of Saudi Arabia.

Saudi Arabia

The ever-expanding “neofascist” process that Rand identified in her critique of contemporary politics is further illustrated by the U.S. government’s socialization of corporate risk across the globe, granting corporations access to American taxpayer dollars—and the U.S. military if need be—to protect their foreign investments. Schwartz seems to approve of this. Looking at how Western-developed oil fields have been expropriated by foreign governments, such as Saudi Arabia, Schwartz would have us believe that it is the U.S. government’s duty to “safeguard American lives and property” abroad “by using retaliatory force against the initiators” (15). Hence, for Schwartz,

America could readily take over the oilfields [in Saudi Arabia] militarily (they properly belong to Western companies anyway, which developed them and from which they were expropriated decades ago by the Saudi state). The only explanation is that we have morally acquiesced to the Saudis. We are reluctant to pronounce judgment on them. We don’t believe we are entitled to assert our own standards. We have concluded that we must compromise those standards—i.e., that we have to give up some of our freedom—in order to accommodate the wishes of tyrants. (38)

Well, this is not “the only explanation.” Again, Schwartz misses the underlying dynamic at work in the current political system. That’s because, almost without fail, he focuses on moral issues acontextually; he insists on pronouncing sweeping moral judgments on various global phenomena but frequently brackets out any discussion of the actual history—the actual context—within which these phenomena have evolved. We are left, in the end, with moral generalizations that are disconnected from the concrete circumstances with which Schwartz attempts to grapple.

I’ve long argued that U.S. companies short-sighted enough to enter into contracts with foreign governments like those of the former Soviet Union or Saudi Arabia—which had/have a poor history of upholding private property rights—should not have the right to hold American taxpayers and lives hostage to their stupidity. “We” do not have an obligation to bail out Western oil companies whose property was “expropriated” by the House of Sa’ud. A cursory look at the history of oil development in Saudi Arabia would show us, in any event, that the Western oil industry has been in bed—“embedded” if you will—with their ‘expropriators’ from the beginning. Nothing much has actually changed since the Saudi government ‘took over’ the oil by successively increasing its share of the Arabian-American Oil Company (ARAMCO); U.S. administrators, technicians, and personnel are still firmly in place and U.S. oil companies like Exxon-Mobil remain at the forefront of all new oil exploration in the country.

As I’ve argued here, the formation of the Rockefeller-controlled ARAMCO depended upon a 60-year monopoly concession from the Saudi Arabian government; that government didn’t have the moral right to grant such monopoly concessions to begin with.

Let me emphasize a key point here: This was not homesteading. Western oil companies didn’t simply arrive on the Arabian peninsula so as to “mix their labor” with the land in order to attain Lockean acquisition rights. They were granted monopoly concessions in advance of drilling. Such concessions entail monopolizing all the oil in a vast land area through state force, which bars competing oil producers who might seek out oil in that area. The monopolist, in other words, uses the host government to gain control over a land mass through ownership claims granted by that government, which has no such legitimate authority to grant ownership rights (see Rothbard, The Ethics of Liberty).

ARAMCO, as such, was born of a political relationship. And the U.S. government facilitated this Saudi-Western oil arrangement over time. In the early days, the Rockefeller-influenced U.S. Export-Import Bank even paid $25 million to the Saudis to construct pleasure railroads, while Franklin D. Roosevelt provided $165 million in secret appropriations out of war funds to help in the construction of ARAMCO pipelines across Saudi Arabia. Over the years, the money made by the House of Sa’ud in granting the monopoly concession was pumped into the creation of institutions dedicated to the dissemination of fanatical Wahhabi ideology, which has been exported to the rest of the Arab world—fueling fundamentalism and terrorism throughout the region.

Schwartz himself bemoans this Saudi Arabia-U.S. alliance and the financing of “an array of Wahhabi indoctrination schools, or madrasas, where new crops of Islamic holy-warriors are continually cultivated ...” But instead of focusing on the money that drives the establishment and growth of these schools, Schwartz is simply disgusted by the “utterly perverse” U.S. “readiness to grant [the Saudis] a moral endorsement” (34). That “moral endorsement” goes hand-in-hand with a politico-economic endorsement. And this is why it is a virtual certainty that the Saudi government will never be touched by the U.S. in the current “War on Terror.” As I wrote in my essay, “A Question of Loyalty”:

And throughout this whole “War on Terror,” the poisonous soil from which Bin Laden emerged—Saudi Arabia—remains untouched. While the U.S. is busy fighting in Iraq, it sleeps with the Saudis, continuing a 60+ year-affair that most likely led the Bush administration to blot out 28 pages from a report on the failure of 9/11 intelligence, which might have embarrassed its Saudi “allies.” U.S. corporations engage in joint business ventures with the Saudi government—from petroleum to arms deals—utilizing a whole panoply of statist mechanisms, including the Export-Import Bank. The U.S. is Saudi Arabia’s largest investor and trading partner.

In the history of ARAMCO and the U.S.-Saudi partnership, we find the kind of “pull-peddling” that Rand condemned as “neofascist.” And it is the U.S.-Saudi-Big Oil Unholy Trinity that continues to sustain an autocratic, undemocratic Saudi regime, one of the breeding grounds of Islamic terrorism. Yes, that regime finds itself increasingly at odds with the fanatical elements in its midst. As I argued at length here, “the fundamentalist ideology that the House of Sa'ud has long funded and exported is now undermining its very rule. While the failure of the Saudi state at this point in time would be an utter catastrophe, those who would take power—the fanatical fundamentalists among them—are, to borrow a Randian phrase, 'the distilled essence of the [Saudi] Establishment's culture ... the embodiment of its soul' and its 'personified ideal'." (An interesting article on this subject,"Al Qaeda on the March" by Ehsan Ahrari, was published today.)

None of these complexities are even mentioned by Schwartz in his book.

Tomorrow: The History of U.S. Foreign Policy.

See also Part I, Part II, Part IV and Part V.

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