The decision facing President Donald Trump is not an easy one, a problem not of his own choosing and one that the politically charged president would rather not have to deal with.
To sanction or not sanction Saudi Arabia over the alleged killing last month of prominent Saudi journalist Jamal Khashoggi (that often criticized in his Washington Post columns the royal family and Saudi Prince Mohammed bin Salman) will dictate U.S.-Saudi relations more than any other development since the 1973 Arab oil embargo that sought to punish Washington and its western allies over its support of Israel in the Yom-Kippur War.
The fallout and disapproval has taken on a life of its own in both diplomatic circles and among global media outlets after news initially broke that Jamal Khashoggi had been killed in the Saudi consultant in Istanbul in early October. Not that politically charged killings are anything new, unfortunately, but the problem in this instance was the inconsistencies in the Saudi narrative from the onset.
Saudi officials initially rejected assertions that Khashoggi had even been killed. On October 15, Trump said Saudi Arabia's King Salman denied any involvement, and the president suggested that "rogue killers" could be responsible for the killing. The next day, Trump said criticism of Saudi Arabia was another case of "guilty until proven innocent." And the following day, he said he'd contacted Turkish officials and requested audio and video related to the case, "if it exists."
However, amid all of the uncertainty and political posturing, Turkey pushed its investigation. The Associated Press on October 16 quoted a high-level Turkish official as saying police who entered the consulate found "certain evidence" that Khashoggi was killed there. The same day, The Wall Street Journal reported that Turkish officials had shared with the U.S. and Saudis details of an audio recording said to prove that Khashoggi was beaten, drugged, and then killed minutes after entering the consulate.
On the 16th, U.S. Secretary of State Mike Pompeo traveled to Saudi Arabia to discuss the case with the Saudis, who (according to Pompeo) pledged to conduct "a thorough, transparent, and timely investigation." By the 18th, and under even more pressure both at home and abroad, Trump said that he believed that Khashoggi was dead. "It certainly looks that way to me," he told reporters, and added that there would be "very severe" consequences if investigations into Khashoggi's disappearance conclude the Saudis are responsible. Related: World’s Cheapest Natural Gas Market Could Be Facing A Shortage
On October 19, after more than two weeks of denials, Riyadh released a statement acknowledging Khashoggi's death, stating that had he died in a fistfight in the consulate, adding that 18 people in connection with the killing had been arrested.
Two days later, on FOX news, Saudi Foreign Minister Adel al-Jubeir said that Khashoggi was killed as a result of a "rogue operation," adding that Crown Prince Mohammed bin Salman had no prior knowledge of the incident. He also described the killing as a “murder.”
Trump, for his part, amid the best bilateral relations between Washington and Riyadh in decades, still stood by his Saudi allies, all the while pledging to safe guard the countless number of American jobs that would be lost if the U.S. canceled arms sales with the Saudis. Trump also said that he wasn’t satisfied with the Saudi account over Khashoggi’s death.
One of worst cover-ups in history
However, the next day, Trump described the killings as one of the worst cover-ups in history and said he'd leave any ramifications against the Saudis up to Congress. Pompeo said the U.S. would take “appropriate actions” against people it could identify that took part in Khashoggi’s murder, including revoking visas and economic reprisals.
However, the narrative kept changing as more dismal reports came from Turkish investigators came out, including a report that Khashoggi had been strangled shortly after entering the consulate and that his body had been dismembered.
Diplomatic row continues
Turkey is now demanding that the Saudis disclose the location of Khashoggi’s body after the Saudis admitted that the journalist had been murdered. “This case cannot be covered up, and we are expecting close cooperation from Saudi authorities on the investigation we are conducting transparently and meticulously,” Turkey’s Justice Minister Abdulhamit Gul told reporters on Thursday.
There have numerous other developments over Khashoggi’s murder, including (not surprisingly) squabbling among EU members, some who want to stop arms sales to the Saudis while others push for their continuance, as well as Canada's statement that their arms sales to the kingdom would continue. Noted diplomatic and corporate leaders also pulled out of the much-heralded Future Investment Initiative (FII), which began in the Saudi capital on October 23.
However, the impact over the incident that will have the greatest impact both geopolitically and in global oil markets, is how the U.S. will ultimately respond. Trump, for his part, now has little choice but play along with Congressional critics that are calling for a tougher line as well as possible economic reprisals. The Saudis, who have learned the fine art of public relations and media management since their ill orchestrated and poorly managed oil embargo against the West some four plus decades ago, have maintained that politics and economics will remain separate, in essence that even if sanctions are taken against them over the killings of Khashoggi it would not impact their oil production. Related: Energy Earnings Pull Trinidad And Tobago From Recession
Yet, if economic sanctions hit and hit hard and if they are protracted, the official Saudi line will likely change and see Riyadh and their closest Arab allies push back. And, the greatest weapon they still have is the so-called oil weapon. Though global oil markets are now shifting once again from concern about a supply crunch as new U.S. sanctions hit Iran's energy sector in a few days, worries are now growing that amid soft demand from global economic woes will continue to exert downward pressure on prices and an ensuing oil supply overhang could develop. However just the prospect of the Saudis withholding oil production as a backlash for possible sanctions would be enough to roil global oil markets who act and over react on geopolitical developments, particularly coming from Riyadh.
Moreover, if Saudi Arabia did indeed withhold barrels from global oil markets in retaliation against sanctions from the U.S. and its allies, global oil markets would be impacted even more, playing into the hands of Tehran, who all along has maintained that the world could not do without Iranian oil production at full throttle.
The decision facing President Trump as more developments come forth over Khashoggi’s killing has no easy answer for neither him, the U.S., the Saudis or global oil markets.
By Tim Daiss for Oilprice.com
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President Trump doesn’t want to lose the very lucrative arms sales to Saudi Arabia so he will limit his response to the Khshoggi’s affair to sanctioning the Saudis who were involved in the murder of the Saudi journalist and revoking their visas which they will not be needing now or forever.
King Salman of Saudi Arabia will not take the drastic measure of stripping his son Crown Prince Mohammed bin Salman of his powers and punishing him even if it was irrevocably proven that he was involved in the murder because this will complicate the leadership transition process once King Salman departs the scene and will create turmoil within the House of Saud. However, there will be many who will have to pay the price as scapegoats.
The US needs to put its values back at the centre of its foreign policy. Unfortunately, this has not been the case since the end of the Second World War. I single out the United States because it has depicted itself as the ‘indispensable superpower’. If that is true, then morality should precede self-interest. Unfortunately, the US has been demonstrating the ugly face of capitalism particularly under the administration of President Trump.
Only when dictators are unsure if freedom is an American priority do they come to believe they can murder with impunity. However, the United States under virtually all its administrations has cultivated dictators for self-interest and geopolitical gains. The murder of the Saudi journalist Jamal Khashoggi is no exception. It illustrates abundantly the hypocrisy and duplicity of the United States' foreign policy.
At first, President Trump threatened Saudi Arabia with severe punishment if it is proven that the journalist was murdered. But when Saudi Arabia threatened to retaliate with stronger measures against any US punishment, President Trump started to back track by floating the idea that “rogue killers” might have been behind the murder of the Saudi journalist.
President Trump was afraid that were Saudi Arabia to retaliate by cutting its oil production drastically, it could push oil prices far above $100 a barrel and accelerate the use of the petro-yuan for its oil exports, something that is going to happen anyway. The biggest casualty could have been President Trump’s Republican Party in the mid-term Congressional elections in November.
Another measure the Saudis could have taken is to refuse to compensate for any possible loss by Iran oil exports resulting from US sanctions though I am on record having been saying for the last ten months that based on market realities, US sanctions against Iran are doomed to fail miserably and Iran will not lose a single barrel from its oil exports.
President Trump stopped short of threatening the cancellation of US arms sales to Saudi Arabia estimated at more than $100 bn annually because he knows that these could easily be replaced by Russian arms which are as sophisticated as US arms and cheaper.
Only when morality and the defence of freedom become an integral part of the foreign policy of the indispensable superpower will the Palestinian people achieve their aspiration in an independent State.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London