The Beginning of the End for the US-Saudi Relationship?

By Kyra Ward
Economics & International Relations Student

For the first time in his presidency Obama saw his veto of a bill overridden. With a 97-1 majority in the House (House democratic minority leader Harry Reid being the only exception) and 348-77 majority in the Senate the bill had overwhelming bi-partisan support. With a Congress increasingly embittered and unwilling to cooperate across party lines this level of unanimity about an issue is an incredible feat.

The bill in question? The Justice Against Sponsors of Terrorism Act also known as JASTA. This newly made law allows the families of 9/11 victims to sue the Saudi Arabian government for its involvement in the attacks. This is incredibly contentious, however, because the Saudi government has adamantly repeated that it has had no involvement in the terrorist attacks, despite 15 of the 19 hijackers being of Saudi nationality. John Cornyn the Texas Senator who brought JASTA to Congress articulates his motivation for introducing the bill in a quote from his website, “The United States needs to use every tool available to stop the financing of terrorism. Victims and families who have lost loved ones in terror attacks deserve the opportunity to seek justice.”

This is incredibly contentious, however, because the Saudi government has adamantly repeated that it has had no involvement in the terrorist attacks.

Given that the US is currently in an election cycle, many politicians seats are in contention and being seen as anti-9/11 could be damming for any political campaign. So this is why despite the concerns with the implications of such a bill it was overwhelmingly popular.

So, now that it is a law what does the JASTA bill do and what are its implications? Officially JASTA, “amends the federal judicial code to narrow the scope of foreign sovereign immunity (i.e., a foreign state’s immunity from the jurisdiction of U.S. courts).” Essentially it erodes some of the economic diplomatic immunity that government officials have in the United States. This could potentially be a dangerous precedent because it justifies other countries using the same legal framework to indict US employees overseas, as well as US government workers.

Obama echoed these concerns in a statement to CNN after hearing that his veto had been overturned, “So this is a dangerous precedent and it’s an example of why sometimes you have to do what’s hard. And, frankly, I wish Congress here had done what’s hard. I didn’t expect it, because if you’re perceived as voting against 9/11 families right before an election, not surprisingly, that’s a hard vote for people to take. But it would have been the right thing to do. ” The broader implications of this infringement on sovereignty can only be hypothesized in terms of its effect on the US. The more pressing and current problem is what this bill will do to US-Saudi relations.

Essentially it erodes some of the economic diplomatic immunity that government officials have in the United States.

The economics of the US-Saudi relationship are incredibly intertwined. Saudi is currently the US’s closest stable ally in the Middle East, and with the passing of JASTA they have threatened to reduce cooperation in the fight against terrorism as well as incentivizing other Gulf States to reduce support as well. In addition to that they have also recommended that Gulf States restrict their air bases to US fighter jets as well as withdraw their investment from the US. However, the larger problem may be the economic repercussion of Saudi’s retaliation.

Saudi governmental officials have said that if the US launches a case against them that they will sell off all of their US Treasury bills, the AP reports that, “Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics, said estimates put the figure of official Saudi assets in the government at somewhere between $500 billion and $1 trillion when considering potential foreign bank deposits and offshore accounts.”

At a point in time when the economy is recovering at an increasingly slowed rate and the IMF has lowered growth rate expectations, given the political turmoil of the upcoming November elections, the economic strain of the loss of 1 trillion dollars could be potentially detrimental to the health of the US economy. In addition this it may also cause Saudi to rethink its oil trading partnership with the US. While the US uses mostly domestic oil Saudi can still have a large effect on the oil market and also less reliant on the US than the US is on them given the other partners to choose from in Europe and other countries.

But what will the bill do to Saudi? Right now it is unclear, both on the economic impacts and the implications of Saudi’s involvement in the 9/11 attacks. Private US litigation teams, who are representing the families of the victims, are handling the research being conducted on the question of Saudi’s culpability. This is important because the government will not be involved in the case beyond action if the Saudi government does not comply. Meaning that normal diplomatic governmental action will not be used, therefore changing the rules of engagement for both countries.

If the US government does take action against Saudi in terms of paying reparations it is unclear what they will do and how they intend to have Saudi pay. Economically, there has been no mention to how much and from whom the families intend to sue for. This case is unprecedented in the way that no country has ever been sued for something they have not been found explicitly guilty for, so there is no way to say whether the reparations will be more or less than reparation cases in the past.

So ultimately, I find that socially JASTA is absolutely beneficial to the families of victims in both a tangible (though payment) and intangible (though perceived justice) way. However, both in the political and economic realm I think JASTA has the potential to cause great harm both to the Saudi and American governments as well as a general degradation of the norms surrounding economic diplomatic immunity.

Featured image Pete Souza