Saudi King Gives Obama One Choice: American Blood Or Cheap Oil?

Saudi King Gives Obama One Choice: American Blood Or Cheap Oil?

OFFICIAL WHITE HOUSE PHOTO BY PETE SOUZA
President Barack Obama met with King Abdullah bin Abdulaziz Al Saud of the Kingdom of Saudi Arabia in Saudi Arabia on March 28.

The disappearance of Malaysia Airlines Flight 370 was a perfect cover for President Barack Obama’s unnoticed trip to Saudi Arabia. So fortuitous was the news of the Boeing 777-200ER jet one has to wonder about the circumstances of its disappearance. Of course, we may never know the real answer to that. But we have a pretty good idea what Obama’s instructions from King Abdullah were. The king and the two highest-ranking representatives of the oil dynasty — Crown Prince Salman and the foreign minister, Prince Saud al-Faisal — explained in strict terms that the United States is making a mockery out of their monarchy and that Obama damn well better gear up for imminent military intervention in the Mideast.

There has been little press coverage of this. Most Americans were so focused on Flight 370 they didn’t know Obama was away. In fact, Obama put in two overseas trips. He jumped easily from his mission in Brussels with the G-7 — focusing on the values and principles the United States has in common with its European allies — to Saudi Arabia, a nation that holds no regard for democracy or pretty much any other values that Obama may or may not embrace.

Not that Obama had much of a choice in showing up; he is just the latest Presidential messenger sent to Saudi Arabia. For previous Presidents, pleasing the Saudis was always about affordable oil. For Obama, it is about that and perhaps other personal and religious reasons for his steadfastness. If so, there is also another riddle without resolution, is Obama really a loyal Muslim first?

Barry Of Arabia

Given 90-year-old Abdullah’s poor health and the need for a standby respirator, it was short and not sweet for Obama.

Saudi Arabia has a litany of complaints against the United States, which include:

  • Washington peace overtures with Iran. Since the fall of the Shah in 1979, Saudi Arabia has feared military and economic domination by Iran. For more than a decade, Iran has used its influence and terror cells to build up its prestige as a Mideast and OPEC leader. If Iranian leadership is obtained, it will diminish Saudi Arabia’s position as the world’s super oil power. It is also making the kingdom susceptible to a wave of radical Muslim rule and perhaps the overthrow of the Saudi royal family.
  • Obama’s decision to not follow through on airstrikes against Syria and its stockpiles of chemical weapons, which threaten the Saudi royals. 
  • Abdullah’s fury that Obama did not back Hosni Mubarak during Egypt’s first crisis in 2011, giving rise to the Qatar-backed Muslim Brotherhood. Other missteps along the way with regard to Egypt is that Obama has refused to be supportive of the military now ruling Egypt, something Saudi Arabia is insisting Obama do immediately to counter the growing Muslim radicalism.

In December, Mohammed bin Nawaf bin Abdulaziz al Saud, Saudi Arabia’s ambassador to Britain, wrote an op-ed for The New York Times with this threatening headline: “Saudi Arabia Will Go It Alone.” He wrote:

The foreign policy choices being made in some Western capitals risk the stability of the region and, potentially, the security of the whole Arab world. This means the Kingdom of Saudi Arabia has no choice but to become more assertive in international affairs: more determined than ever to stand up for the genuine stability our region so desperately needs.

Saudi Arabia has enormous responsibilities within the region, as the cradle of Islam and one of the Arab world’s most significant political powers. We have global responsibilities — economic and political — as the world’s de facto central banker for energy.

Obama, A Saudi Servant To The End

Obama must heed the king’s warning that the House of Saud has set its sights on control over Mideast foreign policy. There are a third of a billion reasons why — the number of barrels of Saudi oil — that make Obama a Saudi servant.

Obama will do Saudi bidding because of its oil wealth. This fact will be ignored by the greens in his Administration who fail to accept the fact that renewable energy is a joke, a sidebar story to please the environmental lobby. But on the big stage with global power and money, it is given no consideration.

Saudi Arabia has enough cheap crude to last decade upon decade, as do the rest of the Mideast, Canada and North Dakota, with its increasingly productive Bakken formation. That makes solar, wind and other green dreams just that — dreams.

Will Obama Use American Military As Mercenaries?

Obama is facing an international crisis this year, and it has nothing to do with Russia. It has to do with the Arab Spring and using our military might to procure Saudi favor and the guarantee of cheap oil.

The only good news for Obama when he left Riyadh was the promise that if he met Saudi expectations with regard to Mideast intervention, the OPEC kingpin would reduce the price of crude. That’s an important carrot for Obama with the summer driving season coming on and an economy ready to fall into another recession.

Right now, Obama and America’s military have their marching orders, which came from the king of Saudi Arabia. America’s young men and women will soon be involved in the Mideast to try to bomb reason into groups like the Muslim Brotherhood, which will only incite more hatred against the United States and more calls for terror attacks against America.

Around and around it will go until there are definitive winners and losers in the Mideast. That could take a very long time to decide.

And America will be left to account for our actions, leaving Washington and the Nation to shoulder responsibility for our involvement in tribalism that continues seemingly without end in the Arab world.

It is all part and parcel of our addiction to cheap oil — something that won’t be broken for decades and something we cannot even wean ourselves from with increasing domestic production. Meanwhile, the greens continue to protest North American oil and gas projects. They may think they are achieving a greener world. In fact, all they are doing is helping create a bloody red one. It will bleed from the Mideast all the way to America’s heartland.

It is certainly sad we have in our President a man who will prove to be a dutiful Saudi servant.

Yours in good times and bad,

–John Myers

40 Central Banks Are Betting This Will Be The Next Reserve Currency

40 Central Banks Are Betting This Will Be The Next Reserve Currency

Standard Chartered notes that at least 40 central banks have invested in the Yuan and several more are preparing to. Is this the next reserve currency?

Source:  Zero Hedge

 

As we have discussed numerous times, nothing lasts forever – especially reserve currencies – no matter how much one hopes that the status-quo remains so, in the end the exuberant privilege is extorted just one too many times. Headline after headlines shows nations declaring ‘interest’ or direct discussions in diversifying away from the US dollar… and as SCMP reports, Standard Chartered notes that at least 40 central banks have invested in the Yuan and several more are preparing to do so. The trend is occurring across both emerging markets and developed nation central banks diversifying into ‘other currencies’ and “a great number of central banks are in the process of adding yuan to their portfolios.” Perhaps most ominously, for king dollar, is the former-IMF manager’s warning that “The Yuan may become a de facto reserve currency before it is fully convertible.”

The infamous chart that shows nothing lasts forever…

Nothing lasts forever… (especially in light of China’s recent comments)

 

As The South China Morning Post reports, Jukka Pihlman, Standard Chartered’s Singapore-based global head of central banks and sovereign wealth funds (who formerly worked at the International Monetary Fund advising central banks on asset-management issues), notes that:

At least 40 central banks have invested in the yuan and several others are preparing to do so, putting the mainland currency on the path to reserve status even before full convertibility

The US dollar remains in charge (for now)…but

The US dollar is still the world’s most widely held reserve currency, accounting for nearly 33 per cent of global foreign exchange holdings at the end of last year, according to IMF data. That ratio has been declining since 2000, when 55 per cent of the world’s reserves were denominated in US dollars.

The IMF does not disclose the percentage of reserves held in yuan, but the emerging market countries’ share of reserves in “other currencies” has increased by almost 400 per cent since 2003, while that of developed nations grew 200 per cent, according to IMF data.

As SCMP goes on to note, the rising popularity of the yuan among central bankers is probably mainly due to Beijing’s extremely favourable treatment of them as it has sought to encourage investment in the yuan.

For example, central banks enjoy preferential treatment in the qualified foreign institutional investor category, both on the size of the quota and the length of the lock-up period. The QFII quotas given to central banks are not publicly known, but some of those announced by investing central banks are up to 10 times larger than others in the programme and, most importantly, free of any capital controls.

“Central banks and sovereign funds have special treatment,” Pihlman said. “They have the ability to invest in a way that any other investor does not have. When it comes to convertibility, there is nothing formally out there, but it is fully convertible.”

As Pihlman explains, things are accelerating…

Pihlman said “a great number of central banks are in the process of adding [yuan] to their portfolios”.

“The [yuan] has effectively already become a de facto reserve currency because so many central banks have already invested in it,” he said. “The [yuan] may become a de facto reserve currency before it is fully convertible.”

The central banks more likely to add yuan holdings in the future were the ones with “strong trade linkages to China” and those which had relatively large levels of reserves which could consider diversifying more for return-related reasons, he said.

“The [yuan’s] convertibility may be already there for central banks in a way that has got them comfortable to start investing in the currency,” Pihlman said.

We leave it to a former World Bank chief economist, Justin Yifu Lin, to sum it all up…

“the dominance of the greenback is the root cause of global financial and economic crises,”

It appears the world is beginning to listen