Are the Economic Pins to the Saudi-US Relationship Still in Place?

As I noted the other day, 60 Minutes renewed attention on the 28 pages implicating Saudi, surely to set up the announcement that the White House is conducting a declassification review of the section of the Joint Congressional Inquiry that implicates one of our closest allies in that attack. I went on to argue that the suppression of those pages for 15 years, even as the Saudis continued to support anti-American terrorism, indicts those who’ve been complicit.

Sadly, this whole orchestrated move toward declassifying the 28 pages may well be a charade — a threat to the Saudis designed to make them change their ways. At this point, after tolerating Saudi double dealing for so long, those 28 pages indict Americans just as badly as they indict the Saudis.

To illustrate just how much of a charade the attention on the President voluntarily conducting a declassification review of the Saudi section of the Joint Inquiry, in the wake of that hullaballoo, the NYT reported on the financial threats the Saudis made that (the article suggests) are one of the things, though not the only thing, that has led Obama to lobby against a bill permitting the Saudis to be held accountable in court.

Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.

The Obama administration has lobbied Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon. The officials have warned senators of diplomatic and economic fallout from the legislation.

Adel al Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi Arabia would be forced to sell up to $750 billion in treasury securities and other assets in the United States before they could be in danger of being frozen by American courts.

Several outside economists are skeptical that the Saudis will follow through, saying that say such a sell-off would be difficult to execute and would end up crippling the kingdom’s economy. But the threat is another sign of the escalating tensions between Saudi Arabia and the United States.

The administration, which argues that the legislation would put Americans at legal risk overseas, has been lobbying so intently against the bill that some lawmakers and families of Sept. 11 victims are infuriated.

So on the one hand, Obama is making a big show of declassifying the 28 pages. On the other hand, he is lobbying (privately until this NYT report) to ensure that nothing legal will come of the release of those pages.

It feels kind of like Obama’s treatment of torture, allowing very limited exposure of what happened, all while ensuring there will be no legal accountability (legal accountability, I’d add, that would threaten to expose others higher up in the US executive branch; and  note that while the Administration is permitting a lawsuit of James Mitchell and Bruce Jesson, I’m skeptical this well get very far either).

Against this background, the Saudis are trying to negotiate an oil freeze to bring up prices, but apparently have delayed doing so, ostensibly because of rising animosity with Iran but also, analysts suggest, to hurt US capacity.

Failure to reach a global deal would signal the resumption of a battle for market share between key producers and likely halt a recent recovery in prices.

“If there is no deal today, it will be more than just Iran that Saudi Arabia will be targeting. If there is no freeze, that would directly affect North American production going forward, perhaps something Saudis might like to see,” said Natixis oil analyst Abhishek Deshpande.

Of course, our investment in fracking has always been, in significant part, about undercutting the power over the Saudis. The Saudis have been especially concerned about losing their privileged relationship with us since the Iranian deal, and since then the Saudis have been playing a game of chicken with oil production, daring other opponents to outlast it (which South American producers have been unable to do).

So a lot of this is financial.

But the fact that it is financial — and the fact that NYT’s analysts are skeptical that the Saudis could manage to screw us over, financially — suggests there’s something more.

Obama also doesn’t want the Saudis sued for liability reasons. He says, overseas.

Except this charade has been going on far too long for liability to exist only overseas.

12 replies
  1. P J Evans says:

    I’d guess that there are a lot of defense-industry corporations that get a ton of money from the Saudis. Airplanes, missiles, drones, bombs, mines, firearms: we sell these to them, and the government approves the export licenses, and therefore knows how much money is involved and who’s getting it.

  2. martin says:

    quote”Airplanes, missiles, drones, bombs, mines, firearms: we sell these to them, and the government approves the export licenses, and therefore knows how much money is involved and who’s getting it.”

    Naw. Really? And all this time I thought the Saudi’s were spending all that oil cash making the planet a better place to live. You know..spreadin all that Wahabisim shit.. er…goodwill ..haha..all over the planet..takes a lot of cash. And buyin up as much real estate in the US as they can.. hey, that must take bukooo bucks too. Oh, and let’s not forget their new role as the Posterchild for Human know.. one of those scum sucki…er.. upstanding Saudi doods is actually the top dog at the UN Human Rights Council now. I mean, they gotta be pretty cool..right? I mean..rumor has it they’re even cuttin back on their beheading quota this year… pun intended. ..but that’s gotta stand for somthin.. right? Only problem I see is..if only they could do sompthin about that stench. …you know..that camel or goat shit on their shoes or whatever that is. I mean..the last time I strolled by their Embassy…sheeezus..thought I’d vomit. God..and then there’s those stupid things they wear. fuk.. every time I see those moronic head dress.. I swear I’m going to laugh myself to death. But then again, ya can’t blame them ..I mean..bangin their heads on the ground 6 times a day..that must turn their brains to jello..right? Of course.. I would too if I was threatened with beheading. each their own I guess. Ok..well, I suppose the USG should keep those 28 pages sekrit.. after all.. Murikan’s just might gett a little pissed off..know what I mean? Hell, we might even cause a rukus.. like protest or sompthin. I mean, what’s a hard workin, tax payin Murikan sposed to do.. take it lyin down? Well, I gotta go to work now. But I’mma gonna be thinkin bout this shit. Till then.. C’ya.

  3. Ian says:

    EMPTYWHEEL(Marcy) says:
    To illustrate just how much of a charade the attention on the President voluntarily conducting a declassification review of the Saudi section of the Joint Inquiry, in the wake of that hullaballoo, the NYT reported on the financial threats the Saudis made that (the article suggests) are one of the things, though not the only thing, that has led Obama to lobby against a bill permitting the Saudis to be held accountable in court

    I say:
    While I also had noticed the coincidence of timing for the renewed interest in publication/declassification of the “28 pages” and the sudden press reports out of Washington DC of what the Saudi Foreign Minister may, or may not, have told members of the Congress several weeks ago back in March 2016 about moving “upto $750bn” away from the actions of a US court—I had seen it through a different lens/prism than most.
    Back on Jan 16,2015 INFO SECURITY MAGAZINE[a] had published a summary of the recently concluded agreement between London & Washington on how to conduct “cyber war games” under the direction of the Bank of England with both the USA’s NSA & FBI & Britain’s GCHQ & MI5[London’s counter-espionage/counter subversion/counter-terrorist function]—- “creat(ing) “a joint cyber cell,” with an operating presence in each country.The cell will have colocated staff from each agency.” during the 2015 year.
    On Dec 10,2015 The Clearing House [] a NYC based Financial payments pool owned by 24 major banks who have 50% of the USA’s US dollar deposits on their balance sheets signed an agreement [b] with VOCALINK [c] [which is the City of London’s Financial Payments pool moving money within the Hundreds of Banks & Financial Institutions that call “the City” their home] to have Vocalink install their “online, real-time, immediate payment software system ” into NYC and thus interconnect all across the USA-thus offering the USA payment system providers [moving checks, salary direct deposits, “wire transfers” etc around] a “1st in the USA” system for “immediate payment of unlimited $ value.” The US “moving money around system” would then come up to the existing Bank of England standards [Vocalink has offered immediate transfer across Britain since 2008] and the USA would join Singapore & London & Britain in having a world-class “payments” system.
    On March 29,2016 the Financial Times carried the headline: “BoE and ECB
    settle four-year battle over City clearing houses”[ECB=European Central Bank based in Frankfurt issues Euros for the Eurozone]—the report detailed how the ECB in Frankfurt had finally agreed that trillions of Euro(s) might never leave the City of London yet the ECB & the BoE working together would be able to properly supervise the financial institutions that use them.
    During the 1st week of April ,2016 we find the AP & the WSJ explaining that the US Treasury is considering how they can allow Tehran to use US $(s) to purchase “everything but nuclear bomb materials” and thus allow the P5+1 agreement to proceed—by reinventing a legal document nicknamed “a U-turn License” not allowed for under US law since 2008.[d]
    The advantage of such a legal instrument is that ANY foreign entity that fears the malicious actions of anyone of the various malicious actors that infest the USA’s “instruments of governance” could exchange into another currency OR merely transfer their US $ sums of money within the City of London, say, and never come into contact with any of those American “bad actors” that they rightly or wrongly, fear.
    The “offshore clearing house” is supervised by the host countries Central bank[i.e. Vocalink is supervised by the Bank of England] and even the folks in Washington wouldn’t try and shut down the City of London.
    So, the Saudi’s are not fools.
    They know that, if the 333m population,$13trn Annual GDP territory known as the Eurozone [which itself is part of the 510m population $17trn (i.e.$17,000bn) Annual GDP known as the EU] can have their main “money plumbing system” based outside their territory [Britain itself still uses the Pound Sterling] then all that the US Treasury need do is: —tell the Saudi’s to keep their US dollar denominated financial instruments –but house them in London while expanding the proposed Iranian only U-turn license to Iran & Saudi Arabia also.
    Washington can go ahead and release the 28 pages & tell the world (& the US electorate) how shocked!, just shocked! it is in finding out that various Saudi nationals could have done such a thing—yet the USA’s economy suffers not at all.
    Interestingly enough there is an earlier precedent for such a rapid transfer of the USA’s dollar currency & it’s role as the world’s trading currency from NYC/Washington to the City of London—and that was in March-December 1933.
    Prof Barry Eichengreen [e] made much of his reputation by examining closely the actions that FDR took upon his taking office in March 1933 when FDR,yes he declared a 4 day Bank Holiday, transferred all the various banks organized under State Charters into Federally regulated institutions—but what he also did was say US borrowers of “dirty little foreigners money” could not repay them IN GOLD without a special license from the US Treasury—which strange to tell, never did seem to materialize. So the Pennsylvania Railroad which had gained very cheap financing BECAUSE it was willing to invest wisely and promise to repay in gold or US $, at the foreigners option, had to default on the GOLD promise—with the result as Eichengreen has shown that by 1937 the Rest-of-the-World’s Central Bank’s transferred their main “Reserves” as they call them into London—yes London had devalued the Pound Sterling but they still honored the foreign currency to Pound Sterling conversion—Washington wasn’t willing to do that.
    [a] Jan 15,2015–INFO SECURITY MAGAZINE: Obama & Cameron: Arm-in-Arm on CyberSecurity
    [b] Dec 10,2015–VocaLink and The Clearing House sign a groundbreaking deal to deliver national real-time payment services in the U.S.
    [c] VOCALINK:
    [d] Return of the U-Turn License –
    [e] Prof Barry Eichengreen: He has been President of the Economic History Association (2010–2011).-

  4. blueba says:

    Some interesting posts here – food for thought.

    What I don’t understand about the Saudi “threat” of selling off its t-bills is that if it would do so, the Fed could just buy it all as soon as it hit the market thus nullifying any harmful effect the sale might have on the economy (by economy they mean the cash flow and profits of the oligarchs through the corporations they own).

    The Saudis live with the same economic system as the rest of us, any harm to the USD would harm they too.

    The US has benefited enormously from its relationship to the Saudi royals the Neoliberal empire is dependent on the vast economic power of the Saudis working in close coordination with US capital. The Saudis have collected TRILLIONS of dollars selling oil to the world sense WWII they have invested than money in key sectors of the economy. They hold vast power over the global economy and can throw trillions of dollars at any market causing distortion and misery for millions even a billion people or more.

    Look at what the Saudi royals have done, they have effectively thrown 4+ trillion dollars into distortion of oil prices by lowering prices and forgoing the profits. This has not effected their power one bit but it has demonstrated the control over the global economy the Saudi royals have.

    And just a side note for all you Keynes dupes out there that was a 4 trillion stimulus package for the economy under your arguments it should have been a big boost to the economy – what happened? The answer of course is that Keynes and ALL the rest of the mythology of economics is in existential crisis and disarray due to its failure to predict or manage the economy in any way which does not serve the wealthy. Economics is a mythology used to justify capitalism and dynastic wealth not a science or even a soft science it is a religion.

    If in fact there are disagreements between the two camps of the empire that is a real threat to the power of the empire let’s hope they are real.

    • martin says:

      quote”Economics is a mythology used to justify capitalism and dynastic wealth not a science or even a soft science it is a religion. “unquote

      Ed is either gettin shit faced drunk..or typing his fire laded reply as I type.

      • blueba says:

        I get your kind of replies often and I generally find them amusing.

        Of course I would prefer it if people would address my statements on their merit, or lack there of rather than the level and type of my medication.

        I think it is a result of dealing with things which are so fundamental to our understandings of the economy and world (global warming – US democracy) being shown to be wrong and based of false assumptions.

        Surly you are not going to present a case for economics as a hard science as it claims, are you? Or perhaps defend economics as a “soft science” such as sociology in which case you need to explain why economics reject any influence by, research, or any understandings of society or psychology into their models.

        FDR had it right, economics is about “saving capitalism” it is not about understanding the economy or working out what will produce prosperity or even reasonable subsistence living for the 2/3rds of the human population unable to access clean water on any regular basis.

        Never does economics include within its models the great fortunes or their effects on economics and society. Not the dearly loved by the left Keynes or anyone in economics even recognize that such fortunes as the Saudi royals have – as they throw 3 or 4 trillion dollars at the price of oil and distort commerce significantly. (low oil prices means the Saudis have forgone that amount which is the same as spending it). The loved and worshiped Keynesian economists Sitigletz being prominent DID NOT predict or even expect the biggest crash in the history of modern capitalism and offered nothing but half measures for the fix which has never happened.

        Economists from ALL schools have been wrong over and over their models and charts are no more accurate or effective than numerology is.

        Not only has economics been wrong they are unrepentant and continue to produce models intended to “save capitalism” not to find a good solution to inequity or the many other distortions of Neoliberal capitalism. Piketty offers a great example – he produced the 1001st and most exhaustive work showing the inherent weaknesses and inevitable inequity capitalism has ALWAYS produces. Then began immediately to say that all that is needed is a better tax structure. He totally ignores all the times including FDR this approach was tried to “save capitalism” after which in the blink of an eye the great fortunes bribe and blackmail themselves back to having everything their way.

        I would really like to have a debate with someone who wants to defend the field of economics against the overwhelming evidence that it is a phony myth created and supported by capitalists for their own narrow interests.

    • Ian says:

      blueba says:
      What I don’t understand about the Saudi “threat” of selling off its t-bills is that if it would do so, the Fed could just buy it all as soon as it hit the market thus nullifying any harmful effect the sale might have on the economy (by economy they mean the cash flow and profits of the oligarchs through the corporations they own).
      I SAY:
      Because mechanically it doesn’t work quite like that.
      I have $750bn of financial instruments created under the laws of the USA & in addition I am also receiving 5 & 6 days a week yet more US $ because I keep selling oil with yet more contracts decided under US law.
      Since the end of the Cold War Washington based politicians have claimed that if you even own US currency & US $ denominated financial instruments YOU MUST UNDERSTAND THOSE US $ INSTRUMENTS ARE THEMSELVES SUBJECT TO THE RULES CREATED BY THE INSTRUMENTS OF GOVERNANCE OF THE USA. Holding aloft your own countries Constitution while shouting out loud “What about my personal property rights under my countries constitution?” is not considered a reasonable excuse to avoid subjecting yourself to Washington based rules.
      SO the Republic of Argentina, for example [NML v Argentina 2001-2016] can point out that is a full country in its own right,listed at the UN as such, yet when a US Judge says, in essence, “I am the Ruler of World. By an Act of the Congress I can cause the entire world’s trading system to come to a complete halt until I am convinced that my judgements and opinions have been satisfied”.
      The SCOTUS agreed with the US Judge that the Congress had indeed intended any US (Federal) Judge to have the power to shut down the entire world’s trading system–until THEY & THEY ALONE are satisfied that their rulings have been followed.
      The Congress itself ALSO claims similar rights.
      So for Saudi Arabia, or indeed any country that Washington decides to “teach a lesson too for holding US $ denominated financial instruments” that means they must:
      i) SELL the existing holdings of US $ instruments AND ALSO refuse any further additional US $ instruments
      b) ACCEPT ONLY non-US $ currency–both for the $750bn of existing holdings AND ALSO FOR ALL FUTURE SALES OF OIL
      c) For all practical purposes that means Euros–issued by the ECB in Frankfurt. While the Chinese currency is slowly becoming convertible there still isn’t enough going around in the City to cover $750bn and many billions more on a daily basis
      d) Converting the sale & purchase of the world’s energy supplies to a non-US $ currency is not something the EU would instantly agree to.
      e) So the alternative approach is to ARRANGE FOR THE LAUNDERING/THE WASHING OF SAUDI OWNED US$ INSTRUMENTS ON AN INDUSTRIAL SCALE by mixing the Saudi owned instruments with everyone else’s.—a technique that created the “Eurodollar” in the 1960s in the 1st place.

      The USA at the time had rules that the Soviet Unions’ money derived from exporting Siberian forest’s lumber to furniture companies in Greece, say, but paid for in US $’s, was to be confiscated/stolen from the “dirty little commies” because American currency wouldn’t want to help “the Soviets” would it?. It was the French & their banks that said they would allow Moscow to maintain US $ deposit/savings accounts in Paris based banks—& if Washington came snooping they would insist that Washington was to be told that all US $ held at French banks was as the result of the sale of Champagne & various French wines.
      f) What the US Treasury is proposing for Tehran is a similar attitute—any Iranian bank would be able to “write checks” in London or Hong Kong, say, in US $s & all in Washington would be told it had no further need for knowing what was going on—the money was all under the control of the Bank of England or under the control of the People’s Bank of China, say.
      Money from the sale of Jaguar cars would be indistinguishable from money from the sale of Saudi oil or Persian/Iranian carpets.

  5. Denis says:

    Note to Martin: Don’t forget to register Republican to vote for Trump.
    His kids missed out in NY because they were either really stupid or
    incredibly brilliant. Ooops . . . durn, ya’ mean there’s a deadline for
    these things? Gesh, sorry Dad.
    Everybody is a’scratchin’ their heads over BO’s KSA policy, or lack
    thereof, but he’s gonna’ have to poop or get off the potty on this b/c his
    time is drawing nigh. If he leaves office with those 28 pages still buried
    in the basement of the capitol, or wherever, then his legacy for
    covering up the truth of 9/11 becomes another one of the many points
    in which his presidency becomes indistinguishable from Bush, Cheney,
    & Co.
    But KSA is a thorny issue. It’s not like dealing with the Government of
    Yisrael where both D and R politicians toss $3 billions of Americans’ tax
    money every year at a despicable apartheid regime and in return
    campaign coffers fill up with shekels. That sort of bribery is fairly
    straight-forward, logistically speaking.
    Morally, it’s a bit more . . . well, slimy. Congress and presidents sending
    tens of billions of tax money to GoY over the decades have deprived
    Americans of untold amenities such as libraries, teachers, infrastructure,
    a national health system, &etc. while indirectly providing those same
    amenities to Yisraelis by allowing GoY to divert billions per year of
    its own taxes from its defense budget. These benefits are being
    stolen from your children and grandchildren and delivered to the
    children and grandchildren of Yisraelis, who will continue the
    Palestinian genocide until the last minaret west of the Dead Sea
    is destroyed. This scam is sickening, when you think it through.
    The KSA, however, is entirely different. The Wahhabi Kingdom takes
    virtually no US tax money. According to the Congressional Budget
    Justification summary tables on Foreign Assistance for FY2015, of all
    the countries receiving US foreign assistance, KSA is waaay last at $9,000
    – that’s right, just 9 freaking thousands of dollars a year, which is for
    military education/training. IOW what KSA gets from the US in a year is
    less than 3 minutes worth of a Hillary Clinton Wall St. speech at her
    minimum fee of $225,000.
    So I guess what I’m saying is that the US economic hegemony-model is
    flipped w/respect to KSA – the carrot is very puny, leaving only the club
    — and so the analysis is complex. Although the elite in KSA have grown
    obscenely wealthy — not from US tax money but from decades of the
    GM/Ford/Chrysler morons building gas guzzlers that were run on Saudi
    oil — that income stream has dried up and whatever control it gave DC at
    one time has also dried up.
    While there is a symbiotic weapons market, the technology that KSA gets
    is – by US law – at least one notch below what GoY gets. As Ru and China
    develop their high tech toys market, the US toys w/ their statutory
    GoY-friendly, in-built limitations will be less and less attractive
    to the Wahhabis in Riydah, particularly if the US is buying less oil.
    Against this complex and changing scenario, it is fascinating how many
    US-KSA issues have made headlines already this year:
    1. KSA’s attempt to get the Gulf countries on board a plan to attack Syria.
    2. FM AL-Jubeir’s visit to D.C. in Feb., where he was more or less snubbed
    by Obama, followed by a clandestine meeting between Al-Jubeir and Bibi
    in Tel Aviv to discuss Syria.
    3. KSA crazy-ass war on Yemen, which is going about as well as a Westboro
    Baptist Church franchise in the Castro District.
    4. Obama’s Trump-like stream-of-consciousness characterization of Gulf
    states as “free riders” less than a month prior to Thursday’s address
    at the Gulf Cooperation Council meeting — aka the Gulf Sunni Free Riders’
    Wing-ding and Pork BBQ — to discuss the fight against Da’esh.
    5. WH now making a big stink over reviewing the 28-pages in a manner
    that suggests that the PR is more important to the WH than the actual
    release of the information.
    6. Obama sending 9 Gitmo prisoners to KSA, which sounds like a frying
    pan-to-fire move for these orange-jumpsuit guys as a result of some secret
    quid/quo deal with Salman. By the time they get their heads chopped off,
    Obama will be chilling in Diamond Head on great retirement benefits.
    Congressional Budget Justification
    Al-Jubier meets with Netanyahu

    • martin says:

      quote”Note to Martin: Don’t forget to register Republican to vote for Trump.”unquote

      Satire isn’t your strong suit. Neither is political persuasion perception. Btw, it wouldn’t bother me if someone assassinated Trump. Go Bernie!!!

  6. martin says:

    quote “5. WH now making a big stink over reviewing the 28-pages in a manner that suggests that the PR is more important to the WH than the actual release of the information.”unquote

    PR? Ummm…no, the USG is afraid of what will happen should the Bill to strip SA of Sovereign immunity…ie…other countries citizens would inherit the same right to sue the USG for actions like… vaporizing hundreds if not thousands of innocent men, women and children, should their governments do same to US. Moreover..would bring the Drone program into direct judicial review. Which would make my day.

    quote”In addition to seeing whether Obama will release the pages, Americans are also waiting to see how the president will react to Riyadh’s threat of financial retaliation. The Obama administration has argued that stripping sovereign immunity from nations over terror attacks on the US would endanger Americans and spark similar legislation against the US.”unquote

    I’ve got $25 that says more than one family of 9/11 victims would string up Obama in a New York second, should he side with SA. I wouldn’t blame them either.

  7. martin says:

    ps.. I’ve also got $25 that says there’s a SECOND Obama “we must look forward..not backward” statement coming in ..5…4…3…..2

  8. wayoutwest says:

    It’s sad to watch the once proud, if clueless, Truther Movement with their varied conspiracy motifs reduced to this ambulance chasing blood money liability scheme. These lawyers know there need be no proof but only enough suspicion and belief for a bobble-headed jury to infer they are passing judgment based on facts.

    I doubt these 28 pages will produce the holy grail that many people believe they contain but, from already leaked information, they may only contain information about third level Saudi government employees, not members of the HoS, who donated money that ended up being used by AQ.

    The House of Saud has been wed to Western financial interests since the resolution of the oil embargo in the ’70s and while they may appear to be religious zealots due to their Bedouin garb and head chopping they vacation on the French Rivera and invest their money with the Infidels which makes true Salafists cringe and sharpen their swords for a little royal head-chopping.

    The KSA certainly has their own agenda in the ME and they are not toady vassals for the US like much of Europe and our other allies so they appear and behave more independently, as their counter threat to this US legislation shows but it also shows their close alliance with the West.

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