The US Would Be Cutting Off Its Hand To Spite Its Foot If It Sanctioned Saudi Arabia
by John Lawrence, October 25, 2018
Since it is becoming clear that Salman, the Saudi leader, ordered the murder of Jamal Khashoggi, there is talk of sanctioning Saudi Arabia as punishment in the same way that the US has sanctioned Russia and other countries over human rights violations. The NY Times reported:
WASHINGTON — President Trump on Tuesday condemned Saudi Arabia’s account of the killing of the journalist Jamal Khashoggi as “the worst cover-up ever,” and his administration warned for the first time that it would impose human rights sanctions on some of those who took part in the plot.
Mr. Trump’s criticism, and the sanctions announced by Secretary of State Mike Pompeo, attested to the mounting pressure on the White House after Turkey’s president, Recep Tayyip Erdogan, characterized the killing of Mr. Khashoggi in the Saudi Consulate in Istanbul as premeditated and “savage.”
But the president still appeared to be playing for time, complaining about how the Saudis botched the crime rather than about who was behind it, and blacklisting what are likely to be Saudi operatives rather than decision makers like Saudi Arabia’s crown prince, Mohammed bin Salman.
“They had a very bad original concept, it was carried out poorly, and the cover-up was one of the worst in the history of cover-ups,” Mr. Trump said to reporters in the Oval Office.
OK, then can we agree that Salman ordered the killing? If Salman himself is not sanctioned, then at least Saudi Arabia should be sanctioned. But wait a minute. Let's consider the history of the US-Saudi relationship. In 1971, President Nixon took the US off the gold standard and offered a deal to the Saudi king at that time that, if he would accept only US dollars as payment for oil, the US would offer the Saudis military protection. The deal was done and that resulted in the US dollar becoming the world's reserve currency. Because the US dollar is the world's reserve currency and most business world wide is conducted using dollars, the US has the ability to sanction individuals and countries which means that they can't do business using the US dollar because those dollars have to be processed by US controlled banking institutions which just won't allow it if the President so orders.
So what does this mean in the case of Saudi Arabia? If Saudi Arabia were to be sanctioned they couldn't sell oil for dollars which more or less nullifies the original agreement. From their perspective the US would be effectively negating the agreement that allowed the US dollar to become the world's reserve currency which resulted in the US' ability to sanction in the first place. The net result would probably be that the Saudis would sell oil for other currencies which would diminish the role of the US dollar as the world's reserve currency and, therefore, limit the US' ability to sanction. So the Saudis would probably say to the US: Ha. Ha. Sanction us and you will lose the ability to sanction anyone or any other country.
This gives the Saudis carte blanche to violate the human rights of anyone they choose to with impunity. Trump's excuse for not sanctioning Saudi is that the US would lose jobs due to an arms deal being nullified and they would buy their arms elsewhere. But Trump could sanction any country from selling the Saudis arms so that excuse is bogus. No, it's more than an arms deal that's at stake. It's the whole edifice of world financial transactions based on the US dollar. Trump is whistling Dixie to reporters because he and the other hypocrites that run the US know in their hearts that they will never sanction Saudi Arabia over Khashogg's murder.