I’m reading Currency Wars right now, which may be one of the reasons I suspect that the decision to launch signature strikes in Yemen was not requested by CIA and JSOC but instead dictated by Saudi Arabia. But I’ve also recently read the WikiLeaks cables that show how nervous recent discussions of the Saudi peg of the riyal to the dollar have been.
For example, one of the most recent cables released, describing a mid-February 2010 meeting between Deputy Treasury Secretary Neal Wolin and Saudi Monetary Agency Governor Muhammad Al Jasser and Minister of Finance Ibrahim Al Assaf, records Jasser invoking Chinese calls for an alternative to the dollar.
(C) Jasser reaffirmed Saudi Arabia’s support for the riyal-dollar peg, noting that the peg is in Saudi Arabia’s “cold-blooded self interest,” though he noted it sometimes felt like “we are alone.” Referencing past calls by China and others in the G-20 for an alternative to the U.S. dollar as the world’s reserve currency, Jasser said some have asked him why he does not give up on the U.S. dollar. He turned to a response he gave to a European newspaper that asked why Saudi Arabia hadn’t switched its peg to the Euro, “When oil is denominated in Euros, we’ll research it.”
In the same meeting, Jasser reminded Wolin that Saudi Arabia had far more ability to “undermine and safeguard” the world economy than its GDP might suggest.
Jasser stated that, as an oil economy, Saudi Arabia has the ability to both undermine and safeguard the world’s economy. He noted that Saudi Arabia was able and willing to support reform efforts at the IMF and World Bank, but that the ability to harm or help the global economy is a better measure of a nation’s relative economic importance than GDP.