From: Reuters
Published April 24, 2008 03:52 PM

U.S. arms sales to OPEC at risk over oil: senators

By Chris Baltimore

WASHINGTON (Reuters) - Democrats in the U.S. Senate stepped up their attacks on OPEC oil producers on Thursday, threatening to block billions of dollars in arms sales to suppliers such as Saudi Arabia if they fail to take action to tame record oil prices.

Democratic senators Charles Schumer of New York, Byron Dorgan of North Dakota and others called on the White House to "jawbone" OPEC members to boost output or risk Congress blocking arms deals with Saudi Arabia, the United Arab Emirates and other OPEC members.

"The Saudis have to understand this is a two-way street," Schumer told reporters. "We provide them weapons, our troops provide them protection, and then they rake us over the coals when it comes to oil."

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The Bush administration is in a delicate position on Middle East policy, and record-high oil prices near $120 a barrel are just one of many thorny regional issues.

President George W. Bush has repeatedly nudged OPEC members like Saudi Arabia to boost output, but is also trying to use U.S. arms sales to offset Iran's influence in the Middle East.

The lawmakers' plan is "the wrong approach when it comes to our security and our energy," White House spokesman Scott Stanzel said, criticizing Democrats for blocking plans to drill for oil in an Alaska wildlife refuge.

"Arms sales to our allies are made because they are in the national security interests of our country, not because they are a bargaining chit," Stanzel said.

The Bush administration has notified Congress it plans to sell Saudi Arabia bomb-guidance kits worth about $120 million.

Over the past six months, the White House has proposed almost $14 billion worth of weapons sales to Middle East OPEC members, the senators said.

That includes a Patriot missile deal with the United Arab Emirates worth up to $9 billion and $2 billion in arms sales to Kuwait, they said in their letter to Bush.

The United States needs OPEC's oil much more than cartel members need U.S. arms, said Gal Luft, co-director of the Institute for the Analysis of Global Security

"For the Saudis these weapons are luxury goods," Luft said. "For the U.S. oil is a matter of national survival."

Big OPEC suppliers like Saudi Arabia have blamed high oil prices on a lack of spare refining capacity and speculation, not a lack of supplies.

The White House would likely veto efforts to link Middle East arms sales to oil prices, said Greg Priddy, an analyst with the Eurasia Group.

Though U.S. lawmakers blame OPEC for soaring oil prices, "the cartel has really lost control of the market at this point," he said.

Tying oil prices to arms sales could motivate Middle East producers to seek cozier arms-for-oil agreements with countries such as Russia and China, said Frank Verrastro, an energy expert at the Center for Strategic and International Studies.

Last year, Democrats in the U.S. Congress pushed through a bill that would allow the federal government to sue OPEC for price manipulation. The White House has said it would veto the so-called NOPEC bill, and opponents have warned that OPEC members could retaliate by turning off the taps.

(Additional reporting by Tom Doggett in Washington)

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