Saudi Arabia signed fifteen preliminary agreements with China on Tuesday, September 6, 2016. The agreements were on a variety of different areas, ranging from the energy sector, to housing and even military partnership. The trip was headed by Saudi Minister of Defense/Deputy Crown Prince Mohammed bin Salman, the heir apparent to his father, King Salman of Saudi Arabia (despite Crowned Prince Mohamed bin Nayef being publicly deemed next in line for the Saudi throne).
Just over a month after high-level talks with a Russian delegation after the G20 summit, the Kingdom of Saudi Arabia has decided to keep all options on the table (Russia’s policies in Syria and Iran are worlds apart from those of the KSA as mentioned in my previous article).
Deputy Crowned Prince Mohammed bin Salman has some hard decisions to make in light of the U.S. Congress overriding President Obama’s veto of the JASTA Bill, which passed by a large margin of 97-1 (Tim Kaine abstained from voting, instead choosing to appear at an event with Hillary Clinton. Harry Reid of Nevada was the only nay vote). This is the first bill overridden by Congress in Obama’s two terms in office, and the JASTA Bill will soon become law.
The JASTA legislation gives victims' families of the 9/11 attacks, the right to sue in U.S. court for any role that elements of the Saudi government may have played in the 2001 act of terrorism (fifteen of the nineteen September 11 hijackers were Saudi nationals).
While the world holds its’ collective breath, waiting on the outcome of this year’s U.S. Presidential Elections, Prince Mohammed bin Salman (MBS) has been a very busy man, making contingency plans for a future where The Unites States and Saudi Arabia are no longer the closest of allies.
MBS’s visit to China is part of Saudi’s Vision 2030, far sweeping plans for reform, championed by the powerful prince to cut the kingdom's reliance on oil exports and to showcase to the world (in this case China) that Saudi Arabia is a “dynamic nation with diverse opportunities for global investors.”
During Prince Mohammed’s visit to China he met with China’s vice premier Zhang Gaoli. The two discussed strategic relationships and future opportunities to “enhance” the existing partnership between the Kingdom of Saudi Arabia and China.
This meeting marks a monumental change in Saudi Arabian foreign policy in regards to their Western allies. Fifteen memorandums of understanding (MoUs) were later signed between the two nations. These MoU’s solidified deals in a host of sectors including oil storage (aka a pipeline to secure Yemeni oil), water resources, cooperation on science and technology (aka Arms sales), and “cultural” cooperation.
In April (right around the time the JASTA Bill was picking up steam), Prince Mohammed launched wide sweeping economic reforms designed after hugely successful U.A.E. models to develop non-oil industries in the K.S.A. including theme parks (Six Flags Co, is in negotiations to build a park in Saudi Arabia) and state of the art malls similar to Dubai’s Ibn Battuta Mall.
The only problem with this plan is that the K.S.A. is a despotic country run by a strict Sunni, Wahhabist monarchy with a Sharia police force that is far stricter than police forces in Dubai and the U.A.E.
Chinese and Japanese banks know that making the K.S.A. the tourist “Mecca” of the Middle East will never work and the U.A.E. model is just not suited to a country with no middle class and a poor public infrastructure.
However, foreign investment, especially Chinese and Japanese banks and companies are integral to Prince Mohammed bin Salman’s goals for Saudi Vision 2030. MBN knows that both China and Japan are salivating to get a piece of the 5% Aramco I.P.O. and he wisely flew to Japan from August 31st to September 3rd to meet with Japanese Prime Minister Shinzo Abe. From Japan, the prince returned to China to chair Saudi Arabia's delegation at the September 4th and 5th G20 summit of leaders in the eastern city of Hangzhou.
A Saudi source familiar with the trip said Prince Mohammed presented to the summit his economic reform plan, which plans on spending $72 billion in the next five years on projects to diversify the Saudi Arabian economy.
Prince Mohammed's father, King Salman, led the Saudi delegation to last year's G20 summit in Turkey. With Deputy Crowned Prince Mohammed bin Salman heading this year's delegation instead of Crowned Prince Mohammed bin Nayef is proof positive that the 31-year-old Minister of Defense will rise to the kingship upon the passing of his father.
The KSA knows they are in big trouble. With the JASTA Bill soon to become law in the United States and the West finally removing sanctions against Iran, who is already ramping up oil exports, Saudi Arabia is quickly losing ground in a number of major markets including Russia and China.
Saudi officials are in a precarious position and have discussed energy cooperation agreements with both Japan and China. Under Prince Mohammed's economic reforms, Riyadh plans to sell a stake of 5 percent (or a little less) in the national oil giant Aramco that could be worth tens of billions of dollars, and Chinese and Japanese money could prove vital in making for a smooth I.P.O. (Gamal).
The JASTA ACT is soon to be U.S. law and the Saudis are not happy about it, to say the least. Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that “Saudi Arabia would be forced to sell up to $750 billion in treasury securities and other assets in the United States before they could be in danger of being frozen by American courts (Wall Street Journal).”
Economists are skeptical that the KSA would follow through on such threats, such a large sell-off would not only be extremely hard to execute, it would also harm the Saudi economy as well. Never the less, this direct threat is just another sign of the escalating tensions between the United States and the Kingdom of Saudi Arabia.
The big question is why has the Obama Administration and U.S. policy changed so drastically in regards to the worlds largest oil supplier and a decades old, crucial American ally?
Quite simply, the Kingdom of Saudi Arabia has become a liability. For years the relationship between these two allies received little oversight, attention or scrutiny from lawmakers. However, despite ISIS being a joint venture between the C.I.A. and the House of Saud (MI6, the Mossad and Jordan), Saudi Arabia, along with Erdogan’s Turkish regime will be the fall guys for the creation of the radical Sunni Wahhabi philosophy that has left Syria in tatters and led to a population of radicalized refugees, mainly young men invading Europe.
Nobody asks why Merkel and other EU leaders would welcome such large numbers into their homelands and nobody asks why less than 3% of these refugees are Christian, despite being the most persecuted group in Syria, one of the oldest enclaves of Christianity in the Middle East.
Clearly this agenda is bigger than Merkel and other European leaders. Quite simply, it is part of the N.W.O plan to dilute European culture in hopes of eradicating nationalism (as was the formation of the E.U. in the first place).
As the JASTA Bill passes, bipartisan criticism grows louder in Congress in regards to Washington’s alliance with Saudi Arabia; with the infamous 28 pages of the 9/11 Commission going public at some point in the near future, many are jumping ship.
This past April two senators introduced a resolution that would put restrictions on American arms sales to Saudi Arabia, which have greatly expanded during the Obama administration.
The Saudi government sees the writing on the wall and is making whatever contingency plans they deem necessary. The Saudi Arabian oil giant Saudi Aramco and China’s Sinopec signed a framework agreement for strategic cooperation in September according to the Saudi state news, Saudi Press Agency. The deal is estimated to be worth between US$1 billion and US$1.5 billion (SPA).
Relations between the two nations have developed slowly, but many Saudi officials and businesses have already said there should be “broader ties with China.”
Saudi Arabia is already the biggest supplier of crude oil to China. The International Monetary Fund said that as of 2013, trade between the two nations has increased from US$1.28 billion in 1990 to US$74 billion in 2012 (IMF).
“On the military front, China provided the kingdom with up to 60 CSS-2 intermediate-range ballistic missiles in 1988 – two years before they established diplomatic ties (Pinghui).” Despite US “protests” Saudi Arabia also operates a medium-range DF-21 ballistic missile system.
Egypt was the first country in Africa and the Arab world to establish diplomatic ties with China in 1956. The two countries started larger strategic cooperative initiatives in 1999 and have expanded this into a comprehensive strategic partnership since December 2014 (Al Arabiya).
Egypt (like the United States) has a large trade imbalance with China that clearly favors the mainland. “The total trade volume reached US$11.62 billion in 2014 – a 13.8 percent increase compared with the previous year, China’s exports to Egypt increased by a quarter in 2014 to US$10.46 billion, while imports dropped 37.4 percent to US$1.16 billion (Pinghui).”
The Chinese mainland exports machines, electronics and garments, while only importing crude oil, liquefied petroleum gas and marble. China has also set up a state-level overseas economic and trade cooperation zone in Egypt using investment of US$100 million in 2014 (Pinghui).
China helped mediate the Iranian nuclear deal last July and Xi will be the first state leader to visit Iran since the nuclear-related sanctions were lifted on January 17. This does not sit well with the Saudi regime so the KSA is trying to keep all of their options open.
China and Japan are the frontrunners in terms of overall oil consumption. But the Kingdom is eager to diversify its economic relationships with both countries in non-oil sectors within the framework of the Saudi Vision 2030 as it is envisioned by Deputy Prince Mohammed bin Salman.
Saudi businessman Mohammad Al-Abdullah Al Anqari said “the presence and presentation of Vision 2030 by Prince Mohammed at the G-20 summit, which joins the largest and the most important countries in the world, represents a great contribution to the summit and proves that the Saudi vision has global dimensions.”
Japan, which imports about 1.2 million barrels a day, and China, about 1 million barrels a day, are not only major energy customers of Saudi Arabia but also partners on a variety of energy-related joint ventures and partnerships. In fact, Saudi Aramco continues to seek investment in Asian refineries from Indonesia to Vietnam, as well as China.
It is obvious to everyone in commodities that China, the world’s largest oil consumer, has been continually increasing their oil imports and reveling in the low crude oil prices.
Recent plans between Russia and Saudi Arabia to stabilize crude oil prices would cut into China’s oil hoarding. The question must be asked, Is China deliberately trying to derail the Russian/Saudi oil deals? Of course they are!
“Chinese oil imports have increased to 32.85 million tons in August, the second highest figure after the record 33.19 million tons import figures of December 2015. It’s a 7 percent increase over the same period last year, and a 6 percent increase over July. Currently, the Asian giant imports 66 percent of its crude oil requirements (Upadhyay).”
“Chinese oil majors are no longer under orders to increase domestic production, as they were doing so at a loss,” said Adam Ritchie, executive general manager for supply at Caltex Australia Ltd. “China’s change to let economics decide between imports and domestic production is a big change,” reports Bloomberg.
In recent years, Russia and Saudi Arabia, the two largest oil suppliers, have been battling it out to increase their market share in China. “While Russia has done well to increase its’ market share in China (up from 12.6 percent last year to 13.6 percent this year), the Saudi’s have seen a sharp decline during the same period (from 15.1 percent to 14 percent during the same period) (Upadhyay).”
Clearly “there’s a market-share battle going on mainly among the Middle East producers and Russia,” Olivier Jakob, managing director of Petromatrix, said by phone from Zug, Switzerland. “Rivals are making a big push into China,” reports Bloomberg.
Now that the U.S. Saudi relations are on the ropes, the KSA will have to learn to think much more strategically. Obviously any agreement between the KSA and Russia, who are both competing, oil- producing nations, would reduce the bargaining power of Chinese refiners to a great extent. Already China has begun to choose the spot sales offered by Russia against the long-term contract policies of Saudi Arabia.
In a public statement recently, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources Khalid Al-Falih stated he is “optimistic that other large oil producers will join forces with Russia and Saudi Arabia to take appropriate steps to stabilize the markets.” I wouldn’t hold your breath waiting on that prediction to come true.
Al-Falih continues "we are optimistic that (the) Algiers meeting (to be held in November) will provide a forum, and pre-Algiers consultations, which will take place bilaterally and in groups, will bring us to Algiers with some sort of coordinated decisions.” But Al-Falih agrees, “even if there is no consensus, we will be willing to take joint action when necessary.”
Along with all the infighting and deal making between Russia, the KSA and other OPEC countries, China and the U.S. recently announced their formal joining of the Paris Agreement. China has agreed to wean their economy away from the use of fossil fuels if it expects to achieve its target of carbon emissions by 2030. In order to realize this shift, “China will have to make an initial investment of $5.2 trillion in lean energy technologies, which will lead to $8.3 trillion in savings by 2050, according to a recent study (Reinventing fire: China.)”
Naturally, as a major importer of oil, China will want any and all cooperation between Saudi Arabia and Russia to fail so crude oil prices continue to remain low. If China can make that happen, it can postpone investments into fossil fuels and divert that money towards “clean” technology, which will help it to reduce its carbon footprint.
The West has placed the KSA in a precarious position with these nonsensical carbon tax schemes. The Russians may not buy into it, but the Saudis may not have a choice since 90% of their economy is based on crude oil production.
Eventually Saudi Arabia will have to choose sides, if Hillary Clinton becomes the next POTUS she may make good on her promises to the Saudis (who are one of her largest Superpacts) and we can return to business as usual: destroying any sense of stability in the Middle East, Europe and continuing U.S. proxy wars the world over.
It is no secret that the KSA has refused an audit of their oil supplies and rumors of fracking the Ghawar well (Saudi’s largest oil well) to continue daily production quotas are legitimate. While the KSA has other wells, none are as big as the Ghawar and Saudi Arabia may well be past peak production.
Yemen on the other hand has plenty of untapped oil wells but lacks the infrastructure and refining capabilities. An escalation of the conflict in Yemen could allow Saudi Arabia to secure the resources it needs to remain big man on the slippery oil totem pole. Only the United States (with assistance from the CIA and ISIS) can help the KSA install a puppet regime in Yemen.
This pipeline will also need the help of Western globalist “banksters” to manifest the financing needed for this oil pipeline from Yemen, through Djibouti directly to Saudi oil refineries. The Saudis may have to maintain the status quo and remain loyal to the West. Saudi Arabia will certainly have a much harder time negotiating with the East, but certain language to take the teeth out of the JASTA Bill will have to be implemented by the next U.S. President.
The last thing the Western Globalists want is for Saudi Arabia to join the BRICS, and unless relations are patched up between the United States and the KSA, a Saudi pivot East and a secret agreement to join the BRICS may already be in the works.
Rumors abound that Saudi Arabia has secretly made a deal with China to simultaneously dump their US Treasury Bonds in tandem, crashing the entire economic system, forcing the United States to go back to a gold standard and play ball with the BRICS nations. Sources close to the House of Saud believe that this will be an inevitable eventuality unless the U.S. does something to reaffirm their commitment to the House of Saud.
Others believe that this economic crash is part of the great work of the ages; a N.W.O plan to spark World War III and bring in a new financial system.
Saudi Arabia and China (as well as Pakistan) have signed economic and military agreements in the last few months. If the Saudis have secretly agreed to join the BRICS, it may give the Globalists a reason to topple the House of Saud. The Saudis know that joining the BRICS would be the proverbial straw to “break the camels back” and unleash the wrath of the Anglo-American power structure and they are certainly preparing for that eventuality.
The big question is will Russia and or China allow such a move? The BRICs alone could topple western economic hegemony. Already Syria, Yemen, the Ukraine, the Baltics and Soykaku Islands are all flashpoints for a hot war to erupt.
China has the West in a precarious position to say the least when it comes to hard assets such as silver and gold. For the time being China is content to continue building their Silk Road into Europe, expanding the BRICS to other nations and syphoning real estate, precious metals and other commodities from the United States, just as the United States has done to third world countries who cannot bay back their debts.
While Russia has shown amazing restraint to U.S. provocations, China grows more bellicose as they grow stronger economically. A variety of situations could lead to an all out war with Russia, China and their allies, a Democrat U.S. President like Hillary Clinton, coupled with a neo-con administration, may be willing to roll the dice and see what may come if push comes to shove.
We have clearly crossed the “economic Rubicon” in 2008, and by not fixing the problems that caused the crash, reinstating Glass-Steagall, letting banks fail and putting the “banksters” who caused the crash in prison, the West has decided to just paper over these major, systemic problems and kick the economic can down the road.
The old adage of trade wars, currency wars and eventually world wars has come to pass twice in the previous century, there is no reason why it won’t hold true in the 21st century. It is one way to pull nation states out of economic depressions, but in the next global clash of civilizations this old model will not work as it has in the past.
If World War III were to start today the “allies” would be the United States, the UK, India, Japan, Iran and depending on the cause, some fragmented form of NATO (the side that Germany would take in this hypothetical conflict would be pivotal and hard to foresee without a cause for this war).
The “axis” in this 21st century conflict would be Russia, China, Pakistan and the Sunni Muslim countries (China, Pakistan and Saudi Arabia have already formed a military pact this September).
Only ten short years ago, this type of alignment would seem ridiculous to “think tanks” and intelligence services, but just in the last few years, the global chest board has been overturned and recent trends have rapidly moved in the direction of these new alignments in lieu of any type of “New World Order.”
Global events in recent years including the Arab Spring, the Syrian and Yemeni Wars, the proxy war taking place in the Ukraine, the US-Iran nuclear agreement, and China’s policies in the East and South China Seas, have all advanced global geopolitics along this new trend line.
On October 8th, a Saudi airstrike in Yemen at a funeral in the city of Sana killed over 140 people and wounded 500 but Saudi Arabia’s 20-month war in Yemen hardly draws any attention in the Western media. While U.S./Saudi relations are strained, it is not because of the conflict in Yemen.
Morally and perhaps legally, America and Britain are complicit in Saudi actions by selling warplanes and munitions to the Saudi regime; they also provide mid-air refueling and help with ground targeting.
Saudi Arabia is said to be an ally against jihadism but it inflames global extremism through its’ export of intolerant Wahhabi doctrines and has done nothing to stem the flow of refugees from Syria, let alone take any refugees into their own country.
There are new alignments being made. Most of these alliances are not shallow political policies made for domestic consumption. They are being made for economic dominance and other alignments are deep in the DNA of the countries, based on experiences of multiple generations over centuries.
If we see any terrorism in Saudi Arabia, the alliance between the United States and the House of Saud is over. If we see the United States continue to look the other way and covertly help the Saudi agenda in Yemen then the alliance is still strong.
While much depends on the outcome of the United States Presidential Election, the Saudis are making plans to pivot East, either slowly over time, or quickly and without notice. The United States is well aware of this and we are no longer going to play softball with the regime.
The Western elite brought the House of Saud to power and they can just as easily take them out. What China and Pakistan will do (since the three countries have recently signed a military alliance) remains unknown. The only thing that can be certain is that there will be monumental effects in the economic markets in the next 24 months.