How Oil Fuels Authoritarianism

It has long since been established that Crown Prince Mohammed bin Salman is not the world’s greatest guy, and Saudi Arabia’s centrality to 9/11 places them in frenemy status at best with the United States. The friend part is solely due to the political power of defense contractors who sell them weapons, and America’s longstanding agreement to purchase their oil. The enemy part is, well, everything else.

Across his whole career and at Splinter, Dave Levitan has excellently chronicled the myriad calamitous climate consequences of our dependence on an energy choking the planet to death, and in a rational world, this bevy of scientific evidence would be enough to deviate off our apocalyptic course. But we don’t live in a rational world, we live in one driven by the self-interest of power willing to burn the Earth to the ground in the name of profit.

Even meeting our political and economic system on its own depraved terms, there is still a clear logic that emerges to moving off burning dead dinosaurs to fuel our world. For example, Saudi Arabia is using endless oil profits they manipulate in order to pay for their insane and insanely expensive plans to make the country the epicenter of the global zeitgeist, all while they avoid any accountability for their repressive regime at home who funds terrorism abroad that attacks their economic partners.

Saudi Arabia’s ruling class has already ruined golf by paying preposterous amounts of money to hijack PGA Tour players to their pointless exhibitions on the LIV Tour, and they have tried and failed to do something similar to soccer by setting up their own professional league and paying fading superstars like Christiano Ronaldo gobs of money he could never get anywhere else. The goal of all this sportswashing is to make the country an attractive investment vehicle for foreign capital.

And it’s largely paid for with money from the world’s most valuable oil company, Aramco, of which Saudi Arabia currently owns 96% of between the country and its Public Investment Fund. When Aramco’s Initial Public Offering launched in 2019, it was the largest ever at $29.4 billion.

The Wall Street Journal is reporting today that Saudi Arabia has a new idea to attract foreign capital, as it plans to sell between $10 and $20 billion worth of stock in Aramco, and Reuters noted that “Global oil prices increased on Tuesday on the expectation that OPEC+ will maintain crude supply curbs at its June 2 meeting.”

Saudi Arabia gets to restrict oil supply through OPEC+, which raises oil prices, all in advance of a stock sale from the world’s largest oil supplier they have almost complete ownership over. Capitalism baby! We love it folks, don’t we?

Ironically many of the capitalists housed in the United States would probably disagree in this situation, as this economic power provides immense amounts of leverage over us (especially when it comes to inflation), as the largest economy in the world cannot sustain itself without this global poison. Without the seemingly endless amount of oil and natural gas they’re sitting on top of, Saudi Arabia could never push around the United States the way it does.

They get compared to Israel a lot on the frenemy front, but the two situations are vastly different. Israel has immense political clout and can personally threaten politicians, but Saudi Arabia has bypassed the empty suits in D.C. entirely and allied itself with their bosses in the defense and oil industries. Both Israel and Saudi Arabia are primarily strategic allies in the United States’s bid to contain Iran, but only one of them has real leverage over our entire country.

The suits in D.C. certainly looked at MBS with googly eyes at first, as he presents himself as the ideal version of a “pro-market” American-backed autocrat. Famed lapdog to power Tom Friedman even wrote a glowing propagandistic profile of him in The New York Times that has aged far worse than it looked like it would at first.

Now no one even bothers to give lip service to MBS’s supposed reforms, as he has proven himself to be the megalomaniacal autocrat he clearly was from the very beginning. He has batshit insane plans to build a $500 billion city in the middle of the desert called Neom with two 110-mile-long buildings taller than the Empire State Building. He is not a serious person.

And this is why he’s selling stock. His crazy plans have dwindled the regime’s cash reserves and he’s looking for ways to replenish it.

Twenty billion may seem like an incredibly large amount, and it’s not hard to look at that and envision a hilarious world where MBS spends the regime into bankruptcy by trying to build Las Vegas 2 but way hotter and much less fun.

But to a $7.078 trillion dollar company, this is like a hubcap falling off a semi-truck. If Aramco sells the maximum end of their desired range, that would represent 0.28% of the company’s market cap. Saudi Arabia’s stake in its foundational economic engine would plummet from 96% to 95.72%.

If MBS wanted to sell $500 billion to cover his entire idiotic plan, it would only represent 7% of Aramco’s market cap. This man could sell stock to build another six Neom’s and still maintain majority control over the world’s largest oil company.

And this is how they can literally get away with murder. Oil is what makes the world go-round, and this unholy alliance with the United States dollar has given Saudi Arabia the ability to name its price. They can even pay for it in blood, just so long as the dollars keep flowing to the right people, everything will work out just fine for the globe’s second-largest purveyor of poison. Both literally and economically, these gulf state rulers are the most liquid rich people in the world.

There are plenty of humanitarian reasons to want to get off oil, but cynical self-interested geopolitical ones are also eminently persuasive. Historians will record the downfall of the United States through its litany of quagmires in the Middle East, and one cannot wonder what our foreign policy might look like in a world where the centerpiece of our strategy was not based around controlling the flow of a substance owned by autocrats that is killing the planet.