Saudi Arabia was founded in 1932, by Ibn Saud, who joined four regions of Arabia into one and proclaimed himself a king. The four regions are Hejal, Najd, Eastern Arabia, aka Al Ahsa, and Southern Arabia, aka Asir. Southern Arabia borders Yemen where civil war is going on. Saudis support ex-president Hadhi, who was overthrown by the Huthis, the biggest ethnic group in Yemen. Eastern Arabia borders the Persian Gulf,and across the Gulf faces Iran. Eastern Arabia is rich in hydrocarbons, oil and gas. A large desert country, it has to import most of the food for its 30 million inhabitants, a quarter of them foreign workers. The workers are mainly from the Middle East and South Asia. All the important posts of the country are in the hands of the descendants of the founder of the Kingdom, Ibn Saud. The number of descendants is anywhere between six and ten thousand individuals. Women have few if any rights. The Wahabi form of Islam is the official religion. Saudi Arabia, in essence is owned by Royal family members. It is like the Walton family who owns Walmart.
A special relationship had been established between Saudi Arabia and the US in 1945 during the Second World War when President Roosevelt was returning from the Yalta Conference. The Saudi King met President Roosevelt on an American warship in the Mediterranian Sea. This special relationship was sealed. Saudi Arabia would become the special servant of the US. In return, the US would provide protection.
The US defaulted on its gold obligation or politely stated, President Nixon took the dollar off of the gold standard in August of 1971. Up until then, the Central Banks of surplus dollar countries could exchange their dollar holdings for 35 dollars an ounce. The US was losing its’ gold. Over night the gold window was closed. President de Gaulle of France extracted as much gold from the US as he could in the 1960’s. He sent French warships to load up the gold that belonged to France and took it there. Other countries followed. Imagine how enamored US officials became of de Gaulle! (Incidentally, de Gaulle was forced to resign in 1969. Massive demonstrations took place in Paris in May of that year. Could there be any connection to de Gaulle’s independent economic and foreign policy?) De Gaulle told the Europeans not to accept Britain into the European Union. He warned that Britain would be the American “Trojan Horse”. Georges Pompidou, a banker, then became president of France. Britain then joins the Union. Any connection there????
The dollar started to drift, and inflation and gold were rising. President Nixon introduced price control, which was not too successful. The key country in saving the dollar was Saudi Arabia. How? Let me explain. The pre emptive war which Israel carried out against the Arabs was stunningly successful; the Arabs were devastated, they lost Gaza, the West Bank along with East Jerusalem, the Golan Heights of Syria, and the Sinai. The Suez Canal was closed. Israel controlled the Sinai bank of the Suez Canal. Then, Nasser of Egypt died. The defeat was too much for him. Anwar Al Sadat, a general, took over. A deal had to be made. Sadat broke with the Soviet Union. Secretly, the Arabs were encouraged to win their lost territories back. The Yom Kippur War started in October of 1973. Israel was losing this war. Golda Meir, the prime minister pushed back by threatening to use the “Samson Option”: that is, using nuclear weapons to win the war. Nixon ordered a huge military supply to Israel. The front stabilized and negotiations began. The Arab World formed OPEC, the Organization of Petroleum Exporting Countries. Saudi Arabia, being the biggest producer and exporter, played a key role. The Petro Dollar was born. From henceforth, all oil and oil products would be traded in dollars. Every importing country had to have dollars to import oil. As for the US, all it had to do was to print paper dollars. In 1975 Americans were allowed to buy gold for the first time since 1935. The Shah of Iran also played a major role in the formation of OPEC. But then the Iranian Revolution came about in 1979 and the Shah was overthrown. The US lost control over Iran. Hundreds of billions of dollars of Iranian assets were frozen in the US. They are still frozen to this day. The Islamic Republic of Iran became the implacable enemy of Saudi Arabia…
Saudi Arabia is afraid of revolution a la Iran, or the possibility of a secular revolution, though this is less likely. The Saudi Royal family hates both Iran and Syria and they share a common goal with Israel: Israel wants Syria and Iran destroyed, which would give Israel a free hand in the Middle East. (They would get the waters of Lebanon, especially the Litani River which flows in the shape of a hockey stick through the Bekka Valley of Lebanon into the Mediterranean Sea.) Turkey would like parts of Syria bordering on its south eastern area in order to control the Kurdish problem. Saudi Arabia faces the Houthi independence of Yemen. The war is not going well, at least presently. The Houthis will deliver a hanjar (Arabic word for a dagger) into the Royal Family of Saudi Arabia. Europe is looking at Russia and Syria in a different light because of the massive refugee problem. If the world economy collapses further, the price of oil may go down to twenty dollars. That would implode the Kingdom, which would be followed by an Iranian style revolution. Israel will face a massive Palestinian uprising. The tragedy of this world is that morally and ethically speaking, the US, Israel, and Saudi Arabia are on the wrong side of history. Only time will tell…
JP Geonomics 