Saudi Arabia has warned the Obama administration and members of Congress that it will liquidate hundreds of billions of dollars’ in U.S. assets should Congress pass a bill that would hold the Saudi government responsible for any role in the September 11, 2001 (9/11), terrorist attacks, according to a bombshell report from The New York Times (NYT).
The bill before Senate is meant to clarify that the immunity enjoyed by foreign nationals should not be applicable to cases where a nation is found responsible for a terrorist attack on U.S. soil. If the bill should be passed, it would effectively clear the way for the role of the Saudi government to be explored in the numerous lawsuits filed regarding the 9/11 terrorist attacks.
Realizing that their complicity in the events of 9/11 are on the precipice of being exposed, Saudi Arabia has gone into a full panic mode.
As such, Saudi Foreign Minister Adel al-Jubeir delivered a stark warning to the U.S. last month during a trip to Washington, where he said that the kingdom would sell up to $750 billion in U.S. treasury securities and other assets before the bill puts them in danger of being frozen by U.S. courts, According to the NYT report.
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.
The spectacular threat by the Saudis has caught the U.S. off guard, as speculation about using divestment of U.S. Treasury bills as a economic weapon was largely thought of as a potential threat to be wielded by China in the event of a major geopolitical conflict with the United States.
But surprisingly, it was the Saudis, and not China, that have been the first to threaten to use this potentially devastating economic weapon.
Saudi Arabia is the third largest holder of U.S. Treasury bills in the world, behind China and Japan, but how much do the Saudis really own?
Here’s more insight from Zero Hedge:
… their actual composition remains as a secret, because while the US discloses the explicit Treasury holdings of all other nations, Saudi Arabia’s holdings, for some unknown reason, are not officially disclosed.
“It’s a secret of the vast U.S. Treasury market, a holdover from an age of oil shortages and mighty petrodollars,” Bloomberg wrote of Saudi Arabia’s US Treasury holdings.
“As a matter of policy, the Treasury has never disclosed the holdings of Saudi Arabia, long a key ally in the volatile Middle East, and instead groups it with 14 other mostly OPEC nations including Kuwait, the United Arab Emirates and Nigeria,” Bloomberg goes on to note, adding that the rules are different for almost everyone else. Although Saudi Arabia’s “secret” is protected by “an unusual blackout by the U.S. Treasury Department,” for more than a hundred other countries, from China to the Vatican, the Treasury provides a detailed breakdown of how much U.S. debt each holds.”
So who does know how much US paper the Saudis are sitting on? Well, the Saudis of course,”a handful of Treasury officials,” and some bureaucrats at the Fed, Bloomberg says, noting that “for everyone else, it’s a guessing game.“
Even as the actual holdings of U.S. Treasuries by the Saudis is not yet known, the blackmail threat to the U.S. of sudden divestment — if executed — would almost certainly crash the U.S. dollar alongside global markets, but to what extent that the damage would actually cause economically on a global scale could only be imagined.
Perhaps this would explain Obama’s unwavering support for the Wahhabi regime, as congressional aides and administration officials have confirmed that the U.S. President has been lobbying Congress to block the passage of the bill — because if the Saudis make good on their threat, there could be a potentially extreme ‘economic and diplomatic fallout’.
Here is more from the NYT report:
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.
— New York Times World (@nytimesworld) April 16, 2016
The threat highlights the continuously deteriorating relationship and escalating tensions with Saudi Arabia, as the two have been at odds over how to deal with Iran, Saudi Arabia’s bitter enemy.
However Riyadh’s resolve to actually deliver on the threat is seen as dubious, since selling off such assets would be difficult and would damage the dollar and thus crush the Saudi Arabian economy, as their currency is pegged to the dollar.
Saudi Arabia has already already felt the effects of a fall in the price of oil which has taken a toll on its economy, and currency speculators have made the situation worse by betting that the kingdom will give under pressure and cut its currency peg to the dollar, thus forcing it to slash spending while also revamping its economy and attempting to setting up a global wealth fund.
— EMerging Equity (@EMequity) April 4, 2016
Edwin M. Truman, a fellow at the Peterson Institute for International Economics, told the NYT that he thought the Saudis were most likely making an “empty threat,” because “the only way they could punish us is by punishing themselves.”
Under the current U.S. law, foreign nations have a degree of immunity from being sued in U.S. courts, under The Foreign Sovereign Immunities Act of 1976, which is one of the reasons why members of the Saudi royal family were not brought to court over suspicions of financially supporting the terrorist attacks of 9/11.
The new bill introduced in Senate would waiver such immunity for cases that involve terrorist attacks that kill U.S. citizens on U.S. soil.
Possible links between the perpetrators of the 9/11 attack and Saudi Arabia could be hidden inside the classified 28-page part of the 2002 congressional report, which allegedly describes how Saudi Arabian nationals with links to the government had financially assisted the 19 hijackers who flew airplanes into World Trade Center and the Pentagon.
Those conclusions, contained in the classified 28 pages of the report, still have not been released publicly.
The Obama administration has opposed the new bill, which it argues would make foreign nations retaliate by passing similar legislation that would target U.S. citizens and firms in their national courts.
U.S. Secretary of State John Kerry told a Senate panel in February that the new bill, in its current form, would “expose the United States of America to lawsuits and take away our sovereign immunity and create a terrible precedent.”
Ironically, sovereign immunity didn’t stop a U.S. judge last month from ordering Iran to pay $10.5 billion in damages to families of the 9/11 victims. A ruling that was passed because Iran didn’t bother to defend itself against the allegations.
The ruling put the blame on Iran over its links with the militant group Hezbollah, which plaintiffs argued, helped to aid Al-Qaeda. The argument is based on the same congressional report, which also said that no link between the hijackers and Iran had been found.
None of the 19 hijackers were Iranian citizens, whereas 15 of the hijackers were citizens of Saudi Arabia.
Last weekend 60 Minutes broadcasted a segment titled “28 pages” in which former U.S. Senator Bob Graham and others urged the Obama administration to declassify the redacted pages that hold the secrets of 9/11.
Indeed, the road ahead is rocky, as Saudi Arabia falls under increasing pressure, as cracks in the regime are increasingly pointing towards a total collapse.
— EM Equity (@EM_Equity) March 10, 2016
Obama is set to arrive in Riyadh on Wednesday for meetings with Saudi King Salman bin Abdulaziz Al Saud and other Saudi officials, and it certainly appears that the dispute over the new legislation will be on the cards of the agenda during the talks.
So how exactly will this situation play out between the U.S. and Saudi Arabia?
Only time will tell — stay tuned!