So why am I the only guy talking about this? In today’s video I connect a bunch of dots to point out that Saudi Arabia’s investment program isn’t going to help them out of their current mess. In fact that investment program is more than a bit nuts. Funds that are desperately needed to reinvent the country are being sent to some of silicon valley’s riskiest money pits. It’s possible that these investments will make some money eventually, but it isn’t what I’d call likely.
The truth is that all of this information is out there. Today’s video wouldn’t be possible without some great financial journalism done by folks at Bloomberg and the Financial Times. The FT’s “Saudi Sovereign Wealth Fund Scrambles For Resources” in particular was very useful. But this stuff is often behind paywalls, and only read by nerds like myself. This information is all out there, and it’s being acted on by serious investors. That’s why that magical city, NEOM, isn’t going anywhere, and its German CEO has already been shuffled off to another job. That’s why the Saudi-Blackstone infrastructure fund announced at the Saudi-Trump orb fest last year can’t find any other investors. The broader situation really is dire, far beyond the headline grabbing problems with Tesla and Uber.
This is a slow motion catastrophe. But it hasn’t made much of an impact on the broader consciousness yet. That’s because the Saudi PR machine is still working in high gear. Bloomberg, FT, and occasionally the New York Times will follow up on all these projects and their failings, in articles that are only read by a few tens of thousands of people. But when a new project is announced it’s in ALL the outlets, with videos, puff pieces, and endless social media placements. The more disturbing facts are all out there, and I’m proud that I got to bring them to you with today’s video.
Full disclosure: I own some Tesla stock and I’m actually pretty bullish on the company’s long-term chances. If Elon Musk can get his head on straight that is. That doesn’t mean it’s a good investment for Saudi Arabia…
Over the past year Saudi Arabia has experienced a perfect storm of factors in its favor. Asset prices in the US economy and elsewhere have gone nuts. Saudi Arabia is a country that owns a lot of stock, land and everything else, so that’s been very helpful. On the oil market front, the most important front there is for Saudi Arabia, they’ve had unprecedented cooperation on the OPEC production slow-down, and a series of competitors have given up millions of barrels a day in production due to sundry wars and dictatorships.
If Saudi Arabia’s ambitious plans for the future were ever going to work, 2017 would have been the year for it. But as this video shows, some of the key metrics that illustrate the hole Saudi Arabia is in haven’t changed much at all. As I said in last year’s video, and as I repeat in today’s video… Saudi Arabia is still finished.
Saudi Arabia is a US colony. It owes its existence to the British Empire, and it owes its continued existence to the United States. This is not widely known. Folks just assume that Saudi Arabia was always there, they got lucky with oil, and now we’re stuck with them. That’s not how it went at all. It’s probably worth documenting this claim in a longer blog post than normal. It’s a bit too complex to wrap into this video.
The Saud family, and its nasty relationship with religious extremism does go back a ways. I document this relationship at length in the essay, which I recommend you buy. They managed to put together a pretty impressive, if briefly lived state in the late 1700s and early 1800s. They held Mecca and Medina briefly, from 1802 to 1818. They were booted out of there by an Ottoman Egyptian Army. The Saud family then managed to put together another chunk of land based around Riyadh, but by the 1890s they were refugees, forced to seek shelter in Kuwait. If you’d picked a family ca. 1910 to end up the most powerful (and possibly richest) of the last royal families standing it certainly wouldn’t have been the Sauds.
Which is where the British empire stepped in. In 1915 the British were fighting World War I against the Ottoman Empire, among others. They were looking to support any Arab leader they could against the Ottomans, who had controlled the Middle East since the 1500s. Have you seen Lawrence of Arabia? That’s about the British support given to the Hashemite family, that had ruled Mecca for hundreds of years. The Arab Revolt that made Lawrence a celebrity was led by Faisal of the Hashemites. This was all lovely, stuck it to the Ottomans, and turned Faisal into a somewhat internationally respected figure.
This presented the British with a problem when the war ended in 1918. They had Faisal, a well respected, charismatic leader, with established connections to the Arab urban centers, and some modernizing instincts. Faisal had a pan-Arab mindset, and envisioned a unified, powerful and developing Arab state, stretching from his family’s territory in Mecca and Medina as far as Damascus and Baghdad, and maybe beyond. This was more or less what he had been promised during the War, and he went to the Paris Peace conference to press his case.
But the British didn’t want that. They wanted the territory for themselves. They got it, establishing “Mandates” in Palestine and Iraq. The Brits got Baghdad and Jerusalem, and the French got Damascus, establishing what became the ill-fated state of Syria. Arabia, or rather all the unimportant and desert bits of Arabia were left to the Hashemites. But not just the Hashemites. The British continued to support the Sauds, with cash subsidies, and a ton of surplus munitions from the war. It depends who you read, but many sources maintain that the British subsidies were the only thing keeping the dirt poor and enthusiastically anti-modern Saudi army going.
If you were the British who would you rather support as a neighbor? A charismatic descendant of the prophet, experienced in international diplomacy? Or a bunch of desert whackos? The desert whackos looked a lot less threatening. The British continued to support both families, but it’s unlikely that they were all that disturbed when the Sauds came screaming out of the desert and took Mecca and Medina in 1925. This conquest was accompanied by strikingly ISIS like destruction of ‘idolatrous’ Muslim heritage sites and massacres of non-combatants. The British didn’t lift a finger to help the Hashemites reclaim their historic lands. They felt a bit bad though, so they made Faisal King of Iraq. In May 1953 his descendants were massacred, and the monarchy was ended in one of Iraq’s many brutal changes of government. King Abdullah II of Jordan is the last ruling member of the Hashemite dynasty, descended from one of Faisal’s brothers. The Sauds got Mecca and Medina, the de facto leadership of Sunni Islam, and extraordinary oil wealth. The Hashemites got that really cool set from the climax of Indiana Jones and the Last Crusade.
The British catch a lot of flack for their mishandling of the Israel-Palestine issue, but if you ask me, their creation of Saudi Arabia is a lot more unforgivable.
My roommates went to Coachella this weekend. When they got back I made them talk about Saudi Arabia. They were pretty beat, but it’s still a more useful conversation than you would ever get on Fox News or CNN. The talk is a bit rambling, but it’s super useful. It gave us a chance to enlarge on some of the issues brought up by the videos. It also brings in some of the issues covered by the “Everybody’s Lying About Islam” essay that may not get covered in the videos.
The most important issue that the talk covers is my personal attitude towards Saudi Arabia and Saudi Arabians. It’s important to emphasize that as angry as I am about the US-Saudi relationship, I bear no ill will towards Saudi Arabians. The whole country, even its leadership is caught in a trap. It’s not a trap that’s entirely of their own making. Find out more by reading the essay…