U.S. consumers, battered by a year of record-high fuel prices, at least can take solace in the fact that Saudi Arabia, the world's largest oil producer, is firmly in the American camp.

Or maybe not. On July 14, during a meeting in Moscow little reported in the foreign press, Interfax reported that Saudi Arabian Secretary-General Prince Bandar bin Sultan bin Abdulaziz and Russia's VTS (Military-Technical Cooperation) agency head Mikhail Dmitriev, in the presence of Prime Minister Vladimir Putin, signed "an agreement about military-technical collaboration."


As the United States has been Saudi Arabia's primary arms supplier for the last three decades, the announcement must have sent CEOs of the military-industrial complex spinning. For the last decade Saudi oil money has purchased nearly $1 billion annually in arms, and a year ago Washington announced the sale of $20 billion worth of advanced weaponry to Saudi Arabia and its fellow Gulf Cooperation Council members.

But if the announcement set alarm bells ringing in defense corporate boardrooms, a second brief announcement later the same day had even greater potential import for the world energy market, as Interfax quoted Bandar bin Sultan as remarking, "Both Russia and Saudi Arabia agree upon and understand each other in virtually every energy-related issue."