Trump backs purge of Saudi royal family – at a price
US President offers strategic support for King Salman and Crown Prince in return for an NYSE listing of the Aramco IPO
US President Donald Trump has swiftly followed up his Tuesday tweet in support of the great Saudi purge of the kingdom’s elite. A White House statement on Wednesday “welcomed” the allegation by Riyadh that Iran is supporting the Houthi militias of Yemen “including the supply of illegal arms such as ballistic missiles.”
In his tweet, Trump plunged straight into the heart of the power struggle in the House of Saud, saying “I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing … Some of those they are harshly treating have been “milking” their country for years!”
I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing….
— Donald J. Trump (@realDonaldTrump) November 6, 2017
On Saturday, even as the Saudi purge got under way, Trump also made a phone call to Saudi King Salman. The White House readout signaled Trump’s support of the imminent purge and also put a price tag on the support – “listing (of) Aramco on a stock exchange in the United States” and, secondly, “the purchase of appropriate military equipment that would keep Saudi Arabia safe and help create American jobs.”
Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!
— Donald J. Trump (@realDonaldTrump) November 4, 2017
The readout also mentioned that Trump “discussed the continuing threat of Iranian-backed Houthi militias in Yemen and [Saturday’s] intercepted missile attack on Riyadh. They emphasized the importance of countering extremist ideologies and championing moderation and tolerance.”
From these three Trump articulations through last Sunday and Tuesday, the contours of a US-Saudi deal at the leadership level have appeared. It contains three elements.
First and foremost, King Salman and his Crown Prince know they have embarked on a risky gambit by taking on the kingdom’s political and business elite on such a scale. They desperately need Trump’s open support, which will send a big signal to their detractors and opponents within the royal family.
The alacrity with which Trump responded from the Far East amidst a challenging tour of Asia suggests a prior understanding. Conceivably, the three visits by Trump’s senior advisor and son-in-law Jared Kushner to Saudi Arabia in recent months can now be put in perspective. David Ignatius at the Washington Post has written:
“It was probably no accident that last month, Jared Kushner made a personal visit to Riyadh. The two princes (Kushner and MBS) are said to have stayed up until nearly 4 am several nights, swapping stories and planning strategy.”
Now, there is nothing like a free lunch in Trump’s scheme of things. The White House statement on Sunday gives a fair idea of the quid pro quo. It singled out the recent $15 billion deal involving the Terminal High-Altitude Area Defense (THAAD) missile system, which is designed, built, and integrated by Lockheed Martin Space Systems as prime contractor.
Interestingly, there has been feverish speculation lately regarding the main foreign listing of Aramco – London, New York, Hong Kong, etc. Trump has now put his hat in the ring openly and brazenly. (The Saudi Crown Prince has suggested Aramco should be valued at $2 trillion. Independent estimates put the value closer to $1-$1.2 trillion, which would raise $50 to $60 billion if 5% of the company were offered through an IPO listing.)
Finally, the Iran bogeyman has reappeared. If Iran is there, can Israel be far behind? And Kushner is an ardent Zionist himself. Besides, it must be factored in that the Saudi Crown Prince has been mentored by none other than the UAE Crown Prince Sheikh Mohammed bin Zayed.
In sum, we are getting a heady cocktail. Washington is backing the 32-year-old Saudi Crown Prince Mohammed bin Salman’s audacious bid to succeed his father Salman as the king (breaking all conventions and practices of Saudi succession), while expecting tens or hundreds of billions of dollars worth of Saudi business deals for the US (‘America First’).
A US-Saudi-UAE-Israeli strategic convergence provides the underpinning for coordinated regional policies aimed at encircling and containing Iran.
Will all this work the way it is intended?
The crackdown on Saudi elites is bound to trigger uncertainty among businesses that could intensify capital flight or derail reforms and discourage potential investors at a time when the protracted oil slump has created financial difficulties for the regime. Authorities have frozen the bank accounts of the accused and warned that any assets related to the corruption cases would be seized as state property.
Indeed, this is not exactly the way to publicize the Crown Prince’s pet reform project known as Vision 2030, which pins hopes on large-scale investments to rev up the sagging economy.
Even more problematic is the geopolitics. There is feverish excitement that Lebanon is going to be the Maginot Line to push back at Iran’s regional influence. It’s largely bravado.
Simply put, the Saudis lack the capability to fight it out with Iran and always depended on proxies. But Hezbollah’s towering presence makes Lebanon a vastly different theatre. The Saudis would be delighted if Israel does the fighting. But then, Israel has entered Lebanon before and knows the Hezbollah may go down fighting but will take thousands of Israeli lives with them.
Israel would be out of its mind to do the dirty work for the Saudis. As for the Trump administration, only very recently it observed the 34th anniversary of the 1983 US Embassy bombing in Beirut.
These are early days. From the televised speech by Hezbollah chief Hassan Nasrallah on Sunday, there was no sense of panic. Iran’s president Hassan Rouhani in remarks on Wednesday was plainly contemptuous of the capricious Saudi rulers. Tehran holds many cards.
Trump is bluffing. He doesn’t propose to go to war with Iran. He hopes to settle Syria with Russian help. And if EU foreign policy chief Federica Mogherini is to be believed, the US Congress is not abandoning the Iran nuclear deal. Trump must know that too.