Cooperation under the Radar: The US-Saudi Arabian Joint Commission for Economic Cooperation (JECOR)

Economists and political analysts who write about Saudi Arabia often say that the most difficult part of their research is finding accurate statistics about the Kingdom. Population, food production, water resources, oil and gas reserves, industrial output — many kinds of data that are essential to sound planning and accurate evaluation cannot be taken at face value, especially if they are generated by Saudi government agencies.

The reasons for the statistical imprecision vary from department to department. In an environment where the government is a wholly-owned subsidiary of the ruling family and there is no accountability to the public or any elected body, statistics may be manipulated for political reasons. Some of the data anomalies arise from a lack of coordination between different government departments. The most important numbers of all, oil production and crude oil reserves, are probably accurate, but they are entirely under the control of Saudi Aramco, the state oil company, and the Ministry of Petroleum — making them impossible to independently verify.

When I was reporting from Saudi Arabia in the late 1970s as regional correspondent for The Washington Post, this state of affairs was taken for granted. Drowning in a Niagara of oil cash, Saudi Arabia was growing at a rate that far outstripped its administrative capabilities. That it is still true to some extent today represents, in an odd way, the failure of a novel — and little-known — US government initiative.

By the late 1970s, American civil servants (employees of the US federal government) were ensconced in several Saudi government departments instructing their counterparts on how to conduct the public’s business in a modern state.

In 1979, a 28-member team from the US Census Bureau was teaching the Saudis methods of statistical compilation, under a ten-year, $36.5 million contract. Other Americans were providing instruction in financial data collection, agriculture and water research, accounting standards, banking methods, and “applied research capabilities.” Statisticians trained at the University of Maryland were teaching the Saudis how to compile a consumer price index and take an accurate census. Throughout the Saudi government, Americans were like evangelists, preaching the importance of accurate data.

The Americans understood that accurate statistics are essential to a modern state. Allocation of resources for housing and education, development planning, agriculture and water planning and economic analysis depend on them. But to the Saudis of the 1970s, these functions were understood only dimly, if at all.

Saudis now remember 1979 as a difficult year because of distressing political events at home and overseas: the Iranian Revolution, the extremist takeover of the Great Mosque in Mecca, Shi‘ite rioting in the Eastern Province, and the Soviet invasion of Afghanistan. But at the same time, Saudi Arabia in 1979 was becoming unimaginably wealthy. The country literally had more money than it could spend because of the great oil price surge that began with the Arab embargo of 1973-74, which sent the Kingdom’s revenue skyrocketing.

At the beginning of the decade, in 1970, Saudi crude oil had sold for $1.39 per barrel. By January 1974, the price was $8.32. The price kept rising throughout the decade, eventually reaching $32, and state revenue rose with it because consumers kept buying anyway. The Saudi government’s annual oil income, less than $4 billion a year early in the decade, would peak at almost $102 billion by 1981. The government undertook giant infrastructure projects all over the country, but still the cash flowed in faster than it could be spent.

The Americans who were seconded into the Saudi government were there as part of a grand design engineered by William E. Simon, President Richard Nixon’s last Treasury Secretary, to channel as much of that money as possible back to the United States. Simon was Deputy Secretary until he was promoted into the top job on May 8, 1974 — just three months before Nixon’s resignation in the Watergate scandal. He stayed on as Secretary under Nixon’s successor, Gerald R. Ford.

Despite the distractions of Watergate, the spring of 1974 was a crucial period in US-Arab relations. Agreements negotiated by Secretary of State Henry Kissinger in his famous “shuttle diplomacy” had ended the hostilities of the 1973 war and stabilized the battlefields of Egypt, Syria, and Israel. The United States restored diplomatic relations with Egypt. With the end of hostilities, the Arab oil producers, led by Saudi Arabia, ended their wartime embargo on exports to the United States. In that newly favorable atmosphere, Nixon embarked on a last-hurrah trip to the region. While in Saudi Arabia, he agreed to the creation of a US-Saudi Arabian Joint Economic Commission, known as JECOR. This was Simon’s brainchild.

JECOR’s mission was twofold: first, to teach the Saudis — who had no tradition of organized public agencies — how to operate the fundamental bureaucracy of a modern state; and second, to ensure that all the contracts awarded in pursuit of that mission went to American companies. JECOR would operate for 25 years, channeling billions of Saudi oil dollars back to the United States, but would attract almost no attention in this country because Congress ignored it. The Saudis were paying for it, so there was no need for US appropriations or congressional oversight.

The Commission’s objectives were listed in a joint statement issued by the American and Saudi officials who created it: “Its purposes will be to promote programs of industrialization, trade, manpower training, agriculture, and science and technology.” The participating Saudi government agencies would be the Ministries of Foreign Affairs, Finance and National Economy, Commerce, and Industry, and the Central Planning Organization, soon to become the Ministry of Planning. On the US side, the managing agency was Simon’s Treasury Department, not the Agency for International Development, because it was not a traditional foreign aid program — it was a money-management program.

Given the novelty of the arrangement and the complexity of the programs to be undertaken, it took some time for JECOR to become fully operational. By 1979, with Jimmy Carter in the White House, the Commission was in high gear.

Each day some 250 American civil servants — GS-9s and 11s — seconded by their departments at home would go to work in their counterpart agencies in Saudi Arabia, sitting with Saudi colleagues, offering tutorials, advice, and the knowledge of their experience. They worked, in English, from 7:30 a.m. to 2:30 p.m., the Saudi government work day, then went back to the JECOR office to write reports and supervise the translation of documents. The office was not part of the US Embassy because it was an arm of the Treasury Department, and the JECOR team often made a point of keeping the Embassy uninformed.

By 1979, JECOR was not just providing instruction but taking on the management of specific projects, such as the creation of a national network of vocational training schools and even the development of the country’s first national park, in the Asir region of the mountainous southwest. Those were missions the Saudis understood and appreciated; the compilation and distribution of statistics was another matter.

The government objected, for example, when an America-designed plan for creating a consumer price index included the price of gold as one of the commodities to be measured. The Saudis thought it would be politically ill-advised to flaunt their wealth by including gold, even though it was a staple of family wealth. Saudis whom the Americans were training in census techniques had a different problem: there was no credible or socially acceptable method of tabulating female citizens.

Three decades later, Saudi Arabia is by all technological measurements a fully modern country, and the Saudis no longer need the type of instructional input they were getting in 1979. JECOR went out of business, with no formal announcement by either country, at the end of Bill Clinton’s presidency. The JECOR teams accomplished a great deal in terms of bringing the instruments of government in Saudi Arabia into the modern world of nation-states; but reliable statistics are still sometimes elusive, which should not be surprising considering the numbers are controlled by officials who have an interest in what they show.

Earlier this year, for example, Patrice Flynn, a labor economist working at Effat University in Jeddah, wrote a brief essay on the labor market for the US-Saudi Arabia Business Council, a private group. How many Saudis are working? How many are unemployed? What are the figures for women? How many foreign workers are there? She drew two conclusions: “It depends on the year” in which the statistics were compiled, and “It depends on the data source” because the numbers issued by different departments often cannot be reconciled.

The Saudis have begun preparations for a new nationwide census in 2010. The announced results of all previous censuses have been greeted with skepticism by demographers and economists outside the Kingdom. If the new one fares better, JECOR’s lessons will finally have been absorbed.