Saudi Arabia will only hurt itself by following through on a threat to dump U.S. assets if Congress allows American families to sue the country for 9/11 damages.
“What King Salman is really threatening is to shoot himself in the foot if Congress disregards his wishes," says Weifeng Zhong, a research fellow in economic policy studies
at the American Enterprise Institute, referring to the leader of the Saudi monarchy. “Congress should laugh the threat off.”
The possible Saudi action comes as President Obama visits the country for a summit where Gulf leaders will discuss the conflict in Yemen, the role of Iran, Lebanon's instability and the fight against ISIS. Relations between the U.S. and Saudi have been strained as Congress considers a bill to allowing the kingdom to be held accountable for any role in the 9/11 terrorist attacks.
Saudi foreign minister Adel al-Jubeir last month said the kingdom would sell up to $750 billion in Treasury securities and other assets before they could be frozen by the courts if the bill is passed, The New York Times reported
If the Saudis were to dump their U.S. assets by selling large blocks of stocks and bonds on the open market, they wouldn’t trigger a major crash, according to Zhong. If anything, it may be a good buying opportunity as the market quickly recovered.
“There's no question that block trades could affect asset prices in the short run. What this means to the Saudis, though, is a huge loss on their part,” Zhong writes in an online commentary. “The Saudis could choose to lose a lot of their money by flooding the market, only to see share prices recover rapidly.”
Fifteen of 19 terrorists who hijacked American planes and crashed them into the World Trade Center, Pentagon and Pennsylvania on Sept. 11, 2001, were Saudis. A Congressional investigation didn’t establish a direction connection between the Saudi government and the attackers, but the censoring of 28 pages
of a report by the Joint Intelligence Committee has raised speculation about its contents.
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