Treasury Secretary Lloyd Bentsen will visit Saudi Arabia next month to meet with King Fahd in the latest effort by the Clinton administration to shore up relations with the skittish oil kingdom.
Bentsen will visit the Saudi capital Oct. 4-6 after a long-scheduled trip to Madrid, where he will participate in the annual meeting of the International Monetary Fund and the World Bank. In addition to meeting with Fahd, Bentsen will meet with Saudi Oil Minister Hisham Nazer and Finance Minister Mohammed Ali Aba Khail.
Administration officials said Bentsen's trip will focus primarily on financial and economic issues affecting the two countries -- including Saudi Arabia's recent cash flow problems and the outlook for world oil prices.
Though they sit atop the world's largest pool of proven oil reserves, the Saudis have found themselves strapped for cash in recent years -- a development analysts attribute to declining oil prices, the high costs of financing the Persian Gulf War, the weakness of the U.S. dollar and the extravagant spending habits of the royal family.
Bentsen's planned visit follows a quiet trip last month to Riyadh by President Clinton's former chief of staff, Thomas F. "Mack" McLarty. He was accompanied by two other senior officials, Martin Indyk, the National Security Council director for Middle Eastern affairs, and Robert H. Pelletreau Jr., assistant secretary of state.
The McLarty meeting, which lasted for two hours the night of Aug. 17, was largely an attempt to reassure Fahd of continued U.S. support in the aftermath of the civil war in neighboring Yemen, administration officials said. McLarty's message from Clinton was that "this relationship is very much intact, that this president is supportive, and that any direct threat to Saudi Arabia is a threat to the U.S. national interest," said a knowledgeable official.
Arrangements for McLarty's trip began after Prince Bandar bin Sultan, Saudi Arabia's ambassador to the United States, approached Clinton in July in Naples, just after the economic summit there, and asked that a top-level emissary travel quickly to the kingdom for talks.
The war in Yemen had ended a few days before with the defeat of the Saudi-backed insurgents in southern Yemen, and the Saudis were worried about relations with their superpower patron, the United States, according to administration officials. The United States had taken a neutral stance during the Yemen war. The U.S. view was that imposing a breakup of Yemen by force was inappropriate, and some U.S. officials were concerned by what they said was "extensive" Saudi support for the southern rebels.
After the southern rebellion failed, Bandar sought to mend fences. He initially proposed a visit by the president's national security adviser, Anthony Lake. When that proved impossible, he suggested McLarty, because of his close relationship with Clinton.
Sources said that during the meeting with McLarty, Fahd was surprisingly conciliatory toward the victorious Yemen leadership of President Ali Saleh, saying that Saudi Arabia wanted good relations with Yemen again. This theme was later conveyed to the Yemeni leadership.
"The Saudis have decided that it's not worth it to keep a southern secessionist movement alive in Yemen," said an administration official. The White House expects the Saudis won't provide a base for a military or paramilitary opposition movement to Ali Saleh's government.
Beyond the flap over Yemen is the bedrock issue of U.S.-Saudi economic relations. Changes in Saudi oil production policies can influence the U.S. inflation rate, and the Saudis are major purchasers of U.S. weapons and commercial aircraft. Indeed, the Saudis have orders for as much as $30 billion in new weapons by the end of the decade, and they have pledged to purchase $6 billion in commercial aircraft from Boeing Co. and McDonnell Douglas Corp.
But in February, because of its cash flow problems, Riyadh extended payment and delivery schedules for 72 F-15s it had ordered from McDonnell Douglas. Moreover, the Saudis have not yet signed final contracts for the commercial planes, worrying U.S. industry sources who expected the deal to have been completed long ago.