Oil and arms are Saudi Arabia's saving graces amid the fallout from Khashoggi's death
OLI SCARFF | AFP | Getty Images Military aircraft enthusiasts watch as a United States Air Force (USAF) F-15 fighter jet as it travels at low altitude. F-15s have been sold en masse to Saudi Arabia.
As much as Saudi Arabia would have liked its flashy investment forum in Riyadh last week to have dominated the headlines, the continuing fallout from the death of Saudi critic Jamal Khashoggi led the front pages of most news outlets.
It's hardly surprising given the amount of incriminating evidence that Turkey appears to have amassed in its investigation into the journalist's death, and incredulity towards Saudi Arabia's claims that Khashoggi died in a fistfight within the Saudi consulate in Istanbul on October 2. The kingdom's public prosecutor has since said that the killing was premeditated and Foreign Minister Adel Al-Jubeir said Saturday that prosecutions would take place in Saudi Arabia.
While the kingdom might appear to be losing the public relations war against a body of evidence and a barrage of negative headlines, its economic firepower is going to save it from defeat.
That Saudi Arabia is the largest arms importer, and the largest oil exporter, in the world and that could be the kingdom's saving grace â" and for all it s condemnation of Khashoggi's death, the West knows it.
Oil is the kingdom's main export and the West relies on its production to keep oil flowing, and prices stable. The West (i.e. President Donald Trump) is also relying on Saudi Arabia to fill the shortfall created by U.S. sanctions on Iran's oil sector. Despite increasing U.S. shale oil production, Saudi Arabia still represents its second-largest source of crude oil imports after Canada. In July 2018, U.S. Energy Information Administration data shows the U.S. imported 876,000 barrels of Saudi crude oil a day.
While revenues from oil may pour in to Saudi Arabia from the Western customers, that money has enabled it to buy arms to maintain, defend and enhance the kingdom's influence in the Middle East.
The U.S. Defe nse Security Cooperation Agency said earlier this month that U.S. arms sales jumped 33 percent in 2018 from the previous year with $55.6 billion worth of closed deals; over half that $55.6 billion was due to Saudi Arabia's decision to buy 84 F-15 fighter jets, for $29 billion. That's small fry compared to the 2017, when Trump and King Salman signed a near-$110 billion defense package.
No wonder then that Trump, despite calling Khashoggi's death a "cover-up," wants to tread carefully around Saudi Arabia to protect U.S. arms manufacturers and thousands of jobs. The same goes for major arms manufacturers in the U.K., France and Germany â" although the latter has said its stopping arms exports to Saudi Arabia in the wake of Khashoggi's death, urging other European states to follow suit.
It's unlikely its neighbors will heed the call, however, given the economic (albeit distasteful) boon provided by arms sales. President Trump summed up this feeling last Saturday, when he said cancelling arms orders to Saudi Arabia "hurts us far more than it hurts them."
For more insight from CNBC contributors, follow @CNBCopinion on Twitter.Source: Google News Saudi Arabia | Netizen 24 Saudi Arabia