The Saudi-American Financial Relationship

For several years, America has been portraying itself as the harbinger of the free world. American foreign policy is intrusive and interferes with the way that other nations conduct themselves. America has invaded many nations like Iraq and Afghanistan. The excuse commonly used by Americans to justify their intrusions is that they fight to protect democracy. The propaganda spread by the Americans states that America is strictly against human rights abuses and takes action whenever it finds nations who do not adhere to the norms.

Obviously, many people find this claim to be false. Saudi Arabia is the biggest exception to the American doctrine. In this article, we will have a closer look at how the financial relationship between Saudi Arabia and America has caused America to turn a blind eye to many cases of human rights abuses.

Saudi Arabia: In A State of Impunity

The gruesome murder of Saudi journalist Jamal Khashoggi in Istanbul is only the latest addition to Saudi Arabia’s belligerent behavior. Freedom of speech is one of the fundamental rights in any country. Americans seem to be very concerned about freedom of speech in other countries. However, when Saudi Arabia kills a journalist in its own embassy for criticizing the state, Americans have no qualms in simply looking the other way.

Saudi Arabia has some of the most brutal laws in the world. Whiplashes are commonly given as punishment. This is obviously a matter of human rights abuse. However, the American government chooses to remain silent.

Similarly, Saudi women do not have some of the most fundamental human rights. Until recently, they were not even allowed to drive a car! Their movements and lifestyle are severely restricted by the medieval laws imposed by the state. America is a champion of women’s rights worldwide. However, it does not feel the need to impose any kind of pressure on the Saudi government to rescind some of these laws.

Lastly, Saudi Arabia has been involved in a battle with the Houthi rebels in Yemen. Up until now, they have inflicted more than 10,000 casualties in this war. It has been estimated that more than 40% of these casualties have been inflicted on civilians with women and young children forming a large number. Instead of criticizing Saudi’s actions, America has actually been a partner to this war.

The blatant nature in which Saudi Arabia continues to violate human rights is based on an assumption of impunity. It seems like the Saudi kingdom is well aware that the decisions made by America are based on financial logic more than on moral rhetoric. They seem to be well aware that as long as they are financially beneficial to the Americans, their actions will not have any consequences.

The Root Cause: Financial Relationship

Saudi Arabia and America have a very close financial relationship. The relationship is deep i.e. it involves a lot of money. However, it is not at all multifaceted. It is based on a simple two-way transaction. America has a dire need for Saudi oil. On the other hand, Saudi Arabia needs American weapons.

America’s Defense Industry

Donald Trump was asked at a press conference to impose sanctions on Saudi Arabia in response to the gruesome murder of a journalist. President Trump didn’t even care to make an excuse. He was very open about his reasoning. Just a few days before the murder, Saudi Arabia had agreed to a defense deal of more than $110 billion. Donald Trump was of the opinion that more weapons bought by Saudi meant more revenues for American companies. This meant more jobs for American workers and more money for American shareholders! Also, this was not the first and only time that Saudi had purchased weapons from the United States. Saudi Arabia is by far the largest buyer of American made weapons. The country purchases more than 20% weapons that are manufactured in America. Trump was of the opinion that imposing sanctions on Saudi was pointless. This is because they had such a huge budget for buying weapons that other countries like Russia and China would welcome them with open arms. Hence, America has limited ability to curtail Saudi’s behavior.

America’s Dependence on Saudi Oil

Over the past few years, America’s dependence on Saudi oil has gradually reduced. However, they are still not in a position to openly challenge Saudi Arabia. This is because of the fact that the American economy is heavily dependent upon energy imports. Earlier, Saudi Arabia was the main seller of oil. It had the power to shock the entire world market by curtailing the supply of oil. However, now the world market has become considerably more diverse. In fact, America itself produces almost the same amount as Saudi Arabia. However, the energy usage by American companies is so high that oil imports are still a necessity. It is important to realize that Saudi still holds a lot of clout in OPEC (Oil Producing and Exploring Countries). Hence, even though it cannot directly harm the United States, it has the influence required to form a cartel of other countries that would stop supplying to the United States.

The bottom line is that Saudi is well aware that America stands to lose financially if it tries to harm Saudi interests. This is the reason why they have a brazen attitude when it comes to committing offenses. However, the Khashoggi murder has created a public relations storm for the United States. A change in the American response may be possible in the near future.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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