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ESAI Energy: Trump statement not oil policy

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Oilfield Technology,

Many in the oil patch have pointed to President Trump’s recent statement on Saudi Arabia as a signal to Saudi Crown Prince Mohammad bin Salman (and the world), absolving the prince of guilt for the execution of Jamal Khashoggi and somehow setting up a quid pro quo that requires the Saudis to facilitate President Trump’s perceived preference for low oil prices. That is far too oil-centric an interpretation. President Trump’s statement is for the American people and his own foreign policy team. He wants the focus back on Iran, and knows Saudi Arabia is key to his policies with regard to Iran, not to mention China and Russia. The oil market should resist the temptation of seeing this statement as oil policy. The Saudis still have considerable leeway to pursue their own production policy, notwithstanding President Trump's oil price tweets.

On November 20, the White House issued a statement entitled “Statement from President Donald J. Trump on Standing with Saudi Arabia.” The language in the statement, and later reporting on it in the press, indicate that it was directly dictated by President Trump after he received briefings by U.S. intelligence agencies on findings regarding the murder of journalist Jamal Khashoggi. It provides a clear framework for U.S. policy towards Saudi Arabia, and particularly towards Crown Prince Mohammed bin Salman, under the Trump administration. While more information about Mr. Khashoggi’s murder may come to light and political pressure may mount for different U.S. government actions, the statement provides a very strong firewall against change in the relationship. Based on the statement, it is highly unlikely that the Trump administration will take or acquiesce to any Congressional actions that would significantly alter the relationship between Washington and Riyadh. A brief analysis of the statement provides a sense of where the Trump administration is, and likely will remain, with Saudi relations going forward.

The statement begins and ends with President Trump’s campaign and governing slogan: “America First!” This framing provides the overarching reasoning for the policy statement – that the administration, and in this case the President, considers this policy choice as clearly in America’s interest. The statement then describes the world as a dangerous place – a geopolitical argument for supporting Saudi Arabia and its rulers. That is then followed by a litany of examples of Iranian actions that the administration considers dangerous and unacceptable in Yemen, Syria, and Lebanon. The statement notes that Iran has killed Americans, regularly professes death to America and Israel and is considered the world’s leading sponsor of terror. The set up for the choice, therefore, frames American policy toward Saudi Arabia as being directly related to Iran’s unacceptable activities.

The second half of the rationale for the policy choice is framed in terms of monetary and job gains for the United States. The statement claims that Saudi Arabia will be buying US$450 billion worth of goods from the United States after President Trump’s visit last year, including US$110 billion worth of weapons and military services, and if the U.S. were to cancel arms sales, the beneficiaries would be Russia and China, who would sell Riyadh arms. Recall, the Trump administration’s National Security Strategy and National Defense Strategy emphasize the need to recognise and engage in great power competition against both China and Russia in the military, economic, and political arenas.

The statement then indicates that the administration does not condone the murder. It notes that the U.S. has already sanctioned seventeen people that the Saudi government has identified as having been involved. President Trump concedes that it is possible that the Crown Prince was somehow involved, but he concludes by saying that the facts may never be known. The conclusion is that regardless of the facts, known or not, the relationship with the Kingdom as a whole is important because it is an ally in the fight against Iran.

The statement ends noting that members of Congress might propose different policies, a nod to the fact that even some Republican Senators have called for stronger measures against the Kingdom. The statement first casts doubts on those differences by indicating that they may be politically motivated but then says that they might be considered but only if they square with the administration’s view of what is in the U.S. national security interest.

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