If the Saudi Arabia Situation Doesn't Worry You, You're Not Paying Attention

While turbulent during the best of times, gigantic waves of change are now sweeping across the Middle East. The magnitude is such that the impact on the global price of oil, as well as world markets, is likely to be enormous.

A dramatic geo-political realignment by Saudi Arabia is in full swing this month. It's upending many decades of established strategic relationships among the world's superpowers and, in particular, is throwing the Middle East into turmoil.

So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.

The main elements currently in play are these:

  • A sudden and intense purging of powerful Saudi insiders (arrests, deaths, & asset seizures)
  • Huge changes in domestic policy and strategy
  • A shift away from the US in all respects (politically, financially and militarily)
  • Deepening ties to China
  • A surprising turn towards Russia (economically and militarily)
  • Increasing cooperation and alignment with Israel (the enemy of my enemy is my friend?)

Taken together, this is tectonic change happening at blazing speed.

That it's receiving too little attention in the US press given the implications, is a tip off as to just how big a deal this is -- as we're all familiar by now with how the greater the actual relevance and importance of a development, the less press coverage it receives. This is not a direct conspiracy; it's just what happens when your press becomes an organ of the state and other powerful interests. Like a dog trained with daily rewards and punishments, after a while the press needs no further instruction on the house rules.

It does emphasize, however, that to be accurately informed about what's going on, we have to do our own homework. Here's a short primer to help get you started.

A Quick Primer

Unless you study it intensively, Saudi politics are difficult to follow because they are rooted in the drama of a very large and dysfunctional family battling over its immense wealth. If you think your own family is nuts, multiply the crazy factor by 1,000, sprinkle in a willingness to kill any family members who get in your way, and you'll have the right perspective for grasping how Saudi 'politics' operate.

The House of Saud is the ruling royal family of the Kingdom of Saudi Arabia (hereafter referred to as "KSA") and consists of some 15,000 members. The majority of the power and wealth is concentrated in the hands of roughly 2,000 individuals. 4,000 male princes are in the mix, plus a larger number of involved females -- all trying to either hang on to or climb up a constantly-shifting mountain of power.

Here's a handy chart to explain the lineage of power in KSA over the decades:

(Source)

We'll get to the current ruler, King Salman, and his powerful son, Mohammed Bin Salman (age 32), shortly. Before we do, though, let's talk about the most seminal moment in recent Saudi history: the key oil-for-money-and-protection deal struck between the Nixon administration and King Faisal back in the early 1970's.

This pivotal agreement allowed KSA to secretly recycle its surplus petrodollars back into US Treasuries while receiving US military protection in exchange. The secret was kept for 41 years, only recently revealed in 2016 due to a Bloomberg FOIA request:

The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America's spending.
It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the country's Treasury purchases stay “strictly secret," according to a diplomatic cable obtained by Bloomberg from the National Archives database.
“Buying bonds and all that was a strategy to recycle petrodollars back into the U.S.," said David Ottaway, a Middle East fellow at the Woodrow Wilson International Center in Washington. But politically, “it's always been an ambiguous, constrained relationship."
(Source)

The essence of this deal is pretty simple. KSA wanted to be able to sell its oil to its then largest buyer, the USA, while also having a safe place to park the funds, plus receive military protection to boot. But it didn't want anybody else, especially its Arab neighbors, to know that it was partnering so intimately with the US who, in turn, would be supporting Israel. That would have been politically incendiary in the Middle East region, coming as it did right on the heels of the Yom Kipper War (1973).

As for the US, it got the oil it wanted and – double bonus time here – got KSA to recycle the very same dollars used to buy that oil back into Treasuries and contracts for US military equipment and training.

Sweet deal.

Note that this is yet another secret world-shaping deal successfully kept out of the media for over four decades. Yes Virginia, conspiracies do happen. Secrets can be (and are routinely) kept by hundreds, even thousands, of people over long stretches of time.

Since that key deal was struck back in the early 1970s, the KSA has remained a steadfast supporter of the US and vice versa. In return, the US has never said anything substantive about KSA's alleged involvement in 9/11 or its grotesque human and women's rights violations. Not a peep.

Until recently.

Then Things Started To Break Down

In 2015, King Salman came to power. Things began to change pretty quickly, especially once he elevated his son Mohammed bin Salman (MBS) to a position of greater power.

Among MBS's first acts was to directly involve KSA into the Yemen civil war, with both troops on the ground and aerial bombings. That war has killed thousands of civilians while creating a humanitarian crisis that includes the largest modern-day outbreak of cholera, which is decimating highly populated areas. The conflct, which is considered a 'proxy war' because Iran is backing the Houthi rebels while KSA is backing the Yemeni government, continues to this day.

Then in 2016, KSA threatened to dump its $750 billion in (stated) US assets in response to a bill in Congress that would have released sensitive information implicating Saudi Arabia's involvement in 9/11. Then-president Obama had to fly over there to smooth things out. It seems the job he did was insufficient; because KSA-US relations unraveled at an accelerating pace afterwards. Mission NOT accomplished, it would seem.

In 2017, KSA accused Qatar of nefarious acts and made such extraordinary demands that an outbreak of war nearly broke out over the dispute., The Qatari leadership later accused KSA of fomenting 'regime change', souring the situation further. Again, Iran backed the Qatar government, which turned this conflict into another proxy battle between the two main Gulf region superpowers.

In parallel with all this, KSA was also supporting the mercenaries (aka "rebels" in western press) who were seeking to overthrow Assad in Syria -- yet another proxy war between KSA and Iran. It's been an open secret that, during this conflict, KSA has been providing support to some seriously bad terrorist organizations like Al-Qaeda, ISIS and other supposed enemies of the US/NATO. (Again, the US has never said 'boo' about that, proving that US rhetoric against "terrorists" is a fickle construct of political convenience, not a moral matter.)

Once Russia entered the war on the side of Syria's legitimate government, the US and KSA (and Israel) lost their momentum. Their dreams of toppling Assad and turning Syria into another failed petro-state like they did with Iraq and Libya are not likely to pan out as hoped.

But rather than retreat to lick their wounds, KSA's King Salman and his son are proving to be a lot nimbler than their predecessors.

Rather than continue a losing battle in Syria, they've instead turned their energies and attention to dramatically reshaping KSA's internal power structures:

Saudi Arabia's Saturday Night Massacre
For nearly a century, Saudi Arabia has been ruled by the elders of a royal family that now finds itself effectively controlled by a 32-year-old crown prince, Mohammad bin Salman. He helms the Defense Ministry, he has extravagant plans for economic development, and last week arranged for the arrest of some of the most powerful ministers and princes in the country.
A day before the arrests were announced, Houthi tribesmen in Yemen but allied with Iran, Saudi Arabia's regional rival, fired a ballistic missile at Riyadh.
The Saudis claim the missile came from Iran and that its firing might be considered “an act of war."
Saudi Arabia was created between the two world wars under British guidance. In the 1920s, a tribe known as the Sauds defeated the Hashemites, effectively annexing the exterior parts of Saudi Arabia they did not yet control. The United Kingdom recognized the Sauds' claim shortly thereafter. But since then, the Saudi tribe has been torn by ambition, resentment and intrigue. The Saudi royal family has more in common with the Corleones than with a Norman Rockwell painting.
The direct attack was undoubtedly met with threats of a coup. Whether one was actually planned didn't matter. Mohammed Bin Salman had to assume these threats were credible since so many interests were under attack. So he struck first, arresting princes and ex-minsters who constituted the Saudi elite. It was a dangerous gamble. A powerful opposition still exists, but he had no choice but to act. He could either strike as he did last Saturday night, or allow his enemies to choose the time and place of that attack. Nothing is secure yet, but with this strike, there is a chance he might have bought time. Any Saudi who would take on princes and clerics is obviously desperate, but he may well break the hold of the financial and religious elite.
(Source)

This 32 year-old prince, Mohammed bin Salman has struck first and deep, completely upending the internal power dynamics of Saudi Arabia.

He's taken on the political, financial and religious elites head on. For example, pushing through the decision to allow women to drive; a provocative move designed to send a clear message to the clerics who might oppose him. That message is: "I'm not fooling around here."

This is a classic example of how one goes about purging the opposition when either taking over a government after a coup, or implementing a big new strategy at a major corporation. You have to remove any possible opponents and then install your own loyalists. According the Rules for Rulers, you do this by diverting a portion of the flow of funds to your new backers while diminishing, imprisoning or killing all potential enemies.

So far, Mohammed bin Salman's action plan is par for the course. No surprises.

The above article from Stratfor (well worth reading in its entirety) continues with these interesting insights:

The Iranians have been doing well since the nuclear deal was signed in 2015. They have become the dominant political force in Iraq. Their support for the Bashar Assad regime in Syria may not have been enough to save him, but Iran was on what appears to be the winning side in the Syrian civil war. Hezbollah has been hurt by its participation in the war but is reviving, carrying Iranian influence in Lebanon at a time when Lebanon is in crisis after the resignation of its prime minister last week.
The Saudis, on the other hand, aren't doing as well. The Saudi-built anti-Houthi coalition in Yemen has failed to break the Houthi-led opposition. And Iran has openly entered into an alliance with Qatar against the wishes of the Saudis and their ally, the United Arab Emirates.
Iran seems to sense the possibility of achieving a dream: destabilizing Saudi Arabia, ending its ability to support anti-Iranian forces, and breaking the power of the Sunni Wahhabis. Iran must look at the arrests in Saudi Arabia as a very bad move. And they may be. Mohammad bin Salman has backed the fundamentalists and the financial elite against the wall.
They are desperate, and now it is their turn to roll the dice. If they fall short, it could result in a civil war in Saudi Arabia. If Iran can hit Riyadh with missiles, the crown prince's opponents could argue that the young prince is so busy with his plans that he isn't paying attention to the real threat. For the Iranians, the best outcome is to have no one come out on top.
This would reconfigure the geopolitics of the Middle East, and since the U.S. is deeply involved there, it has decisions to make.

So given Yemen, Syria, and its recent domestic purges, Saudi Arabia is in turmoil. It's in a far weaker position than it was a short while ago.

This leaves the US in a far weaker regional position, too, at precisely the time when China and Russia are increasing their own presence (which we'll get to next).

But first we have to discuss what might happen if a civil war were to engulf Saudi Arabia. The price of oil would undoubtedly spike. In turn, that would cripple the weaker countries, companies and households around the world that simply cannot afford a higher oil price. And there's a lot of them.

Financial markets would destabilize as long-suppressed volatility would explode higher, creating horrific losses across the board. That very few investors are mentally or financially prepared for such carnage is a massive understatement.

So..if you were Saudi Arabia, in need of helpful allies after being bogged down in an unwinnable war in Yemen, just defeated in a proxy war in Syria, and your longtime 'ally', the US, is busy pumping as much of its own oil as it can, what would you do?

Pivot To China

Given its situation, is it really any surprise that King Salman and his son have decided to pivot to China? In need of a new partner that would align better with their current and future interests, China is the obvious first choice.

So in March 2017, only a very short while after Obama's failed visit, a large and well-prepared KSA entourage accompanied King Salman to Beijing and inked tens of billions in new business deals:

China, Saudi Arabia eye $65 billion in deals as king visits
Mar 16, 2017
BEIJING (Reuters) - Saudi Arabia's King Salman oversaw the signing of deals worth as much as $65 billion on the first day of a visit to Beijing on Thursday, as the world's largest oil exporter looks to cement ties with the world's second-largest economy.
The deals included a memorandum of understanding (MoU) between giant state oil firm Saudi Aramco and China North Industries Group Corp (Norinco), to look into building refining and chemical plants in China.
Saudi Basic Industries Corp (SABIC) and Sinopec, which already jointly run a chemical complex in Tinajin, also agreed to develop petrochemical projects in both China and Saudi Arabia.
Salman told Xi he hoped China could play an even greater role in Middle East affairs, the ministry added.
Deputy Chinese Foreign Minister Zhang Ming said the memorandums of understanding and letters of intent were potentially worth about $65 billion, involving everything from energy to space.
(Source)

This was a very big deal in terms of Middle East geopolitics. It shook up many decades of established power, resulting in a shift away from dependence on America.

The Saudis arrived in China with such a huge crowd in tow that a reported 150 cooks had been brought along to just to feed everyone in the Saudi visitation party.

The resulting deals struck involved everything from energy to infrastructure to information technology to space. And this was just on the first visit. Quite often a brand new trade delegation event involves posturing and bluffing and feeling each other out; not deals being struck. So it's clear that before the visit, well before, lots and lots of deals were being negotiated and terms agreed to so that the thick MOU files were ready to sign during the actual visit.

The scope and size of these business deals are eye catching, but the real clincher is King Salman's public statement expressing hope China will play "an even greater role in Middle East affairs."

That, right there, is the sound of the geopolitical axis-tilting. That public statement tells us everything we need to know about the sort of change the Salman dynasty intends to pursue.

So it should have surprised no one to hear that, in August this year, another $70 billion of new deals were announced between China and KSA. The fanfare extolled that Saudi-Sino relations had entered a new era, with “the agreements covering investment, trade, energy, postal service, communications, and media."

This is a very rapid pace for such large deals. If KSA and China were dating, they'd be talking about moving in together already. They're clearly at the selecting furniture and carpet samples stage.

As for the US? It seems KSA isn't even returning its calls or texts at this point.

You Ain't Seen Nothing Yet...

All of the above merely describes how we arrived at where things stand today.

But as mentioned, the power grab underway in KSA by Mohammed bin Salman is unfolding in real-time. Developments are happening hourly -- while writing this, the very high-profile Prince Bandar bin Sultan (recent head of Saudi Intelligence and former longtime ambassador to the US) has been arrested.

The trajectory of events is headed in a direction that may well end the arrangement that has served as the axis around which geopolitics has spun for the past 40 years. The Saudis want new partners, and are courting China hard.

China, for reasons we discuss in Part 2 of this report, has an existential need to supplant America as Saudi Arabia's most vital oil customer.

And both Saudi Arabia and China are inking an increasing number of strategic oil deals with Russia. Why? We get into that in Part 2, too -- but suffice it to say, in the fast-shifting world of KSA foreign policy, it's China and Russia 'in', US 'out'.

Maybe not all the way out, but the US clearly has lost a lot of ground with KSA over the past few years. My analysis is that by funding an insane amount of shale oil development, at a loss, and at any cost (such as to our biggest Mideast ally) the US has time and again displayed that our 'friendship' does not run very deep. In a world where loyalty counts, the US has proved a disloyal partner. Can China position itself to be perceived of as a better mate? When it comes to business, I believe the answer is 'yes.'

In Part 2: The Oil Threat we couple these developments with China and Russia's recent efforts to drop the dollar from trade, especially when purchasing oil, and clearly see the unfolding of the biggest new driver of the world's financial, monetary and geopolitical arrangements in 50 years.

We also explain why, unless something very dramatically changes in either the supply or demand equation for oil, and soon, we can now put a timeline in place for when the great unraveling begins. Somewhere between the second half of 2018 and the end of 2019 oil will dramatically increase in price and that will shake the foundations of the global mountain of debt and its related underfunded liabilities. Think 9.0 on the financial Richter scale.

Let me be blunt - you have to have your preparations done before this happens. You really, really want to be a year early on this (at least). When it starts happening, the breakdown will progress faster than you can react.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

We've finally heard some news on the migrant caravan. Some of the migrants have given up and gone back home, but some are still there waiting at the border. A leader representing the group has decided to step forward, and he's made out a list of... demands. Remember when I said back in October that this caravan was originally formed as a Leftist act against the Honduran government by people with ties to Venezuela and Cuba? Well what do you know… wait until you hear who this guy is.

RELATED: BOMBSHELL: Filmmaker Ami Horowitz blows the lid off media's deceit about the migrant caravan

Alfonso Guerrero personally walked into the U.S. Consulate in Tijuana, Mexico with a list of demands from the caravan. Get a load of this. The caravan is demanding that if they're not granted immediate asylum they want the following:

  1. Fifty thousand dollars in cash for every caravan member (which would be a total of tens of millions).
  2. The immediate removal of all U.S. economic and military assets in Honduras.

Failure to comply to these demands will result in the caravan continuing to try and penetrate the U.S. border.

I mean, if you're trying to appear like some grassroots movement for migrants that are just escaping the dangers of their own country, you might want to - oh I don't know - tone down the crazy Leftist freedom fighter schtick. I'm just saying. Demanding millions of dollars AND the removal of the U.S. military from Honduras kinda just screams, "Hey check me out. I'm a Marxist terrorist." It would have been basically the same thing if he just charged up to the embassy wearing a beret and shouted "Viva la Revolution!!" while firing off an RPG.

Well, it turns out this isn't the first time Mr Guerrero has tried to claim asylum. Back in 1987 he claimed asylum in Mexico after being suspected by the Honduran and U.S. government for - wait for it - left wing terrorism… Jeez, you know you really can't make this stuff up. This is INSANE. Here's the story…

This is ridiculous. Can we all now agree that this entire charade is a fraudulent scam?

In 1987 Honduras was ground zero for U.S. and Soviet proxy forces fighting the Cold War. The Contra rebels were actually based there, and leftists terrorists would sometimes carry out operations in the country in response. On August 8th a bomb was thrown into the China Palace restaurant, just a few miles from the U.S. military base in Honduras. Six American soldiers were injured in the blast. Alfonso Guerrero was the primary suspect. He escaped to Mexico and claimed asylum. The Reagan Administration charged the Mexican government for quote "harboring a terrorist" for granting Guerrero protection.

But all the caravan wants is a better life in the United States… oh and millions of dollars AND a list of political demands for their home country. This is ridiculous. Can we all now agree that this entire charade is a fraudulent scam? This is a Leftist political stunt. It has been since the very beginning.

TRANS-INSANITY: Not everyone is bowing down to the PC culture

DOMINIQUE FAGET/AFP/Getty Images

Here's an incident that you won't hear about anywhere else. It doesn't fit the mainstream media's transgender narrative, their fairy tale of infinite genders, where any criticism is viewed as transphobic and taboo and certainly not something that the majority of Americans think or feel.

Last week, in West Point, Virginia, a high school French teacher named Peter Vlaming was fired after a five-and-a-half hour hearing that centered on his refusal to use a transgender student's specific gender pronouns. Vlaming said that doing so violated his religious beliefs.

RELATED: There is no truth anymore

Vlaming's lawyer Shawn Voyles told reporters:

Tolerance is a two-way street. Unfortunately, tolerance on the part of the school division has been noticeably absent. It chose to impose its own orthodoxy on Mr. Vlaming and fired him because he didn't relinquish his rights protected by the First Amendment.

School administrators fired Vlaming "due to this insubordination and repeated refusal to comply with directives made to him by multiple WPPS administrators."

The school justified the firing by pointing to a set of policies aimed at curbing misgendering of transgender students.

Vlaming's lawyer disputed this, saying that the policies include no such mention of transgenderism, adding that:

My client respects the rights of all students, including this student's rights; he simply asked that his rights be respected as well. Unfortunately, the school division refused to consider any solutions that would respect the freedoms of everyone involved.

There is a ray of hope in all of this, though. The students. A group of students from the school immediately staged a walkout in protest of Vlaming's firing.

One student told reporters:

I feel like everyone should have the freedom of speech and the freedom of religion as well.

Students lined up outside the school with signs that said, "Free Vlam." Another included a quote from Ben Shapiro: "Facts don't care about your feelings." Another read "You can't impose delusion onto us."

You can sigh a sigh of relief. There's hope for the future yet.

Whether it's a 'War on Christmas' or just progressivism run amok, the song 'Baby It's Cold Outside' has been firmly in the crosshairs this holiday season. Here are just a few of the headlines making the rounds:

Should radio stations stop playing 'Baby, It's Cold Outside'?

They range from the previous as questioning and then roll right into the following and assume facts not in evidence.

'Baby, It's Cold Outside,' Seen As Sexist, Frozen Out by Radio Stations

It may be seen as sexist but according to one radio stations polling, only about 5% do. Then they go from saying it's sexist to straight up claiming it as a rape song.

Radio Bans 'Baby It's Cold Outside' Over Claims It's A Rape Song, English Teacher Explains Its Real Meaning

And then they just flat out call for its retirement.

Is it time to retire 'Baby, It's Cold Outside'?

The left might think they are woke and on the right side of history in the wake of the #MeToo movement — but how shocked do you think they'd be if they knew Glenn beat them to the punch over a decade ago? Don't believe me? Take a listen to this clip from our audio vault from 2008.

Christmas has arrived early for mainstream media. They have their first sentencing of a major player in President Trump's inner circle. Yesterday, Trump's former lawyer Michael Cohen was sentenced by a federal judge in Manhattan. How did it come to this and how did Cohen explain himself to the judge? We start there next…

President Trump's former attorney, 52-year-old Michael Cohen, is going to jail. Well, it will probably be one of those federal prison camps with a dorm that's more like a college campus. But he's going to be locked up. A federal judge sentenced him to three years in prison for financial crimes, and two months for lying to Congress. He also ordered Cohen to pay $2 million in financial penalties. The judge called Cohen's misdeeds a "veritable smorgasbord of criminal conduct."

RELATED: Michael Cohen's plea deal won't lessen Trump's support. Here's why.

The judge said:

As a lawyer, Mr. Cohen should have known better. While Mr. Cohen is taking steps to mitigate his criminal conduct by pleading guilty and volunteering useful information to prosecutors, that does not wipe the slate clean.

Cohen pled guilty in August to eight criminal charges in two different cases. One brought by special counsel Robert Muller for Cohen's lying to Congress about a potential Trump Tower project in Moscow. The second was for bank-fraud, tax, and campaign finance violations brought by federal prosecutors in New York.

President Trump said recently that Cohen has simply been lying to get a reduced sentence for crimes that have nothing to do with him. Cohen was very emotional as he apologized to the judge, saying:

It was my own weakness and a blind loyalty to this man that led me to choose a path of darkness over light. Time and time again I felt it was my duty to cover up his dirty deeds rather than to listen to my own inner voice and my moral compass.

The left thinks that Cohen's sentencing marks the beginning of the end for Trump's presidency. They may be ultimately disappointed in that regard. But this does intensify the long national nightmare of the Muller investigation that seems to have no end in sight.