The Persian Gulf: Issues for U.S. Policy, 2006

CRS Report for Congress
The Persian Gulf States:
Issues for U.S. Policy, 2006
Updated August 21, 2006
Kenneth Katzman
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

The Persian Gulf States:
Issues for U.S. Policy, 2006
The U.S.-led war to overthrow Saddam Hussein virtually ended Iraq’s ability
to militarily threaten the region, but it has produced new and un-anticipated security
challenges for the Persian Gulf states (Saudi Arabia, Kuwait, Bahrain, Qatar, Oman,
and the United Arab Emirates). The Gulf states, which are all led by Sunni Muslim
regimes, fear that Shiite Iran is unchecked now that Iraq is strategically weak. The
Gulf states strongly resent that pro-Iranian Shiite Muslim groups and their Kurdish
allies (who are not Arabs) have obtained preponderant power within Iraq. This has
led most of the Gulf states, particularly Saudi Arabia, to provide only halting support
to the fledgling government in Baghdad and to revive the focus on U.S.-Gulf defense
cooperation that characterized U.S.-Gulf relations during the 1990s.
The new power structure in Iraq has had political repercussions throughout the
Gulf region, particularly as Sunni-Shiite violence in Iraq has come to overshadow
direct insurgent violence against U.S. forces as the key threat to Iraqi stability. The
Sunni-Shiite tensions in Iraq apparently are spilling over into the Gulf states. Shiite
communities, particularly that in Bahrain, have been emboldened by events in Iraq
to seek additional power, and Sunni-Shiite tension in the Gulf states is said by
observers to be increasing.
Some Shiite communities, which view themselves as long repressed, are
attempting to benefit politically from the Bush Administration’s focus on promoting
democracy and political reform in the region. Domestically, all of the Gulf states are
undertaking substantial but gradual economic and political liberalization to deflect
popular pressure and satisfy U.S. calls for reform. However, the reforms undertaken
or planned do not aim to fundamentally restructure power in any of these states. The
Bush Administration advocates more rapid and sweeping political and economic
liberalization as key to long-term Gulf stability and to reducing support in the Gulf
states for terrorist groups such as Al Qaeda. The Administration is funding civil
society programs in the Gulf states — funding that is not necessarily welcomed by
the Gulf leaderships — but it is also promoting the bilateral free trade agreements
that most of the Gulf leaders seek.
The Bush Administration also is working to maintain or improve post-
September 11 cooperation with the Gulf states against Al Qaeda. Some Gulf states
allegedly tolerated the presence of Al Qaeda activists and their funding mechanisms
prior to the September 11 attacks. Fifteen of the nineteen September 11 hijackers
were of Saudi origin, as is Al Qaeda founder Osama bin Laden.
This report will be updated as warranted by regional developments. See also
CRS Report RL33533, Saudi Arabia: Current Issues and U.S. Relations; CRS
Report RS21513, Kuwait: Post-Saddam Issues and U.S. Policy; CRS Report
RS21852, The United Arab Emirates: Issues for U.S. Policy; CRS Report RL31718,
Qatar: Background and U.S. Relations; CRS Report 95-1013 F, Bahrain: Key Issues
for U.S. Policy; and CRS Report RS21534, Oman: Reform, Security, and U.S. Policy.

Threat Perceptions and U.S.-Gulf Security Cooperation....................1
The “Dual Containment” Approach of the 1990s.....................3
The Post-Saddam Gulf Threat Profile..............................4
Iran Strategically Strengthened...............................4
Shiite Communities Emboldened.............................5
Spillover From Iraq Battlefield...............................6
Post-Saddam U.S.-Gulf Defense Cooperation........................7
U.S. Arms Sales and Security Assistance......................12
Excess Defense Articles (EDA)..............................14
Foreign Military Sales (FMS)...............................14
Other Gulf State Security Initiatives..............................18
Potential Cooperation With NATO...........................19
Domestic Stability and Political Liberalization..........................20
Leadership Transition.........................................20
Political Liberalization.........................................22
Continued Human Rights Concerns...............................25
U.S. Democratization Efforts....................................25
Economic Liberalization and Integration ..........................26
U.S.-Gulf Free Trade Agreements............................28
Other Foreign Policy and Counter-Terrorism Cooperation.................29
Arab-Israeli Peace Process......................................29
Cooperation Against Al Qaeda..................................31
Appendix 1. Gulf State Populations, Religious Composition ..............34
List of Figures
Figure 1. Facilities Used by U.S. Forces in the Gulf.....................11
Figure 2. Map of the Persian Gulf Region and Environs .................35
List of Tables
Table 1. Gulf Hosting of U.S. Troops and Equipment (2005)..............10
Table 2. U.S. Assistance to the Gulf States............................13
Table 3. Comparative Military Strengths of the Gulf States, Iraq, and
Iran (2006)..................................................17
Table 4. GCC State Oil Production/Exports (2005) .....................27

The Persian Gulf States:
Issues for U.S. Policy, 2006
The Persian Gulf region is rich in oil and gas resources but has a history of
armed conflict and of challenging U.S. national security. The Gulf states — Saudi
Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman, bound together in a 1981
alliance called the Gulf Cooperation Council (GCC) — have experienced three major
wars in the past twenty five years: the Iran-Iraq war (1980-1988), the Persian Gulf
war (1991), and Operation Iraqi Freedom (2003-current). This report, which will be
revised periodically, discusses U.S. and Gulf efforts to manage the new challenges
posed by the September 11, 2001, attacks on the United States and the aftermath of
the overthrow of Saddam Hussein. The report is derived from a wide range of
sources, including press reports, unclassified U.S. government documents, U.N.
documents, observations by the author during visits to the Gulf, and conversations
with U.S., European, Iranian, and Gulf state officials, journalists, and academics.
Threat Perceptions and
U.S.-Gulf Security Cooperation
Prior to the 2003 war against Iraq, the United States was repeatedly drawn into
conflicts in the Gulf to counter Iranian or Iraqi aggression and contain regional
escalation. In the “Iran-Iraq War,” Iran and Saddam Hussein’s Iraq fought each other
from Iraq’s invasion on September 22, 1980, until August 20,1988, jeopardizing the
security of the Gulf monarchy states, which collectively backed Iraq. Similarly, the
United States tilted toward Iraq in that war to defeat the radical Islamist threat posed
by Iran’s Islamic revolutionary government, which came to power in February 1979
after ousting the U.S.-backed Shah. Iran and the United States fought minor naval
skirmishes during 1987-1988, at the height of the Iran-Iraq war. During one such
skirmish (Operation Praying Mantis, April 18, 1988) the United States fought a day
long naval battle with Iran that destroyed almost half of Iran’s largest naval vessels.
On July 3, 1988, the United States mistakenly shot down an Iranian passenger aircraft1
flying over the Gulf (Iran Air flight 655), killing all 290 aboard. After about
400,000 Iraqi and almost 1 million Iranian casualties, the Iran-Iraq war ceased in
August 1988 after Iran’s forces collapsed from a series of successful Iraqi offensives
and Iran accepted U.N. Security Council Resolution 598, amounting to an Iraqi
victory in the war.

1 In May 1987, Iraq hit the U.S.S. Stark with French-supplied Exocet missiles, presumed by
most to be a mistake, killing 37 U.S. Navy personnel.

The Iran-Iraq war victory emboldened Saddam Hussein to assert himself as the
“strongman” of the Gulf. He invaded and occupied Kuwait on August 2, 1990,
asserting that he did so because Kuwait (and UAE) were overproducing oil and
thereby betraying Iraq (by lowering world oil prices). Others believe Saddam
Hussein wanted to position Iraq to control, directly or indirectly, oil exports from the
Gulf. To liberate Kuwait, the United States deployed over 500,000 U.S. troops,
joined by about 200,000 troops from 33 other countries. That war (Operation Desert
Storm, January 16- February 27, 1991) resulted in the death in action of 148 U.S.
service personnel and 138 non-battle deaths, along with 458 wounded in action. The

1991 Gulf war reduced Iraq’s conventional military capabilities roughly by half, but,

prior to Operation Iraqi Freedom (March 2003), Iraq was still superior to Iran and the
Gulf states in ground forces.
The Gulf is one of the few theaters where weapons of mass destruction (WMD)
and ballistic missiles have been used in hostilities. Iraq’s missile, chemical, nuclear,
and biological programs, accelerated during the Iran-Iraq war, were among the most
sophisticated in the Third World at the time of Iraq’s invasion of Kuwait. Israel was
sufficiently concerned about Iraq’s nuclear program that it conducted an air-strike
against Iraq’s French-built Osirak nuclear reactor on June 7, 1981, temporarily setting
back Iraq’s nuclear effort. During the Iran-Iraq war, Iraq fired enhanced Scud
missiles at Iranian cities,2 and Iran fired its own Scud missiles at Iraqi cities as well
in the so-called “war of the cities.” On ten occasions during the Iran-Iraq war, Iraq
used chemical weapons against Iranian troops and Kurdish guerrillas and civilians,
killing over 26,000 Iranians and Kurds.3 U.N. investigation missions found that Iran
also used some chemical weapons against Iraq during the war, although Iran’s
capability was less advanced than that of Iraq during that period.4 During the 1991
Gulf war, Iraq fired 39 enhanced Scud missiles at Israel, a U.S. ally, and 39 enhanced
Scud missiles on targets in Saudi Arabia. One Iraqi missile, fired on coalition forces
on February 25, 1991 (during Desert Storm) hit a U.S. barracks near Dhahran, Saudi
Arabia, killing 28 military personnel and wounding 97. U.N. weapons inspectors
dismantled much of Iraq’s WMD infrastructure during 1991-1998, but they left in
1998 due to Iraqi obstructions and without clearing up major unresolved questions
about Iraq’s WMD. New U.N. inspections began, under threat of U.S. force, in
November 2002, but were ended after the Bush Administration and its allies
determined that Iraq’s regime was not fully disarming and that it was necessary to
overthrow the regime by force (Operation Iraqi Freedom, OIF).

2 The missiles were supplied by Russia, but Iraq enhanced their range to be able to reach
Tehran, which is about 350 miles from the Iraq border. The normal range of the Scud is
about 200 miles.
3 Central Intelligence Agency. “Iraq’s Weapons of Mass Destruction Programs.” October

2002, p. 8. According to the study, Iraq used mustard gas, tabun, and other “nerve agents.”

According to the report, the majority of the casualties were Iranian, suffered during major
Iranian offensives, including Panjwin (October-November 1983), Majnoon Island (February-
March 1984), the Hawizah Marshes (March 1985), Al Faw (February 1986), Basra (April

1987), and Sumar/Mehran (October 1987).

4 U.N. Security Council. Document S/19823. Report of the Mission Dispatched by the
Secretary-General to Investigate Allegations of the Use of Chemical Weapons in the
Conflict Between the Islamic Republic of Iran and Iraq. April 25, 1988.

The “Dual Containment” Approach of the 1990s
During 1993-1997, the Clinton Administration articulated a policy of “dual
containment,” an effort to keep both Iran and Iraq weak rather than alternately tilting
toward one or the other to preserve a power balance between them. During this
period, Saudi Arabia and Kuwait were primarily concerned about the conventional
threat from Iraq and saw Iran as a counterweight to Iraqi power. The states of the
lower Gulf were further from Iraq and tended to view Iran as a greater danger than
Iraq. Bahrain, in 1981 and again in 1996 — the latter a period of substantial Shiite-
inspired unrest — openly accused Iran of plotting to destabilize that country by
supporting radical Shiite movements there. In 1992, the UAE became alarmed at
Iranian intentions when Iran asserted complete control of the largely uninhabited
Persian Gulf island of Abu Musa, which Iran and UAE shared under a 1971 bilateral
All the Gulf states improved relations with Iran significantly at the end of the
decade, particularly after the May 1997 election of the relatively moderate president
Mohammad Khatemi, who curtailed Iran’s support for Shiite dissident movements
in the Gulf states. Despite the rapprochement, which was matched by unsuccessful
attempts by the Clinton Administration to open direct talks with Khatemi’s
government, the United States continued to try to constrain Iran’s WMD programs,
but with mixed success. Unlike Iraq, which was the target of U.N. sanctions after it
invaded Kuwait, Iran faced no mandatory international restrictions on its imports of
advanced conventional weapons or of “dual use” technology (civilian goods useful
for WMD). Some of Iran’s WMD programs made significant strides during the
1990s, reportedly with substantial help from Russia, China, North Korea, and other
countries and entities, such as the network of Pakistani nuclear scientist A.Q. Khan.
The dual containment policy also had little success in curbing Iran’s (or Iraq’s)
support for international terrorism. Iran has been on the U.S. list of terrorism state
sponsors (“terrorism list”) since 1984 (the list was created in 1979). Iraq was on the
terrorism list during 1979-1982, and again from 1990 until the U.S.-led overthrow
of Saddam Hussein. Over the past decade the State Department’s annual report on
terrorism has described Iran as “the most active state sponsor of terrorism. The
Islamic regime in Iran had held American diplomats hostage during November 1979-
January 1981, a seizure for which Iran has not apologized. The pro-Iranian Lebanese
Shiite Muslim organization Hizballah held Americans hostage in Lebanon during
1984-1991, occasionally releasing some and then abducting others. Some U.S. law
enforcement officials say Iranian operatives were involved in the June 1996 bombing
in Saudi Arabia of the Khobar Towers housing complex for U.S. military officers,
in which 19 U.S. airmen were killed, although some indications from the “September
11 Commission” final report (p.60) says Al Qaeda operatives might have had some
role in that bombing. According to the recent annual State Department reports on
international terrorism (“Country Reports on Terrorism: 2005,” released April 2006)
Iran provides material support to the following groups that oppose the U.S.-
sponsored Arab-Israeli peace process: Hizballah and the Palestinian groups Hamas,
Palestinian Islamic Jihad, the Al Aqsa Martyr’s Brigade, and the Popular Front for
the Liberation of Palestine-General Command.

Iraq’s former regime was on the terrorism list and publicly supported
Palestinian violence against Israel. According to the September 11 Commission
report, neither Iran nor Saddam’s Iraq was linked to the September 11 attacks and
neither had an “operational” relationship with Al Qaeda. However, press accounts
say that some Al Qaeda activists fleeing Afghanistan transited or took refuge in both
countries, including Al Qaeda-Iraq leader Abu Musab al-Zarqawi,5 and there
apparently were some limited contacts between Al Qaeda and the Saddam Hussein
regime. The new government in Iraq, which consists of political leaders who are
generally well disposed toward the United States, was removed from the terrorism
list on September 24, 2004. No observer is predicting that Iran will soon be removed
from the U.S. list of state sponsors of terrorism (“terrorism list”).
The Post-Saddam Gulf Threat Profile6
The Gulf threat profile has been altered — but not necessarily reduced — by
the overthrow of Saddam Hussein’s regime in Iraq. The fall of Saddam had initially
generated a sense of relief among the Gulf states because the conventional and
WMD threat posed by Iraq was essentially ended. However, no clear U.S. Gulf
security architecture has emerged, and the Gulf states now sense new and different
threats, although no major security crises have erupted in any of the GCC states since
Saddam’s fall. Others note that, in the past, crises have erupted on short notice,
including Saddam Hussein’s invasion of Kuwait and the internal unrest in Bahrain
in the 1990s, neither of which were widely predicted.
Iran Strategically Strengthened. First and foremost, the Gulf states
believe that the strategic weakness of post-Saddam Iraq has emboldened Iran to take
a more active role in Gulf security and to seek to enlist the Gulf states in an Iran-led
Gulf security structure. Iran has a long coastline and a well-honed sense of
nationhood; it was not created by colonial powers and believes it is entitled to a
major role in Gulf security. All of the Gulf state fears about Iran have been
compounded by the Iranian presidency of hardliner Mahmoud Ahmadinejad. He has
appointed to key positions longtime associates from his career in the Revolutionary
Guard and Basij militia — both bastions of hardline sentiment and armed force and
sponsors of radical activity in the Gulf in the past. However, to date, GCC leaders
have leveled no specific allegations of renewed Iranian meddling in the GCC states,
and the Gulf leaders have been receiving visiting Iranian leaders, including
Yet, Gulf and U.S. concerns continue that further progress on Iran’s WMD
programs, particularly its nuclear program, could embolden Iran to try to intimidate
the Gulf states. Qatar, for example, is wary that Iran might try to encroach on its
giant natural gas North Field, which the two share. In response, in 2006, the Gulf
states and the United States have renewed and expanded discussions on some of the

5 Zarqawi was killed in Iraq by a U.S. air-strike on June 7, 2006.
6 For further information on developments in and U.S. policy toward Iraq, see CRS Report
RL31339, Iraq: Post-Saddam Governance and Security; and CRS Report RL32048, Iran:
U.S. Concerns and Policy Responses, both by Kenneth Katzman.

joint defense initiatives that have been de-emphasized in the past five years.7 Some
of these steps are discussed in the section on defense issues below. Many U.S.
experts believe that the GCC states would likely back U.S. action, including military
action, to halt or set back Iran’s nuclear program, despite fears of Iranian retaliation
against them for any U.S. military move against Iran.
At the same time, Iran is not perceived as militarily able to move in force across
the Gulf to invade any of the Gulf states, even if the United States were not present
in the Gulf to block such a move. Senior U.S. military officials say Iran could use
its coastal missiles, patrol boats, mines, aircraft, submarines, and other capabilities
to try to block the Strait of Hormuz, the key oil shipment route, but U.S. officials
express confidence that the U.S military presence in the Gulf could quickly
overwhelm Iran’s relatively older equipment and thwart any such Iranian action.
Others argue that even a failed Iranian attempt to block the Strait could raise shipping
insurance rates and drive up oil prices to unprecedented levels.
Shiite Communities Emboldened. Compounding the threat perception of
the Gulf states is the rise of Shiite Islamist factions in post-Saddam Iraq —
particularly revered clerical leader Grand Ayatollah Ali al-Sistani, the Supreme
Council of the Islamic Revolution in Iraq (SCIRI), the Da’wa (Islamic Call) Party,
and the faction of radical young cleric Moqtada Al Sadr. The Shiite Islamists have
dominated Iraq’s two elections for a parliament - in January and again in December
2005. The rise of Iraqi Shiite parties are reportedly prompting growing Shiite
demands for power in the Gulf states themselves. As shown in the Appendix, several
of the Gulf states have substantial Shiite populations; in Bahrain they are a majority
(about 60%), but most Gulf Shiite communities consider themselves under-
represented in government and lacking key opportunities in the economy. Bahraini
Shiite groupings, including those that boycotted 2002 parliamentary elections, are
planning to compete in the October 2006 parliamentary elections in the hopes of
asserting Shiite rights against the Sunni-dominated government there. To prevent the
emergence of Sunni-Shiite tensions that have erupted in Iraq, Bahraini leaders have
begun reconciliation efforts, such as ending the distinction between Sunni and Shiite
mosques and encouraging joint worship.
Kuwait’s concerns are also high even though Shiites (about 25% of Kuwaitis)
are well integrated into the political system. Radical factions of an Iraqi Shiite
Islamic party, the Da’wa Party, attacked the U.S. and French embassies in Kuwait
City in December 1983, and attacked the Amir’s motorcade in May 1985, injuring
him slightly. Although Kuwaiti fears of a resumption of such activity have faded,
Kuwait remains wary of potential Shiite militance and has engaged Iraq’s Shiite
clerics and provided about $500 million in humanitarian aid to Iraq through a Kuwait
based Humanitarian Operations Center. Kuwait has pledged to send an ambassador
to Baghdad, although no ambassador has been named, to date. In Saudi Arabia, there
is acute fear of potential Shiite unrest, in part because Shiites are concentrated in the
eastern provinces where many of Saudi Arabia’s oil fields are located and in which
much of its oil export infrastructure is based. Resenting Shiite domination in Iraq,

7 Krane, Jim. “U.S. Seeks to Bolster Its Gulf Ties.” Boston Globe, May 23, 2006.

Saudi Arabia has disbursed little of its $1 billion in aid pledges to Iraq, and it has not
committed to appointing an ambassador to Iraq.
Spillover From Iraq Battlefield. Prior to the U.S. intervention in Iraq, the
Gulf states had predicted that ousting Saddam would not necessarily produce stability
in Iraq, and several were reluctant to support it. For the most part, Gulf leaders
publicly indicated that they would only support a U.S. attack if such action were
authorized by the United Nations and had broad international support. Two of the
Gulf states, Kuwait and Qatar, were more openly supportive of the U.S. position, and
both hosted substantial buildups of U.S. forces and equipment that were used in the
offensive against Iraq. Kuwait, which strongly wanted to see the former invader,
Saddam Hussein, overthrown, hosted the bulk of the personnel and equipment used
in the ground assault. Saudi Arabia was the most vocally opposed to a U.S. offensive
against Iraq, even though the prospect of the overthrow of Saddam Hussein held out
the possibility that the 6,000 U.S. personnel that were based there in anti-Iraq
containment operations would be able to depart. That redeployment happened after
Saddam’s fall.
Judging from the final statement of the 26 Gulf Cooperation Council summit
in Abu Dhabi, UAE (December 2005), the Gulf leaders are expressing concern that
spillover from the Iraq war could be worse than they had anticipated. Some Sunni
Islamist insurgents have tried or succeeded in entering some of the Gulf states,
particularly Kuwait, to commit acts of retribution against the Gulf governments or
to try to attack U.S. forces staging for deployment into Iraq. The Sunni militants
perceive the Gulf governments — even though they are Sunni-led — as traitors for
having backed or acquiesced in the U.S. invasion of Iraq and ouster of Saddam
Hussein. The Gulf states believe that parts of Iraq might become a safe haven for
Sunni Islamic militants if the United States were to withdraw militarily from Iraq, an
outcome that the Gulf states fear could result if U.S. casualties continue to mount.
This issue is discussed in greater depth in the final section of this paper.
At the same time, efforts by the Gulf states to promote ethnic and sectarian
balance in Iraq might be increasing the potential for spillover from Iraq. Saudi
Arabia, and possibly other Gulf states, are said to have tacitly permitting some Saudis
to enter Iraq to assist the Sunni insurgency there. Observers say there is an active
debate in the Kingdom about whether to provide more active support to the Sunnis
but that King Abdullah has decided against it out of concern that doing so would
stimulate Iran to step up aid to Shiite groups in Iraq. U.S. military officers say that
Saudi fighters accounted for about half of the foreign insurgents killed in Iraq in
2005.8 In November 2004, 26 radical Saudi clerics issued a pronouncement calling
on Iraqis to fight U.S.-led forces in Iraq, although the Saudi religious establishment
subsequently contradicted that pronouncement. At the same time, Saudi Arabia has
pursued diplomacy to increase the role of Sunni Arabs in Iraq’s government. Press
reports say the Saudis were influential in persuading hardline Iraqi Sunni clerics to
attend a November 2005 Arab League-sponsored reconciliation meeting in Cairo.

8 Meyer, Josh. “U.S. Faults Saudi Efforts on Terrorism.” Los Angeles Times, January 15,


Post-Saddam U.S.-Gulf Defense Cooperation
The post-Saddam Gulf is somewhat less stable than the United States initially
expected, and the pillars of U.S.-Gulf defense cooperation that were put in place after
the 1991 Gulf war are drawing renewed emphasis as Iran’s power is perceived to be
rising. The U.S.-GCC relationships enable the United States to continue to operate
militarily in Iraq and have facilitated ongoing operations in Afghanistan as well.
After the September 11, 2001, attacks, the Gulf states willingly and openly hosted
U.S. forces performing combat missions in Afghanistan in Operation Enduring
Freedom (OEF, the war against the Taliban and Al Qaeda). As discussed above, the
Gulf states, perceiving potential fallout, were far less enthusiastic about the war to
topple Saddam Hussein, although all the Gulf states did make facilities available for
Operation Iraqi Freedom (OIF).
The cornerstones of U.S.-Gulf defense relations are broad bilateral defense pacts
between the United States and each Gulf state except Saudi Arabia. The text of the
agreements, most of which were adopted after the 1990-91 Gulf crisis, are classified.
However, observers report that the pacts provide for:9 facilities access for U.S.
forces, but also for U.S. advice, training, and joint exercises; lethal and non-lethal
U.S. equipment pre-positioning; and arms sales. The pacts do not include security
guarantees that formally require the United States to come to the aid of any of the
Gulf states if they are attacked, according to U.S. officials familiar with their
contents. Nor, say officials, do the pacts give the United States automatic permission
to conduct military operations from Gulf facilities; the United States must obtain
permission on a case by case basis. None of the Gulf states has moved to suspend
or end these formal pacts now that Saddam Hussein is gone from power.
The approximate number of U.S. military personnel in the Gulf theater of
operations is listed in Table 1 below, based on unclassified tables provided to CRS
by the Department of Defense in late 2005. During the U.S.-led containment
operations against Iraq during the 1990s, there were about 20,000 U.S. military
personnel stationed in the Gulf at most times, although about 60% of those were
afloat on ships. Although there are fewer U.S. forces in most of the Gulf states than
there were at the height of OEF and OIF, the aggregate is still higher than the 20,000
“baseline” during the 1990s — almost entirely due to the large numbers of U.S.
personnel still in Kuwait supporting OIF. U.S. forces in Iraq number about 130,000.
The following is an overview of U.S. defense cooperation with the GCC states:
!Saudi Arabia, concerned about internal opposition to a U.S.
presence, did not sign a formal defense pact with the United States.
However, it has entered into several limited defense procurement
and training agreements (for both the regular military and the Saudi

9 Provisions of the pacts can be found in Hajjar, Sami. U.S. Military Presence in the Gulf:
Challenges and Prospects. U.S. Army War College, Strategic Studies Institute. March
2002, p. 20. Other information in this section derived from unclassified author
conversations with U.S. military and diplomatic officials in the Gulf region, 1993-2006.

Arabia National Guard, SANG) with the United States.10 During
1992-2003, U.S. combat aircraft based in Saudi Arabia flew patrols
to enforce a “no fly zone” over southern Iraq (Operation Southern
Watch, OSW), but Saudi Arabia did not permit preplanned strikes
against Iraqi air defenses, only retaliatory strikes for tracking or
firing by Iraq. OSW ended after the fall of Saddam Hussein and
most of the 6,000 Saudi-based U.S. personnel, along with all Saudi-
based U.S. combat aircraft, were withdrawn in September 2003. For
OEF, Saudi Arabia did not offer to allow U.S. pilots to fly missions
in Afghanistan from Saudi Arabia, but it reportedly did openly
permit the United States to use the Combined Air Operations Center
(CAOC) at Prince Sultan Air Base, south of Riyadh, to coordinate
U.S. air operations over Afghanistan. Despite reservations about the
war against Iraq, the Kingdom also quietly allowed use of the CAOC
for OIF and permitted some U.S. special operations forces staging
missions from there into Iraq.11
!Bahrain has hosted the headquarters for U.S. naval forces in the Gulf
since 1948, long before the United States became the major Western
power in the Gulf. (During the 1970s and 1980s, the U.S. presence
was nominally based offshore.) Bahrain signed a separate defense
cooperation agreement with the United States on October 28, 1991,
and the pact remains in effect. In June 1995, the U.S. Navy
reestablished its long dormant Fifth fleet, responsible for the Persian
Gulf region, and headquartered in Bahrain. Bahrain allowed U.S.
combat aircraft missions from Bahrain in both OEF and OIF, and it
publicly deployed its U.S.- supplied frigate naval vessel in support
of both operations, according to the State Department. It was the
only Gulf state to deploy its own forces to provide humanitarian aid
inside Afghanistan.
!After Iran’s 1979 revolution, Oman on April 21, 1980 signed a
facilities access agreement providing the United States access to
Omani airbases and allowing some prepositioning of U.S. Air Force
equipment. The agreement was renewed in 1985, 1990, and 2000.
In keeping with an agreement reached during the 2000 access
agreement renewal negotiations, the United States provided the $120
million cost to upgrade the air base near al-Musnanah (Khasab).12
!On September 19, 1991, Kuwait, which saw itself as the most
vulnerable to Iraqi aggression, signed a 10-year pact with the United
States (renewed in 2001 for another 10 years) allowing the United

10 For more information on these agreements, see CRS Report 94-78, Saudi Arabia: U.S.
Defense and Security Commitments. February 3, 1994, by Alfred Prados.
11 Solomon, John. “Saudis Had Wider Role in War.” Philadelphia Inquirer, April 26, 2004.
12 Sirak, Michael. “USA looks to Expand Bases in Oman and Qatar.” Jane’s Defence
Weekly, April 17, 2002.

States to preposition enough equipment to outfit two U.S. brigades.
Joint U.S.-Kuwaiti exercises were held almost constantly, and about
4,000 U.S. military personnel were in Kuwait at virtually all times
during the 1990s. The United States opened a Joint Task Force
headquarters in Kuwait in December 1998 to better manage the U.S.
forces in Kuwait, and the United States spent about $170 million in
1999-2001 to upgrade two Kuwaiti air bases (Ali al-Salem and Ali
al-Jabir) that hosted U.S. aircraft during the 1990s containment
operations against Iraq. As noted previously, Kuwait closed off the
entire northern third of the country to serve as host of the U.S.-led
invasion force in OIF.
!Even before OEF and OIF, Qatar was building an increasingly close
defense relationship with the United States. It signed a defense pact
with the United States on June 23, 1992, and accepted the
prepositioning of enough armor to outfit two U.S. brigades at a site
called As Saliyah site, which was upgraded with U.S. help. (Most
of the armor at the site was used in OIF.)13 The United States built
an air operations center (Combined Air Operations Center, CAOC)
at Al Udeid air base that, by 2003, had largely supplanted the one in
Saudi Arabia and Qatar now hosts U.S. Central Command
(CENTCOM) forward headquarters. Qatar publicly acknowledged
the U.S. use of Al Udeid in OEF, and it continues to support OEF
and OIF, according to the State Department.
!The UAE did not have close defense relations with the United States
prior to the 1991 Gulf war. After that war, the UAE determined that
it wanted a closer relationship with the United States, in part to deter
and balance out Iran. On July 25, 1994, the UAE announced it had
signed a defense pact with the United States, although there are still
some differences in interpretation of the legal jurisdiction of U.S.
military personnel in the UAE, according to observers. The UAE
allows some U.S. pre-positioning, as well as U.S. ship port visits at
its large man-made Jebel Ali port, and it hosts U.S. refueling aircraft
at Al-Dhafra air base for OEF and OIF. However, wanting to act
within an Arab consensus, the UAE limited the United States to
conducting support air operations during OIF.

13 U.S. briefing for congressional staff in Qatar, January 2003.

Table 1. Gulf Hosting of U.S. Troops and Equipment (2005)
CountryU.S. Forces/Facilities Access
Saudi Arabia!About 400 U.S. military personnel, mostly to train Saudi
military and national guard
Kuwait!About 90,000 mostly Army, supporting OIFth
!Ali al-Salem air base: hosts U.S. 386 Air Expeditionary
Group supporting OIF
!Camp Arifjan: main facility for US forces supporting OIF
!Camp Buehring: firing range for U.S. training prior to OIF
!Camp Doha: was main facility for U.S., but was vacated in
Dec. 05
UAE!About 1,800 mostly Air Force supporting OIF and OEF th
!Al Dhafra air base: 380 Air Expeditionary Group, KC-10,
KC-135 refueling aircraft and surveillance craft
!Jebel Ali: port facilities for U.S. ships resupplying Al Dhafra
Qatar!About 6,000 mostly Air Force supporting OEF and OIF
!Al Udeid airbase, a hub of U.S. air operations in the Gulf:
hosts U.S. F-16’s, KC-10 and KC-135 refueling planes,
surveillance aircraft, and CAOC
!CENTCOM forward hq (since 2003) and hq for special
operations component of CENTCOM (Socent)
!As Saliyah: pre-positioned U.S. Army materiel
!Millenium Village: built to house U.S. personnel
Oman!About 25 mostly Air Force
!equipment, U.S. Air Force access to Seeb, Thumrait,
Masirah, Khasab air bases mostly for contingencies

Bahrain!About 4,700, mostly Navy supporting OIF and OEF
!Manama: large portside site for U.S. Fifth fleet headquarters
and naval (Navcent) and Marine (Marcent) components of
CENTCOM. These commands direct U.S. and allied anti-Al
Qaeda, anti-drug, anti-proliferation naval operations and Iraq
oil terminal defense
!Mina al-Sulman port: docking for small U.S. warships, is
being improved to handle carriers
!Shaikh Isa air base: mainly for contingencies and pre-
positioned U.S. equipment
!Muharraq Airfield for U.S. Navy reconnaissance aircraft
Sources: Factsheets provided to CRS by the Department of Defense in 2005; Overseas Basing Commission
(May 2005). U.S. force figures per country from November 2005.

Figure 1. Facilities Used by U.S. Forces in the Gulf

U.S. Arms Sales and Security Assistance. A key feature of the U.S.
strategy for protecting the Gulf states has been to sell them arms and related defense
services. Some of the Gulf states, particularly Saudi Arabia, are reportedly
contemplating new arms purchases from other suppliers, as well as the United States,14
to counter the perceived growing threat from Iran. On August 19, 2006, it was
announced that Saudi Arabia had agreed to buy 72 Eurofighter Typhoon aircraft in
a deal valued at about $18 billion.
Congress has not blocked any U.S. sales to the GCC states since the 1991 Gulf
war, although some in Congress have expressed reservations about sales of a few of
the more sophisticated weapons and armament packages to the Gulf states in recent
years. Some Members believe that sales of sophisticated equipment could erode
Israel’s “qualitative edge” over its Arab neighbors, if the Gulf states were to join a
joint Arab military action against Israel or transfer weapons to “frontline” states, but
few experts believe that the Gulf states would do so. Others are concerned that some
U.S. systems sold to the Gulf contain missile technology that could violate
international conventions. Even if they were to do so, successive U.S.
administrations have maintained that the Gulf states are too dependent on U.S.
training, spare parts, and armament codes to be in a position to use sophisticated
U.S.-made arms against Israel or any other U.S. ally.15 The Foreign Relations
Authorization Act of 1994-1995 (P.L. 103-236, signed April 30, 1994) bars U.S.
arms sales to any country that enforces the primary and secondary Arab League
boycott of Israel. The provision has been waived for the Gulf states every year since
Most of the GCC states are considered too wealthy to receive substantial
amounts of U.S. security assistance, including Foreign Military Financing (FMF)
and excess defense articles (EDA). However, U.S. aid to the GCC states, even the
most wealthy among them, has increased recently. It is being used to promote a
number of U.S. objectives in the Gulf, including building GCC anti-terrorism
capabilities, promoting military-to-military ties and military obedience to civilian
rule; enabling the GCC states to maintain U.S.-made weapons and to operate them
in concert with U.S. forces; and signaling continued support for their alliance with
the United States. Despite its wealth, Saudi Arabia receives a nominal amount of
International Military Education and Training funds (IMET) to lower the costs to the
Saudi government (approximately a 50% discount) of sending its approximately 400
military officers to U.S. schools each year. A provision of the FY2005 foreign aid
appropriations (in Consolidated Appropriations law, P.L. 108-447) cut IMET for
Saudi Arabia, but President Bush waived that restriction on September 26, 2005, to
provide the aid (PD2005-38).

14 Hammond, Andrew. “Military Expanded in Response to Iran.” Washington Times, July

24, 2006.

15 Ratnam, Gopal and Amy Svitak. “U.S. Would Keep Tight Rein on Missile Sold to
Bahrain.” Defense News, September 11, 2000.

Table 2. U.S. Assistance to the Gulf States
(Amounts in USD)
CountryAid TypeFY2005FY2006 FY2007
Saudi IM ET 24,000 20,000
NADR-CT F 200,000 100,000
NADR- 760,000 400,000
FMF19.84 million13.86 mil.14 mil.
OmanIMET1.141 mil. 1.089 mil. 1.135 mil.
NADR- 400,000 300,000 325,000
NADR-254,0001.3 mil.1.045 mil.
BahrainFMF18.847 mil. 15.593 mil. 15.75 mil.
IM ET 649,000 650,000 640,000
NADR-1.489 mil. 3.098 mil. 955,000
K uwait IM ET 20,000
NADR-814,000840,0001.07 mil.
QatarNADR-1.379 mil. 1.274 mil. 1.493 mil.
UAENADR-284,000810,0001.105 mil.
NADR- 250,000 230,000
Note: IMET: International Military Education and Training funds; ESF: Economic Support Funds; FMF :
Foreign Military Financing; NADR: Nonproliferation, Anti-Terrorism, Demining, and Related Programs. ATA
is Anti-Terrorism Assistance; CTF is Counter-terrorism financing; EXBS is Export Control and
Related Border Security Assistance.

Excess Defense Articles (EDA). Of the Gulf states, only the two least
financially capable, Bahrain and Oman, are eligible to receive EDA on a grant basis
(Section 516 of the Foreign Assistance Act). EDA are U.S. military items declared
to be surplus or out of service for U.S. uses, but are still considered usable either as-is
or with refurbishment. The UAE is eligible to buy or lease EDA. In 1998-1999,
Oman received 30 and Bahrain 48 U.S.-made M-60A3 tanks on a “no rent” lease
basis. The Defense Department subsequently transferred title to the equipment to the
recipients. Since July 1997, Bahrain has taken delivery of a U.S. frigate and an I-
HAWK air defense battery as EDA. Bahrain is currently seeking a second frigate
under this program. According to State Department budget documents, in FY2007,
both Bahrain and Oman will receive some EDA to assist military mobility and their
ability to monitor their borders.
Foreign Military Sales (FMS). The United States has considered U.S. arms
sales (foreign military sales, FMS) to the Gulf states as an integral part of U.S. efforts
to cement its alliances with the Gulf states, as well as to promote inter-operability16
between Gulf and U.S. forces. Some of the recent sales, particularly of combat
aircraft, appear intended to deter Iran. The rationale for some land systems might be
less clear now that the land threat from Iraq has largely ended and because Iran is
judged to lack an ability to move land forces across the Gulf. Some Gulf states might
be seeking arms from non-U.S. sources, possible to diversify their defense
relationships or perhaps to gain leverage over potential suppliers or allies of Iran.
!The UAE historically has purchased its major combat systems from
France, but UAE officials apparently have come to believe that arms
purchases from the United States enhance the U.S. commitment to
UAE security. In March 2000, the UAE signed a contract to
purchase 80 U.S. F-16 aircraft, equipped with the Advanced
Medium Range Air to Air Missile (AMRAAM), the HARM (High
Speed Anti-Radiation Missile) anti-radar missile, and, subject to a
UAE purchase decision, the Harpoon anti-ship missile system. The
total sale value, including weapons and services, is estimated at over17
$8 billion. Deliveries began in May 2005. On November 17,
2004, DSCA notified Congress of a potential sale to UAE of 100
JAVELIN anti-tank missile launchers (plus 1,000 JAVELIN missile
rounds) at a potential cost of $135 million. On July 28, 2006, DSCA
notified Congress of a sale of up to 26 UH-60M (Blackhawk)
helicopters, with a total sale value of up to $808 million. The UAE
is also considering buying an anti-ballistic missile system, according
to UAE Air Force Commander Maj. Gen. Khalid Al Bu-Ainain in
November 2005.

16 Information in this section was provided by press reports, Defense Security Cooperation
Agency (DSCA) in Security Assistance Program Summaries (unclassified) for each of the
Gulf states. March-May 2004; and DSCA arms sales announcements.
17 See CRS Report 98-436, United Arab Emirates: U.S. Relations and F-16 Aircraft Sale.
Updated June 15, 2000, by Kenneth Katzman and Richard F. Grimmett. Transmittal notices
to Congress, No. DTC 023-00, April 27, 2000; and 98-45, September 16, 1998.

!Saudi Arabia, buoyed by high oil prices, has absorbed about $14
billion in purchases of U.S. arms during the Gulf war, as well as
post-war buys of 72 U.S.-made F-15S aircraft (1993, $9 billion
value), 315 M1A2 Abrams tanks (1992, $2.9 billion), 18 Patriot
firing units ($4.1 billion) and 12 Apache helicopters. It reportedly
is now considering major new purchases, including a new generation
fighter aircraft to replace aging U.S.-made F-5’s and British-made
Tornadoes. A Wall Street Journal Europe report on December 22,
2005 said Saudi Arabia had signed an agreement to buy up to 48
Eurofighter Typhoon jets. In three notifications on October 3, 2005
DSCA told Congress that Saudi Arabia intends to buy up to $2
billion in U.S.-made armored personnel carriers (144) and related
equipment and services; equipment support; and communications
upgrades for the military and National Guard (SANG). In two
notifications on July 28, 2006, DSCA notified Congress of a sale of
58 M1A1 new Abrams tanks, as well as upgrades of Saudi Arabia’s
existing Abrams tanks and upgrades of its U.S.-made Apache
helicopters. The total of these sales is up to $3.3 billion.
!In 2005, Kuwait began taking delivery of a long-delayed purchase of
16 U.S.-made AH-64 “Apache” helicopters, equipped with the
Longbow fire control system - a deal valued at about $940 million.
According to DSCA, Kuwait is considering purchasing an additional
10 F/A-18 aircraft to complement its existing fleet of 40 of those
aircraft, but there has been no movement on this recently. Kuwait
also bought 5 Patriot firing units in 1992 and 218 M1A2 Abrams
tanks in 1993. On April 1, 2004, the Bush Administration
designated Kuwait as a “major non-NATO ally” (MNNA), a
designation that will facilitate the future U.S. sales of arms to
!President Bush designated Bahrain an MNNA in March 2002,
reflecting the close relationship. Among recent sales, in 1998,
Bahrain purchased 10 F-16s from new production at a value of about
$390 million. In late 1999, the Administration, with congressional
approval, agreed to sell Bahrain up to 26 AMRAAMs, at a value of
up to $69 million. Among the more controversial sales to a Gulf
state, in August 2000 Bahrain requested to purchase 30 Army
Tactical Missile Systems (ATACMs), a system of short-range
ballistic missiles fired from a multiple rocket launcher. The Defense
Department told Congress the version sold to Bahrain would not
violate the rules of the Missile Technology Control Regime
(MTCR),18 an effort to allay congressional concerns that the the sale
would facilitate the spread of ballistic and cruise missiles in the

18 The MTCR commits member states not to transfer to non-member states missiles with a
range of more than 300 km, and a payload of more than 500 kilograms. Turkey, Greece, and
South Korea are the only countries to have bought ATACMs from the United States.

Gulf.19 In addition, the Administration proposed a system of joint
U.S.-Bahraini control of the weapon under which Bahraini military
personnel would not have access to the codes needed to launch the
missile.20 Bahrain accepted that control formula, and delivery began
in October 2002. In two notifications on July 28, 2006, DSCA
reported to Congress a sale of up to 180 Javelin missiles (and
associated launchers and equipment) and nine Blackhawk
helicopters, with a total value of up to $294 million.
!Qatar has traditionally been armed by France and Britain, and no
major U.S. sales seem imminent, despite Qatar’s healthy economy
that benefits from burgeoning sales of natural gas. DSCA says that
Qatar has expressed interest in a few U.S. systems, including the
ATACM, which Bahrain has bought and which the United States has
told Qatar it is eligible to buy. Qatar is also expressing active
interest in the Patriot (PAC III) missile defense system, according to
DSCA. Qatar might be seeking to buy advanced combat aircraft if
it finds a buyer for the 12 Mirage 2000s it put up for sale in 2002; a
possible sale to India collapsed in August 2005 over pricing issues.21
!Oman has traditionally purchased mostly British weaponry,
reflecting British influence in Oman’s military, and the British
military’s mentoring and advisory relationship to Sultan Qaboos. In
October 2001, in an indication of waning British influence, the
United States announced that Oman would buy 12 F-16 A/B aircraft,
at an estimated value of $825 million. The first deliveries began in
December 2005. In April 2003, Oman decided to purchase a podded
airborne reconnaissance system for the F-16’s; a sale valued at $46
million. On July 28, 2006, DSCA notified Congress of a possible
sale to Oman of up to 250 Javelin missiles and associated launchers
and equipment, valued at $48 million.

19 Ratnam, Gopal and Amy Svitak. “U.S. Would Keep Tight Rein on Missile Sold to
Bahrain.” Defense News, September 11, 2000.
20 Ibid.
21 Raghuvanshi, Vivek. “Low Bid Scuttles Deal,” Defense News, August 1, 2005.

Table 3. Comparative Military Strengths of the
Gulf States, Iraq, and Iran (2006)
Defens e
CountryMilitaryPersonnelTanksSurface-Air MissilesCombat AircraftSurfaceShipsBudget(billion
160 Patriot-2
Saudi199,500 (incl.75,000 Saudi1055 (incl. 315 M-1A2 plus 3,716 otherSAM2917621.3
ArabiaNational Guard)Abrams)(plus 10 CSS-2 (incl. 155 F-15) (incl. 7 frigate)
mi ssile)
40 +100 +18
UAE50,500545 (incl. 390 Leclerc)(plus 6 Scud-B(incl. new F-16) (incl. 2 frigate)2.65
mi ssile)
Oman41,700154 (incl. 70 M-60) 54(incl. 20 Javelin)(incl. 12 F-16)133.0
36884 batteries39
Kuwait15,500 (incl. 218 M-1A2 (incl. 24 I-Hawk and F/A-18404.3
Abrams)Patriot batts.) C and D
Qatar12,40030AMX-3075 SAMs (incl. 12Stinger)18212.2
Bahrain11,200180M-60A38 I-Hawk batteries33 (incl. 21 F-16)11 (incl. 1 frigate).526
Total330,8002,300 +4,000 +500 +17933.98
Iraq115,000 77 T-72 other donated armor?Negligible. Mostly helos.10 patrol ?
545,000260 (incl. 10
(incl. 125,0001,69376 batteries280Hudong, 40
IranRevolutionary (incl 75 T-72)(incl. I-Hawk) plus(incl. 25 MiG-29Boghammer, 34.4
Guard)some Stingerand 30 Su-24)frigates) Also
has 3 Kilo subs
Source: International Institute for Strategic Studies, The Military Balance 2006. (Note: Figures shown here include
materiel believed to be in storage); various press reports.
Iraqi aircraft figures include aircraft flown from Iraq to Iran during 1991 Gulf war. Patriot firing unit figures do not include
U.S.-owned firing units emplaced in those countries by the United States. U.S. Patriot firing units are emplaced in Qatar,
Kuwait, and Saudi Arabia. Boston Globe, May 23, 2006.

Other Gulf State Security Initiatives
The United States has continued to encourage the Gulf states to increase
military cooperation among themselves. As shown in Table 3, the Gulf states could
potentially have superiority in equipment over Iran were they to combine their
operations in response to a threat, and the Gulf states’ military technology purchased
from the United States and Europe is likely superior to Iran’s mostly Russian and
Chinese-supplied arsenal. However, the small (approximately 10,000 personnel)
Saudi-based multilateral force known as Peninsula Shield, formed in 1981, has
always suffered difficulties in coordination and command. Peninsula Shield, based
at Hafar al-Batin in northern Saudi Arabia, did not react militarily to the 1990 Iraqi
invasion of Kuwait, exposing the force’s deficiencies. After that war, manpower
shortages and disagreements over command of the force prevented the GCC states
from agreeing to an Omani recommendation to boost Peninsula Shield to 100,000
men. In September 2000, the GCC states agreed in principle to increase the size of
Peninsula Shield to 22,000,22 but no timetable was set for reaching that level. U.S.
emphasis on building intra-GCC land force cooperation waned after the fall of
Saddam Hussein, not only because Iraq’s conventional force was largely eliminated
in the 2003 war but because, as noted above, Iran is not considered a major land
invasion threat. At the December 2005 GCC summit, the Gulf leaders “endorsed”
a Saudi proposal to disperse donated Peninsula Shield forces back to their home
countries.23 These forces would remain available for deployment to the Peninsula
Shield force in a crisis.
Sensing growing air and naval threats from Iran and from terrorist infiltration
by sea, the United States is reportedly planning to focus on improving GCC state
naval and air cooperation. In mid-2006, the Bush Administration, in a series of high-
level U.S. visits, began efforts to revive and build on the Clinton Administration’s
“Cooperative Defense Initiative” to integrate the GCC defenses with each other and
with the United States. Under that initiative, in early 2001, the GCC inaugurated its
“Belt of Cooperation” network for joint tracking of aircraft and coordination of air
defense systems, built by Raytheon. Another part of that initiative, to which Bush
Administration officials are attaching new importance, is U.S.-GCC joint training to
defend against a chemical or biological attack, as well as more general joint military
training and exercises.24
The Cooperative Defense Initiative, was a scaled-back version of an earlier U.S.
idea to develop and deploy a GCC-wide theater missile defense (TMD) system.
However, this missile defense concept reportedly is a focus of the renewed Bush

22 “GCC States Look to Boost ‘Peninsula Shield’ Force to 22,000.” Agence France Press,
September 13, 2000.
23 Khawaji, Riad. “GCC Leaders to Disband Peninsula Shield.” Defense News, January 2,


24 Press Conference with Secretary of Defense William Cohen. Office of the Assistant
Secretary of Defense (Public Affairs), April 8, 2000.

Administration initiative,25 in response to Iran’s growing missile capabilities. The
original idea envisioned a system under which separate parts (detection systems,
intercept missiles, and other equipment) of an integrated TMD network would be
based in the six different GCC states. That concept ran up against GCC states’
financial constraints and differing perceptions among the Gulf states of the threat
environment.26 As noted in the table, Kuwait and Saudi Arabia have Patriot anti-
missile units of their own, and these states, in addition to Qatar, host U.S.-controlled
Patriot systems.
The 2006 Bush Administration joint U.S.-GCC security initiative reportedly
also focuses on counter-proliferation actions. U.S. officials, in their 2006 visits to
the Gulf, are encouraging the GCC states to close Iranian companies in those states,
which might be used to procure WMD technology. Another aspect of the initiative
is to track shipments to Iran. The Bahrain-based 5th Fleet/Navcent command already
plays a major role in patrolling the Gulf to prevent smuggling and the movement of
terrorists across the Gulf. The patrols, which also include securing Iraqi oil export
platforms, are conducted by about 30 U.S. and (OIF and OEF) allied warships in
“Combined Task Force”: 150, 152, and 158. On June 28, 2006, CTF-152, responsible
for the central and southern Arabian Gulf, came under command of Italy.
Another joint security cooperation idea never extended beyond the concept
stage. Gulf state suspicions of Syria and Egypt prevented closer military cooperation
with those countries, as envisioned under a March 1991 “Damascus Declaration.”
Under the Damascus Declaration plan, Egyptian and Syrian forces would have been
stationed in the Gulf to bolster the Peninsula Shield force.
Although their manpower constraints continue, many of the political disputes
that had hindered cooperation within the GCC have dissipated. Almost all border
disputes between GCC states have been settled, although the UAE still claims that
Saudi Arabia occupies part of what UAE considers its territory. Bahrain and Qatar
resolved their territorial dispute over the Hawar Islands and other territories
following a March 2001 decision by the International Court of Justice in favor of
Bahrain. The two have now agreed to construct a causeway connecting them.
Potential Cooperation With NATO. There are some indications that the
Gulf states might be diversifying their security cooperation relationships with
Western powers, while emphasizing such security-related issues as preventing drug
trafficking, human trafficking, and proliferation. NATO is increasingly engaged in
activities outside its traditional European base, and the NATO summit in Istanbul in
2004 launched an “Istanbul Cooperation Initiative” for greater NATO-Gulf state
cooperation on some of these issues. To date, Kuwait, Bahrain, Qatar, and the UAE
have joined the Istanbul initiative, but the absence of Saudi and Omani participation
could slow development of this concept. Some NATO experts want to see the
Istanbul initiative be further developed to allow for cooperation similar to that
provided for in NATO’s “Partnership for Peace” program. To promote greater

25 Krane, Jim. “U.S. Seeks to Bolster Its Gulf Ties.” Boston Globe, May 23, 2006.
26 Finnegan, Philip. “Politics Hinders Joint Gulf Missile Defense.” Defense News, March

22, 1999.

NATO interaction with the Gulf states, NATO Secretary General Jaap de Hoop
Scheffer attended a ground breaking meeting of high level Gulf defense officials in
Qatar on December 1, 2005. During 2005, NATO (including U.S.) naval units, with
participation of some Gulf naval forces, held exercises in the Arabian Sea in support
of the U.S.-led “Proliferation Security Initiative” (PSI), a program to halt potential
WMD-related shipments at sea.
Domestic Stability and Political Liberalization27
The external threats the Gulf monarchies face have not produced regime-
threatening instability within the Gulf states. However, there are domestic forces
that, particularly if aggravated by outside Gulf powers such as Iran, could suddenly
and unexpectedly prove destabilizing. Bahrain and Saudi Arabia have experienced
periodic open unrest since the early 1990s, although both have largely quieted that
unrest. The Gulf states are instituting gradual domestic political and economic
reform efforts that are intended to satisfy the pro-reform elements of the population
while maintaining tradition.
Leadership Transition
Still governed by hereditary leaders, several of the Gulf states also have
completed at least interim leadership transitions over the past several years. The
transitions have allowed new leaders to move forward on some long-dormant
political or economic reforms.
!In Saudi Arabia, King Fahd suffered a stroke in November 1995 but
he held the title of King until his death on August 1, 2005. He was
immediately succeeded by his half-brother and heir apparent, Crown
Prince Abdullah, who had been de-facto ruler of the country.
Abdullah is the same age as was Fahd (about 81) but Abdullah
appears to be in reasonably good health. Abdullah has been more
willing than Fahd to question U.S. policy in the region and U.S.
prescriptions for Saudi security, although he has maintained a
cooperative relationship with the United States. Together with his
image of piety and rectitude, Abdullah’s perceived independence
accounts for his relative popularity among the Saudi tribes and
religious conservatives, giving him the legitimacy he needs to
combat Saudi-based Al Qaeda or pro-Al Qaeda militants. The new
heir apparent is Prince Sultan, a full brother of the late King Fahd,
as expected, but the longer term succession could be clouded by
family factional politics. The post-Fahd cabinet has remained
largely unchanged; Sultan remains Defense Minister.

27 Much of the information in this section are from the following reports by the State
Department: Country Reports on Human Rights Practices - 2005 (March 8, 2006);
Supporting Human Rights and Democracy: The U.S. Record 2005-2006 (April 5, 2006);
the Trafficking in Persons Report for 2006 (June 5, 2006); and International Religious
Freedom report - 2005 (November 8, 2005), as well as recent CRS visits to Gulf states.

!In Bahrain, the sudden death of Amir (ruler) Isa bin Salman Al
Khalifa on March 6, 1999 led to the accession of his son, Hamad bin
Isa Al Khalifa, who was commander of Bahrain’s Defense Forces.
In February 2002, he wanted to promote a more limited monarchy
and formally changed Bahrain into a kingdom and took the title King
instead of Amir. King Hamad is about 57 years old and has named
his son Salman, who is about 38 years old and is an avowed
economic reformer, as Crown Prince. The two are sometimes said
to be at odds with the King’s traditionalist uncle, Khalifa bin Salman
Al Khalifa, who remains Prime Minister.
!The UAE completed a transition upon the November 2, 2004 death
of Shaykh Zayid bin Sultan al-Nuhayyan, ruler of the emirate of
Abu Dhabi who helped found and became President of the seven-
emirate UAE federation in 1971. His eldest son, Crown Prince
Khalifa, who is about 49, succeeded immediately as ruler of Abu
Dhabi and President of the UAE. His dynamic younger brother,
Shaykh Mohammad, who is about 45, was named Abu Dhabi Crown
Prince/heir apparent and he yielded his UAE Armed Forces chief-of-
staff position to a non-royal (Lt. Gen. Hamad Al Rumaithi). Further
changes occurred on January 4, 2006 when the ruler of Dubai,
Shaykh Maktum bin Rashid Al Maktum, died suddenly. He was
succeeded as Dubai ruler and UAE Prime Minister by his younger
brother, Mohammad bin Rashid Al Maktum, who had been running
Dubai de-facto for many years. The UAE is well placed to weather
political transition because it has faced the least unrest of any of the
Gulf states. Its GDP per capita ($22,000 per year) is among the
highest in the Gulf, and there are few evident schisms in the society.
!Qatar’s Amir, Hamad bin Khalifa Al Thani, who ousted his father in
a bloodless coup in June 1995, sees himself as the leader among the
Gulf rulers in instituting political reform and a public role for
women. The Amir’s reform agenda has been bolstered by the high
public profile of his favorite wife, Shaykha Moza al-Misnad. Amir
Hamad also has carved out a foreign policy independent from that
of Saudi Arabia, has garnered wide support internally and there has
been little evidence of unrest. On the other hand, some indications
suggest that Qatar could lack dynamic leadership if the Amir were
to leave the scene unexpectedly; in August 2003 the Amir suddenly
and unexpectedly changed his crown prince/heir apparent from
Shaykh Jassim to Jassim’s younger brother, Tamim, purportedly
perceiving Jassim as insufficiently capable of leadership.
!Kuwait completed a peaceful but troubled transition following the
January 15, 2006 death of Kuwait’s long serving Amir Jabir al-
Ahmad Al Sabah. A succession struggle among Al Sabah factions
was resolved in favor of Sabah al-Ahmad Al-Sabah, about 76 years
old, who was serving as Prime Minister. Shunted aside was the heir
apparent, Sa’d Abdullah Al Sabah, on the grounds that he was too
ill to become leader. However, the struggle left lingering tensions

within the ruling family and between it and other elites. It also
clouded the leadership futures of some younger potential successors,
including Foreign Minister Mohammad Al Sabah and Ahmad al-
Fahd Al Sabah, the latter of whom was dropped from the cabinet
after the June 29, 2006, National Assembly elections in which
government opponents were mostly victorious. Despite the political
skirmishing, there is little anti-regime violence in Kuwait; most
opposition is expressed within the National Assembly. On the other
hand, some Al Qaeda or pro-Al Qaeda activists have carried out
attacks against Kuwaiti security personnel, as discussed later.
!The Sultanate of Oman has seen little unrest since Sultan Qaboos
bin Said Al Said took power from his father in 1970. Qaboos is
about 65 years old, apparently in good health, and widely assessed
as highly popular. However, the royal family in Oman is relatively
small and there is no heir apparent or clear successor. This could
lead to a succession crisis or power struggle if Qaboos were to leave
the scene unexpectedly, as almost happened in 1995 when Qaboos
was shaken up in a car accident in which one of his ministers was
killed. Since an alleged Islamist plot in 1994 that led to a few
hundred arrests, there had been little evidence of a radical Islamist
element in the Sultanate until a similar wave of arrests on similar
charges in January 2005. Thirty-one Omanis were convicted of
subversion in the alleged plotting but were pardoned in June 2005.
Political Liberalization
Virtually all the Gulf leaders are opening the political process to some extent,
in part to help them cope with the challenges of modernization and globalization.
The Bush Administration has expressed strong support for political liberalization in
the Gulf and the broader Middle East as a means of addressing what it sees as root
causes of the September 11, 2001 attacks - the relative lack of popular influence in
governance. However, most Gulf reform efforts predate Bush Administration urging
and appear to be continuing without substantial U.S. prodding. Some of the Gulf
leaders fear that more rapid liberalization could backfire by providing Islamist
extremists a platform to challenge the incumbent regimes. As part of their
liberalization efforts, all of the Gulf states except the UAE and Saudi Arabia now
allow full female electoral participation, and all except Saudi Arabia have appointed
at least one woman to a cabinet post.
!Kuwait has traditionally been at the forefront of political
liberalization in the Gulf, but during the 1990s its progress was
limited to expanding the all-male electorate for its 50-seat National
Assembly. The Assembly has always had more influence in
decision-making than any representative body in the Gulf states,
consistently exerting its power to review and veto governmental
decrees. It played a role in the succession struggle of January 2006
by confirming the accession of Shaykh Sabah as Amir. The
appointment of Shaykh Sabah as Prime Minister in May 2005 was
the key to finally achieving Assembly approval of legislation to

allow female suffrage. It took effect as of the June 29, 2006,
Assembly elections, although none of the women who ran were
elected. The newly elected Assembly, which has a majority of
reformists, has succeeded in persuading the government to accept a
major reform: the consolidation of Kuwait’s election districts to five
(from 25). The reformists believe that the larger districts reduce the
potential for vote-buying and other corruption.
!In the start of a series of initiatives to expand public participation, in
March 1999 Qatar held elections to a 29-member municipal affairs
council. In a first in the Gulf, women were permitted full suffrage
and 6 women ran for the council, but all six lost. (One woman won
in the 2003 municipal elections.) In April 2003, a constitution was
adopted in a national referendum, in which women voted. Its
approval (by 97% of the electorate) paved the way for elections to a
one-chamber assembly, now planned for early 2007, according to
Qatari officials. It would replace a 35 member consultative council
in place since independence in 1971. Thirty seats of the 45-seat
Assembly are to be elected, with the remaining fifteen appointed.
Qatar has one woman minister (Education).
!Oman began holding direct elections to its 83-seat Consultative
Council in September 2000. At that time, the electorate consisted of
25% of all citizens over 21 years old - mostly local notables and
elites. The process contrasted with past elections (1994 and 1997)
in which a smaller and more select electorate chose two or three
nominees per district and the Sultan then selected final membership.
At the same time, Qaboos appointed new members, including five
women, to a 53-seat “State Council.” The State Council serves, in
part, as a check and balance on the elected Consultative Council;
both combined form a bi-cameral “Oman Council.” In November
2002, Qaboos extended voting rights to all citizens over 21 years of
age, beginning with the October 4, 2003 Consultative Council
elections. Those elections produced a body similar to that elected in
2000, including election of the same two women as the previous
election (out of 15 female candidates). The Oman Council lacks
binding legislative powers and there are no evident groupings or
factions within it. Formal parties are banned. Since 2001, Qaboos
has expanded the number of women of ministerial rank to four, with
two heading full ministries.
!The King of Bahrain’s decision to abandon his late father’s refusal
to accommodate Shiite Muslim demands to restore an elected
national assembly has changed Shiite unrest from the violence of the

1990s to mostly peaceful election competition. In February 2002,

Bahrain held a referendum on a new “national action charter,”
establishing procedures for electing a 40-member national
assembly. Those elections (two rounds) were held in late October
2002, and the results were split between moderate Islamists and
secular Muslims. None of the eight female candidates was elected.

Some Shiite critics of the Sunni-dominated government boycotted
the elections, claiming that the formation of an appointed upper
body of the same size represented an abrogation of the government’s
promise to restore the 1973 parliamentary process. (No appointed
upper body was established during the 1970s.) However, the major
Shiite opposition bloc (Wifaq) says it will take part in the October
2006 National Assembly elections, hoping to use the Assembly to
assert their demands and air grievances. The King has appointed
two women to cabinet posts, and two others have been given
ministerial rank.
!Saudi Arabia, now under King Abdullah, is beginning to accelerate
political liberalization.28 During King Fahd’s reign, the Kingdom
expanded its national Consultative Council to 90 seats from 60 in
1997, to 120 seats in 2001, and to 150 in April 2005, but Fahd
resisted national elections or the appointment of women to the
Council. In 2004, the government approved new powers for the
Council, including the ability to initiate legislation rather than
merely review government proposed laws, and giving the Council
increased ability to veto draft governmental laws. Observers in
Saudi Arabia say the public is increasingly aware of the Council’s
activities and its growing role as a force in Saudi politics. In
February 2005, Saudi Arabia held elections for half of the seats on
178 local municipal councils around the Kingdom, but women were
not allowed to vote. In November 2005, two Saudi women won
election to the Jeddah Chamber of Commerce, the first vote of any
kind in the country in which women participated. The vote was
viewed as a prelude to allowing female suffrage in the 2009
municipal elections, and it could presage a possible move by King
Abdullah to allow women to drive.
!To date, the UAE has been the least active on political reform, but
movement is now evident. In November 2005, the government
announced that half the seats of the forty seat advisory Federal
National Council (FNC) would be selected by a limited electorate in
each emirate. Each of the seven emirates of the UAE federation has
a fixed number of seats on the FNC, and the size of the electorate
will be 100 times the number of seats each emirate has. The UAE
constitution permits males or females to sit on the FNC (although no
women have been on it to date), indicating that women might be
selected to the FNC in the newly opened selection process. Since
the November 2004 death of Shaykh Zayid, two women have been
appointed to cabinet positions.

28 For more information on Saudi political reform efforts, see CRS Report RL33533, Saudi
Arabia: Current Issues and U.S. Relations, August 18, 2004, by Alfred B. Prados and
Christopher M. Blanchard. Some of the information in this section is also taken from a CRS
staff visit to Saudi Arabia in September 2004, which included several meetings with
members of the Saudi Consultative Council.

Continued Human Rights Concerns
The moves toward political openness in the Gulf states are praised by U.S.
officials but still do not give Gulf citizens the right to peacefully change their
government. The foreign workers on which the Gulf economies rely have virtually
no political rights, although they are slowly acquiring labor rights, particularly in
Bahrain, including the right to join unions. Some strikes by foreign workers have
taken place in UAE for non-payment and poor working conditions. Almost all the
Gulf states are cited by human rights organizations and U.S. human rights reports for
varying degrees of religious discrimination, arbitrary arrests and detentions,
suppression of peaceful assembly and free expression. Virtually all are criticized by
the State Department for abuses against domestic workers who are mostly of foreign,
and primarily Asian, origin. On November 28, 2005, the State Department
condemned the UAE’s arrest of a dozen same-sex couples and the announcement that
they would be subjected to hormone treatment.
On religious freedom, Saudi Arabia draws the sharpest U.S. criticism for
actively prohibiting the practice of non-Muslim religions on its territory, even in
private, with limited exceptions. In 2005, for the second year in a row, it was
designated as a “Country of Particular Concern” under the International Religious
Freedom Act (IRFA). Qatar prohibits public non-Muslim worship but tolerates it in
private, although it has shifted its position in late 2005 and is now allowing church
construction. In Kuwait, Bahrain, the UAE, and Oman, there are functioning
Christian churches and congregations. Small Jewish communities in some Gulf
countries are generally allowed to worship freely, and there is a Jewish member of
the upper house of Bahrain’s national assembly.
The Gulf states appear to be falling short of U.S. expectations in preventing
trafficking in persons, although some have pledged to improve their performance.
Several, including Qatar and UAE, have taken steps to end the trafficking of young
boys to the Gulf to work as camel jockeys. As of the 2006 State Department
Trafficking in Persons report, only Saudi Arabia has remained in “Tier 3,” the worst
category, indicating it is not making significant efforts to address the problems of
human trafficking. The other five Gulf states are designated as “Tier 2 ‘Watch List’”
suggesting they might be placed in Tier 3 if they do not improve efforts to prevent
this activity. This designation represents a downgrading of Oman’s performance; it
was Tier 2 in the 2005 report. Kuwait, Qatar, and UAE were Tier 3 in 2005 and have
apparently taken some steps against trafficking since then.
U.S. Democratization Efforts
As the Bush Administration has made political and economic reform a priority,
it has expanded the programs and policies used to promote that agenda. As noted in
the State Department’s “Supporting Human Rights and Democracy: The U.S. Record
2005-2006,” released April 5, 2006, the Administration is promoting these reforms
not only through diplomatic exchanges between U.S. diplomats in the Gulf and their
counterparts but also with new programs run by the U.S. Agency for International
Development (USAID), the State Department’s Near East Bureau and its Bureau of

Democracy, Human Rights, and Labor, and the “Middle East Partnership Initiative”
(MEP I). 29
Recent and ongoing U.S.-funded democratization programs in the Gulf focus
on adherence to the rule of law, economic transparency, judicial reform,
strengthening civil society organizations, including political societies in some Gulf
states, improvement in the education system, media openness, and women’s
empowerment. Because U.S. diplomats in the region generally seek to maintain good
relations with their counterparts and because U.S. interests in the Gulf are broad,
most U.S.-funded programs are supported by — or at least not opposed by — the
Gulf governments. Many of the programs bring Gulf government officials, students,
journalists, and other civil society participants to the United States for training or to
see firsthand how various functions are carried out in a democracy. Several programs
using MEPI funds were used to help the Gulf countries comply with World Trade
Organization and other requirements for the free trade agreements being negotiated
with the United States (see below).
Economic Liberalization and Integration
Iran, Iraq, and the GCC states possess about 715 billion barrels of proven oil
reserves, representing about 57% of the world’s total, and 2,462 trillion cubic feet
(tcf) of natural gas, about 45% of the world’s proven reserves of that commodity.
The countries in the Gulf (including Iran and Iraq) produce about 20 million barrels
per day (mbd) of oil, about 30% of the world’s oil production, according to the U.S.
Energy Information Administration. Saudi Arabia and Iraq are first and second,
respectively, in proven reserves. Iraq, which is relatively unexplored, might
ultimately be proven to hold more oil than does Saudi Arabia. Iran and Qatar,
respectively, have the second and third largest reserves of natural gas in the world;
gas is an increasingly important source of energy for Asian and European countries.
This resource concentration virtually ensures that the Gulf will remain a major source
of energy well into the 21st century. All of the countries of the Gulf, including Iran
and Iraq, appear to have an interest in the free flow of oil, but past political conflict
in the Gulf has sometimes led to sharp fluctuations in oil prices and increased
hazards to international oil shipping. As noted in the below, oil export revenues still
constitute a high percentage of GDP for all of the Gulf states. The health of the
energy infrastructure of the Gulf producers is also a key concern of the United States
— Gulf state oil exports comprise about 20% of the United States’ approximately

13 million barrels per day (mbd) net imports.

A sharp oil price decline in 1997-1998 prompted the GCC states to reevaluate
their longstanding economic weaknesses, particularly the generous system of social
benefits they provide to their citizens. However, the strong expectation in these
countries of continued benefits led the Gulf regimes to look to other ways to reform
their economies. In the current period of high oil prices (about $70 per barrel in
August 2006), the Gulf leaders say they are determined not to discontinue economic

29 Funding amounts for each program type can be found at []. For
information on the initiative and funding provided by it, see CRS Report RS21457, The
Middle East Partnership Initiative: An Overview, by Jeremy M. Sharp.

reform at a time of high oil prices, as they did in the past to their economic detriment.
The cornerstone of GCC economic reform efforts has been to ease underemployment
problems by instituting programs, including job training in high-wage industries, to
encourage their nationals to work in jobs traditionally held by foreigners. Some of
the Gulf states have tried to reduce the percentage of foreign workers by requiring
that certain percentages of jobs in some industries be held by nationals as of specified
Table 4. GCC State Oil Production/Exports (2005)
Oil ExportsOil
CountryOil Exports(mbd)to U.S. Revenues
(mbd)as % GDP
Kuwait 2.2 0.26 50%
Saudi Arabia 8.75 1.558 40%
Qatar 1.02 negligible 30%
U.A.E. 2.33 negligible 33%
Oman 0.763 0.04 40%
Bahrain 0.02 0 30%
Total 19.133 2.52N/A
Source: DOE, Energy Information Agency (EIA), OPEC Revenue Fact Sheet viewed in
August 2006, although some EIA data are as of 2004 or 2005, and various press reports.
All countries in the table are members of OPEC except Bahrain and Oman.
Several of the Gulf states have made substantial strides to diversify their
economies and to attract international capital and needed advanced technology to the
energy and other sectors. Several Gulf states have developed relatively dynamic
tourism industries, particularly UAE, but increasingly including Qatar and Oman.
The Gulf states have passed laws allowing foreign firms to own majority stakes in
projects and eased restrictions on repatriation of profits. Some, including UAE and
Qatar, are now allowing outright foreign ownership of real estate. U.S. officials have
applauded progress by the Gulf states in eliminating the requirement that U.S. firms
work through local agents and in protecting the intellectual property rights of U.S.
As a result of the economic liberalization, several Gulf states now host
companies that are of global scale and impact, such as the Kingdom Holding Co.
established by Prince Walid bin Talal Al Saud in Saudi Arabia, Dubai Ports World
of Dubai, and another UAE-based firm, Emaar Properties. Bahrain has largely
rebuilt its reputation as a Gulf financial hub since the unrest there in the 1990s. On
the other hand, some Arab and other critics say that the UAE emirate of Dubai, in
particular, has gone away from its Arab roots by building huge towers, hotels, malls,
and other projects designed to cater to Western expatriates. Others say that the need
to attract tourism has led to a proliferation of bars and alcohol-serving establishments

that has led to crime, drugs, prostitution, human trafficking, and other social ills not
previously witnessed to this extent in the Gulf. Of the Gulf states, Saudi Arabia and
Kuwait have not to date developed substantial tourist industries; both still prohibit
alcohol consumption and do not want to risk the social consequences the other Gulf
states are seeing from their tourism drives.
In the oil and gas sector, Qatar has partnered with foreign investors such as
Exxon Mobil, Totalfina Elf (France), and others to develop its North Field, the
world’s largest non-associated gas field, which now has customers in Asia and sells
some liquified natural gas (LNG) to the United States. It is also the hub of the
“Dolphin Project,” in which underwater pipelines are to be constructed to link gas
supplies in Qatar and Oman to the UAE, with possible future connections to South
Asia. In January 2004, the first Omani supplies under the project began flowing to
the UAE emirate of Fujairah; under a swap arrangement, those supplies are replaced
by gas shipments from Qatar to Oman. At the same time, both Bahrain and Oman
are confronting a declining oil sector; Bahrain and Oman are expected to exhaust
their oil supplies in 15 and 20 years, respectively, at current rates of production.
Kuwait and Saudi Arabia have been in discussions with Western oil companies,
including several American firms, about further developing their oil and gas reserves.
However, internal opposition to opening up this vital asset to foreign investors has
significantly slowed the entry of international firms in the two countries. The
Kuwaiti government has not, to date, obtained National Assembly approval for its
“Project Kuwait,” a plan under which foreign investors would develop Kuwait’s
northern oil fields. The government wants the development to compensate for
declining older fields and to increase oil production to 4 million barrels per day by
2020, but the National Assembly wants to ensure that Kuwait retains full sovereignty
over its oil sector. Similarly, King Abdullah’s 1998 initiative to open the Kingdom’s
gas reserves to Western development was significantly delayed over commercial
issues between the Kingdom and the international energy bidders. After gas
development deals collapsed in 2003, the Kingdom signed agreements in June 2005
for the gas investments with Royal Dutch Shell (Netherlands), Totalfina Elf (Italy),
Lukoil (Russia), Sinopec (China), ENI (Italy), and Repsol (Spain).
The Dolphin project is an example of growing Gulf economic integration and
coordinated action. In December 2002, the Gulf states agreed to implement a
“customs union,” providing for uniform tariff rate on foreign imports; that union is
to be completed by the end of 2007. In October 2005, Saudi Arabia became the last
Gulf state to formally join the World Trade Organization (WTO) after protracted
negotiations mainly to assuage remaining U.S. concerns.
U.S.-Gulf Free Trade Agreements. As part of its strategy to promote
reform and democracy in the Middle East, the Bush Administration has been
negotiating bilateral free trade agreements (FTAs) with the Gulf states. The
Administration decided that an overall U.S.-GCC FTA would likely take too long to
negotiate; a similar joint agreement pursued by the European Union has still not been
finalized after about a decade of negotiation. An FTA was signed with Bahrain on
September 14, 2004. Legislation to approve and implement the agreement was
passed by Congress (H.R. 4340, P.L. 109-169, signed January 11, 2006). In
conjunction with congressional review, Bahrain dropped the primary boycott of

Israel. In September 2005, the United States and Oman agreed on the provisions of
an FTA, and the agreement was signed on January 19, 2006. Implementing
legislation on the U.S.-Oman FTA (S. 3569) passed the Senate on June 29, 2006, by
a vote of 60-34. Oman also has pledged to drop all Arab boycotts of Israel in
conjunction with the FTA. Negotiations on an FTA with the UAE are making
progress, according to U.S. negotiators, possibly because the wealthy UAE is
unwilling to make many compromises to reach an agreement. Kuwait and Qatar have
expressed interest in such FTAs as well.
Other Foreign Policy and
Counter-Terrorism Cooperation
The United States has looked to the Gulf states to support U.S. policy on several
other regional and international issues. One such issue is the Arab-Israeli dispute,
which concerns most citizens in the Gulf countries. Other issues on which the United
States seeks Gulf support would include such crises as may arise, such as the July -
August 2006 Israel-Hezbollah conflict. Another is counter-terrorism, an issue on
which the Gulf states have been increasingly cooperative since their interests in
preventing Islamic extremist movements have converged with U.S. goals. In the case
of the August 2005 Hurricane Katrina disaster, some Gulf states, particularly Kuwait,
have sought to express solidarity with the American public by offering financial
disaster assistance to the United States.
Arab-Israeli Peace Process
Since Iran’s Islamic 1979 revolution began a period of instability and warfare
in the Gulf, the Gulf states have not focused on the Arab-Israeli dispute to nearly the
degree that “frontline states” such as Egypt, Syria, Jordan, and Lebanon have. Most
of the Gulf states have tried to support U.S. mediation efforts in the Arab-Israeli
dispute, but they also have sought to modify and shape U.S. policy on that issue, as
well as on other issues such as the July-August 2006 Israel-Hezbollah conflict. In the
aftermath of the 1993 Israeli-PLO mutual recognition agreement, the GCC states
participated in the multilateral peace talks, even though Syria and Lebanon boycotted
those talks. Bahrain, Qatar, and Oman hosted sessions of the multilaterals, and a
regional water desalination research center was established in Oman as a result of an
agreement reached in that forum. In 1994, all six GCC countries relaxed their
enforcement of the secondary and tertiary Arab boycott of Israel, enabling them to
claim that they no longer engage in practices that restrain trade (a key WTO
condition). Oman and Qatar opened low-level direct trade ties with Israel in 1995
and 1996 and hosted visits by Israeli leaders during that period. In November 1997,
at a time of considerable strain in the peace process, Qatar bucked substantial Arab
opposition and hosted the Middle East/North Africa economic conference, the last
of that yearly event to be held.
At the same time, Saudi Arabia — to which the other Gulf states tend to defer
on Arab-Israeli matters — is taking a more active role on this issue now that
Abdullah is King. He has always been highly focused on this issue and has often
tried to guide and support U.S. policy on this issue; he engineered Arab League

approval of a vision of peace between Israel and the Arab states at a March 2002
Arab League summit. The Gulf states all publicly endorsed the Bush
Administration’s “road map” for Israeli-Palestinian peace. In September 2005, after
Israel’s unilateral withdrawal from the Gaza Strip, Qatar’s foreign minister held a
widely publicized meeting with his Israeli counterpart as part of what the Qataris said
should be encouragement and praise for Israel’s move. The final statement of the
GCC summit in December 2005 “hailed” the August 2005 Israeli withdrawal from
the Gaza Strip as a “step in the right direction” but expressed the hope it would be
followed by a complete Israeli withdrawal from all occupied Palestinian territories.
In October 2005, Qatar became the first Arab country to donate money to a town
inside Israel, giving $6 million to build a stadium in the ethnically Arab city of
Sakhnin in northern Israel. Oman and Bahrain have also dropped the primary Arab
boycott in connection with their FTAs with the United States, as discussed above.
On the other hand, the Gulf states, as Arab states, clearly support the Arab
position on the dispute. After the latest Palestinian uprising began in September
2000, Oman closed its trade office in Israel and ordered Israel’s trade office in
Muscat closed. Qatar announced the closure of Israel’s trade office in Doha,
although observers say the office has been tacitly allowed to continue functioning at
a low level of activity. (Qatar did not open a trade office in Israel.) That uprising
also prompted the Arab League, with heavy Gulf financial support, to set up funds
to support the Palestinian Authority (PA) and the Palestinian people. The funds,
called the Al Aqsa fund and the Intifada fund, and managed by the Islamic
Development Bank, were to provide up to about $1.2 billion in donated funds to the
PA. Saudi Arabia pledged$270 million of that amount, and it has largely fulfilled
that commitment. The other Gulf states have mostly been in arrears.30
A key difference between the United States and the Gulf states has been on how
to treat Palestinian militant groups, particularly Hamas. The differences sharpened
in the wake of Hamas’ victory in the January 2006 Palestinian legislative elections,
which enabled Hamas to form a cabinet for the Palestinian Authority (PA). The
United States still sees Hamas as a designated foreign terrorist organization (FTO,
as named by the State Department in 1997) that conducts attacks on Israelis and
moved to curb aid to the PA in the aftermath of the Hamas win. The Gulf states see
Hamas as a legitimate defender of Palestinian interests and resister of Israel’s
occupation of Palestinian territories. To help the Hamas-led PA cope with the
reduction of Western aid, Saudi Arabia and Qatar pledged funds ($92 million and
$50 million, respectively) to alleviate a PA budget crisis. In July 2006, Saudi Arabia
announced a longer term program of reconstruction aid for the Palestinian territories
in the amount of $250 million.
Differences between the United States and the Gulf states was far less
pronounced in the Israel-Hezbollah conflict of July-August 2006. Hezbollah is a
named FTO and the United States supported Israel’s decision to combat Hezbollah
following Hezbollah’s cross-border raid on July 12, 2006. Viewing the Shiite
movement as an ally of Iran, Saudi Arabia criticized the Hezbollah raid as

30 Kessler, Glenn. “U.S. to Press Arab Nations to Pay Pledges Made to Palestinians.”
Washington Post, February 26, 2005.

“adventurism,” although it and the other Gulf states subsequently denounced Israel’s
raids on civilian targets and urged an immediate ceasefire. Qatar and the UAE were
directly involved in negotiations leading to U.N. Security Council Resolution 1701
(August 11, 2006), which called for a ceasefire and the movement of Hezbollah’s
militia away from the border with Israel. The UAE flew in humanitarian aid to
Lebanon during the crisis, and Saudi Arabia announced a $500 million grant to
Lebanon on July 26, 2006 — over and above a $50 million emergency relief grant
— to help the country rebuild after the conflict. In August 2006, there reportedly
was agreement among the GCC states that, in addition to the Saudi pledge, UAE
would help rebuild schools and hospitals and remove landmines in south Lebanon,
Qatar would rebuild the town of Bint Jubail, site of heavy Israeli-Hizballah fighting,
and Kuwait would donate $800 million in reconstruction funds for Lebanon.
Cooperation Against Al Qaeda
The September 11 attacks stimulated some tensions between the United States
and some of the Gulf monarchy states, particularly Saudi Arabia, over allegations
that Gulf donors had, wittingly or unknowingly, been contributing to or tolerating
groups and institutions linked to Al Qaeda. Many experts believe the Gulf states
were tolerant of the presence of militants in order to avoid a backlash among citizens
that agree with the militant’s anti-U.S., anti-Western stances. Osama bin Laden’s
Saudi origins, coupled with the revelation that fifteen of the nineteen September 11
hijackers were Saudis, caused substantial criticism of Saudi Arabia among some
U.S. experts and opinion-makers. Two of the hijackers were UAE nationals. The
September 11 Commission report stated that Khalid Shaykh Mohammad, alleged
mastermind of the September 11 plot, lived in Qatar during 1992-1996 at the
invitation of Shaykh Abdullah bin Khalid Al Thani, the current Interior Minister and
a former Minister of Islamic Affairs, adding that Khalid Shaykh was warned by
Qatari officials in 1996 of a U.S. indictment, and fled. Qatar also hosts an outspoken
Islamic cleric of Egyptian origin, Shaykh Yusuf al-Qaradawi. In September 2004,
in one of his most hardline statements, Qaradawi said that it is a religious duty for
Muslims to fight U.S. forces and civilians in Iraq.31 Despite his statements, Qaradawi
meets with and sometimes appears at panel discussions with Qatari senior officials.
Some Saudi clerics, and even some Saudi officials, such as Interior Minister Prince
Nayef, have earned opprobrium in the United States for similar statements that
appear to blame the United States and U.S. policy for Islamic terrorism against the
United States.
Others accept the official view of some Gulf states that they hoped to calm
regional militancy through negotiations and by working with governments, such as
the Taliban, in an effort to keep Al Qaeda militants contained. Saudi Arabia and the
UAE were joined only by Pakistan in extending official recognition to the Taliban
regime of Afghanistan during 1996-2001, breaking ties with the movement only
after the September 11, 2001 attacks. Prior to September 11, the UAE had refused
repeated U.S. requests to break ties with the Taliban and to stop hosting Ariana
(Afghan national airline) flights to and from Dubai emirate; these flights were one

31 “Cleric Says It’s Right to Fight U.S. Civilians in Iraq.” Reuters, September 3, 2004.

of the few connections between the Taliban and the outside world.32 The September
11 Commission report on the attacks noted that the hijackers had made extensive
use, among other means, of financial networks based in the UAE, in the September
11 plot. There has also been extensive public discussion about the use of Saudi
charities and other Saudi-based networks to fund Al Qaeda and other terrorist
networks, although the September 11 Commission found no evidence that the Saudi
government or Saudi officials funded Al Qaeda.
Since the September 11, 2001, attacks and the start of the Iraq war in March
2003, the Gulf states have been partners of the United States against Al Qaeda and
pro-Al Qaeda movements as these militants have posed a threat to the Gulf states
themselves. As noted in the table earlier in this paper, the United States has
increased U.S. anti-terrorism assistance to almost all of the Gulf states to help them
counter Al Qaeda and other terrorist and proliferation threats.
As of mid-2006, the domestic Al Qaeda-related terrorist threat to the Gulf states
appears to be receding as these states have moved assertively against the militants.
In Saudi Arabia, there have been attacks on Westerners, regime installations, and
those perceived as linked to the U.S. military or the U.S.-led war in Iraq. The most
well known was the May 12, 2003 attack on a Western housing complex in Riyadh.
In December 2004 there was an attack on the U.S. consulate in Jeddah. Saudi
authorities have found and captured or killed several successive leaders of the Al
Qaeda organization in Saudi Arabia, including Abdul Aziz al-Muqrin and his
successor, Saleh al-Oufi, the latter of whom was reputedly killed in August 2005
shoot-out with Saudi authorities. In Kuwait, there have been sporadic attacks on
Kuwaiti security personnel in attacks that might have been attempts to disrupt OIF-
related U.S. military deployments there, but Kuwaiti authorities have taken actions
similar to those of their Saudi counterparts. In addition, in December 2005, Kuwait
convicted six men of belonging to a terror group (“Lions of the Peninsula”) allegedly
planning attacks on U.S. troops in Kuwait. Qatar’s tranquility was disrupted in
March 2005 when an Egyptian expatriate bombed a theater frequented by Westerners
as a purported response to Qatar’s hosting of U.S. forces in OIF. No similar
incidents have occurred there since.
In its most recent annual report on global terrorism, covering the year 2005
(“Country Reports on Terrorism: 2005, released April 2006), the Bush
Administration generally praises Gulf state cooperation against such extremists,
although noting some deficiencies:
!All of the Gulf states are credited with enacting at least some new
measures to combat terrorism financing, including freezing
suspected terrorist assets, requiring approval for charitable
transaction, adopting anti-money laundering laws, or instituting
laws and procedures to track suspicious financial transactions. Each
of the Gulf states has joined the Middle East and North Africa

32 Information in this section from the September 11 Commission final report. pp. 138, 146,
and 527. For an extended discussion of this issue, see CRS Report RL32499, Saudi Arabia:
Terrorist Financing Issues, by Alfred Prados and Christopher Blanchard.

Financial Action Task Force (MENA-FATF), and Bahrain hosted its
inaugural meeting. U.S. officials continue to press their Gulf state
counterparts to rigorously enforce these new measures, and some
U.S. officials have criticized some Gulf governments, particularly
Saudi Arabia, for failing to prosecute some individuals suspected of
being terrorist financiers.33
!Some Gulf states are credited with arrests of suspected Al Qaeda
figures. The UAE is praised by U.S. officials for providing
assistance in several terrorist investigations; it assisted in the 2002
arrest of at least one senior Al Qaeda operative in the Gulf, Abd al-
Rahim al-Nashiri.34 In August 2004, the UAE emirate of Dubai, in
cooperation with Pakistani investigators, arrested an alleged senior
Al Qaeda operative, Qari Saifullah Akhtar. Bahrain has on a few
occasions in 2003 and 2004 arrested suspected Al Qaeda activists,
although it has later released many of them pending trial or because
of a lack of legal justification for holding them. Qatar and Oman are
generally cited by the 2005 State Department terrorism report for
supporting or assisting U.S. counter-terrorism efforts, and the 2004
and 2005 State Department reports did not repeat language from the
2003 report that “Members of transnational terrorist groups and
state sponsors of terrorism are present in Qatar.”
!Several of the Gulf states are providing assistance on port and
container security. In December 2004, the UAE emirate of Dubai,
a major Gulf port hub, signed a statement of principles to participate
in the U.S. “Container Security Initiative” to screen U.S.-bound
container cargo in Dubai. Oman joined that initiative as well in
November 2005. On the other hand, some in Congress have
expressed concern, including during consideration of the U.S.-Oman
FTA, that some GCC or non-GCC firms might try to use U.S.-Gulf
FTAs to invest in operations of U.S. ports. The new concerns built
on earlier security-related questions that scuttled a February 2006
U.S. decision to allow the Dubai-owned firm, Dubai Ports World, to
take over operations at six U.S. ports. U.S. officials say that the
FTA agreements with the Gulf countries would permit the United
States to block such investments on security grounds.35

33 Meyer, Josh. “U.S. Faults Saudi Efforts on Terrorism.” Los Angeles Times, January 15,


34 “U.S. Embassy to Reopen on Saturday After UAE Threat.” Reuters, March 26, 2004.
35 See CRS General Distribution Memorandum. “National Security Issues and the Proposed
U.S.-Oman Free Trade Agreement.” July 19, 2006, by Todd Tatelman.

Appendix 1. Gulf State Populations,
Religious Composition
CountryTotalNumber of Religious
PopulationNon-Citizens Composition
(of total population)
Saudi Arabia27 million5.58 million90% Sunni; 10% Shia
Kuwait2.42 million1.29 million85% Muslim (of which

70% Sunni, 30% Shiite);

15% Christian, Hindu,

United Arab2.6 million2 million80% Sunni; 16% Shiite;
Emirates4% Christian, Hindu, other
Bahrain699,000235,00081.2% Muslim (of which

70% Shiite, 30% Sunni);

9% Christian; 9.8% other
Qatar885,000500,00095% Muslim, almost all
Sunni; 5% other
Oman3.1 million577,00075% Ibadhi Muslim; 25%
Sunni and Shia Muslim,
and Hindu
Source: Central Intelligence Agency World Factbook, updated August 2006, and various press
reporting. Most, if not all, non-Muslims in GCC countries are foreign expatriates.

Figure 2. Map of the Persian Gulf Region and Environs