23 October 2018

How a Journalist's Disappearance Could Affect U.S.-Saudi Ties

The Khashoggi affair is unlikely to cause a rupture between the United States and Saudi Arabia because of their deep and longstanding ties. While the United States could follow any number of courses of action, it is Congress, not the president, that will likely lead the way. Riyadh could retaliate against Washington in a variety of ways, but the United States will remain on the front foot in shaping the countries' relations following Khashoggi's disappearance. Just how far will the U.S.-Saudi fallout over the disappearance of journalist and dissident Jamal Khashoggi go? There is a lot at stake: The United States needs Saudi Arabia to balance oil markets, combat Iran, fight terrorism and purchase arms. Saudi Arabia, in turn, needs American weapons and defense cooperation, access to U.S. technology and investment, and U.S. protection against a resurgent Tehran. It all means that the geopolitical ties that bind Riyadh and Washington are likely to remain tight. But with congressional rhetoric hot and media outrage at a fever pitch, American repercussions against the kingdom are likely in some form — though the Saudis aren't devoid of their own courses of action either.

The Big Picture

The U.S.-Saudi alliance is a linchpin of the Middle East's strategic situation. Both countries are bearing down on Iran, and both are working together to ensure the safety and stability of the world’s oil markets. Occasionally, however, cracks have emerged in their relationship — including now, as Crown Prince Mohammed bin Salman pursues his own policies with a speed and brazenness that has unnerved key allies and investors.

America's Choices

At least four investigations are ostensibly attempting to determine Khashoggi's fate: one led by Turkey, another by Turkey together with Saudi Arabia, a third by the United States and one by Saudi Arabia itself. In the main, however, it is the U.S. government that must decide if and how it will act. Both the U.S. Congress and the White House have signaled they will take action if firm proof emerges that the Saudi government assassinated Khashoggi, although Congress has been more strident in its rhetoric than the White House.

U.S. President Donald Trump could choose to spearhead the response by imposing sanctions on Saudi individuals and entities, tearing up arms deals or reducing U.S. support for Riyadh's military intervention in Yemen. But Trump has signaled that he considers arms deals too important — to say nothing of Riyadh's significance as a bulwark against the administration's enemy No. 1, Iran — to risk over the Khashoggi affair, and even if he hadn't signaled so clearly, his administration no longer views human rights as a cornerstone of U.S. foreign policy. The White House may, like Riyadh, simply try to wait out the controversy and continue relations as normal after a time; it's a strategy that could come to pass if the White House accepts the Saudis' purported explanation that Khashoggi died accidentally under interrogation.

That response may leave the ball in Congress' court. If proof emerges that Riyadh was responsible for killing Khashoggi, a bipartisan majority in Congress could pass legislation against Saudi Arabia or block arms sales. In a more extreme case, a supermajority of two-thirds of the U.S. House and the U.S. Senate could vote to override any presidential veto of congressional actions. Such actions are not without precedent: In the 1980s, Congress delayed or blocked several of the Reagan administration's arms deals with Saudi Arabia, while Congress also passed the Justice Against Sponsors of Terrorism Act in 2016 despite intensive Saudi lobbying, as well as a presidential veto.

Congress could take varying actions against Saudi Arabia, including the highest-profile action: targeting the bilateral arms trade.

Ultimately, Congress could take varying actions against Saudi Arabia, including the highest-profile action: targeting the bilateral arms trade. However, because Saudi Arabia is the biggest destination for U.S. weapons, accounting for 18 percent of all American arms exports, Congress has a powerful economic incentive to avoid a full rupture. Moreover, security ties are strong between the United States and Saudi Arabia, and Riyadh's position as an anti-Iran power remains invaluable to Washington.

Congress may also push through legislation such as its once-proposed No Oil Producing and Exporting Cartels Act (NOPEC) to undercut the power of OPEC. Though the NOPEC bill has foundered in Congress previously, renewed anti-Saudi feeling, combined with higher oil prices, may create a political climate that aids in its passage. NOPEC, unlike arms deals, also aligns with some of Trump's own political priorities, as the president has publicly scolded Saudi Arabia on oil prices and criticized OPEC, making it less likely that the bill would need a veto-proof supermajority to pass.
Riyadh's Response

Saudi Arabia could pursue a series of measures in response to concerted U.S. pressure over Khashoggi's disappearance. For one, the country may yet flirt with other arms suppliers, as Riyadh strives to insulate itself from an overriding reliance on the United States. The country is exploring relationships with new arms providers such as China and Russia (it already has expressed an interest in acquiring Russia's S-400 air defense missile system), strengthening its own arms industry, opening up new avenues for a partnership with Israel and bolstering its own regional coalitions, especially with the United Arab Emirates, to offset some of its need for the United States.

Nevertheless, Saudi Arabia remains on the comparative back foot when it comes to arms deals, as it cannot rapidly replace the United States as an arms supplier with China or Russia, meaning it will remain reliant on U.S. technology and training for the time being. More than that, U.S. intelligence has also been a boon for Saudi Arabia's intervention in Yemen. And then there is the question of defense if Saudi Arabia ever went to war with Iran. After all, neither Moscow nor Beijing are in a position to protect Riyadh as the Kremlin did for Damascus.

But even if the United States does retain the upper hand when it comes to arms deals, Saudi Arabia has other options, such as the pace at which it's willing to increase oil production to offset Iranian sanctions. It could also make a show of divesting from the United States in high-profile or politically sensitive locations and replicate its German and Canadian diplomatic spats by pulling Saudi students from U.S. schools, canceling contracts with symbolically meaningful U.S. companies and downgrading diplomatic relations.

Each of Riyadh's potential moves could ignite more meaningful U.S. retaliation.

Each of these moves, however, could ignite more meaningful U.S. retaliation and increase the likelihood that Congress passes new anti-Saudi legislation, such as NOPEC, that the White House imposes sanctions or even that the U.S. political environment becomes more conducive to the severance of arms deals and defense ties. Accordingly, Saudi Arabia might opt for the less dangerous move of compartmentalizing the scandal internally. Riyadh could lay blame on symbolic individuals and, potentially in accordance with negotiations with the United States, permit Washington to sanction relatively unimportant individuals within the country. It may even attempt to mollify congressional opinion by arresting and trying "rogue agents" for Khashoggi's murder. (And because the monarchy so closely controls the kingdom's courts, verdicts would be a foregone conclusion.)

Saudi Arabia could also commence a slow pivot away from the petrodollar and conduct more trade in non-dollar currencies — although the long time frame required for such a move and the uncertainty surrounding it will slow this course of action.

Finally, Crown Prince Mohammed bin Salman himself — the person widely accused of ordering the operation against Khashoggi — may lose some of his powers at the behest of King Salman. Because of his high royal status, the current heir apparent is unlikely to endure sanction, arrest or exile, but rivals who have earned more of King Salman's trust could supplant the crown prince in some of his positions, including that of defense minister. Alternatively, King Salman could reduce his son's media visibility, prevent him from traveling abroad to conduct foreign policy or ensure he is no longer the face of Vision 2030, if not reduce the emphasis on the ambitious reform program altogether. But the most dramatic change would be Mohammed bin Salman's demotion from the position of crown prince, just two years after he maneuvered to grab the post from his cousin, Mohammed bin Nayef.

The Khashoggi affair has convinced multiple sponsors and Western companies to cancel their attendance at the crown prince's prominent investment conference later this month. Already, Saudi Arabia is banking on its closest Gulf Cooperation Council (GCC) neighbors — Bahrain, the United Arab Emirates and Kuwait — to stand in solidarity if Riyadh chooses to boycott prominent companies that pull out of the investment conference.
Looking Ahead

Foreign investors who already have shown hesitation in participating in the kingdom's Vision 2030 program now have another reason to steer clear of working with an unpredictable Riyadh. On a bilateral level, Saudi Arabia and the United States still have powerful reasons to stick together on the fundamentals, but disruption remains a real possibility, with the makeup and decisions of the post-midterm Congress (a number of sitting lawmakers are not seeking re-election next month) likely to prove instrumental in determining how much the Khashoggi affair affects their relationship. Saudi Arabia has plenty of ways to retaliate against any U.S. action, although a move to pin the blame on scapegoats appears to be the least risky option for Riyadh. But as the bigger of the two powers, it is the United States — and, more specifically, the U.S. Congress — that will ultimately define the scope and scale of the fallout.

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