Saudi Arabia is both friend and foe

In the case of China, it is not clear if the country is foe or friend, with an argument to be made on both sides of the issue. In the case of Saudi Arabia, there is little doubt it is both foe and friend, a matter that has led to extraordinary confusion.

{mosads}Recently, as The New York Times reports, Saudi officials told the Obama administration “that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.”

This is an unmitigated threat. Interest rates in the U.S. are relatively low — in large part, because foreign governments, like Saudi Arabia, buy large parcels of our bonds. If a substantial buyer sells, the U.S. would want someone else to buy its debt; however, with global deflation, that would be hard to do.

Whether any lawsuits against the Saudi government are warranted or even legal is in some sense beside the point. The Obama administration made it clear that it will not pursue the matter, raising the specter of capitulation. Nonetheless, an Associated Press dispatch reported that Saudi officials decided not to send a high-level delegation to greet President Obama on his recent visit to Riyadh. This gesture was obviously intended to send a clear message the Saudi government doesn’t have much faith in him.

Based on this slight, the president should say that we will reveal what is in the redacted 28 pages of the 9/11 Commission report, however damaging the evidence might be. Second, the president could incentivize fracking despite the low price of oil in an effort to push the price down further and, in the process, adversely affect Saudi oil revenue. We might need the cooperation of Saudi Arabia in the bond market, but they need our assistance in the oil market.

For years Saudi Arabia exported its brand of Wahhabism to madrassas across the globe. Formerly pacific places imbibed the militancy that emerged from this form of extremist ideology. We averted our gaze until recently, when it became apparent that these teachings can result in violence. Even the Saudi leadership is starting to understand the bitterness their policies have engendered.

While complete repudiation has not occurred, there are hopeful signs, such as the banning of the Muslim Brotherhood. Most notably, the Saudi king has realized that the only counterweight to Shiite imperial goals in the region is a Saudi-led military alliance that includes Egypt, Jordan and the Gulf States. That is a role that enhances presumptive balance of power objectives and could eventually create regional stability.

Of course, there is suspicion on both sides of this equation. The Saudis view Obama’s capitulation to their demands as another example of U.S. weakness in an area where it once was the hegemonic power. It is also the case that U.S. influence in Saudi Arabia is waning. The Saudis may acquire F-16s, but they can no longer easily acquire loyalty. U.S. dependence on Saudi oil, which was the basis for bilateral understanding, has been modified by dramatic shale oil discoveries and technological innovation, making the U.S. somewhat fossil-fuel independent. Put simply: Saudi Arabia is not a front-burner issue in the State Department’s agenda.

Managing this relationship won’t be easy. Neither bullying nor capitulation will work. History will find a solution, but at present, we are justifiably angry at what the Saudis have done to radicalize Islam. At the same time, we may need the Saudis to stem the tide of Iranian imperialism. As has been noted before, “there isn’t a prize for predicting rain, only for arks.” We must build diplomatic arks with a nation we would often like to punish. This isn’t easy, but it is essential.

London is president of the London Center for Policy Research.