The Rise of Adnan Khashoggi

So we had a request a while back for an essay on Adnan Khashoggi (1935-2017), the Saudi arms dealer and legendary partier. I confess that I knew who Khashoggi was but I hadn’t really known any more about him than you could’ve learned from one of his obituaries, so this required a bit of extra research and that’s why it’s taken me so long to get to it. But here we are, and I thought we could run through the story of Khashoggi’s background and his rise to prominence in the 1960s. I think that’s enough for one essay, and anyway beyond that you get into a lot of celebrity gawking which I don’t find to be especially interesting. I’m happy to come back to this topic though if there’s interest in continuing.

Adnan Khashoggi

Most of this is taken from a book called The Richest Man in the World: The Story of Adnan Khashoggi, by Ronald Kessler, so if you’re interested in reading more on your own I’d start there.

Khashoggi was at one time arguably the richest man in the world. At his height he was a billionaire (somewhere in the 2-4 billion dollar range) in the early 1980s, when (unlike nowadays) billionaires weren’t crawling all over the place. His fortune was diversified into real estate, energy, development, and other areas, but he got his start as an importer/middleman and is most infamous for being the main arms dealer for the Saudi government. This naturally brought him into contact with the United States, weapons wholesaler to the world, and he was able to leverage those contacts into serving as a middleman between Washington and Riyadh more generally. He bears some responsibility for the fact that American policy in the Middle East is so inextricably linked with the Saudis, for better or (usually) worse.

(Khashoggi’s family is actually of Turkish descent, not Arab, for any Nassim Nicholas Taleb fans who might be wondering about his haplogroups or whatever, but they’d been in Arabia for some 400 years by the time Adnan was born.)

Adnan Khashoggi came by his relationship with the Saudi royals through his father, Muhammad Khashoggi, and his uncle (by marriage), Yusuf Yassin. Muhammad was court physician for King Abdulaziz, aka Ibn Saud. By virtue of his regular contact with the king, Muhammad became a trusted adviser on matters other than health. Yassin was Ibn Saud’s national security adviser by day and the guy who got girls for the king by night. He’s apparently the person who taught Adnan how to move in high class circles and leverage his connections strategically.

Young Adnan got started as a broker while he was away at school in Egypt, reportedly by hooking up a Libyan friend whose father wanted to import towels into Libya with an Egyptian friend whose father made, you know, towels. He got a commission for arranging the deal and basically never looked back. Before going to college to be an engineer, at Chico State in northern California, he started a Saudi importing business. He seemed to adhere to the idea that if you look like you have money, people will start treating you like you have money and that means they’ll do business with you. So he would throw big parties for prospective clients (including escorts hired to liven things up) and he made ostentatious displays of wealth (sometimes wealth that he didn’t actually have) at school.

It worked. Adnan was soon living in a house while his friends were still in the dorms. His work as a middleman kept expanding (trucking became a big area for him) and pretty soon he’d decided to transfer to Stanford as a business major. He only stayed for a semester before dropping out and going home to run his burgeoning business. It was clearly the right choice. Saudi Arabia in the 1940s and 1950s was a country swimming in money but with nothing to show for it, so a man who was good at procuring things stood to make an excellent living. His importing business also gave him an inside track when it came to manufacturing, because he could easily bring in raw materials. And so he got state contracts for things like bricks, furniture, gypsum, etc.

Khashoggi’s first foray into military goods came during the 1956 Suez Crisis. Israel, the UK, and France invaded Egypt after Gamal Abdel Nasser nationalized the Suez Canal. The Saudis wanted to send materiel to aid Egypt’s war effort, but their trucks, exhibiting some of the far-reaching thinking that has come to characterize the Saudi military, couldn’t drive over sand. Khashoggi brokered the purchase of trucks that could drive over sand and was handsomely rewarded for it. He then took nearly every riyal he had to his name and threw what must have been a legendary party in Paris for high-end business types and Saudi princes. Again, he believed it was important to convince people you had money, even if you didn’t, in order to get them to do business with you.

Khashoggi started cutting bigger and bigger deals with Western firms to import cars, electronics, helicopters, and more into the kingdom. Then the North Yemen Civil War broke out in 1962 and Khashoggi really came into his own. A group of republicans in the North Yemeni military launched a coup against the Mutawakkilite King Imam Muhammad al-Badr, and Nasser saw an opening to expand his influence and threw his support behind the revolutionaries. The Saudis, who had just been helping Nasser a scant six years earlier and exhibiting some more of that far-reaching thinking, now decided that Nasser was the Worst Person in the World because he was a republican and was aiding the overthrow of a fairly recently-established monarchy (this hit a little close to home for the Saudis, as you might imagine). So they resolved to intervene (there’s history rhyming for you) on behalf of the Mutawakkilites (even though the Mutawakkilites were Shia, so there’s history not quite rhyming that much for you).

Kessler writes that the future King Faisal, at this point still crown prince (he wouldn’t overthrow his brother, King Saud, until 1964) called Khashoggi into his office and gave him a check for one million British pounds. Khashoggi was to use it to buy weapons for the Yemeni royalists. The Saudis wanted to stop Nasser, but they wanted some plausible deniability about it, hence the use of a non-royal middleman. Khashoggi brokered the sale and transfer of what must have been a great number of rifles to the royalists, and also is alleged to have procured weapons for British-aligned forces during the 1963-1967 Aden Emergency in southern Yemen (when the Brits were eventually driven out of southern Yemen by the Nasser-backed National Liberation Front). He then, remarkably, told Faisal he didn’t want a commission for his efforts.

That extremely savvy decision is probably what made him his later fortune, because it apparently impressed the hell out of Faisal and, of course, Faisal later became king. And not just any king, but a king who was more than a little paranoid about the threat of a Nasserist wave sweeping over the Middle East and who therefore wanted to build up his kingdom’s military capacity and infrastructure in a hurry. Faisal believed that close ties with the West, and in particular with the US, were key to achieving that aim, and he made Khashoggi his unofficial intermediary.

Luckily for Khashoggi, it was right around this point that oil prices started to rise substantially, and Saudi state revenues along with them. Khashoggi started his work with defense contractors (he was a particular favorite of Lockheed’s), scoring massive deals to equip Saudi Arabia’s military that netted him millions in commissions. And as revenues continued to rise and his deals got bigger, Khashoggi also began to up his commission percentage. The arms suppliers didn’t care because they just increased their prices to cover the extra commission, and the Saudis didn’t care because, hell, what were they going to do with all that money if not buy a bunch of planes and tanks and other cool shit? Khashoggi’s climb toward obscene wealth had begun.

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