Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.The Obama administration has lobbied Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon. The officials have warned senators of diplomatic and economic fallout from the legislation.
Since the Saudis long have been suspected of complicity in the attacks, it’s fair to say they’re the prime target of the legislation. But the Saudis’ immediate concern is that their U.S.-based assets could be frozen by a court for the lengthy period it would take for lawsuits for damages to make their way through the judicial system. That makes their representation about U.S. assets look a bit less like a threat than an expression of defensive strategy.
If Saudi Arabia follows through on its recent threat to sell off its investments in the United States, the financial maneuver could be painful — mostly for Saudi Arabia….Such a fire sale might roil financial markets or cause problems for companies that lost funding, but experts say it is hard to imagine a significant or lasting impact on the American economy. Global investors continue to shovel money into the United States; if the Saudis go, the experts say, others will take their place.
- Saudi Arabia holds fewer dollar assets than China;
- Saudi Arabia’s 2016 economy is far less imposing than China’s 2009 economy;
- The U.S. dollar is even more dominant now than it was in 2009;
- The U.S. economy — in particular the fiscal picture — is in far better shape now than in 2009;
- The array of alternatives to dollar-denominated assets look way worse now than in 2009;