Last week, the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Saudi Arabia and Russia, said that it will slash oil production by 2 million barrels per day, the biggest cut since the start of the pandemic, in a move that threatens to push gasoline prices higher just weeks before US midterm elections. The group announced the production cut following its first meeting in person since March 2020. The reduction is equivalent to about 2% of global oil demand.
The Biden administration criticized the decision in a statement, calling it “shortsighted” and saying that it’s harmful to some countries already struggling with elevated energy prices the most.
The production cuts will start in November.
The Democratic member of the Senate Foreign Relations Committee Chris Murphy in this regard said that “there’s got to be consequences” after Saudi Arabia and a cartel of major oil producers moved to slash oil production last week.
Senate Foreign Relations Chair Bob Menendez, who has veto power over foreign arms sales, is also vowing to block all future weapons sales to Saudi Arabia and urging the Biden administration to immediately freeze all aspects of US cooperation with the kingdom in response to its decision to cut oil production amid a global energy crisis set off by Ukraine war.
To know more about these issues, we reached out to Professor Hossein Askari, Economist, Emeritus Professor of Business and International Affairs at George Washington University. Following is the text of the interview with him:
How serious are the US and Saudi differences?
Not as much as most think. The US pays lip service to human rights and corruption in Saudi Arabia. The US says things against Saudi war crimes in Yemen but still sells them bombs, refuels their planes and provides them with the intelligence to continue their crimes. But it finds Saudi Arabia’s increasing rapport and cooperation with Russia and China very problematic, as exemplified by its refusal to maintain oil output, something that clearly supports the Russian war effort in Ukraine. The US has been used to giving the Al-Sauds what they need and wants total cooperation from them in return. But MBS is going his own way and flashing Saudi money to the likes of Kushner and Mnuchin to get the support he needs in the US.
Why has the US always closed its eyes to human rights abuse by Saudi rulers?
Saudi Arabia has many backers in the US. There are dozens of major American companies that export goods and services to Saudi Arabia, from defense contractors to computer companies to medical equipment. There are many financial institutions that receive Saudi deposits and intermediate Saudi funds. There are dozens of engineering firms, consulting firms, and law firms that provide services to Saudi clients. These entities support Saudi interests in the US. They lobby Congress and the White House to maintain their business interests in Saudi Arabia. So Saudi Arabia gets its way in the US. The business of the US is business. Money, not human rights, rules in America, and countries such as Saudi Arabia and the UAE throw their money around and get their way. Look, they brutally dismembered Khashoggi and yet Biden went to see MBS, to beg him to produce more oil to lower prices at the pump as this is what matters to most Americans.
Nowadays we see that the world even the US allies in the Middle East and Europe are resisting the norms and orders created by the US after the world war. Considering the developments across the world how do you see the future of US hegemony across the world? Will we see any changes to the current world order?
The US has a number of potent weapons, which the rest of the world has not matched and is unwilling to unite to match. First, is its economy. It is the biggest. It is supported by the dollar and the US can print what it wills. And it has the deepest financial markets. These economic and financial strengths allow the US to impose unilateral primary and secondary sanctions on whom it wishes. This power is arguably even more potent than its others' powers. Second, America has the premier intelligence services supported by unparalleled technology. It uses its intelligence to support or undermine friends and foes around the world. Arguably Jared Kushner used his top secret access to support his budding friend MBS to remain in power. Third, America has the strongest military in the world. When you combine all of this, it is hard to see America’s global influence falling off a cliff. Yet, I would agree that the US is losing its soft power and this could in time undermine the future of its hegemony. The surest way to create a multi-polar world is for countries such as China, Russia, Brazil, Poland, and the like to unite and create an alternative to the dollar and to oppose US sanctions by retaliating whenever the US imposes sanctions and piles on secondary sanctions.