US Saudi relations are under increased threat due to ongoing legal and financial claims. At same time, Washington's Administrations strategy for the Middle East is contraproductive.
The longstanding US-Saudi cooperation, set up since 1943, largely meant to support Western interests in the Middle East, securing strategic energy supplies and stability, now seems to be in shambles. After the already debilitating geopolitical maneuvering of the Obama Government, leading to the Arab Spring disaster, destabilization of several major Arab powers and Egypt, lifting the UN/US sanctions on Iran and showing a poor judgement with regards to military interventions in the region (Syria, Libya, Iraq), now has stepped up the effort to totally destabilize one of the US-Western bulwarks in the region, Saudi Arabia.
The move by the US Congress, after that the US Senate in a blowing majority voted for the 9/11 Lawsuit Bill, to block the veto put in place by President Obama, has to be seen as a total blow to Saudi interests. It also shows how US sentiment has turned against the Kingdom. Still, the latter is partly to be blamed on the current US election fever, in which not only a new US president is to be elected in November, but also a large part of the US Senate. Current US internal politics show a tendency to support hardliners, leaving moderate Senators and Congress Members no other choice than to vote for the bill. However, the current political dimensions of US internal politics is blocked and destroying a long-time relationship which is of the utmost importance not only to US geopolitical interests but also will have its negative repercussions for European/NATO interests in the region.
9/11 Bill last nail in the coffin
Looking at the current Saudi political developments the move by US Congress will be seen as one of the last nails in the coffin. Since the election of president Obama in 2008, bringing in place a Democrat Party President, needing to deal with the inheritance left by the Bush Administration in Iraq and Afghanistan, US-Saudi relations have become under increased pressure. Obama’s views on the Middle East, and his specific military-economic policies in his second period, have caused widespread anger under leading Arab regimes. Obama’s relatively positive stand on the Muslim Brotherhood led presidency of Mohamed Mursi in Egypt, the tacit support for the removal of Ghadaffi in Libya, and the total incomprehensible strategy in Syria, has not been taken lightly by the remaining Arab ruling elite. At the same time, all Arab countries, except Syria and some factions within the Iraqi governments, have condemned the decision to remove (part) of the sanctions on Iran. Saudi Arabia, Egypt, and the majority of the GCC countries, have been opposing the latter decision with all their might, but still Obama (and the European countries) have chosen to open up to Iran in full. For Saudi Arabia the US decision on Iran has been seen as a direct attack by Washington on the Kingdom’s regional interests and internal security of Saudi Arabia.
At the same time, Washington and Riyadh have been butting heads on several other issues, especially the Yemen War, Iran’s influence and military operations in Iraq, and the delay of the US multibillion weapon sales programs for Saudi Arabia. The underlying issue, Syria, is also an open wound, as Riyadh (and all other Arab countries) have been critizing Washington not to support a direct military action to remove Syrian President Bashar Al Assad.
The 9/11 bill however is a much larger threat, as it directly opens up legal roads in the US to file lawsuits against foreign governments over terrorist attacks. The socalled Justice Against Sponsors of Terrorism Act is seen by the Saudis as a direct statement that Saudi Arabia is guilty of involvement in the attacks of 9/11, causing thousands of deaths. The latter is seen by the Saudi Royal Family as a direct insult, as it indicates involvement of Saudi government officials and the ruling Royals. In stark contrast to former Saudi rulers and their court members, the current King Salman bin Abdulaziz has taken a much direct and pro-active internal and regional military-political approach. Since King Salman has taken the crown, Saudi Arabia has become much more pro-active as a regional power broker, leaving no room for discussion on who is the leader of the Arab Middle East. At the same time, the King has appointed a new Minister of Defense, Deputy Crown Prince Mohammed bin Salman (MBS), who has become the voice and strategist of the “New Saudi Arabia”. MBS has not only shown a keen interest in the economic future of the Kingdom, presenting a Saudi Vision 2030, showing the need for economic and social diversification in the country, but he also has been the main supporter of Saudi military interventions in Yemen (to quell a Shi’a supported uprising of the Houthis) but also giving more support to Syrian opposition groups, financing part of the recovery of the Egyptian economy and military, while addressing a new geopolitical strategy in which openings have been made to other geopolitical powers, especially Russia, China and Turkey.
The 9/11 Bill is also another step in confronting Saudi Arabia as one of the supporters/sponsors of terrorism, as already was inclined during the process of the release of 28 pages by the US government from a congressional inquiry detailing links that the FBI found between the 9/11 terrorists and Saudis based in the US. The latter pages however have not given any evidence that Saudi government officials and/or Royals were involved. Still, the public opinion at present in the US is mounting against Saudi Arabia.
In a reaction to the 9/11 bill, and the blocking of the Obama Veto by Congress, the Saudi government has stated that the bill’s passage was a “source of great concern to countries that object to the weakening of the principle of sovereign immunity, as a principle governing international relations for hundreds of years,” adding that the new law would affect all countries, including the U.S. No direct threats have been made by Riyadh, indicating that there will be severe repercussions for the current already very thin relationship between the Obama Administration and Riyadh. However, an indirect reaction is definitely to be expected.
Saudi reactions and possible outcome?
First of all, Saudi Arabia, already orientating its foreign investment and geopolitical policies, will be more than inclined to address possible strategic cooperation with non-Western allies. The ongoing discussions with Russia, at present largely focusing on oil, gas and investments, could easily be strengthened by adding a defense and security component. The latter is more than feasible, as Russia is more than willing to supply whatever Saudi Arabia would need for its military. For Riyadh, another aspect is also of importance. Russia is currently the staunch supporter of Iran in the Middle East, especially in Iraq and Syria. If Riyadh could enhance its cooperation with Russia, this could open up a way to lessen Moscow’s support for Tehran. In the energy field, Saudi-Russian cooperation would be a game changer. An OPEC-Russia cooperation would not only put in place a new oil and gas cartel of unknown proportions, but also increase the viability of Russian oil and gas companies entering in full the Saudi upstream sector. In light of an Aramco IPO this would be an interesting development. Saudi Arabia’s current oil based geopolitical cooperation with Asia would also be detrimental to US interest in the Pacific. Growing cooperation between China and Saudi Arabia could also lead to some military cooperation, opening up even bases or ports for China’s defense forces. Another main issue to be looked upon is the fact that the US main Middle East military base is in Bahrain (in addition to Qatar). If a crisis will occur between Washington and Riyadh, Manama will be following Saudi standpoints. Taking into account that according to Saudi law, Bahrain is considered to be a fully integrated entity, the in-depth cooperation between Riyadh and Manama could also result in military changes in case of the US base in Bahrain. Western views on the Bahraini handling of the internal Shi’a led opposition issue are also not taken positively in Bahrain and Saudi Arabia.
Secondly, Washington still needs to take into account that Saudi Arabian investors and Sovereign Wealth Funds are heavily involved in the US market. At present, official figures show that Saudi Arabia holds .5 billion in assets in the US Treasury. At the same time, SAMA, SAGIA and wealthy Saudis are also holding multibillion stakes on the NYSE and in other sectors. Threats have already been made, but always with a slight tendency to cool a crisis down. A total retreat of SWFs investments and the sale of US Treasury paper would stir the market increasingly. At the same time, the ongoing conflict between Washington and Riyadh also could have a negative impact on the overall financial situation of the Kingdom. International rating agencies are keeping a wary eye on the developments, as the Saudis are now battling not only on their own domestic financial markets to cover government debt but could be facing a downgrade by agencies too. Analysts, such as Prince Faisal bin Farhan, who is part of the Royal Family, stated that the 9/11 Bill also could lead to a situation that an US court would order the freeze of Saudi assets, pending a verdict. It is expected that in the next weeks a large outflow can be seen of Saudi financial assets to the Kingdom. Sources also have indicated that the 9/11 Bill and ongoing differences between both countries could increase the likely hood that Riyadh will end the dollar-peg of the Saudi Riyal. This could not only weaken the overall US Dollar position but also have a possible negative impact on ratings.
Some analysts also are pointing to another indirect result of the 9/11 Bill. The Saudi government, especially Deputy Crown Prince Mohammed bin Salman, are looking to diversify their defense spending and procurement programs. As a possible outcome of the US bill, Saudi Arabia could decide to end its multibillion arms procurement program with the US. For some in Washington this would be positive outcome, as opposition to arms sales to Saudi Arabia is growing. For the US defense industry, and bilateral military cooperation, this would however be very negative. Not only would the defense sector in the US loose a client worth billions each year, but the Kingdom would also be forced to look beyond NATO defense sectors, such as Russia or China for new equipment. Arms sales and geopolitical cooperation are intertwined, so Washington should have a new assessment of these issues very soon. Prince Mohammed Bin Salman will be in doubt about the total situation. At first, the US position would strengthen his own position in promoting Saudi indigenous defense production. On the other hand, the loss of access and supply of high-tech US/NATO technology would possibly decrease Saudi military capabilities in the long run.
Intelligence cooperation under treat
Taking all the above, especially when looking at the main underlying reason for the 9/11 Bill, which is countering all kinds of support of terrorism, the current crisis with Saudi Arabia will not lead to a positive outcome. When addressing issues concerning Syria, ISIS/Daesh, Al Nusra, Al Qaida, Houthis or even Iranian IRGC operations, a full scale and open intelligence cooperation between the US/NATO and Saudi Arabia is needed. The Kingdom’s internal and regional network (supported by GCC countries and Egypt) is of the utmost importance to quell spreading of terrorism and extremism. Saudi intelligence support has been vital to operations of NATO forces and others to deal with Syria, Libya and Iraqi developments. The growing mistrust between Washington and Riyadh doesn’t bode well for the future of these conflicts.
Need for re-evaluation Western Saudi interests
Action will need to be taken to re-evaluate the US/West -Saudi relationship. Ongoing American political infighting, inward looking statements and a lack of knowledge of the ongoing changes in Saudi Arabia and the region, are only going to lead to a new Middle East, in which Washington and the European Union/NATO will be standing on the sideline. Russia, China and even India are at present playing into the hands of the Arab leaders, showing their own capabilities and willingness to act as unconditional supporters of their friends. Obama and EU-leaders should be listening more to Arab analysts, insiders in the Saudi Royal Court, or their own military leaders. Following the gut-based politics of the street, which is largely based on total ignorance of regional geopolitics but on one-sided US news gathering and presentation, will lead to a total breakdown of Western interests. The latter should understand that Western interests (including of workers in steel factories or Coca Cola in the US) are directly linked to positive relations with the ruling elite of Saudi Arabia, Egypt and the UAE. Without them, economic downturn in the West will increase, while Middle Eastern problems will be heading towards the West at the same time.