Prince BANDAR BIN SULTAN: -the king of Saudi Arabia, telling him that, "Please, my brother, modernize. Open up your country. Make the schools mixed, women and men. Let women wear miniskirts. Have discos. Be modern, otherwise I cannot guarantee you will stay in your throne."
And the king of Saudi Arabia, King Faisal, used to write to the shah and say, "Your Majesty, I appreciate your advice. May I remind you, you are not the shah of France. You are not in the Elysee, you are in Iran. Your population is 90 percent Muslims. Please don't forget that."
NARRATOR: After a popular uprising tossed the shah off his throne in 1979, it was Islamic militants who took control. American diplomats seemed as surprised as the shah.
WILLIAM QUANDT, National Security Council, '72-'74, '77-'79: There was real anxiety that this was the beginning of a wave that would sweep across the Gulf and that Saudi Arabia might be next, or at least would be in line.
NARRATOR: William Quandt served on the National Security Council at the time.
WILLIAM QUANDT: It's bad enough to have Iran in turmoil, with the uncertainty there, but if it had spread further, it would have really been a disaster.
NARRATOR: The Saudis agreed to a huge arms build-up, based on sophisticated American weaponry. It coincided with an explosion in Saudi oil income. By 1981, Saudi oil revenues reached $116 billion a year.
The Saudi monetary agency had the daunting task of investing $4 million in oil revenue every hour, nearly a $100 million a day. Many of the petrodollars flowed to American construction and engineering firms, which cashed in on Saudi Arabia's rapid modernization.
WILLIAM QUANDT: The petrodollar explosion of the '70s, and then again in the early '80s, had a tremendous impact on the physical aspect of the country. All of the big infrastructural developments that one now associates with Saudi Arabia - the fancy hotels, the enormous airports, the fantastic road system - none of that existed 30 years ago. All of the infrastructure was radically rebuilt. It has physically transformed the landscape.
NARRATOR: The biggest purchases of all were military. It began with five advanced warning aircraft, or AWACS, and eventually a $5.6 billion "Peace Shield," a state-of-the-art command-and-control system for the Royal Saudi Air Force, with six underground command centers linking 147 defense-related sites. Since 1979, the sale of arms to Saudi Arabia has added up to more than $50 billion.
JAMES BAKER III, U.S. Secretary of State '89-'92: They buy our technology because it's the best. They buy our military equipment because it's the best. They buy from America because they want America present there, to the extent we can be in the kingdom, because we are their security.
Why are we their security? We're their security because we have a self-interest in making sure that those energy reserves in the Persian Gulf don't fall under the control of a- of an- of a country that is adverse to the United States.