Treasury’s New So-Called Transparency about Saudi-Held US Debt

According to Bloomberg, Treasury has for the first time ever not only revealed that it hides how much US debt the Saudis are holding, but how much debt that is: $117 billion dollars this month.

The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.

It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the country’s Treasury purchases stay “strictly secret,” according to a diplomatic cable obtained by Bloomberg from the National Archives database.

With a handful of Treasury and Federal Reserve officials, the secret was kept for more than four decades—until now. In response to a Freedom-of-Information-Act request submitted by Bloomberg News, the Treasury broke out Saudi Arabia’s holdings for the first time this month after “concluding that it was consistent with transparency and the law to disclose the data,” according to spokeswoman Whitney Smith. The $117 billion trove makes the kingdom one of America’s largest foreign creditors.

For the record, I don’t think this is a secret. Some of it has been reported in histories of the JECOR petrol dollar laundering program. And, if I’m not mistaken (my copy is Audible not dead tree), the book The Oil Kings provides much more detail on the negotiations that set this up (and Henry Kissinger’s self-dealing as part of that process).

Also, the number Treasury released “consistent with transparency” is almost certainly bullshit. It’s not just me who thinks this is a bullshit number: so does some anonymous person who knows better.

Yet in many ways, the information has raised more questions than it has answered. A former Treasury official, who specialized in central bank reserves and asked not to be identified, says the official figure vastly understates Saudi Arabia’s investments in U.S. government debt, which may be double or more.

More likely, the vehicle of exchange and secrecy set up in 1974 were renewed when the US and Saudis signed the similar Technical Cooperation Agreement in 2008, which got extended in 2013 until 2023. Which would suggest Treasury has a reason to show us the old-style debt holdings, but not whatever they have going on now.So in the interest of “transparency” (that is, in the interest of avoiding any panic as the Saudis threaten to dump US debt if we start releasing information the Kingdom’s role in sowing terrorism) Treasury has revealed the old-style arrangement, but not whatever is the core of what we’ve got going on now.

In other words, what Treasury’s so-called transparency actually tells us is the larger part of Saudi holdings (they threatened to dump $750 billion in US debt) are stashed somewhere even more secret than the original holdings. And they likely rolled out that even-more-secret stash in 2008, long after we knew they were sponsoring terrorism around the world.

Marcy has been blogging full time since 2007. She’s known for her live-blogging of the Scooter Libby trial, her discovery of the number of times Khalid Sheikh Mohammed was waterboarded, and generally for her weedy analysis of document dumps.

Marcy Wheeler is an independent journalist writing about national security and civil liberties. She writes as emptywheel at her eponymous blog, publishes at outlets including the Guardian, Salon, and the Progressive, and appears frequently on television and radio. She is the author of Anatomy of Deceit, a primer on the CIA leak investigation, and liveblogged the Scooter Libby trial.

Marcy has a PhD from the University of Michigan, where she researched the “feuilleton,” a short conversational newspaper form that has proven important in times of heightened censorship. Before and after her time in academics, Marcy provided documentation consulting for corporations in the auto, tech, and energy industries. She lives with her spouse and dog in Grand Rapids, MI.

4 replies
  1. bloopie2 says:

    Well, I know what they’re buying, and it’s not bonds. It’s goddamn electrons. They’re out to corner the market, that’s for sure. I mean, just look at you ”…my copy is Audible not dead tree…” and your use of Yet More Electrons to store your copy of a BOOK. Trees are a renewable resource, you know; electrons, not. You should be ashamed of yourself, not only for not seeing what they are Doing Bad, but also for Contributing To It. And this, too, has been non-secret for some time–we all learned in Science Class that everything eventually turns into heat. But if you store up enough electrons before then, you can build an Electronic (get it, “electrons”?) Cooler which will be useful when the 115º days now normal in the Kingdom become commonplace in yon Lower Peninsula as well. They have the long view, so should we. Nota bene.

    • martin says:

      quote”Well, I know what they’re buying, and it’s not bonds. It’s goddamn electrons.”unquote

      ummm.. do I detect a Memorial Day hangover?

      quote”In other words, what Treasury’s so-called transparency actually tells us is the larger part of Saudi holdings (they threatened to dump $750 billion in US debt) are stashed somewhere even more secret than the original holdings. And they likely rolled out that even-more-secret stash in 2008, long after we knew they were sponsoring terrorism around the world.”unquote

      They likely rolled out that even-more-secret stash in 2008???

      umm..can you explain a bit what you mean by “rolled out that even-more-secret stash”? I understand you have a ton more insight in what is going on in a thousand different spheres of your interests, but please.. sometimes us mere mortals who try to keep up don’t have a running time frame of any given subject matter you opine on. So..

  2. Don Bacon says:

    “… if we start releasing information [of] the Kingdom’s role in sowing terrorism”
    .
    Um, that has been a joint US-Saudi effort, as in Syria currently and Afghanistan before that.

  3. jonf says:

    $750 B sounds small to me. Way small. But we can only take someone’s word for it I guess.
    .
    What I really wonder about though is the sale of those bonds. Who would they sell them to? The ECB perhaps in exchange for Eurobonds. What do they gain from that? One asset gets exchanged for another. If the ECB likes they can sell them back to Uncle Sam when they come due, I suppose.
    .
    Maybe the real threat here is to stop loaning money to the U.S. So what? Since we create the money, if worse comes to worst, we don’t really need to loan money to anyone, just create more as needed. I wish I owned the damn printing press, no more money worries and no more debt.

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