Biden vowed to punish Saudis over oil cut but that is no longer the plan

WORLD  28 January 2023 - 00:02

According to a recent piece in The Washington Post, the main effect of OPEC's plan to reduce supply in advance of last year's midterm elections is the increased resistance in US Congress. Caliber.Az reprints the article.

Months after the White House vowed to punish Saudi Arabia for cutting oil output in defiance of American wishes, the Biden administration has ended its talk of retaliation against the Gulf kingdom, emphasizing the two countries’ long-standing security ties and Riyadh’s steps to back Washington’s priorities in Yemen and Ukraine.

Officials instead point to congressional measures seeking to limit future defense cooperation as a chief repercussion for the OPEC Plus cartel’s production decision in October, which the administration viewed as a potential boon for Russia’s war in Ukraine and a political blow to President Biden ahead of last year’s midterm elections. The about-face underscores the dearth of palatable options available to US policymakers amid intensifying competition with Russia and China playing out in the Middle East and beyond.

A senior State Department official said the determination by OPEC Plus, chaired by Saudi Arabia, to cut output by 2 million barrels a day had a lasting negative impact on the United States’ relationship with the kingdom even though the feared spike in world oil prices did not materialize.

“The OPEC Plus announcement was consequential to the relationship itself and the tenor of the relationship,” the official said, speaking on the condition of anonymity to discuss internal deliberations. “On the other hand, this relationship matters. Our work together is not done as a favor to Saudi Arabia; when you look at the actual cooperation that the United States and Saudi Arabia is engaged in, it advances US interests.”

The dramatic evolution in the administration’s response underscores the kingdom’s importance to the United States, despite the intense strains, not just because of its massive oil reserves but also its vast influence across the Muslim world and its status as a top regional counterweight to US adversary Iran.

Yet the administration faces continued pressure from Democratic allies who cite the OPEC decision as a reason to question Saudi Arabia’s reliability as an ally but also voice concern over its deepening ties with China, its poor record on human rights and political repression, and the actions of its de facto leader Crown Prince Mohammed bin Salman, whom the US government assesses was responsible for the killing of Washington Post journalist Jamal Khashoggi.

“We kept on selling them weapons and looking the other way at human rights abuses because we wanted to make sure they would be there for us when there was a global oil crisis. They weren’t,” said Sen. Chris Murphy (D-Conn.). “So it begs the question, why are we so in deep with them, given all of their unsavory behaviors, if they’re not willing to choose us over Russia?”

OPEC’s decision, which came just weeks before November midterm elections in which inflation and fuel prices were expected to shape voter decisions, generated a dramatic public White House rebuke.

“There’s going to be some consequences for what they’ve done,” Biden said.

The president’s chief economic and security advisers condemned the “shortsighted decision” and, in a scathing statement, hinted they might seek to advance the passage of a bill — the No Oil Producing and Exporting Cartels Act, or NOPEC — which could lift sovereign immunity for OPEC nations and allow the US government to sue them under antitrust laws. A version of the bill passed a Senate committee last year but has faced resistance from the oil industry and, before the cartel’s October decision, from the White House.

Kevin Book, managing director of the independent energy and research firm ClearView, said the apparent reference to NOPEC underscored the depth of the administration’s surprise and anger. “They not only showed the butt of the gun, they took the safety off,” he said.

The incident marked another blow to Washington’s already turbulent ties with its oil-rich partner. While President Donald Trump had embraced the kingdom and made it his first foreign destination, Democrats have been more vocally critical of its record on human rights and political freedom.

It also increased scrutiny of Biden’s visit to Jiddah several months earlier for talks with senior Saudi officials including the prince. The visit, which produced a widely circulated photograph showing the president fist-bumping the young royal, was an uncomfortable moment for a president who as a candidate described him as a “pariah.”

The Saudi Embassy in Washington did not respond to a request for comment.

While administration officials insisted the visit was not about oil prices, they later suggested that Saudi Arabia had made a commitment not to cut production. Some officials saw the decision as a deliberate attempt to aid Republicans in the midterms or to assist Russia at a moment when the United States was leading a global campaign to cut off oil revenue to weaken its position in Ukraine.

The episode underscored the strains to US-Saudi ties in recent years that have also included Saudi opposition to the Obama administration’s nuclear deal with Iran and US legislation allowing families of 9/11 victims to mount legal challenges against the Saudi government.

The United States, which has increased domestic oil production and taken other steps to nudge the US economy off fossil fuels, no longer buys as much Middle Eastern oil as it once did. China is now the kingdom’s top customer.

But global oil prices followed a downward, not upward, trajectory following the OPEC Plus determination. Book said that Saudi officials’ argument that they should reduce production to hold off a price collapse amid weakening global demand ultimately appeared to be sound. At another meeting in December, the cartel maintained its position.

Karen Young, an expert on the Gulf region at Columbia University, said the OPEC decision underscored the kingdom’s increasingly nationalist spirit and growing confidence in its market judgments. “They want more of a seat at the table and they’re definitely not taking hints and nudges” from the White House, Young said. “That’s not going to be the way they do business.”

Under Mohammed’s guidance, the kingdom is seeking to diversify its economy and attract outside investment. It has loosened some restrictions on women, and courted foreign visitors and investment. It has also issued harsh penalties for activists and critics, penalized their family members and taken steps to surveil or intimidate critics overseas.

The dispute remains intertwined with the ongoing debate about the US response to Khashoggi’s death. While Biden administration maintains it has taken appropriate steps to penalize the kingdom for Khashoggi’s killing, declassifying an intelligence report on the murder and imposing sanctions and travel restrictions on a group of Saudis believed to be involved, it did not target the crown prince as some critics had hoped. Saudi courts convicted five men for the crime but officials have denied any involvement by the crown prince.

As some lawmakers angrily demanded a cutoff in military ties or other dramatic steps following the OPEC announcement, the Biden administration committed to reviewing the relationship and considering its options.

“They came out of the gate hot and very quickly went into Hamlet mode — very deliberative,” Book said.

When asked last week about Biden’s promise to impose consequences, White House spokesperson John Kirby pointed to congressional opposition to arms sales. “We didn’t say we were going to do some sort of homework assignment and get back to you in two weeks,” he told reporters. “We said we were going to continue to look at this relationship.”

But even as US officials describe the decision and its repercussions as a “seismic” event, each country has taken steps in recent months that suggest an eagerness to patch up ties.

In the weeks after OPEC’s October meeting, the administration scrambled jets toward Iran when intelligence reports suggested Tehran was attempting an imminent attack on the kingdom. In November, the State Department determined that Mohammed as a sitting head of government enjoyed immunity from a lawsuit filed by Khashoggi’s fiancee and a human rights group he started.

Officials cite Riyadh’s attempts to nudge the war in Yemen, which the kingdom launched with Gulf allies in 2015, toward a peace deal. They also point to a pledge to donate $400 million in humanitarian aid to Ukraine and its steps to help broker a prisoner exchange between Kyiv and Moscow.

Despite the strains, the Pentagon sees its military presence in Saudi Arabia, including air defense systems, as an important part of its strategy to counter Iran. Officials also point to the presence of some 70,000 Americans living and working in the kingdom and say that Chinese President’s Xi Jinping’s recent visit to the kingdom did not necessarily a signal a shift in the kingdom’s primary allegiance.

Some Democrats remain unconvinced. After the October OPEC Plus meeting, Sen. Robert Menendez (D-N.J.), chairman of the Senate Foreign Relations Committee, called for an indefinite freeze on security cooperation with Saudi Arabia and arms sales to the kingdom beyond minimal levels.

US officials now point to the influential lawmaker’s declaration, and the fact that Congress has approved no new arms sales to Saudi Arabia since the OPEC Plus decision, as the principal congressional consequence for the output cut. It’s not clear what the impact of Menendez’s pronouncement will be since he, like the Biden administration, already opposed the sale of offensive weapons such as precision-guided munitions to Saudi Arabia because of its record of striking civilians in Yemen.

In a statement this month, Menendez signaled displeasure with what occurred in the aftermath of the OPEC cut. He said the administration had publicly made a commitment to consult with Congress on the US relationship. “That consultation has not happened,” he said. “We do expect the administration to make good on its word.”

Gerald Feierstein, a scholar at the Middle East Institute and a former ambassador to Yemen, said the incident illustrated how the Biden administration lacked options for punishing the kingdom that wouldn’t undermine America’s own priorities in the region. He said that the best course for the United States would be to further lessen its thirst for fossil fuels and especially those from the Middle East.

“If you want to show the Saudis that you’re going to pursue what’s in the best US interest, [that] is to move to accelerate energy independence,” he said. “You want to kick the Saudis? Show them we don’t need oil.”

Caliber.Az