Saudi Arabia Threatens To Liquidate Its Treasury Holdings If Congress Probes Its Role In Sept 11 Attacks

Tyler Durden's picture

Back in January, when the market was watching in shocked silence as oil prices were crashing to decade lows and as concerns emerged that Saudi Arabia may need to commence selling its vast, if unquantified, USD reserves, we wrote a post titled "Attention Finally Turns To Saudi Arabia's "Secret" US Treasury Holdings" where we noted something very surprising: whereas we do know that Saudi Arabia is the owner of the world's third largest USD reserves...

... 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."

Yes, a “guessing game,” but one that will very soon have profound consequences for markets and for geopolitics.

We closed with a simple, if suddenly very prophetic question:

"who would be the new patron saint of the US Treasury Department in the event the Saudis drawdown all of their reserves and decide to diversify away from USD assets... Put differently, who will monetize the US deficit if relations between Washington and Riyadh hit the skids over Iran?"

It is this question that has suddenly reemerged with a bang, and could rock the US administration to its core as what until recently was a "fringe conspiracy theory" is suddenly exposed as an all too unpleasant fact, and becomes the biggest political scandal to rock the U.S. in years, in the process maybe even crushing the friendly diplomatic relations the U.S. has held for years with its biggest Mid-East ally, Saudi Arabia.

* * *

First, a quick tangent: we have been greatly surprised by the reemergence of the topic of September 11 in recent weeks, and specifically the taboo - in official circles - issue whether there was a "Saudi connection" in the biggest terrorist attack on US soil. Just last weekend, out of the blue, 60 Minutes held  segment on the "28 pages" that were classified in the Congressional investigative report into 9/11 - pages that allegedly confirm the Saudi connection.

To be sure, Saudi officials have long denied that the kingdom had any role in the Sept. 11 plot, and the 9/11 Commission found “no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.” But critics have noted that the commission’s narrow wording left open the possibility that less senior officials or parts of the Saudi government could have played a role. Suspicions have lingered, partly because of the conclusions of a 2002 congressional inquiry into the attacks that cited some evidence that Saudi officials living in the United States at the time had a hand in the plot.

Those conclusions, contained in 28 pages of the report, still have not been released publicly. It was the surprising rekindled focus on these 28 pages in recent days that suggested that something may have been afoot.

Something was.

* * *

In a stunning report by the NYT,  Saudi Arabia has told the Obama administration and members of Congress 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.

Or mostly Congress, because Obama has remained steadfast in his support of his Wahhabi petrodollar overlords, and has been busy lobbying 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.

Deceased Saudi King Abdullah bin Abdul Aziz al-Saud presents
Barack Obama with the King Abdul Aziz Order of Merit

By way of background, the Senate bill is intended to make clear that the immunity given to foreign nations under the law should not apply in cases where nations are found culpable for terrorist attacks that kill Americans on United States soil. If the bill were to pass both houses of Congress and be signed by the president, it could clear a path for the role of the Saudi government to be examined in the Sept. 11 lawsuits.

Suddenly Saudi Arabia is panicking: its response - if the US does pass this bill it would liquidate hundreds of billion in U.S. denominated assets, and perhaps as much as $750 billion in US Treasurys (the NYT's estimate of Saudi Treasury holdings).

The NYT rports that none other than 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."

* * *

This stunning threat has caught America off guard, because until now it had largely been speculated that not the Saudis but China would use the "liquidation of Treasurys" as a bargaining chip. As it turns out, Saudi Arabia was the first.

To be sure, the Saudis whose budget deficit has soared in the past year as a result of collapsing oil prices, would stand to benefit from monetizing their US reserves. According to many, it is only a matter of time anyway. However, a dramatic, immediate liquidation would likely spark a market panic. Outside economists are skeptical that the Saudis will follow through, saying that such a sell-off would be difficult to execute and would end up crippling the kingdom’s economy. But the threat is another sign of the escalating tensions between Saudi Arabia and the United States.

The Obama administration, meanwhile, is far less concerned about the market impact of a Saudi liquidation, and far more worried what a real inquiry into the Saudi role of Sept.11 would reveal (and who it would implicate) and as a result is building strawman arguments that the legislation would put Americans at legal risk overseas. In fact, as the NYT reports, "Obama has been lobbying so intently against the bill that some lawmakers and families of Sept. 11 victims are infuriated. In their view, the Obama administration has consistently sided with the kingdom and has thwarted their efforts to learn what they believe to be the truth about the role some Saudi officials played in the terrorist plot."

“It’s stunning to think that our government would back the Saudis over its own citizens,” said Mindy Kleinberg, whose husband died in the World Trade Center on Sept. 11 and who is part of a group of victims’ family members pushing for the legislation.

Stunning indeed, and yet that's precisely who the "U.S." president sides with when attempting to get to the bottom of the 2001 terrorist attacks.

Incidentally, Obama will arrive in Riyadh on Wednesday for meetings with King Salman and other Saudi officials. It is unclear whether the dispute over the Sept. 11 legislation will be on the agenda for the talks.

President Obama at a Sept. 11 ceremony in 2015. The Obama administration
argues that the bill would put Americans at legal risk overseas.

* * *

The Saudi threat comes as the dispute comes as bipartisan criticism is growing in Congress about Washington’s alliance with Saudi Arabia, for decades a crucial American ally in the Middle East and half of a partnership that once received little scrutiny from lawmakers. Last week, two senators introduced a resolution that would put restrictions on American arms sales to Saudi Arabia, which have expanded during the Obama administration.

Meanwhile, families of the Sept. 11 victims have used the U.S. court system to try to hold members of the Saudi royal family, Saudi banks and charities liable because of what the plaintiffs charged was Saudi financial support for terrorism. These efforts have largely been stymied, in part because of a 1976 law that gives foreign nations some immunity from lawsuits in American courts.

It is this law that the proposed Senate Bill intends to overturn; it is this Bill that Saudi Arabia is suddenly in arms over.

And it is the Saudis that Obama is siding over instead of his own people.

But of course, Obama can't openly come out and say he would rather keep the truth of Saudi involvement buried than push for a probe, so Obama administration officials counter that "weakening the sovereign immunity provisions would put the American government, along with its citizens and corporations, in legal risk abroad because other nations might retaliate with their own legislation. Secretary of State John Kerry told a Senate panel in February that the 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.”

In a closed-door briefing on Capitol Hill on March 4, Anne W. Patterson, an assistant secretary of state, and Andrew Exum, a top Pentagon official on Middle East policy, told staff members of the Senate Armed Services Committee that American troops and civilians could be in legal jeopardy if other nations decide to retaliate and strip Americans of immunity abroad. They also discussed the Saudi threats specifically, laying out the impacts if Saudi Arabia made good on its economic threats.

In other words, the logic is that if the US pursues a full-blown inquiry into the Saudi role behind 9/11, the US itself would be subject to a comparable stripping of immunity - with respect to alleged U.S. terrorist attacks - and "create a terrible precedent." In effect, the US government is defending its position by saying that if one can get to the bottom of Saudi terrorism in the U.S., the world may next learn about U.S. terrorism across the globe.

And that just can't be allowed to happen.

Meanwhile, even as Obama fights tooth and nail to protect the Saudi's dirty laundry, the administration pretends to side with US citizens: "John Kirby, a State Department spokesman, said in a statement that the administration stands by the victims of terrorism, “especially those who suffered and sacrificed so much on 9/11." It just refuses to reveal those who are truly responsible for their death.

* * *

But back to the Saudi (mostly hollow) threat of dumping US Treasuries should the proposed Bill be passed, which indeed is nothing more than just that, especially since the Fed or BOJ would be delighted to have found a willing seller who has as much as three quarter of a trillion in US paper lying around.

Edwin M. Truman, a fellow at the Peterson Institute for International Economics, said he thought the Saudis were most likely making an “empty threat.” Selling hundreds of billions of dollars in American assets would not only be technically difficult to pull off, he said, but would also very likely cause global market turmoil for which the Saudis would be blamed.

Moreover, he said, it could destabilize the American dollar — the currency to which the Saudi riyal is pegged.

“The only way they could punish us is by punishing themselves,” Mr. Truman said.

Well, they would also punish the Fed, because suddenly the Petrodollar would re-emerge as the main driving force behind the value of the greenback.

* * *

And yet, perhaps the Saudis have reason to panic: the Senate bill is an anomaly in a Congress fractured by bitter partisanship, especially during an election year. It is sponsored by Senator John Cornyn, Republican of Texas, and Senator Chuck Schumer, Democrat of New York. It has the support of an unlikely coalition of liberal and conservative senators, including Al Franken, Democrat of Minnesota, and Ted Cruz, Republican of Texas. It passed through the Judiciary Committee in January without dissent.

“As our nation confronts new and expanding terror networks that are targeting our citizens, stopping the funding source for terrorists becomes even more important,” Mr. Cornyn said last month.

It is almost as if Congress has decided to end the long-running alliance the U.S. has had with Saudi Arabia, despite the bitter protests of the administration; it has decided to use the Sept.11 disclosure as its own bargaining chip.

To be sure, as the NYT notes, the alliance with Saudi Arabia has frayed in recent years as the White House has tried to thaw ties with Iran — Saudi Arabia’s bitter enemy— in the midst of recriminations between American and Saudi officials about the role that both countries should play in the stability of the Middle East. But the administration has supported Saudi Arabia on other fronts, including providing the country with targeting intelligence and logistical support for its war in Yemen. The Saudi military is flying jets and dropping bombs it bought from the United States — part of the billions of dollars in arms deals that have been negotiated with Saudi Arabia and other Persian Gulf nations during the Obama administration.

The war has been a humanitarian disaster and fueled a resurgence of Al Qaeda in Yemen, leading to the resolution in Congress to put new restrictions on arms deals to the kingdom. Senator Christopher S. Murphy, Democrat of Connecticut, one of the resolution’s sponsors and a member of the Senate Foreign Relations Committee, said that Congress has been “feckless” in conducting oversight of arms sales, especially those destined for Saudi Arabia.

“My first desire is for our relationship with Saudi Arabia to come with a greater degree of conditionality than it currently does,” he said.

That also appears to be Obama's last desire; while the only desire Saudi Arabia has is to maintain the status quo, one where nobody looks at who pulled the strings behind Sept. 11 and in exchange for which the Saudis would continue dutifully recycling petrodollars, or if they don't get their way, they will simply proceed to launch the biggest liquidation of US Treasurys in history. Or such is their stunning threat..

Which brings us to the original question: why the Saudi panic, and why immediately threaten with the "nuclear option", namely liquidating US Treasurys, if the Saudis have nothing to hide?

The question is, of course, rhetorical.

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Boris Badenov's picture

It's OK to take a profit, when China does it T-bonds rally...

Looney's picture

Cut’em loose. Let’em fend for themselves!

Let’s see how long they last.   ;-)


SoilMyselfRotten's picture

Not the response of an innocent party

Manthong's picture

NBFD.. we ill just print more.

Now, if they threatened to stop buying weapons from us, that’s another thing entirely.

And another thing…

If we devalue the dollar by 50%, good luck keeping the Saudi population paid off and your royal heads attached.


zeropain's picture

holy fuck, it's wind of shit time!  market priced to perfection and the shit pile is about to explode.

Latina Lover's picture

The real reasons the  Saudi's are planning to sell their Tbills to fund their deficits, and get out of the way of a massive USD devaluation.

Any talk of releasing the 28 pages is BS since the deep state will never allow it. Their role in 9/11 was as facilitators for the Neocon plan to restructure the middle east in favor of their world domination fantasies.

back to basics's picture

It's all bullshit. It's all a diversion.

Can the CIA and Mossad liquidate any US treasuries? 

No? I didn't think so.

Then fuck it, move on, nothing to see here.

jefferson32's picture

To notice the recent shift in "common knowledge" on this topic, see that even the Huffington Post allowed some weeks ago a 911 widow to "speak out" and talk about these 28 pages and the KSA's threat to liquidate Treasury holdings.

"The U.S. apparently sold approximately $800 billion of U.S. Treasury Bonds to the KSA and they now threaten to cash out, thereby crashing the U.S. economy."



kliguy38's picture

No its time to rally round the flag boyz....Im enlisting now and going over and fighting anyone that wants to fight........The Saudis are our allies dontcha know? They help us keep our way of life and love us.......get over it

xavi1951's picture

What?  The KSA was involved?  What happened to the CIA and JEWS?  How can this be?  While no planes were flying over the U.S., the Saudi's were flown out for their safety.  Could there be a connection?  What will the truthers say?

mary mary's picture

We might say that they might all have been involved.  The Saudis may have provided the patsies, and Mossad companies the "airport security" and rigging of the buildings for controlled demolition, while CIA kept prying eyes away and gave final go-ahead signals.

remain calm's picture

Trump: " Sell them you camel fuckers then we will invade you towel head sand niggers and take your oil and build many HUGE christian churches with beautiful benches and get rid of those ugly mats and make you worship Jesus".

BaBaBouy's picture

CHINA Dump Your USD Paper For GOLD Before The RATE Reaches $55,000 An O-Zeee...

... Don't Let The Sawdee 911 Sheeks Beet You To It !!!!!!!


jcaz's picture

Oh, you want your money back, Fuad?

Maybe we don't feel like giving it to you.

Welcome to debt.

Four chan's picture

emergency call from yellin to obama?

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Four chan Apr 16, 2016 10:36 AM

The tail is wagging the dog.  First came the issue of the potential selling of the tbills.  Then Schumer, Goldman-Cruz, and the rest of the usual suspects became morally offended at the sheer depravity and disregard of currency.  Then they said: "Hey, why don't we make them out to be doing it as retaliation for our exposing them?"  Don't kid yourself.  WE are blackmailling them, not the other way around.

Joe Trader's picture

Why don't they cancel the Saudi's treasury bills? I for one would fully support an invasion into Saudi Arabia for all the shit they've disturbed.

Bollixed's picture

That's a man standing next to Obama in that picture.

Perimetr's picture

"Michael and I are happy to be home".


knukles's picture

And there you have it kiddies, the reason for El Messiah's and Old Yeller's behind closed door meeting earlier this week.

bigkahuna's picture

if its gonna be that kind of party, im gonna stick my dick in the mashed potatuhs

Muh Raf's picture

Third attempt at pushing this bollocks on ZH this week. At least this time they got the morons lined up to post those 'they must be guilty' lines and up vote each other. The Saudis didn't do jack because they are simply not capable; they have servants to put their sandals on. These 28 pages have probably been re-written a dozen times in the last 15 years anyways. Given the fact the Iran has just been found guilty of 9/11 in a US court, and let's face facts they ain't even in these 28 pages but they is still guilty of being foreigners, and they've been told to pony up $billions, it's hardly surprising that the Saudis are seeing this move as the way for the zionists to bite the hand that's paying for their puppet wars in Syria and the Yemen, by getting a court order that allows the greedy jewish bastards to steal their US based assets. I'd be liquidating too if I were the Saudis. 

beemasters's picture

The only SA threat that would make sense and will be effective is "Try it, we will drag everyone responsible down with the truth."

Selling treasuries???? Not likely!!!

svayambhu108's picture

I think KSA and Turkey might get some taste of their own medicine


jeff montanye's picture

imo the perps (mossad/likud and friends) have moved back to a limited hangout, since nearly nobody but perps and wannabes support the "official story".

that is, bush and cheney knew the attack designed and financed by saudi operatives and money was coming and did nothing to prevent it so as to be able to attack iraq and kill saddam who "tried to kill my daddy."

remember: the tell for a mossad/irgun terror attack is that there will be an arab disguise used.

VinceFostersGhost's picture



I'm looking at account 21214......this can't be right.

OverTheHedge's picture

How much to buy congress and stop the Bill? A bit less than the billions they would lose dumping treasuries. So, on that basis, this is all theatre. 


Tarzan's picture

Well, Joe Trader, your a brave soul, offering up your life for the cause.  You are of fighting age right?  Your going to carry an m16 into battle to save the Petro Dollar?  NO?

Thanks for your moral support, I'll be glad to hand over my three sons for your crusade, as long as you will support them with your clapping hands as they're shipped off to fight your FUCKING WAR!

Damn pansy, HIDING behind an apropos name, ... TRADER,  with your brave "support" to send our boys off to their deaths.

Fuck you and all the other "patriotic" arm chair war mongers, ready to cheer, as long as someone else dies!

Jefferson didn't say that Liberty was refreshed with the blood of Tyrants...  He said with the blood of PATRIOTS and Tyrants.

You want to fight a war and depose a Tyrant?  Do it in your own damn neighborhood, spill your own fucking Blood for Liberty, Then I'll support you!

bigkahuna's picture

John McCain, Hillary and all their friends in DC would joyfully send us all and our kids into any hornets nest they can stir up. Joe just likes us all enough to send us in as well. What a nice guy he is!

thesonandheir's picture



Shit just got real and very interesting.


Doha could be the end of the dollar if Saudi and Russia say they won't sell oil in USD, only in gold valued at $20000.

Physical only please.



cheech_wizard's picture

>WE are blackmailling them, not the other way around.

Excuse me, but isn't that the step-n-fetch nigger bowing to the Sauds and not the other way around?


Perimetr's picture

Time to create some Meccatite (like Trinitite)

monkeyshine's picture

Nah, its not like we weren't going to print that money anyway. Let them sell. We'll just print some more.

king leon's picture

You are dead right! You will need the printing press running 24/7 to pay for the 500$ can of beans.

booboo's picture

"The tail is wagging the dog.  First came the issue of the potential selling of the tbills.  Then Schumer, Goldman-Cruz, and the rest of the usual suspects became morally offended at the sheer depravity and disregard of currency.  Then they said: "Hey, why don't we make them out to be doing it as retaliation for our exposing them?"  Don't kid yourself.  WE are blackmailling them, not the other way around."

SS Rat wins the rest can collect your door prizes on the way out.

Dubaibanker's picture

There is something cooking for sure....

Obama meeting Saudis this week.

Saudis met Chinese in Saudi in Jan 2016 and signed a comprehensive strategic partnership.

Chinese will start gold trading in Yuan on Apr 19, 2016.

Saudis delivered a message last month about US Treasuries to US.

Saudis meeting Russians since last July.

Saudis talking of selling Aramco shares.

Last week Yellen met Obama secretly.

Last week Obama paid a rare CIA visit.

Even US Congress was updated about impact of US foreigners holding US treasuries on March 28, 2016

Foreign Holdings of Federal Debt 

More data

US Government Finance: Debt 

We also have the news of Saudi appearing in a risk report by a British insurance comapny - Aon claiming a heightened risk of a coup.


Saudi Arabia risks coup or insurrection – global study

mkkby's picture

CALL their fucking bluff.  It has NO TEETH.

One more QE absorbs that selling like a sponge mopping up a tiny oil spill.

We withdraw our troops and those faggot princes get head chopped by their own people.  Fast.  And they know it.

So go ahead, assholes.  Make my day.

Nothingman's picture

I wish the threat did have teeth, and there was a real prospect for the dollar ponzi to come crashing down at last.  But I agree with you, and don't believe that is likely at this time.

king leon's picture

"So go ahead assholes, make my day"

That's a great idea! Saudi's kiss and make-up with Iran and Yemen = another big chunk of M/E heading East to join Russia/China. That's a fucking brainwave /Sarc 

Vullsain's picture

Great opportunity for Trump. The only one who will stand up to the hankie heads. 

Theosebes Goodfellow's picture

~"Great opportunity for Trump."~

First of all, it isn't going to happen, (not yet anyway). With the Kow-tow-er in Chief in office there is no way that the Saudi's will allow it. Bear in mind, Barry Soetoro went to college on the House of Saud's dime. He's their boy.

Second, it's going to happen, but not until Trump is in office. Trump's the only guy who will make the "Make America Great Again" Act work by switching North American transportation fuels from gas/diesel to CNG and screwing the Saudis. By diverting the petro-dollars from the House of Saud to US infrastructure, he gets the double whammy of a) undercutting the funding of Islam and b) putting America back to work. It's a no-brainer.



To Hell In A Handbasket's picture

Don't give up the day job, and leave real economic theory and commonsense to the grow-ups. This is the USSA in reality. 1. One Banana Republic. 2. A Two tier justice system. 3. In many parts of the country, it's approaching 3rd world infrastructure. The actual thought(given the prevailing neo-liberal economic thinking, gripping the USSA economic policy think tanks) that Trump would divert large sums of cash(irrespective of origin) to bring USSA infrastructure back to world class/leading levels is the biggest joke of the fucking year. NEVER GOING TO HAPPEN!

maxwellsdemon's picture

Sorry Hell in a basket; Trump is going to upset the Globalists apple cart come hell or high water.   They battled against Andrew Jackson, but Jackson told the bankers that he had the people on his side and any pain they inflicted would come back to bite the bankers in the end.  The Civil war was won by Lincoln but the ensuing peace was won by the bankers, once Lincoln was murdered by a conspiracy likely organized by the bankers.   Trump will battle them; Sanders will too. 

The people have been backed into a corner and you know what animals backed into corners do.  They come out fighting, giving no quarter.  The bankers are going to be arrested.  Or they can choose to be exiled somewhere.

jeff montanye's picture

it may not be true but thanks for trying to keep our spirits up.

Volaille de Bresse's picture

Yeah he has a RACIAL approach to geopolitics and I think he's right : White people (US Europe Russia should unite and look at "browns" from a safe distance. Licking the arses of these retarded inbred Saudis (as Murica has done since 1945) was and still a colossal mistake.

SilverSphinx's picture

I'm in.

It's past time to Christianize the arabs.

Jesus Akbar!

Their children & grandchildren and all their posterity shall bow before the cross of Christ and repent of the evil of islam.

gonna bust up their borg cube also!

jeff montanye's picture

yes, that ought to work well.

but since there are a billion of them, why not try it on a smaller sample size first, say oh i don't know, six million?

give that a go and get back to us.