Donald Trump, Saudi Arabia, And The Petrodollar

Tyler Durden's picture

Submitted by Nick Giambruno via InternationalMan.com,

Obama pulled out his veto pen 12 times during his presidency.

Congress only overrode him once…

In late 2016, Obama vetoed the Justice Against Sponsors of Terrorism Act (JASTA). The bill would allow 9/11 victims to sue Saudi Arabia in US courts.

With only months left in office, Obama wasn’t worried about the political price of opposing the bill. It was worth protecting Saudi Arabia and the petrodollar system, which underpins the US dollar’s role as the world’s premier currency.

Congress didn’t see it that way though. Those up for reelection couldn’t afford to side with Saudi Arabia over US victims. So Congress voted to override Obama’s veto, and JASTA became the law of the land.

The Saudis, quite correctly, see this as a huge threat. If they can be sued in US courts, their vast holdings of US assets are at risk of being frozen or seized.

The Saudi foreign minister promptly threatened to sell all of the country’s US assets.

Basically, Saudi Arabia was threatening to rip up the petrodollar arrangement, which underpins the US dollar’s role as the world’s premier currency.

Donald Trump and the Saudis

Unlike every president since the petrodollar’s birth, Donald Trump is openly hostile to Saudi Arabia.

Recently he put this out on Twitter:

Dopey Prince @Alwaleed_Talal wants to control our U.S. politicians with daddy’s money. Can’t do it when I get elected.

The dopey prince that Trump is referring to is Al-Waleed bin Talal, a prominent member of the Saudi royal family. He’s also one of the largest foreign investors in the US economy, particularly in media and financial companies.

The Saudis openly backed Hillary during the election. In fact, they “donated” an estimated $10 million–$25 million to the Clinton Foundation, making them the most generous foreign donors.

Besides Hillary Clinton, the single biggest loser from the US presidential election was Saudi Arabia.

The Saudis did not want Donald Trump in the White House. And not because of some bad blood on Twitter. There are real geopolitical issues at stake.

At the moment, Trump seems determined to walk back on US support for the so-called “moderate” rebels in Syria.

The Saudis are furious with the US for not holding up its part of the petrodollar deal. They think the US should have already attacked Syria as part of its commitment to keep the region safe for the monarchy.

Toppling Syrian President Bashar al-Assad is a longstanding Saudi goal. But a President Trump makes that unlikely. That’s not good for Saudi Arabia’s position in the Middle East, nor its relationship with the US.

This is just one of the ways President Trump will hasten the death of the petrodollar.

Saudi Arabia, Islam, and Wahhabism

I loathe quoting a neoconservative historian like Bernard Lewis, but even a broken clock is right twice a day:

Imagine if the Ku Klux Klan or Aryan Nation obtained total control of Texas and had at its disposal all the oil revenues, and used this money to establish a network of well-endowed schools and colleges all over Christendom peddling their particular brand of Christianity.

This is what the Saudis have done with Wahhabism. The oil money has enabled them to spread this fanatical, destructive form of Islam all over the Muslim world and among Muslims in the West. Without oil and the creation of the Saudi kingdom, Wahhabism would have remained a lunatic fringe in a marginal country.

This is actually an apt description of Wahhabism, a particularly virulent and intolerant strain of Sunni Islam most Saudis follow. ISIS, Al Qaeda, the Taliban, and a slew of other extremists also follow this puritanical brand of Islam. That’s why Saudi Arabia and ISIS use the same brutal punishments, like beheadings.

Many Wahhabis consider Muslims of any other flavor—like the Shia in Iran, the Alawites in Syria, or non-Wahhabi Sunnis—apostates worthy of death.

In many ways, Saudi Arabia is an institutionalized version of ISIS. There’s even a grim joke that Saudi Arabia is simply “an ISIS that made it.”

After living in the Middle East for three years, it’s clear to me that many people in the region despise everything about Wahhabism. Yet it flourishes in certain Sunni communities, among people who feel they have nowhere else to turn.

It’s also widely believed in the Middle East that Western powers deliberately fostered Wahhabism, to a degree, to keep the region weak and divided—and as a weapon against Shia Iran and its allies. That includes Syria and post-Saddam Iraq, which has shifted its allegiance towards Iran.

Thanks to WikiLeaks we know the Saudi and Qatari governments, which are also the two largest foreign donors to the Clinton Foundation, willfully financed ISIS to help topple Bashar al-Assad of Syria. Julian Assange says the email revealing this is the most significant among the Clinton-related emails his group has released.

Here’s an excerpt of the relevant interview with Assange:

Interviewer: Of course, the consequence of that is that this notorious jihadist group, called ISIL or ISIS, is created largely with money from people who are giving money to the Clinton Foundation?

Julian Assange: Yes.

Interviewer: That’s extraordinary…

With all this in mind, Vladimir Putin opened an unusual conference of Sunni Muslim clerics recently. It took place in Grozny, the capital of Chechnya, a Sunni Muslim region within Russia’s southwestern border.

The conference, which included 200 of the top non-Wahhabi Sunni Muslim clerics, issued an extraordinary statement labeling Wahhabism “a dangerous deformation” of Sunni Islam.

These clerics carry serious weight in the Sunni world. The imam of Egypt’s al-Azhar mosque, one of the most important Islamic theological centers, was among them. (Egypt is the Arab world’s most populous Sunni country.)

Basically, Putin gathered the world’s most important non-Wahhabi clerics to “excommunicate” the Saudis from Sunni Islam. In other words, Putin is going for the jugular of the petrodollar system.

Russia and Saudi Arabia have been enemies for decades. The Russians have never forgiven Saudi Arabia (or the US) for supporting the Afghan mujahedeen that drove the Soviet Army out of Afghanistan. And they haven’t forgiven the Saudis for supporting multiple Chechen rebellions.

As far as I know, the British writer Robert Fisk was the only Western journalist to cover this extraordinary conference.

Here’s Fisk:

Who are the real representatives of Sunni Muslims if the Saudis are to be shoved aside? And what is the future of Saudi Arabia? Of such questions are revolutions made.

If the Saudis are shoved aside, it could strike a fatal blow to the petrodollar system.

The truth is, the petrodollar system is in its death throes. It doesn’t matter if the Saudis willfully abandon it, or if it crumbles because the kingdom implodes. The end result will be the same.

Right now, the stars are aligning against the Saudi kingdom. This is its most vulnerable moment since its 1932 founding.

That’s why I think the death of the petrodollar system is the No. 1 black swan event for 2017.

I expect the dollar price of gold to soar when the petrodollar system crumbles in the not-so-distant future. You don’t want to find yourself on the wrong side of history when that happens.

But that brings up another crucial point. There’s also likely to be severe inflation.

The petrodollar system has allowed the US government and many Americans to live way beyond their means for decades.

The US takes this unique position for granted. But it will disappear once the dollar loses its premier status.

This will likely be the tipping point…

Afterward, the US government will be desperate enough to implement capital controls, people controls, nationalization of retirement savings, and other forms of wealth confiscation.

I urge you to prepare for the economic and sociopolitical fallout while you still can. Expect bigger government, less freedom, shrinking prosperity… and possibly worse.

It’s probably not going to happen tomorrow. But it’s clear where the trend is headed.

It is very possible that one day soon, Americans will wake up to a new reality.

Once the petrodollar system kicks the bucket and the dollar loses its status as the world’s premier reserve currency, you will have few, if any, options.

The sad truth is, most people have no idea how bad things could get, let alone how to prepare…

Yet there are straightforward steps you can start taking today to protect your savings and yourself from the financial and sociopolitical effects of the collapse of the petrodollar.

This recently released video will show you where to begin. Click here to watch it now.

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venturen's picture

they can alway go back to selling used Camels....like what are they going to do?

General Admission's picture

Well, I suspect they will have to leave the country if they want to live.  As soon as the money runs out, which it will if the current price of oil persists, I think there's the real potential for insurrection against the "monarchy."

gatorengineer's picture

Monarchy will be long gone (as has all of the monarchies wealth), the US will send planes and troops to cover the last of the scum leaving the kingdom.  They will be in Europe or NYC, or Cali....

johngaltfla's picture

Bunk. We'll see a USDX around 125 before we'll see it back in the low 80's. The strong dollar policy will continue this year and into 2018 until the Trumpflation hits the tape closer to the 2018 elections (by design). Since CONgress is full of morons, that won't get passed until later this year and that's when the Fed will start having to act faster to keep up with inflation.

In the mean time, look for the Trump administration and CONgress to promote regulatory and tax reforms which will favor domestic US oil producers thus allowing them to put more oil on the market at a lower cost per barrel than the Saudis could ever dream of. OPEC and the GCC are fucked and Saudi Arabial will continue to have the Houthi destroying their isolated military units in Southwestern Saudi Arabia.

In other words its the House of Saud that's fucked, not us.

gatorengineer's picture

The House of Saud left the building a long time ago the 40 and 50 year olds.  They are in England playing with transvestites.  We are fucked the US companies arent.  There is a difference.

hedgeless_horseman's picture

 

It warms my heart that so many of us here on ZH get the truth, at least when it comes to the blood-soaked Petrol Dollar.

Or maybe that is the Manhattan I am enjoying tonight.

Nonetheless.

Thanks to those that taught me the truth years ago.

May our sons never die in a war to benefit foreign royalty and primary dealers!

Stuck on Zero's picture

With 50 countries sitting on a thousand billion barrels of deep oil Saudi Arabia just isn't the pilot of SS Petrol anymore.

weburke's picture

I suspect that the real Saudi ruler, prince who the fuck , who is a JEW. Loves trump.

HowdyDoody's picture

There's the mistake - the Saudis trusted the US.

BabaLooey's picture

A highball for H.H.!

Excellent!

Indeed...being "woke".............

Bartender....................~

hedgeless_horseman's picture

 

Chill a very-large-Waterford-crystal-deep-Champagne saucer.
In a stainless shaker half-full of good-clear ice, add the following two ingredients.

4.5 oz Maker's Mark Bourbon.
2.25 oz Antica Formula Carpano Vermouth.

Shake 44 times.
Pour into chilled crystal deep Champagne saucer.
Add two shakes of Angostura Bitters.
Add two Luxardo Maraschino cherries.

Sit down.
Enjoy!*

 

 

* Loudly, on a McIntosh audio system, God willing

http://www.mcintoshlabs.com


07564111's picture

May our sons never die in a war to benefit foreign royalty and primary dealers!

Misplaced faith HH. Whether the people want war or not makes no difference, they need a way to cover their asses and place the blame on others.

hedgeless_horseman's picture

 

Misplaced faith HH.

God is bigger than the Boogy Man.

07564111's picture

But evil has the bigger gun.

When the war on cash fails we'll see the true nature of that evil.

hedgeless_horseman's picture

 

...we'll see the true nature of that evil.

I love a good fight.

Always have.

07564111's picture

same team then ;) just in different locations.

beware of Intel ;)

Dragon HAwk's picture

You want a Holy war?  Ok May the Best God Win?  :)

hedgeless_horseman's picture

 

No.

I want peace!

Prosperity.

Truth.

Life.

Love.

Liberty.

A faithful horse,

and a wife with good conformation.

ChanceIs's picture

Spent lots of time as a grad student in Weil Hall.  Hours in the Orange and Brew on Friday afternoons.

sixsigma cygnusatratus's picture

I think for the short term, the USD will increase in value because it will be deemed safer than Euros, Japanese Yen, and the Yuan. But after all those currencies have settled (one way or another), the dollar will tank.  Saudis are screwed either way. The fact that Trump doesn't like the Saudis makes me trust Trump all the more.

the late idi armin's picture

 Lead by the boys coming back from Raqqah, Mosul and Idlib.

I woke up's picture

I've never been a fan of US imperialism of other countries but in the case of Saudi Arabia I'm willing to make an exception

General Titus's picture

Saudi Arabia, & the CIA are the top terrorist sponsors

gatorengineer's picture

Saudi Arabia, Israel, and the US are the top terrorism sponsors..... I wouldn't give  all of the credit to the CIA....  Justice does pretty good, and so does the MIC.....

gatorengineer's picture

There is no such thing as a Petro Dollar....Its a fantasy....

The Saudi Regime in cahoots with Israel have been allowed to run amock, under the guise of this myth.

nmewn's picture

I have to agree on the "petro dollar" myth, it was started by the left.

In truth all currency is backed by brute force when not backed by something tangible and while the strategic oil reserve is tangible its only 30-45 days of consumption, unless of course they are talking a "petro ruble" or yen or whatever but it still translates to the same meme no matter, what currency you price oil in. 

And though I'm no lover of debt paper (fiat) I have to say, how many times has the ruble crashed or the franc or the mark or the drachma?

Same-same without the force but lefties already know that...bolivar to the moon! ;-)

chunga's picture

It is the brute force imho. There are reasons that aren't completely malevolent that support the idea of one reserve or anchor currency being beneficial and accepted broadly, but an alliance with sAudi aRabia is not one of them.

nmewn's picture

Oh don't get me wrong on the geopolitics of it all, I despise the monarchs of Saudi Arabia who unleashed these Wahhabist nutcases on the world instead of strangling it in the crib as much as I do Marx, there would be no House of Saud without the allegiance Abd al-Wahhab.

My point was simple, there will be a pricing mechanism for oil (and corn, wheat etc) in a currency. I prefer a gold standard one but obviously those not-so malevolent powers you speak of desire otherwise, until they can do away with all national currencies completely and it doesn't matter (theoretically and moving back to the topic) whether its the ruble, yen or yuan...all that matters is that it be stable and that means it will be backed by force of arms to maintain its stability.

The much larger issue is "they" (one can assign whatever one wishes to who they are) is the fact that they are trying to get rid of all national currencies and with it goes everyones freedom and privacy on the planet...from what, when & how you purchase stuff...to where you go...and even to keep in your possession what you have labored for with zero justification to ask questions about how you came to have it.

You and I (and others) have managed to beat it back and will now in fact outrun it in our lifetimes but as quaint or trite as it may sound, it will be up to the young across the world to understand what the long game really is here and pick up that sword when we lay down. They've managed to bastardize the "meaning of money" up till now but not its very essence in what it means to be individually free. 

Escrava Isaura's picture

nmewn, we’re trapped.

US is a debt economy, not an energy supply economy that it was until 1971.

Shale and ethanol are heavily dependent on crude oil. Heck, we’re addicted to oil.

And Trump has to borrow about $4 billion dollars a day, and it has to be mostly from offshore, otherwise he will be facing higher unemployment and inflation while his real estate will be worth a lot less.

Now, article:

That’s why I think the death of the petrodollar system is the No. 1 black swan event for 2017. 

Then, how long do you think the Saudi Kingdom will last? Do Saddam and Kaddafi ring a bell?

You can count on a war before the death of the Petrodollar.

 

 

Mycroft Holmes IV's picture

I also believe the second Iraq War was a result of the Euros for Oil deal the Iraqi government made with Germany and France (two biggest opponents to the war).

Libya's oil apparently is the best in the world.

Syria and Ukraine are all about pipeline control.

Wouldn't it be crazy if technology for unlimited power were intentionally hidden from the masses in order to promote scarcity of energy to enact conflict and control?

Nah, my wife must have been watching Corey Goode...

Dilluminati's picture

Eff em.. they can pump moar and moar for less and less, we can open our coal, gas, and oil here at home

 

gatorengineer's picture

Coal is a literally a four letter word, there is no reason that Nat Gas prices are above $2 other than manipulation.  In Euros Oil isn't that cheap anymore.

TBT or not TBT's picture

The four letter word has a codependent relationship with five letter word TESLA.  

gatorengineer's picture

I assume because they both burn?  Do you think big oil will let Tesla succeed?  Ever wonder why a 70s Honda gets better mileage than anything on the road today?  

techpriest's picture

Eric Peters over at EPAutos figured it out some time ago - the old Geos got as much mileage as a Prius today, and it's mostly to do with regulations.

Jack.Lincoln's picture

Paid Content.

that's okay; ZH needs to be profitable.

looking forward to the day when we can finally tell people like
Al-Waleed what we really think of them.

SMC's picture

I believe that most ZH regulars are well positioned with sufficient quantities of the important metals, productive land, and the knowledge and skills required to prosper in the uncertain times ahead.

We might even turn a few libtard trolls into productive citizens along the way! :-)

BabaLooey's picture

Those two fucktwits above you on this thread are brainless.

turnball the banker's picture
turnball the banker (not verified) BabaLooey Feb 23, 2017 5:23 AM

Says the 25week troll

pachanguero's picture

wrong USD to be the black swann when it goes up for all the right reasons Trump will win again!

ScratInTheHat's picture

Fiat currencies can be sustained as long as the country of origin can project the military power to make other countries take the fiat currency. Uncle Slam has to slam!

Not My Real Name's picture

The trouble is, the US military might is dependent on the fiat dollar to sustain it.

When the dollar finally shits the bed, the US military will no longer have the means to project its power anymore.

 

 

You Only Live Twice's picture

Very true. When you see the European Bankers looking East instead of West, then the end of the Petrodollar at OPEC will be near.

SofaPapa's picture

To realize just how corrupt our global political economy is, we need realize only that the House of Saud is the lynchpin to keeping it running. Without this family - notorious mostly for their corruption and their many documented links to Islamic fundamentalism and terrorism (remember the redacted pages) - in charge in Saudi Arabia, the plans of the globalists will fail.  So literally, the globalist dream depends on corruption and terrorism.  Let that sink in for a moment.

illuminatus's picture

Break treaties: It's what we do.

quicksilver2's picture

Just sign up for our newsletter and buy our shit. Fear peddler. The lowest form of peddler.

BigFatUglyBubble's picture

Didn't US military help SA out in yemen recently?  And I thought Trump Admin was Hawkish on Syria and were talking about more troops.