Middle East thread

[Moriarte]

A lot of it has to do with the modern world being divided up long before the Arabs discovered oil. Today, there's only one niche they can realistically fill - being an energy supplier to either China or US. The attempts to branch out are filled with Middle Eastern glitter and world conquering ambition, but rarely characterised by realism. I can see the European advisors of Prince Salman whispering all sorts of temptations to his ear, which results in projects, such as Neom. Many of those projects are as beautiful, as they are useless in the grand scheme of industrial integration into the world economy.

An interesting one is the fairly recent push towards becoming a financial hub. This can actually be accomplished, if played right. A sort of offshore place (UAE) for Chinese, Russians, Americans and Europeans to keep their excess cash. UAE recently allowed full foreign ownership of local companies and, generally, offer an interesting alternative, as a place, which is a tiny bit away from usual financial highways, yet offer substantial advantages in terms of taxation, such as "no income tax". Of course, one can still get hanged or stoned for certain things, but who cares when "no income tax" is on the table.

Here's the full list of investment incentives they offer:

https://www.moec.gov.ae/en/investment-incentives

What else can they do in the desert with the whole world being already divided up? Build fancy projects, burn through the cash and hope they find another "hook" they can apply accumulated leverage to.

 

[Birdjaguar]

Saudi Arabia is spending a part of its accumulated dollars, which were of no practical use stashed as US treasuries. And exposed Saudi Arabia to a kind of blackmail: do as we say or we steal all your money.

Are you suggesting that "less than 30" is still not a notable list of countries that evidences Lexi's point? The one you originally questioned?

And beyond that, a second question. Do you not think that sanctioning people / companies is a handy way to get around sanctioning countries? I doubt anyone here's got the time to go through 1200+ pages (I certainly don't, so I wouldn't ask it of anyone else), but I'm willing to bet that there's a skew in the countries of origin, overall.

The original question was about Saudi debt and the US blackmailing them through sanctions. I took issue about the source and then with Lexicus' help we found details on exactly which people and which companies were being sanctioned as well as a list of countries being sanctioned. BTW, as of Feb 2024 the Saudis own $4 billion in US debt. As it were, next to nothing.

You can read the list of sanctioned countries for yourself and decide how notable they are. You don't need my input. The list did not impress me. I do not know how well sanctions work, but I do know that sanctioning individuals and companies is not the same as sanctioning countries unless the companies are owned and run by the government.

My personal opinion is that if sanctions against Russian oligarchs can wreck their finances and take their money/assets, I'm all for them.

 

[Moriarte]

The original question was about Saudi debt and the US blackmailing them through sanctions. I took issue about the source and then with Lexicus' help we found details on exactly which people and which companies were being sanctioned. BTW, as of Feb 2024 the Saudis own $4 billion in US debt. As it were, next to nothing.

Saudis own a little more than $100 bn in US debt. That figure is more or less unchanged since 2016. In effect, adjusted for inflation, one can say Saudis are slowly reducing exposure to US debt. Or keeping it level, whichever suits you.

US Debt portfolio is quite insignificant by the way, compared to their juggernaut Aramco, currently valued at $2 trillion. Furthermore, it should be noted that only 1.5% of Aramco was sold via 2019 IPO, so the actual value of that enterprise is vastly higher.

Note, Aramco is listed in Saudi Arabia, which is yet another smart move, as it constitutes additional layer of protection.

American government have been "influencing" the price of Chinese and other international companies traded on US exchanges so much that it became normal practice for important companies to list IPO as far away from NY as possible.

This is what Inno means about Saudi prince being able to read the news and protecting his money from possible shenanigans.

Saudi holdings of US Treasuries at $119.7 bln in December 2022

Saudi Arabia’s holdings of US Treasuries reached $119.7 billion in December 2022, falling $1.8 billion month-on-month (MoM), new data released by the

www.argaam.com

 

[Birdjaguar]

Thanks for the correction.

 

[H4run]

No, like or dislike him, he's a smart one, that I have to grant. Saudi Arabia is spending a part of its accumulated dollars, which were of no practical use stashed as US treasuries. And exposed Saudi Arabia to a kind of blackmail: do as we say or we steal all your money. So they spend it inside their country, importing and building stuff.

The lesson has been learned by all.

The next time you update your adress with your bank, try putting "Iran" as country of residence and see what happens.

Interesting, just like how they froze (stole) billions of Afghan national assets, contributing to the country's economic and energy crisis. This was like giving a final, brutal blow to people already suffering from the consequences of US military venture. It's an interesting and plausible theory, but it doesn't make spending lavishly to transform Saudi Arabia into a new "Europe" seem less wasteful. Nor does it make their spending on hosting e-sports and entertainment events sound any less frivolous or even genius.

We know of many examples where nations were pushed into ambitious projects designed to weaken their economies and leave them burdened with debt to continue the project. This, in turn, leaves them at the mercy of their debtors who now have a better grip over their wrist.

 

[innonimatu]

Interesting, just like how they froze (stole) billions of Afghan national assets, contributing to the country's economic and energy crisis. This was like giving a final, brutal blow to people already suffering from the consequences of US military venture. It's an interesting and plausible theory, but it doesn't make spending lavishly to transform Saudi Arabia into a new "Europe" seem less wasteful. Nor does it make their spending on hosting e-sports and entertainment events sound any less frivolous or even genius.

We know of many examples where nations were pushed into ambitious projects designed to weaken their economies and leave them burdened with debt to continue the project. This, in turn, leaves them at the mercy of their debtors who now have a better grip over their wrist.

Im my experience this narrative always serves the interests of the controllng groups in those countries. Absent 19th century gunboat diplomacy the creditors can't really force debtor nations ot pay. Countries can default on the debts incurred after construction of any big projects. The reason they do not is because their ruling elites there would lost their financial stashes, often held abroad.

Globalized financialization exists only with the collaboration of the ruling elites in the countries that take part in it. And the "management" or middle-class layer, also.

The Afghan situation is different, they had funds effectively stolen with the argument that there was no "legitimate" government. Bt this was to be expected and is one more example of why a country should not depend on others to hold its reserves. Afghanistan unfortunately, having been through civil war (arguably still being in one?) didn't have the capability of doing so. Every country that can should hold its own strategic reserves of resources (not financial assets) within its own territory.

 

[Birdjaguar]

Every country that can should hold its own strategic reserves of resources (not financial assets) within its own territory.

How did this work as the USSR broke up? Weren't the resources all taken over by Putin cronies and oligarchs?

 

[innonimatu]

Wasn't Putin driving a taxi or whatever when the USSR broke up?

The oligarchs were the handywork of Gorbachev and then Yeltsin, duly advised first by the russians who had worked in the "west" and learned about the benefits of "free market" capitalism & corruption there, and then by western economic hitman as Jeffrey Sachs has recounted at lenght in many pieces (he should know). Putin came later, much later, picked from obscurity as Yeltsin's sucessor in a reaction to the humiliations inflicted on Russia in the Balkans and to the very immediate danger in the Caucasus. Putin was blowback from the bombing of Serbia and the sponsoring of politicla islamism as terrorist grups.

Getting back to resources, my actual point, if you care: back in the ancient age of the pre-1990s countries did have strategis stockpiles. Most were sold out. It was a mistake because they also buffered against market speculators.

What happend to those of the USSR I do not know (I'm more focused on western european histpry) but Gorbachev deliberately crashed its economy and they probably were spent or/and stolen even before the USSR broke up oficially in 1991.

What happend to the european stocks varied from country to country but most were sold off during the 1990s. The swiss were busy selling theirs off into the 2010s. Those that weren't yet sold have been reduced to make-believe, like my country's "strategic" oil reserve stored in... the Netherlands. Might as well hand it to ouright thieves now for all the use they would be in a real emergency: the dutch will steal all the oil and hand a worthless IOU.

What happened to the US's strategic reserves - you check this out. Is Biden leaving any useable oil there before the election? They were supposed to be a strategic buffer, not an electoral buffer... but that's your problem.

The old "third world", including China, is probably better stocked now with strategic reserves than the "west" where market fundamentalism has led everyone to believed that "the market will provide".

 

[innonimatu]

Something significant seems to be happening within Israel.
Ehud Olmert came out very strongly denouncing the crazy plan for regional war by the current government. It's either despair (they're really going to do it, those who see how crazy it is are in a last ditch effort to stp it) or political calculation (they can't do it, are losing control of events and teh army, and I'll be on record saying it was crazy before they quit).

I'm afraid it's the first. It'll get much worse before it gets better.

 

[Kyriakos]

Something significant seems to be happening within Israel.
Ehud Olmert came out very strongly denouncing the crazy plan for regional war by the current government. It's either despair (they're really going to do it, those who see how crazy it is are in a last ditch effort to stp it) or political calculation (they can't do it, are losing control of events and teh army, and I'll be on record saying it was crazy before they quit).

I'm afraid it's the first. It'll get much worse before it gets better.

It's not all despair; they can always count on the US providing ammo/other support for the genocide ^^

 

[H4run]

duly advised first by the russians who had worked in the "west" and learned about the benefits of "free market" capitalism & corruption there, and then by western economic hitman

Indonesia faced a similar experience. When Soekarno rejected economic advice from the West, Western powers supported Soeharto's coup. Soeharto then implemented those Western economic policies, privatizing Indonesia's natural resources and leading to the massive debt the country carries today. And, as you accurately pointed out, our corrupt officials hold accounts and assets outside of Indonesia, especially in the US. These assets act as a form of 'hostages', ensuring we continue to repay our national debt. Very nice post, Inno.

 

[Bonyduck Campersang]

I love hummus.


View attachment 683600

View attachment 683602

Only ever tasted it once, didn't like it. Not for me. Most Arabian food doesn't do it for me. Once had a Syrian shawarma. One of the worst shawarma I ever had

 

[innonimatu]

Indonesia faced a similar experience. When Soekarno rejected economic advice from the West, Western powers supported Soeharto's coup. Soeharto then implemented those Western economic policies, privatizing Indonesia's natural resources and leading to the massive debt the country carries today. And, as you accurately pointed out, our corrupt officials hold accounts and assets outside of Indonesia, especially in the US. These assets act as a form of 'hostages', ensuring we continue to repay our national debt. Very nice post, Inno.

And that is an internal problem of each country: how to get rid of the corrupt caste allied to (and backed by) foreign interests. The thing known as "globalization". Usually it is very hard because those foreign interests can intervene, and not just financially.

But the world is changing. Egypt just got what was a financial gift disguised as investment from the UAE's large dollar reserves, to compensate for the pressure on its finances and make it less permeable to pressure through the IMF. Another example of the arabs putting to use their dollar reserves, spending them on achieving greater political autonomy for the region. The trade imbalaces that led to huge accumilations of dollars outside the US created that potential for blackmail which we just discussed, and bankrolled the US military spending. But they also defanged the tools of financial control where the ruling elites of the countries with those accumulated reserves refuse to be blackmailed and do use them. Then the bluff gets called:
- if the US does its sanction number, Russia has already demonstrated what happens: the fifth column inside the targeted country either flees to their supporters outside, or turns nationalist in rage over having their money stolen; either way they cease being a fifth column inside the country, a threat.
- if the US does not do the sanctions number, the dollars can get spent on sovereignty projects, on cutting off the IMF and neutralising its influence in the wider region of each of these countries, which naturally want to increase their own influence there.

The issue has always been the frailty, more than the cowardice, of ruling elites. Many of the defiant ones got toppled and/or murdered, from Mosadeg to Ghadaffi. Naturally people feared to challenge the "rules based order" - on pain of death.
So it very much hastens change now that the US basicaly disarmed itself and can no longer scare the governments (as in: the people in government) of other countries as effectively as it used to. They don't even have enough missiles to equip their whole navy, nor enough sailors to man the existing ships. The "obey or we'll kill you" threat, demonstrated repeatedly during the 1999-2012 period, lost its teeth. First Syria where Assad did not go, now the wars in both Ukraine and Yemen, are very consequential. The "rules based order" ends in 2024.

 

[Birdjaguar]

Indonesia faced a similar experience. When Soekarno rejected economic advice from the West, Western powers supported Soeharto's coup. Soeharto then implemented those Western economic policies, privatizing Indonesia's natural resources and leading to the massive debt the country carries today. And, as you accurately pointed out, our corrupt officials hold accounts and assets outside of Indonesia, especially in the US. These assets act as a form of 'hostages', ensuring we continue to repay our national debt. Very nice post, Inno.

Why don't those holding those accounts move them out of the US and into some other country? No one is forbidden from selling US investments.

 

[H4run]

Why don't those holding those accounts move them out of the US and into some other country? No one is forbidden from selling US investments.

It attracts scrutiny that corrupt officials want to avoid. And it takes time to cash out the assets quickly – it's not easy, I guess?

They also open bank accounts and have property in the US; Tommy Soeharto owns properties in Beverly Hills, for instance, that's only some part that we know.

@innonimatu will read more into what you wrote later.

 

[Birdjaguar]

It attracts scrutiny that corrupt officials want to avoid. And it takes time to cash out the assets quickly – it's not easy, I guess?

They also open bank accounts and have property in the US; Tommy Soeharto owns properties in Beverly Hills, for instance, that's only some part that we know.

Selling US assets in general is easy. Property is slower than stocks and bonds. the reason so many non citizens put their money in the US is because it is a safe place to hold your wealth if you or your country are not flagrant about being anti US. Even then only 30 or so countries are sanctioned. Having US assets also keeps others from getting to them or rivals taking control. The returns over time are pretty good too. Buy a $5 million house in Beverly Hills and sell it 5 years later for $10 million. Pretty good return. Maybe even collect rent too.

 

[H4run]

Selling US assets in general is easy. Property is slower than stocks and bonds. the reason so many non citizens put their money in the US is because it is a safe place to hold your wealth if you or your country are not flagrant about being anti US. Even then only 30 or so countries are sanctioned. Having US assets also keeps others from getting to them or rivals taking control. The returns over time are pretty good too. Buy a $5 million house in Beverly Hills and sell it 5 years later for $10 million. Pretty good return. Maybe even collect rent too.

I'm anything but familiar with the subject of economics, and what you address seems logical to me due to my lack of knowledge about the subject. However, in my simple logic, I can imagine that if assets are held in the US, it's only logical that the owner of those assets is vulnerable to having them frozen, or their transactions limited or restricted. I think this is also Inno's point when he wrote:

"The next time you update your adress with your bank, try putting "Iran" as country of residence and see what happens."

I can't really satisfy the intellectual dialogue you are after, I think the dialect suppose to be between you and @innonimatu , I just see that his diagnosis as fits as Cinderella shoes regarding to what happened here.

Maybe @Lexicus also got a good grasp regarding the topic, he's quite knowledgeable in economy as well.

 

[Kyriakos]

An issue for the US is that it has become rather clear it is only bluffing with the war on Iran threats. It wouldn't be able to occupy Iran ala Iraq, and even to actually win in that war it'd need to spend ammo and weapons it simply can't afford - of course Ukraine would be fully left to its fate then.
On the other side, those middle eastern regimes likely only do the talk about Palestine so as to take the focus away from their own autocracies/give their public a rallying cry which is comfortably far away from their medieval society.
This all can still go to a large regional war, due to mutual recklessness and of course the actual genocide going on too.

 

[E.man]

Zionist 'after the war' policy announced amounts to blatant annexation.

 

[Bonyduck Campersang]

Iran election turnout drops to 41% as reformists criticise poll

Conservatives expected to remain firmly in charge after parts of media claim ‘election boycott campaign’ has failed

www.theguardian.com

Key figures who challenged the political direction of the current leadership – not just reformists, but centrists such as the former president Hassan Rouhani – were blocked from standing without explanation.

Mohammad Khatami, Iran’s first reformist president, was among critics who did not vote on Friday, despite initial false reports that he had. It is the first time he has stayed away and his decision is seen as a game-changer for reformists that have long debated the value of participating in an electoral process that many see as window-dressing designed to disguise where the true levers of power lie.

The imprisoned Nobel peace prize laureate Narges Mohammadi, a women’s rights advocate, called the election a “sham” in a statement shared by her family with Reuters.

Mahmoud Sadeghi, an MP until 2020, called the decrease in participation in the elections “a big warning to the government and the ruling faction. Instead of denying the reality and falsely claiming victory, take this warning seriously and submit to structural reforms to make the elections meaningful” in a post on social media.

He wrote that “in the previous election, when 42.5% participation was announced, they said it was because of corona[virus]. Now reaching below this quorum is a victory for them!”

The polls were especially significant given that they were the first since the regime crushed the ”Women, life, freedom” protest movement.

The final official turnout will be announced later, and critics say is open to distortion since voters who went to the polls to spoil the ballot paper are also included.