KOPPEL: My guests tonight are former ambassador to Saudi Arabia, Richard Murphy. Ambassador Murphy has held a variety of diplomatic posts in the Middle East and Asia. He is now director of Middle East studies at the Council on Foreign Relations. He joins us from New York. Daniel Pipes is the director of the Middle East Forum and a columnist for the New York Post. Dr. Pipes has worked for both the Departments of State and Defense. He joins us from Philadelphia.

Ambassador Murphy, I think Americans sometimes have the impression that the Saudis would like to have it both ways. When it suits their purposes, they want to be our best friends, when it doesn't they don't.

Mr. RICHARD MURPHY (Former US Ambassador to Saudi Arabia): Well, Ted, I suppose that could be said of us as well around the world. But I think we've been in pretty good relationship over the years, and I've watched them for about 40 years now from my first days in Saudi Arabia. And I haven't seen them turn their back on us as a government.

KOPPEL: Dr. Pipes, your-your assessment of the same question.

Dr. DANIEL PIPES (Middle East Forum): I think Saudi Arabia is, perhaps, the country that is most different from us in the entire world. And we've had, for 55 years, an agreement with them that we'll take oil from them and we'll protect them. And it's an agreement that is very limited and it's very tactical. But anything beyond that it's nothing but disagreement on the way we live, and what we aspire to. So any time it's anything more than oil for security, we've got problems.

KOPPEL: And-and explain what you mean by that. I mean, give us-give us two or three examples of where you think the greatest differences are.

PIPES: The way of life is utterly different. To take one symbolic difference, women cannot drive in Saudi Arabia. There are no political parties in Saudi Arabia. There's not even the pretense in Saudi Arabia of a democracy. You know, there's a completely closed society. At the same time, the Saudis have something we need and want. And they have permitted us to create suburban Americana in some of the cities of-of the country. So, as long as we're out of each other's hair, it's not too much a problem. But as soon as we have a crisis of some sort, as we certainly do now, then all those differences come out and then the real true contradictions are apparent as well.

KOPPEL: Ambassador Murphy, let's get to some of the specifics. Fifteen of the-of the 19 terrorists who committed the atrocities against the World Trade Center and the Pentagon were Saudi citizens. There was a planeload, a private jetliner of Saudis who left the United States just a couple of days after that event, on a jet that was, I believe, owned by the Saudi government. There is a sense that the Saudis have been somewhat reluctant to cooperate with both past, and to a certain degree even this current investigation, with regard to who was involved, how and why. Those do not sound like the actions of a solid or reliable friend.

MURPHY: My understanding on that plane that left shortly after the World Trade Center bombing, that carried members of the bin Laden clan, a very large clan, many of whom were here in the states-those of whom were here in the States who were studying. And that departure had been cleared with the state and the FBI. That's-that's my understanding.

KOPPEL: I agree with you. That's absolutely what happened. But at a time when somewhere in the neighborhood of 1100 or 1200 people of various nationalities are being held, doesn't it seem strange that the family of Osama bin Laden would be permitted to return to Saudi Arabia without any kind of questions being asked?

MURPHY: I don't know what contact there was with our police authorities or with the FBI. But they didn't fly out without people knowing about it. So I assume that it was considered they didn't have anything to contribute to the investigation.

KOPPEL: Dr. Pipes?

PIPES: Can I offer a different take?

KOPPEL: Please.

PIPES: We have a remarkable history of Saudi Arabia, a history of obsequiousness, of giving them what they want and demanding very little in return. And I think this flight out two days after the atrocities is another indication of it. That the Saudi government wants to pull out these people, we say, 'Sure thing.' We demand nothing of them and they get their way. I think it's...

KOPPEL: We-we need to take a short break. And I'm-I'm sure that the ambassador would like to respond to that point, which he will be able to do in just a moment.

(Commercial break)

KOPPEL: And we're back again with Richard Murphy and Daniel Pipes. Ambassador Murphy, Dr. Pipes said a moment ago, a history of obsequiousness by the United States towards Saudi Arabia. I take it you hold a somewhat different point of view.

MURPHY: I certainly do. I'd like to go to the second part of your question, though, which was the issue of have they been helpful. And I think there are two categories that there's been a lot of talk about them being unhelpful. One was that they have failed to meet our military requirements, the other that they have failed to police the money trail inside and outside of Saudi Arabia. Now I think that both of those...

KOPPEL: Or-or that they-or that they have assisted in some of the investigations into previous acts of terror and this one.

MURPHY: I think there's a point in that. They did not open their files, as I understand it, to the FBI in any-in any complete way. They did not make all the people that the FBI wanted to interview available. At the same time, as I heard from one in the bureau, the question was, would we have opened our files, had the situation been reversed, and Saudi investigators landed in Washington. Would we fully share all of our intelligence data which bore on a given crime?

KOPPEL: Dr. Pipes, how do you answer that?

PIPES: We're not asking for intelligence data, we're asking to be able to interview people and find out who's who and what's what. And we've done this in many countries around the world, dozens of them. But the single most important country in this investigation, of course, is Saudi Arabia. And we've been stonewalled. And in some cases in the past, they've actually executed the perpetrators, the people they call the perpetrators, and given us a transcript of the interviews and that's that. Nothing more.

KOPPEL: Perhaps both of you would like to express an opinion or two, or at least give your analysis of what is going on right now. It seems to me that both, in the past and perhaps even more so in the present, Saudi Arabia is, if not entirely, then at least largely, dependent, I'm speaking of the royal family, for its survival against enemies both domestic and foreign on the United States. One would think that that in and of itself would make them absolute allies in this current war against terrorism. Do you think that is so, Dr. Pipes?

PIPES: Not with the history of obsequiousness that we have. They don't need to reach out and-and win us. All they have to do is make demands and, by and large, we give into them.

KOPPEL: Ambassador Murphy?

MURPHY: I don't agree with the obsequiousness comment because I know that they have met some pretty stiff military requirements we've put on them. And they have sent a team to Washington to learn how to control or track the money, as it's flowed through the charitable organizations in Saudi Arabia, some of which has ended up in the hands of Osama bin Laden and the al-Qaeda network.

KOPPEL: Why do you think that is so? Not why have they sent someone to cooperate, but why do you think so much money has been flowing from some of the wealthier families in Saudi Arabia to a group that, I think we can now all agree, is essentially a terrorist organization?

MURPHY: Ted, none of us know in detail about these charitable foundations, what they knew they were doing when-with the money when they got it from well-to-do Saudis. And we've seen, in our own country, how hard it is to track the money trail. They've come to us because they've never done this before. And now, they're-they're starting. They have frozen some accounts. And they are working their investigation.

KOPPEL: Dr. Pipes?

PIPES: They've let this money flow because the Taliban represent an extreme version of what you find in Saudi Arabia. And there's a great deal of sympathy for the Taliban and bin Laden in Saudi Arabia. And so it was easy all those years to just let this money go out. And it's politically costly to stop it. And it is difficult, now, for them to do it. There is a tight-there is an intimate relationship, not between the United States and Saudi Arabia, but between the Taliban and Saudi Arabia. And there is a lot of popular and elite support for it. There's a feeling that the Taliban are living the way the Saudis ought to be doing it. It's a kind of purer version of what Saudi Arabia represents.

KOPPEL: Is it fair or even reasonable to expect that the Saudis will ever become to us and for us the kinds of allies that we would like to have, Dr. Pipes, in this particular instance?

PIPES: I think-I don't know if we'll ever get everything we want from them, but we can get a lot more by simply being more assertive and less obsequious.

KOPPEL: Ambassador Murphy, that was at one point, your job. You were the emissary of the United States to Saudi Arabia. Based on that experience, do you think that day will ever come?

MURPHY: I've seen cooperation on some very sensitive issues in terms of military requirements that the Pentagon has put on them. They have met them. They have not met them instantly because that isn't-they don't work at high speed in some of these issues. They have to build their consensus and get back to us. But, in the end, they've met us. They met us on Desert Storm, and they're meeting us now on Afghanistan.

KOPPEL: Let me just pursue that for one quick moment. When you say they met us on Desert Storm, I mean, of course they met us on Desert Storm. It was their survival that was theoretically at stake here, wasn't it? They weren't doing it as a favor to us.

MURPHY: Well, very much a favor-a favor to them. We have mutual interests in the survival of Saudi Arabia as an independent country. What I challenge is the suggestion that we are there to defend the royal family. We have defended the kingdom of Saudi Arabia against external aggression, be it from Iran in the '80s or Iraq.

KOPPEL: Dr. Pipes, you get the last word.

PIPES: Thank you. In 1979 when a group of extremists took over the Mecca Mosque, the Saudi regime called in French troops, infidels to go into Mecca and take it over. 1990, when Saddam Hussein threatened, they called us in and we protected them. Now it's our turn to call. We're the ones who lost 5,000 dead. We need them, they've got to be there. And they're only going to be there if we have a new resolve and change this relationship and stop being so weak in approaching the Saudis.

KOPPEL: Daniel Pipes, Richard Murphy, thank you both very much for joining us.

PIPES: Thank you.

KOPPEL: I'll be back in a moment with a word about tomorrow's NIGHTLINE.

(Commercial break)

KOPPEL: Tomorrow on NIGHTLINE, an exclusive interview with President Musharraf of Pakistan, a man walking the tight rope, trying to support the US and stay in power. That's our report for tonight. I'm Ted Koppel in Washington. For all of us here at ABC News, good night.

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