Biden’s Middle East Policy Yields Results

Biden’s Middle East Policy Yields Results

Last fall, we wrote a series of pieces on what we believed to be one of the most important yet underappreciated stories of the Biden presidency, namely his destruction of the relationship between the United States and Saudi Arabia.  Biden’s inability to see past the end of his nose and his concomitant inability to formulate a coherent thought that wasn’t spoon-fed to him by his radical advisors would, we argued, not only mean the end of that longstanding, if occasionally tumultuous relationship but would also mean the start of a more problematic era in the Middle East.  Or, as we put it in October:

Destroying the country’s decades-long relationship with Saudi Arabia would, at any normal moment, be highly questionable and likely quite foolish.  Destroying it now, however, at a time when strong allies could be quite useful and the world appears on the verge of either a massive war or a massive realignment, is downright INSANE.

But then, as we noted last week, that’s where we are right now, at a juncture in time during which dream-world thinking predominates and moral insanity is readily and eagerly hailed as the superlative virtue. 

Not quite two weeks ago, the fruits of the Biden Middle east policy began to emerge – in stunning fashion:

Finally, there is a peace deal of sorts in the Middle East. Not between Israel and the Arabs, but between Saudi Arabia and Iran, which have been at each other’s throats for decades. And brokered not by the United States but by China.

This is among the topsiest and turviest of developments anyone could have imagined, a shift that left heads spinning in capitals around the globe. Alliances and rivalries that have governed diplomacy for generations have, for the moment at least, been upended.

The Americans, who have been the central actors in the Middle East for the past three-quarters of a century, almost always the ones in the room where it happened, now find themselves on the sidelines during a moment of significant change. The Chinese, who for years played only a secondary role in the region, have suddenly transformed themselves into the new power player. And the Israelis, who have been courting the Saudis against their mutual adversaries in Tehran, now wonder where it leaves them.

“There is no way around it — this is a big deal,” said Amy Hawthorne, deputy director for research at the Project on Middle East Democracy, a nonprofit group in Washington. “Yes, the United States could not have brokered such a deal right now with Iran specifically, since we have no relations. But in a larger sense, China’s prestigious accomplishment vaults it into a new league diplomatically and outshines anything the U.S. has been able to achieve in the region since Biden came to office.”

Look, we love “peace” as much as the next guy, but that’s NOT what this deal is about.  This deal is about China, Iran, and Saudi Arabia shoving their thumbs in Joe Biden’s eye.  It’s about making the Saudis’ frustration and anger with the United States clear and costly.

The author of the above piece (Peter Baker, the chief White House correspondent for The New York Times) jokes in his lede that the new “peace” in the Middle East is “Not between Israel and the Arabs.”  That’s supposed to be clever, because, of course, that peace is just downright impossible!  Except that it’s not.  Peace between Israel and the Arabs has been the de facto state of affairs for several years, in part because of outreach by the Trump administration and, in larger part, because Israel and the Arab world have a shared interest in keeping the Iranians isolated and ostracized.  Or at least they did have that shared interest.

Team Biden has revived the truism that dominated global affairs during the Obama Administration: there is no country so betrayed and abused as an American ally.  Biden bragged about how he was going to bring Saudi Arabia to heel, and Israel is getting screwed over as a result.

Unfortunately, this is likely just the beginning.  Iran announced the other day that its president, Ebrahim Raisi, has been invited to visit Saudi Arabia to strengthen the two nations’ newly restored ties.  And then there’s this:

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.

The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said….

China buys more than 25% of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of China’s currency. The Saudis are also considering including yuan-denominated futures contracts, known as the petroyuan, in the pricing model of Saudi Arabian Oil Co., known as Aramco.

It would be a profound shift for Saudi Arabia to price even some of its roughly 6.2 million barrels of day of crude exports in anything other than dollars.

It is quite possible that the headlines on both of these stories – the Iran-Saudi Arabia peace deal and the non-dollar oil sales – will prove more dramatic than the actual results.  That is often the case, particularly in this part of the world.

At the same time, the gist of the stories is nevertheless clear: Saudi Arabia has had it up to its eyeballs with Biden/American sanctimony and inattention.  They’re moving on, and the rest of the world will pay a heavy price as they do – most especially Israel.

Stephen Soukup
Stephen Soukup
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Steve Soukup is the Vice President and Publisher of The Political Forum, an “independent research provider” that delivers research and consulting services to the institutional investment community, with an emphasis on economic, social, political, and geopolitical events that are likely to have an impact on the financial markets in the United States and abroad.