Controversy has emerged after a strong bipartisan effort to declassify a 28-page document potentially linking the government of Saudi Arabia to the 9/11 attacks.
A bipartisan bill currently sits in Congress that would negatively affect Saudi Arabia, if the findings were true. Families affected by 9/11 are hoping to sue the Saudi government in American court, which is usually prohibited by U.S. law; however, according to Forbes, “[this bill] would prevent countries accused of having terrorist ties from invoking sovereign immunity.”
Due to these recent developments, the Saudi government has not responded well. The Saudi Foreign Minister, Adel al-Jubeir, has allegedly warned that he will sell $750 billion of Saudi Arabia’s assets in the U.S. if the bill passes.
While $750 billion appears to be a significant chunk of foreign holdings in the U.S. Treasuries, the Saudi government largely seems to be bluffing.
Analysis by Jim Collins of Forbes reveals that the true value of Saudi assets could be as low as $150 billion—“a measly 2.4% of all foreign holdings of U.S. Treasuries.”
Other assets held, including stock and real estate, are minimal; Saudis are not major shareholders in U.S. companies, especially in comparison to other countries such as the United Arab Emirates.
The New York Times posits that even if the Saudi government were to go through with selling assets, it could occur “without causing a ripple in the market.” Ultimately, Saudi Arabia itself would be affected most strongly, as the country would lose significant investments in oil refineries that are vital to its own economic growth.
The only real complication for the U.S. concerns a potential domino effect if other foreign countries followed suit and sold their American assets. This could have long-term consequences for the U.S. economy: “Any flagging of foreign appetites could increase borrowing costs both for the federal government and for American consumers and businesses,” the Times cautions.
However, the Saudis would essentially be working against their own financial interests if they were to sell all U.S. assets, so it’s evident that the threat put forth holds little water—the finance minister’s claims are based in fear-mongering. Actual analysis of the facts demonstrates that Saudi Arabia would suffer more than the U.S. if it were to divest its assets.
Despite these realities, the Obama administration appears eager to appease tensions with the Saudi government and maintain close ties with the regime.
President Obama attempted to smooth over things with the Saudis during his recent trip to the Middle East. He spoke at length with King Salman, although according to CNN, the two “glossed over some of the thorniest matters, including [the] Saudi threat.”
This meeting epitomizes the U.S.’s relationship with Saudi Arabia: although the country could have potentially funded one of the worst terrorist attacks on American soil, we are still required to be allies and keep the regime content, possibly even bowing to their threats (depending on whether the 9/11 bill passes and Obama signs it).
It points to an extremely unhealthy, one-sided relationship with Saudi Arabia based on financial interests—not a good position for the U.S. to currently be in.
As CNN puts it, “[the] relationship long lubricated by barrels of oil is encountering friction.”
For the time being, the situation remains in the status quo. The Saudi government does not likely possess the $750 billion in U.S. assets they claim, nor would selling their assets have any significant effects on the U.S. economy.
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