Written by: John Perkins, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
High-level representatives from Iran and Saudi Arabia met in Beijing on March 6, 2023. In a deal brokered by Beijing, they agreed to normalize relations. It was an extremely significant event with the potential not just of realigning major Middle Eastern powers but also of demonstrating to the world that Saudi Arabia was defying the United States after five decades of strong alliance. It sent an unmistakable message that the global balance of power is shifting from West to East, from the US to China.
Why would Saudi Arabia betray such a long-standing relationship with Washington? A bit of history:
The Saudi Arabian Money Laundering Affair (SAMA) was a strategic deal I helped forge in the early 1970s while working as a Chief Economist for a major US corporation. It can be summarized as consisting of the following five agreements:
Saudi Arabia will invest most of the petrodollars made from selling oil to the world in US treasury securities;
The US Treasury Department will use the interest from these securities to hire US corporations to modernize (“westernize”) Saudi Arabia, building petrochemical plants, ports, highways, and entire cities;
Saudi Arabia will maintain oil prices at levels acceptable to Washington and American oil companies;
Oil will be traded on international markets only in US dollars (the power of the dollar had been jeopardized when President Nixon took it off the gold standard in 1971 because the US was unable to pay foreign debts in gold. This fourth agreement essentially established a new standard for the dollar, the Petro-standard; and
The US will guarantee to defend and protect the royal family of Saudi Arabia and keep it in power as long as the above four agreements are honored.
For 50 years Saudi Arabia honored the first four agreements.
And, as is well known, the US honored the fifth. It flew members of the Saudi royal family out of the United States after 9/11 when all flights had officially been prohibited. It turned a blind eye to evidence that the royal family had sanctioned the assassination of Jamal Khashoggi, a Washington Post columnist and critic of the Saudis. It launched Operation Desert Storm against Iraq when Saddam Hussein threatened Kuwait and, by implication, Saudi Arabia. And it took many other less-known, behind-the-scenes actions to maintain the alliance forged by SAMA.
So what happened? Why is Saudi Arabia no longer responding to Washington’s wishes and instead cutting back on petroleum production and thereby helping Russia earn income vital to its war in Ukraine? The answer is more complicated than the obvious one — that Saudi Arabia simply wants to increase the price of oil.
First of all, it’s important to recognize that SAMA was established in the early 1970s. It was a time when we in the United States believed that the threat to America’s global dominance was Communism and the Soviet Union. Most of the Middle East (including Saudi Arabia) opposed both. Kings and dictators were not about to accept Marxism. Muslims were against atheism. The Soviet invasion of Islamic Afghanistan further encouraged Middle Eastern Muslim leaders to partner with the US.
Today, things are very different. US hegemony is threatened by China’s skyrocketing economic and military power, the Communist Soviet Union has been replaced by a monarch-like regime in Russia, and US wars in Islamic Afghanistan and Iraq have angered traditional Muslim leaders in Saudi Arabia and elsewhere. The US is no longer trusted to keep its previous agreements because many were discarded during the previous administration. Furthermore, the ability of the US Congress to reach compromise is seen by the Saudis, as well as much of the rest of the world, as proof of America’s inability to perform as a functioning democracy.
And then, there’s the role of China as peacemaker. The Saudi-Iran deal happened simultaneously with ongoing efforts by China to find a solution to the war in Ukraine. One result of the meetings between Russian President Vladimir Putin and Chinese President Xi Jinping in September 2023 and March 2024 was that China’s leader emerged looking to many around the world like a person intent on brokering peace. For them, the contrast between an Asian leader who can talk and negotiate with Russia and an American leader who responds to aggression with aggression is striking.
Saudi Arabia’s realignment is indicative of attitudes and policies that are changing on every continent. China’s role as peacemaker appeals to nations whose economies have been severely damaged by the war in Ukraine and who see climate change, future pandemics, environmental destruction, and the possibility of a nuclear war as the real threats to their people.
The US dollar is also being undermined, threatened for the first time since World War II. China is already buying oil from Russia with yuen. Lots of oil. And, according to the Wall Street Journal: “Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.”
A cartoon shows a Saudi prince holding an old-fashioned balancing scale in one hand. Hanging from one side of the crossbar is the US flag; from the other, China’s flag. China’s clearly outweighs the US’s.
That carton is a symbol of the shifting sands of global power. The Saudi prince could be replaced with leaders from many African, Asian, Latin American, and Middle Eastern nations.
John Perkins, Executive Contributor Brainz Magazine
John Perkins is a former chief economist who advised the World Bank, the United Nations, Fortune 500 corporations, and governments around the world. Now as a sought-after speaker and author of 11 books that have been on the New York Times bestseller list for more than 70 weeks, sold over 2 million copies, and are translated into more than 35 languages, he exposes the world of international intrigue and corruption and the EHM strategy that creates global empires. His latest book, Confessions of an Economic Hit Man, 3rd Edition – China’s EHM Strategy; Ways to Stop the Global Takeover, continues his revelations, describes China’s highly effective and dangerous modifications to the EHM strategy, and offers a plan for transforming a failing Death Economy into a regenerative, successful Life Economy. Learn more at johnperkins.org/economichitmanbook.
