Yemeni Missile Attacks, Qatari Peace Feelers to Moscow, Riyal Currency Controls: More Signs Saudi Arabia is 'On the Menu'

From Bloomberg, via Zerohedge, comes the news today that Saudi Arabia is trying to crack down on speculators against the riyal. Riyadh had hoped a crude collapse would not only destroy the U.S. shale oil industry but also force Russia into abandoning the Assad government in Syria. Now the Kingdom is under enormous pressure from financial markets to devalue its currency --  just like other petro-states from Russia to Canada have done: "don’t look now, but Saudi Arabia just banned banks from selling options on riyal forwards."

Saudi authorities ordered banks to stop allowing cheap bets on a currency devaluation, according to five people with knowledge of the matter,” Bloomberg reported this morning, adding that “the directive applies to local banks and the Saudi branches of international banks, the people said.”


With riyal forwards hitting record highs above 900 points, SAMA had apparently had enough.

Saudi Arabia Will Defend the Riyal-(Petro)Dollar Peg, but for How Much Longer?

What this means in practical terms is that the beleaguered Saudi Kingdom, which has reportedly been hemorrhaging dollars to the tune of at least $12 billion a month, is one step closer to implementing capital controls. Riyadh may also be drawing closer to fulfilling a prediction made by Dr. Jim Willie the Golden Jackass that the Saudis would soon be forced to stop selling their cheap crude only in dollars or euros, thus widening the breach with Washington and burying the petrodollar system that has joined the U.S. and the Kingdom at the hip since the early 1970s.

The visit of Chinese President Xi Jinpeng to the Kingdom (and Egypt) this week seems to support Jim Willie's thesis that China wants the Saudis and Iranians to 'play nice', and also that Riyadh is open to denominating oil sales in yuan. The Wall Street Journal's headline for Xi's visit, "Saudi Arabia and Iran Tussle Over Exports to China" leaves little doubt that the Middle Kingdom and not the U.S. is the critical mediator between the rival Sunni and Shi'a powers.

"China wades into the Iran-Saudi swamp" by Pepe Escobar

Saudi pronouncements about the crashing price of crude being solely the result of weak global demand and excess supply, rather than a backfiring geopolitical strategy, are being greeted in the once generally pro-Saudi Western media with growing skepticism. Writing for the mainstream media mouthpiece Business Insider, Armin Rosen says:

An emerging conventional wisdom holds that Saudi Arabia, the world's second-largest oil producer — and largest that isn't under US and EU sanctions — could make the price plunge go away by dialing back its own 10.25 million-barrel-a-day output.

But Riyadh is choosing not to, according to this theory, in order to cut into the oil profits of Iran, Saudi Arabia's top geopolitical foe.

This is not a theory that the Saudi government would like to see advanced.

Saudi Foreign Minister Adel al-Jubeir pushed back against this narrative during a January 19 interview with CNN's Wolf Blitzer. He claimed that Saudi Arabia didn't want to cut production because it's worried about the consequences of what he believes would be an artificial price increase...

Al-Jubeir said that Western speculation about Middle Eastern oil production was a "conspiracy theory." But he's hardly more credible in claiming that "the market" is dictating Saudi production totals.

Rosen's piece goes on to repeat the conventional wisdom that not only are the Saudis pursuing a deliberate strategy of trying to financially put the squeeze on their principal rival Iran (and by extension, Iran's ally Russia), but also that they can absorb the pain of crude crashing through the floor due to their immense cash reserves. However, a growing number of voices in the U.S. foreign policy community are no longer so sure that the Saudis' alleged lowest in the world production costs and reserves cushion can sustain them indefinitely.

Despite Hundreds of Millions Spent Annually on PR and Influence in the West, US/UK Mainstream Media Are Turning on Saudi Arabia

As the Kingdom's PR men in Washington and London are no doubt informing the princes, open criticism of Saudi actions as provocative and intended to sabotage the rapprochement between the U.S. and Iran are becoming more common in the media outlets read by the trans-Atlantic 'Davos crowd' meeting  in Switzerland this week. Take for example, this piece published at Medium "Saudi Arabia's Wedge",  or The National Interest asking "Is Saudi Arabia the Next Syria?" regarding blowback from Saudi jihadists including members of the Islamic State returning home from Syria. Or the 'liberal' U.S.-based Huffington Post's headline implying that the Kingdom is the sick man of the Mideast that Washington is under no obligation to bail out, "The U.S. Should Not Accompany Saudi Arabia Over the Cliff". Or the UK Guardian's headline, "UK arms sold to Saudi Arabia may breach international law in Yemen, Labour says".

Even the neocon-dominated Daily Beast, which has cheer-leaded for Saudi-backed jihadists fighting Assad in Syria for several years, is trying to distance itself from the odious regime in Riyadh by running pieces critical of its terror-seeding Wahhabist ideology. Earlier this week Zerohedge picked up a seemingly regional story about farmers in California and especially Arizona upset that the Saudis were purchasing their land to grow alfalfa, further depleting already depleted water tables in their areas.

Mideast Eye, meanwhile, is reporting that a new docu-drama is set for release on the life of a Palestinian Christian woman who married the late King Fahd after a hasty conversion to Islam. In 1970 she was forced to leave the Kingdom with her family on two hours notice  due to the wrath of the current (senile) Saudi king and Fahd's brother, Salman. The film will also detail Janan Harb’s allegation that Fahd forced her to have three abortions because he “didn’t want any little Arafats running about the palace,” in a reference to the late Palestinian leader Yasser Arafat.


While none of these stories taken alone indicate that the Western kid gloves are coming off for the House of Saud, taken together they demonstrate an ominous pattern for the despotic Saudi royals. Ask not for whom the bus wheels roll, they roll up for thee to get thrown under it, dear Sauds. No wonder individuals like longtime Israel critic Norm Finkelstein feel free to refer to the Sauds as 'parasites' when speaking to Al-Masdar News.

A well-organized Twitter campaign appears underway under the hashtag #SaudiStruggle to slam the regime for its atrocious human rights record, its vicious bombing of civilian targets like hospitals and a school for the blind in Yemen, and the suppression of guest workers, women and the Shi'a minority at home. The Kingdom's execution of a prominent Shi'a cleric has aggravated tensions with the Shi'a minority that lives in the Kingdom's richest oil producing eastern regions, raising the possibility of civil unrest or sabotage of oil infrastructure.

Houthi Dawn: More Casualties and Lost Territory Along the Border in Saudi Arabia's Failing War Against Yemen

While the risks to journalists both from the Houthis and the Saudi-backed coalition forces have limited reporting in the West on the war in Yemen, trustworthy pro-Shi'a sources like Al-Masdar News continue to depict ongoing disasters on the battlefield, which apparently no number of Western or Latin American mercenaries can fix. Recently a Tochka ballistic missile attack killed several Academi/XE (the company formerly known as Blackwater) mercenaries deployed by the Dubai-based private military contractor.

Al-Masdar News reported early this week:

On Sunday morning, the Yemeni Army’s Republican Guard – in coordination with Saleh loyalists and the Houthis – carried out a powerful assault on the Saudi Royal Army’s defensive positions at the Al-Bayrak Camp in the Mar’eb Governorate, resulting in heavy casualties and the destruction of the base’s western fortifications.

According to the Yemeni Army, their forces struck the Saudi Royal Army’s positions at the western perimeter of the Al-Bayrak Camp with a Tochka missile; this caused a large explosion that resulted in the death of several soldiers form the Saudi Army, the Blackwater Group, and the Emirati [UAE] Army.

In a tantalizing hint that Yemeni resistance against Riyadh's aggression may be receiving covert support from outside the Arab world's most impoverished nation, a Yemeni Brigadier General gave an interview to Russia's RIA Novosti bragging about the effectiveness of Russian-made Tochka missiles against the Saudi/mercenary forces:

"We have the possibilities and know how to use them. They laughed at us, saying that all we have are old Russian weapons, but these weapons have put a stop to the arrogance of American weaponry. We are using the Soviet Tochka complex with high precision," Luqman told RIA Novosti.

This is more evidence for the Russia Analyst's high octane speculation that Yemen's old early 1990s vintage, Gorbachev or Yeltsin-era sold Tochka ballistic missiles have been refurbished, and made more accurate by covertly inserted Russian technicians (most likely working for the GRU - Glavnoye Razvedyvatel'noye Upravleniye). The fact that the Russians are still maintaining an embassy with a skeleton crew in Sana'a while other nations have evacuated their personnel due to the high threat of Al-Qaeda in the Arabian Peninsula (AQAP) or ISIS terrorist attacks and kidnappings would tend to support our theory.

So does Stratfor's analysis that there will be no large scale Saudi purchases of advanced Russian weaponry like S400s or Iskander missiles, as Moscow's geopolitical interest in undermining the House of Saud trumps its desire to earn billions of dollars from the erratic Kingdom.

The wreckage of U.S.-made Saudi light armored trucks destroyed by Houthi attacks, in southern Saudi Arabia's Asir province

In addition to covert signals intelligence gathering by the Russians operating out of the Chinese base in Djibouti, located across the strategic Bab-el-Mandeb strait from Yemen, the Houthis may be the beneficiaries of Saudi carelessness when it comes to open source intelligence about their capabilities:

Let’s imagine for a moment that you are a Houthi commander. You know that Saudi is buying weapons from the US via the FMS programme. FMS sales have to be approved by the State Department, meaning they get published. Therefore you manage to get internet and you check the Defence Security Cooperation Agency website and you find out this:

In this list, you can see that Saudi has asked for 1500 Penetrator warheads for its planes. If you have reinforced bunkers, now you have fair knowledge that an attack is being designed against them.

Finally, in another sign that 'the writing's on the wall' for the Saudis favorite jihadist groups in Syria, their longtime allies in the failed attempt to topple Assad, the Qataris, have sent their Emir Tamim bin Hamad Al Thani to Moscow for direct talks with Putin. Note that in the photograph below of Emir Tamim's arrival at a Moscow airport, the sunburst flag of Russian aviation is flying prominently as a subtle Kremlin dig at the Qataris' vanquished proxy forces.

While Saudi, Qatari and Turkish backed jihadists continue to be ground down in northern Syria, ISIS is trying one last ditch offensive in Deir-ezzor

While CBS 60 Minutes continues to put out disinformation about the Syrian Arab Army having only liberated '0.6%' of the territory controlled by the jihadists with the help of the Russians, the pressure continues to build toward a decisive rout of the Jabhat-al-Nusra and Army of Conquest terrorists in Idlib and Aleppo provinces this year.

Joseph P. Farrell @GizaDeathStar on the strategic implications of Russia establishing a Eurasian oil price benchmark to eventually phase out Brent. Saudi Arabia can either be at the table for such moves or 'be on the menu', but it's likely on the menu in any case due to disastrous socio-economics