US – Saudi in Confrontation

Saudi's newly appointed King Salman (R) shakes hands with US President Barack Obama at Erga Palace in Riyadh on January 27, 2015. Obama landed in Saudi Arabia with his wife First Lady Michelle Obama to shore up ties with King Salman and offer condolences after the death of his predecessor Abdullah. AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

Middle East Observer has published a report in its 2016 19th issue, under the name “The September 11 attacks: An American-Israeli-Iranian making”, in which it addressed the US bill on trailing Saudi figures that were allegedly involved in the September 11 attacks and how this decision is related to the Iranian Lobby. This scenario has become a reality with the Congress passing this draft law. This new bill is expected to spark tension to the American-Saudi relations.

How will KSA respond to protect its US investments and assets from being frozen, if this draft law is enacted, following an approval by the House of Representatives? What role will GCC and Arab countries play in this dilemma?

Several US and International economists dismissed the possibility that KSA will sell its huge assets in USA, especially since this step will have a far more negative effect on the Saudi economy than on the American one. This is ascribed to the oil price drop that created a big gap in the Saudi budget, which is the first in years.

Democratic Senator Chuck Schumer pointed out that the Congress will undermine any presidential decision to veto this new act, noting that the Saudi threats to bail out of its investments in the US are “idle” since their damage to KSA will be tougher than that to the US. But, the question here is: Is it in President Obama’s capacity to hold this law? 

Senator Schumer, who proposed the bill, emphasised that most of the 2 third senate votes required to invalidate the president’s veto are guaranteed. This means, according to him, that this draft law will be inevitably approved, regardless of Obama’s stance of it. But, what is more threatening is that the presidential candidates: Hillary Clinton and Sanders…etc., declared their support to it. As for Donald Trump’s stand, observer’s doubt he would take a positive stand with KSA.

On the other hand, Samir Ragheb, strategic and political analyst, considered such decision a cold American war on KSA, through which it is trying to create a crisis in KSA sending the whole world a message that it is still the most dominating power. Moreover, it is trying to get its hands on the Saudi accounts.

What is truly happening is that the US is “blackmailing” KSA and its royal family to seize the largest part of its massive financial reserves, which are now estimated at $587bn including $116bn of American treasury bonds.

How will King Salman manage this dilemma with the US, his strategy adopted in Syria and Yemen is a clear-cut direct confrontation. Attempts to try to deny the fact that there is a true problem will no longer work. Moreover, even if Saudi Arabia paid the compensation US wants, this won’t solve the initiated gap in the long solid relations of the countries. It might be useful here to bring up Muammar Gaddafi who believed that he would buy himself out by paying $3bn to Lockerbie bombing victims. But, after he dismantled his nuclear programme and destroyed his chemical arsenal, Libya remained chained. KSA is fully integrated with the US, with over 200,000 Saudis in US Universities, Key Investments and a joint defence agreement, the decision to confront the US, may start a chain of reaction that will impact the region as a whole.

Assessing Obama’s policies toward Middle East issues, Mohammed Al-Zulfa, Saudi political expert and a former member of the kingdom’s consultative council, said: “The American role, under Obama’s rule, was the strangest and worst of Washington in the Middle East”. “We have seen Obama’s policy create major chaos in the region that no Arab country survived: Egypt, Tunisia, Libya, and Iraq… all these territories face disorders because of Obama’s policies,” he added.

As for the US-Gulf relations, Al-Zulfa said that they have undergone tensions, under Obama’s rule, which never occurred during any previous administration.

He concluded that GCC countries realized that they are the only ones who can manage their own affairs and have relations with different nations to maintain their stability and security, after losing confidence in Obama’s administration.

Will the Gulf Countries Council withdraw there investments from the US?

The US Department of Treasury (DoT) has finally unveiled data on Saudi Arabia’s total US debt holdings that has been kept secret for 40 years.

The stockpile of the world’s biggest oil exporter stood at $116.8bn, ranking it among the top dozen foreign nations in terms of US debt holdings.

Moreover, Bloomberg disclosed US debt holdings of the oil-producing GCC nations for which the Treasury released data. Surprisingly, all 6 GCC countries hold US treasury bonds of $231.1bn, although they own the world’s largest sovereign wealth funds.

According to Bloomberg, the $116.8bn investments in US debt ranks Saudi Arabia on top of GCC nations, followed by UAE with $62.5. Kuwait comes third with $31.2bn, Oman 4th with $15.9bn, then Qatar and Bahrain with $3.7 and $1.2bn respectively.

The data released by DoT came in response to a Freedom-of-Information Act request submitted by Bloomberg News. It addressed GCC investments in US treasury bonds and bills only, excluding any other public or private investments.



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