Saudi Shakeup(down) is the Geopolitical Event of the Year

trump-putin-saudi-middle-east

Crown Prince Mohammed bin Salman’s reign in Saudi Arabia has begun.  What started as a proverbial ‘Night of the Long Knives’ has become more like a week.  And it will likely stretch on far longer than that.

His moves have been about much more than just consolidating the power handed to him by his Father King Abdallah.  It is about making massive changes to the business of the kingdom.  Bin Salman in just five days has completely remade and dismantled a status quo that goes back decades.

In my initial reaction to the purge the other day I wrote on my blog:

Nothing has changed economically for the Saudis.  Bin Salman’s moves this weekend are in line with Donald Trump’s mandate to clean up the corruption of U.S. media and political institutions. The people who were purged, especially Prince Alwaleed bin Talal, who was the main vector of such corruption.

He and Trump were public enemies, sparring on Twitter.  His reach within the U.S. was long.  This purge, in my mind, was done in part as payment for Trump’s backing bin Salman’s regime.  At the same time Putin wants assurances that the Saudis will keep their adventurism to a minimum.

I still feel that way now.  In fact, I feel more strongly that bin Salman has completely capitulated to the big players in the region, the U.S. and Russia.  The former Saudi regime was pursuing a suicidal path which, in the beginning, bin Salman was continuing.

The wars in Syria and Yemen were his operations.  So was the diplomatic isolation of Qatar in June.  These were all aggressive moves made in concert with Israel to oust Iranian influence on the Arabia peninsula and in Syria.

The problem is that these projects are both abject failures.

Failure is an Option

So was the oil price war it picked with both the U.S. and Russia.  The expectation was a continuance of the Obama/Clinton policy which would allow the Saudis to keep pressuring U.S. shale producers.  But that didn’t work because Russia emerged as the producer of the marginal barrel of oil in the world, a position wholly supported by China, who is the consumer of said marginal barrel.

Low oil prices have gutted the country’s finances because of its continued peg of its currency, the Riyal, to the U.S. dollar.  And, amidst this financial crisis that cannot abate if his kingdom wants any support from the U.S. at all bin Salman did the next best thing.

He went after the money squirreled away by his political opposition and, according to this report, in addition the $30+ billion he’s already seized there’s upwards of $800 billion in assets available.

What this says to me is that the Aramco IPO is on hold since the goal was to raise $400 billion from the sale of a stake in the company.  That is what will be used to fuel bin Salman’s Vision 2030 plan to modernize Saudi Arabia’s economy.

Whether that’s possible is beyond anyone’s guess, but the fact remains that the Aramco IPO was never going to bring in that kind of money.

It was announced today that the Saudis have lifted the embargo of the Yemeni port at Aden.  It remains to be seen what this is a prelude to, but if it is the first step towards ending the disastrous war there then it is very interesting.

Israeli Connection

These moves also bring up other issues.  In recent days the de facto, but never admitted, alliance between the Saudis and Israel was, effectively, outed by a leaked memo from the Israeli Foreign Ministry which discussed openly coordinating pro-Saudi/anti-Iranian-Lebanese talking points.

It’s also well established that deposed Prince Alaweed and former Crown Prince Nayef were the favorites of the U.S. CIA, or, at least a faction within the CIA.  Now, with them out of the picture it says two things.

  • Israel now has more pull within Saudi Arabia than previously thought
  • Trump’s war against the CIA has netted him a major concession.

What do I mean by point #2?  Simple.  Why did Trump push for making the JFK files public right after the Uranium One bombshell?  To force a negotiation with his enemies at our various intelligence agencies and grease the skids for what is happening in Saudi Arabia is one possible explanation.

For months I’ve held to the belief that Trump and Putin were inching towards a grand bargain for peace in the Middle East.

By isolating Qatar, the Saudis, as odious as they are, are defining the sides in this new Arab world.  And this is something that I expect Trump and Putin, behind the scenes, have been pushing for, along with, as Trump made clear in his speech two weeks ago, that terrorism and internecine fighting amongst the Arabs sects has to end.

Saudi Arabia hosting that speech tells you everything you need to know about where their future lies.  Qatar is being turned into the scapegoat for the Arab world’s crimes.  And the question remains where will they turn?  Or, more importantly, where will they be allowed to turn.

But, no matter where they turn, further support of radical Wahabi terrorism has to end.  The Saudis just told them the game is over to the West and Iran (and Russia) won’t stand for it to the east.

And that, is how the beginnings of de-escalation around the region begins.

The collapse of ISIS in Syria and Iraq set the stage for this Trump/Putin by Proxy coup of Saudi Arabia.

The Trump and Putin Show

And while Trump has spent a lot of time making overtly supportive noises for Israel, the reality on the ground is that Israel is closer to a moment where they will no longer be allowed to break all the rules and expect the U.S. to back them up than at any time in its history.

With the U.S. on one side ensuring the behavior of the wayward Saudis and Israelis and Russia on the other guaranteeing that Iran and Hezbollah don’t take advantage of their weakened positions that forms the framework for a substantive and lasting peace process in the region.

With Trump and Putin set to meet soon in Vietnam, I suspect this will be the main topic of conversation.  Trump has activated his side of the plan.  Now the next moves will come from Putin, likely to begin at the Sochi Summit on the 18th where the Syria political negotiations are set to begin.

The picture is clearing up.  The narrative that Trump colluded with Russia to steal the election was also meant to forestall these events from occurring.  Now that they have and we’re closer to a peaceful framework than we’ve ever been, it will be time for everyone to stand back and admire the chutzpah it took to pull it off.


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About the Author

Tom Luongo

Tom Luongo is a contributor at Newsmax Media for Financial Intelligence Report. He also writes regularly at Seeking Alpha and Russia Insider. Tom is a professional chemist, amateur dairy goat farmer and outspoken Austrian Economist. You can follow him at:
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