The biggest financial and geopolitical story from mid-April was Saudi Arabia's threat that should the US pass a bipartisan law which would take away immunity from foreign governments in cases arising from a "terrorist attack that kills an American on American soil" and specifically could hold the Saudi kingdom responsible for its role in the Sept 11, 2001 attacks, then the Saudis would retaliate by selling up to $750 billion in American assets.
Today, the Saudi foreign minister Adel al-Jubeir, while speaking to reporters in Geneva after talks with U.S. Secretary of State John Kerry which mainly focused on Syria, admitted this threat saying passage of the law would "erode global investor confidence in America" by which he was, of course, referring only to Saudi Arabia. However, to avoid another slap in the face of US foreign policy on the record, he denied that Saudi Arabia had "threatened" to withdraw investment from its close ally and instead called it a mere "warning."
"We say a law like this would cause an erosion of investor confidence. But then to kind of say, 'My God the Saudis are threatening us' - ridiculous," Jubeir hedged according to Reuters.
Saudi Foreign Minister Adel al-Jubeir talks to the media in
Geneva, May 2, 2016
"We don't use monetary policy and we don't use energy policy and we don't use economic policy for political purposes. When we invest, we invest as investors. When we sell oil, we sell oil as traders."
That said we are confident that Jubeir realizes very well that everyone else uses monetary and energy policy for political purposes - hence the Trasury's brand new Friday watchlist for currency manipulators - which is why when he calls it "erosion of investor confidence" the world reads clearly between the lines.
When he was pressed whether the Saudia Arabia had suggested the law could affect its investment policies, the Saudi foreign minister said: "I say you can warn. What has happened is that people are saying we threatened. We said that a law like this is going to cause investor confidence to shrink. And so not just for Saudi Arabia, but for everybody."
Ah, so now it is "warn", not "threaten"... gradually getting warmer. He continued: "In fact what they are doing is stripping the principle of sovereign immunities which would turn the world for international law into the law of the jungle," Jubeir said.
"That's why the administration is opposed to it, and that's why every country in the world is opposed to it.
Well, China not only isn't opposed to it but China could care less... and China has a little over $1 trillion in US Treasuries. Which implies that all the Saudi was doing was merely trying to avoid a diplomatic threat to its close political ally, one which not even Obama would be able to diffuse.
And then, just to emphasize that Saudi Arabia was not "threatening" the US, he repeated it for the third time: "And then people say 'Saudi Arabia is threatening the U.S. by pulling our investments'. Nonsense."
No matter how one calls the Saudi threat or warning or gentle nudge, however, the reality is that it has no chance of passing in Congress. Not only at the bill's sponsors gradually trying to prevent its passage, but Obama himself has lobbied Congress to block passage of the bill, which passed the Senate Judiciary Committee earlier this year. For those Americans who are confused just whose interests Obama is representing in this matter, those of America's citizens or Saudi Arabia's, we have a few words of advice: don't overthink it.