Saudi Crown Prince Threatened to Damage US Economy

Mohammed bin Salman privately pledged to retaliate in a row over oil production cuts, leaked documents reportedly show

Crown Prince Mohammed bin Salman privately threatened to harm the American economy after President Joe Biden warned Saudi Arabia of “consequences” for agreeing an oil production cut with Russia, the Washington Post has reported, citing leaked material.

The Biden administration had said it would re-evaluate relations with the kingdom following a decision by Riyadh to slash crude production against the wishes of the US.

The Crown Prince, who is widely referred to as MBS, warned that he would not deal with the US administration anymore if Biden penalized Saudi Arabia. He also promised “major economic consequences for Washington,” the Post reported on Thursday.

The threat was contained in a classified document that was leaked on a Discord server, but it was not clear whether the remark was part of intercepted communications or a message sent privately to the US.

Biden made his dissatisfaction with Riyadh clear last October after the OPEC+ group of major oil producers including Russia agreed to cut production by two million barrels a day. Washington was working to punish Moscow with sanctions on its oil trade over the conflict in Ukraine.

“There’s going to be some consequences for what they’ve done with Russia,” the US president said in an interview with CNN at the time, without specifying any possible measures.

On the campaign trail before his election, Biden vowed to make Saudi Arabia a “pariah” over the Crown Prince’s alleged role in the 2018 murder of Washington Post columnist Jamal Khashoggi, which Riyadh blamed on rogue agents.

This threat never materialized, with White House insiders indicating that the Biden administration had opted against jeopardizing bilateral relations. Under a decades-old arrangement, the US provides security to Saudi Arabia, and in exchange retains access to its oil, which the kingdom trades for dollars, propping it up as a global currency.

A number of top US officials recently traveled to Saudi Arabia, including Secretary of State Antony Blinken. These relations contrast with the reportedly poor personal chemistry between Biden and MBS, who have not met since last July.

The 37-year-old Saudi Crown Prince, who is responsible for the day-to-day affairs of the kingdom in lieu of his father, King Salman, reportedly mocks Biden in private, making fun of his gaffes and mental lapses. Critics of the US president have accused him of caving in to Saudi pressure.

How can Saudi Arabia damage the US Economy?

Here are some ways how a country like Saudi Arabia could potentially impact the U.S. economy through various means:

  1. Oil Market Manipulation: Saudi Arabia is one of the world’s leading oil producers, and it has significant influence over global oil prices. By increasing or decreasing oil production, Saudi Arabia could potentially manipulate oil prices, causing volatility and affecting the U.S. economy, which heavily relies on oil imports.
  2. Dumping U.S. Treasury Holdings: Saudi Arabia holds a substantial amount of U.S. Treasury securities. If they decided to suddenly sell off a significant portion of these holdings, it could lead to a decrease in demand for U.S. Treasury bonds, resulting in higher interest rates and a negative impact on the U.S. economy.
  3. Reduction in Arms Deals: The U.S. is a major supplier of military equipment to Saudi Arabia. If Saudi Arabia were to reduce or halt its purchases of U.S. weapons and defense systems, it could negatively impact the U.S. defense industry and result in job losses and economic repercussions.
  4. Economic Sanctions: Saudi Arabia is part of the global economy and engages in trade with various countries, including the United States. If Saudi Arabia were to impose significant trade restrictions or economic sanctions on the U.S., it could disrupt bilateral trade, negatively impacting industries and businesses in both countries.

Saudi Arabia’s holdings of US Treasuries are as follows:

  • As of March 2016, Saudi Arabia owned $116.8 billion in US debt1.
  • In October 2021, Saudi Arabia’s holdings of US Treasuries reached $116.5 billion, with long-term bonds amounting to $17.99 billion, equal to 15% of the total2.
  • In January 2016, Saudi holdings of Treasuries peaked at $123.6 billion3.

It’s worth noting that the Treasury International Capital (TIC) report, which provides information on foreign holdings of US Treasuries, may not account for the entire stock of US government securities held by Saudi Arabia, as some securities might be held in custodial accounts in other countries1. However, it’s unclear how big a subset of the total Saudi holdings the TIC report represents.

The amount that Saudi Arabia has spent on US-made weapons is not entirely clear, but here is what we know:

  • n May 2017, the US and Saudi Arabia signed a series of letters of intent for the Kingdom of Saudi Arabia to purchase arms from the United States totaling $350 billion over 10 years4.
  • Through October 2018, the Saudi government had purchased $14.5 billion of arms5.
  • In 2018, Saudi Arabia reportedly bought $3.4 billion of weapons from the US, more than any other country6.
  • Between 2013 and 2017, Riyadh accounted for 18% of total US arms sales, or about $9 billion7.
  • In November 2021, the US approved a $650 million sale of air-to-air missiles to Saudi Arabia, which was the Biden administration’s first major weapons deal with the Gulf kingdom8.
  • In August 2022, the US State Department approved a possible foreign military sale to Saudi Arabia, which included 300 Raytheon Technologies-made MIM-104E Patriot missiles for more than $3 billion9.

Overall, it seems that Saudi Arabia has spent billions of dollars on US-made weapons, but the exact amount is difficult to determine due to the lack of transparency in arms deals.

More importantly, the House of Saud can destroy some US politicians career. Here is a list of US politicians who have received funds or political donations from Saudi Arabia or Saudi-hired lobbyists:

  • In 2016 and 2017, Saudis donated $2.3 million to US political campaigns10.
  • Political donations made by foreign agents hired to act on behalf of Saudi Arabia exceeded $1.6 million in the 2018 election cycle11.
  • Since 2015, Saudi Arabia paid $18 million to 145 registered lobbyists to influence the US government12.
  • During the first year of the Biden administration, Saudi foreign agents disclosed more than $25 million in payments for foreign influence13.
  • Alfred Mottur, a lobbyist for the Saudi Arabian government, donated $500 each to Democratic presidential candidates John Hickenlooper and John Delaney14.
  • Republican Senators Dean Heller, Roger Wicker, Ted Cruz, and Roy Blunt have received funds from Saudi lobbyists15.

It is worth noting that this list may not be exhaustive, and there may be other politicians who have received funds or donations from Saudi Arabia or Saudi-hired lobbyists that are not included in the search results.

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