(Bugout.news) They say there is nothing almightier than the U.S. dollar, and given a threat leveled by the government of Saudi Arabia over the weekend, that axiom has been confirmed.
Shaken by the prospect that Congress could pass legislation that would allow the Saudi government to be held responsible for any role it played in the Sept. 11, 2001 attacks – a prospect long thought to be strictly in the purview of the zaniest conspiracy theorist – Riyadh, which has long denied any involvement, reacted by pledging to sell off $750 billion in U.S. assets if the bill becomes law.
In addition, the Saudi government has sent high-level delegates to lobby both the White House and members of Congress against passage of the bill. President Obama himself, long a Saudi supporter, would likely veto such legislation, but he’s concerned enough by it that he, too, has been bending the ears of lawmakers in an attempt to get the measure quashed.
It was long been thought that if any country would play the “sell off U.S. treasuries” game, it would be China; with its vast holdings, Beijing could unleash economic hell on the U.S. and the world by suddenly refusing to underwrite U.S. debt. But it turns out that the Saudis are the first ones.
Why does it matter? Because according to Bloomberg News, the Saudis hold the third largest reserves of U.S. treasuries, though the U.S. government makes sure to keep the actual amount the Saudis own secret (even while publishing specific holdings amounts of other nations). So threatening to see off a substantial amount – and make no mistake, $750 billion is a substantial amount – is a big deal, and what’s more our government knows it.
“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 reported further, adding that the rules are different for almost everyone else.
Though 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.
In first reporting on the threat, Zero Hedge closed with an ominous question:
…[W]ho 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?
After years of being relegated to small-cable “conspiracy” TV (think Jesse Ventura) and out there web sites, suddenly this ultimate 9/11 conspiracy theory has been thrust back into the news – and legitimized. Out of the blue a couple weekends ago, CBS News’ “60 Minutes” program aired a segment on the conspiracy, focusing specifically on 28 pages of the 9/11 Commission report [NOTE: When Bugout.news attempted to watch the entire 13-minute segment on the CBS News site, after about 15 seconds the story automatically changes to a different 60 Minutes episode – who wants this story buried?]. In particular, the segment suggests that there may have been a cell of the Saudi government that offered assistance and support for the 9/11 hijackers – evidence that may be contained within the “28 Pages,” as they are known.
Several current and former U.S. elected and government officials who have seen the 28 pages (and there are not many who have) are pushing the Obama administration to declassify them; Obama, however, is pushing back. And, obviously, so are the Saudis.
In reporting on the 60 Minutes episode, The New York Times noted, shockingly:
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.
In addition to the Saudis, there has been pushback against the bipartisan bill, which originated in the Senate, from the State Department and the Pentagon. In short, there is an outsized amount of attention being paid to this by some very powerful forces inside our own government and others as well.
It’s not clear at this point which side will win – and some experts think the Saudis are bluffing anyway – but what is clear is that this high-profile battle taking place behind the scenes is high stakes all the way.
And there is this caveat: The Saudi budget deficit has continued to grow as oil prices remain low and the kingdom remains a war in nearby Yemen, so monetizing some U.S. debt would be an economic boon at a time when the Saudi government needs cash. That said, “a dramatic, immediate liquidation would likely spark a market panic,” Zero Hedge warned.
As a reminder, 15 of the 19 9/11 hijackers were from Saudi Arabia.