The Fuse

Obama Tries to Patch Up Fraying Relationship With Saudi Arabia

by Nick Cunningham | April 19, 2016

U.S. President Barack Obama travels to Saudi Arabia this week, where he will navigate a damaged relationship with an ally while trying to reorient American priorities in the region.

The longstanding relationship between the United States and Saudi Arabia built on security and oil is not exactly unraveling, but a confluence of factors are pushing the two countries apart.

American presidents from both parties have valued the U.S. relationship with Saudi Arabia because of a need for oil, and the U.S. has benefitted not only from direct oil imports, but also from the stability that Saudi Arabia brings to global oil markets. American politicians and pundits often extol the virtues of the free market and rail against OPEC, but Saudi Arabia and OPEC have often smoothed out the boom and bust cycles for crude oil by intervening to adjust supply and dampen volatility. Only in the past two years has OPEC changed course and let the market go where it may.

The U.S. government has long overlooked certain ideological differences and human rights concerns, prioritizing good relations with Saudi Arabia in order to help ensure the oil keeps flowing. In return, the U.S. underwrites Saudi security through arms sales and defense cooperation.

That delicate arrangement is starting to fray. The longstanding relationship built on security and oil is not exactly unraveling, but a confluence of factors are pushing the two countries apart.

Diverging interests

Due to the surge in U.S. oil production, Washington is no longer worried about oil supplies or energy security in the same way that it once was. Rightly or wrongly, U.S. policymakers view high levels of domestic output as a buffer against price shocks. U.S. oil imports have declined from 10 million barrels per day (mbd) in 2008 to between 7 and 8 mbd this year. In addition, low gasoline prices act as a sedative—America’s oil dependence does not provoke urgency in the halls of the Congress with gasoline selling for $2 per gallon. The bottom line is that Saudi Arabia is not perceived to be as indispensable to the U.S. as it was in years past.

The Saudi ruling family had trouble stomaching the welcoming of Iran back into the international community by the United States, and relations between Riyadh and Washington hit a low point.

From the Saudi perspective, the U.S. appears to be increasingly untrustworthy. The Obama administration’s support for the uprisings during the Arab Spring unsettled the Saudi government. Additionally, in 2013 President Obama vowed to launch airstrikes against Syrian President Bashar al-Assad, and then backtracked, disappointing the Saudi government. More damaging to the relationship was the 2015 nuclear deal with Iran and the historic thaw in relations between Washington and Tehran. The Saudi ruling family had trouble stomaching the welcoming of Iran back into the international community by the United States, and relations between Riyadh and Washington hit a low point.

The U.S. has tried to repair the relationship. It has sold $95 billion worth of arms to Saudi Arabia over the last several years, and stepped up arms sales since 2015. Saudi Arabia is feeling increasingly besieged by an unstable region following the Arab Spring and Iran’s resurgence. Saudi Arabia’s global weapons purchases have increased 275 percent over the past five years.

Secretary of State John Kerry and President Obama have painstakingly tried to reassure Saudi Arabia that it can rely on the U.S. for its security. The U.S. government has also quietly supported Saudi Arabia’s disastrous and destructive war in Yemen. The overtures have kept the relationship from falling apart entirely, but the damage already done could be irreparable.

Saudi Arabia under congressional scrutiny

Recently, the U.S. Congress has tested the relationship further, pushing a bill that would open up the Saudi government to legal action for its possible role in the September 11, 2001 attacks in New York City and Washington D.C. An unlikely bipartisan group of Senators are supporting the bill, including Republican Senators John Cornyn (TX) and Ted Cruz (TX), and Democratic Senators Chuck Schumer (NY) and Al Franken (MN), among others. Many in the U.S. Congress blame Saudi Arabia for involvement in 9/11, and more broadly, for its role in fueling terrorism by funneling money to extremist groups.

President Obama has heavily lobbied to kill the bill, for fear that it would open up the U.S. to reprisals overseas. But in an interview with The Atlantic a few weeks ago, President Obama talked at length about his view of Saudi Arabia’s involvement in fomenting radicalism. According to The Atlantic, President Obama described Saudi Arabia’s role in encouraging violence and religious extremism in Indonesia to Australia’s Prime Minister Malcolm Turnbull, to which Turnbull asked, “Aren’t the Saudis your friends?” Obama replied, “It’s complicated.”

Saudi Arabia has threatened to dump its holdings of American assets, selling off $750 billion in U.S. Treasuries if Congress passes the 9/11 bill.

Indeed it is. Saudi Arabia has threatened to dump its holdings of American assets, selling off $750 billion in U.S. Treasuries if Congress passes the 9/11 bill. It is unlikely that Riyadh would take such a step, not just because it would be technically difficult to conduct such a large sale, but also because it would destabilize the dollar, which would blowback on the Saudi economy and roil global financial markets. But the congressional push for the 9/11 bill received more attention after the two candidates for the Democratic presidential nomination voiced their support for the legislation ahead of the New York primary. As New York Magazine put it, “9/11 families are considerably more popular than the Saudi government in New York State.”

Separately, two U.S. Senators are sponsoring a bill that would place conditions on arm sales to Saudi Arabia, a push that stems from the long list of civilian casualties in Yemen at the wrong end of American bombs supplied to the Saudi military. The bipartisan bill, sponsored by Senators Chris Murphy (D-CT) and Rand Paul (R-KY), would require Saudi Arabia to reduce the risk to civilians, extend humanitarian assistance in Yemen, and prove that they are not providing funding or aid to terrorist organizations. The President would have to certify Saudi Arabia met these conditions before any arms sale could proceed. “It’s time that we put real conditions on our military aid to the Saudis, including the requirement that their proxy wars with Iran not distract them from the fight against violent extremist groups like ISIS,” Sen. Murphy said in a statement.

Saudi royal family at a crossroads

Another factor complicating the long-standing relationship between the U.S. and Saudi Arabia is the new Saudi monarch, King Salman, who took the throne in January 2015. Since then, Saudi Arabia has taken a harder line on a range of geopolitical issues. King Salman launched a war in Yemen and has taken a more confrontational approach with Iran. In January, Saudi Arabia executed a prominent Shiite cleric, a move that was not only met with international opprobrium but also sparked protests and attacks on the Saudi embassy in Tehran. In response, Saudi Arabia severed diplomatic ties with Iran.

The King also reshuffled the royal line of succession, naming his 30-year old son Deputy Crown Prince Mohammed bin Salman as his successor, who has since taken on a powerful role within the country. For instance, his fingerprints are clearly visible on the collapse of the Doha negotiations between OPEC and Russia over a potential oil production freeze on April 17. Long-time oil minister Ali al-Naimi, the most respected voice on Saudi oil policy, was reportedly overruled by the young prince.

“One thing we’ve learned in the oil markets: Regarding the Saudis, we now have to listen to MbS,” Michael Wittner, oil analyst at Societe Generale SA, told Bloomberg, using the acronym for the Deputy Crown Prince. “He clearly had the final word on Saudi policy and on their stance in these talks, not Ali al-Naimi.”

The unraveling of Doha suggests that Minister al-Naimi is no longer the top voice regarding Saudi oil policy.

Deputy Crown Prince Mohammed bin Salman detailed the Saudi position in the weeks leading up to the Doha meeting, stating that Saudi Arabia would not participate in the production freeze without Iran. The unraveling of Doha suggests that Minister al-Naimi is no longer the top voice regarding Saudi oil policy.

Where to go from here?

This is the backdrop that President Obama is parachuting into on Wednesday when he lands in Riyadh. President Obama and Secretary of Defense Ash Carter are visiting Saudi Arabia, where they are expected to announce initiatives to bolster Saudi Arabia’s missile defense and counterterrorism efforts. The visit and the security packages should smooth out some wrinkles, but more than at any time in recent memory, the U.S.-Saudi relationship is shifting as the interests of the two countries diverge.

 

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