Saudi 9/11 Bill Becomes Law: Implications for US and Middle East

On September 28, Congress overwhelmingly overrode the presidential veto causing the Justice Against Sponsors of Terrorism Act (JASTA) to become a law - the first veto override of President Obama’s presidency, just four months before it ends. The vote is a heavy blow to the administration. Almost all its strongest Democratic supporters joined Republicans to oppose the veto. The repudiation magnifies a blot on Barack Obama’s presidency.

The new law grants an exception to the legal principle of sovereign immunity in cases of terrorism on US soil, clearing the way for lawsuits seeking damages from the Saudi government. Riyadh has denied longstanding suspicions that it backed the hijackers who attacked the United States in 2001. Fifteen of the 19 perpetrators were Saudi nationals. President Obama argued that JASTA could expose US companies, troops and officials to lawsuits if other countries passed reciprocal legislation, and may alienate key allies in the Middle East. US corporations including General Electric Co and Dow Chemical Co also opposed it, as did the European Union and other US allies. Secretary of Defense Ash Carter, General Joseph Dunford, chairman of the Joint Chiefs of Staff and CIA Director John Brennan opposed the bill.

The congressional vote puts into question the future of the US relationship with Saudi Arabia - the richest and geographically largest Middle Eastern country, which is also a key America’s ally. Congressmen have expressed their disappointment over Saudi Arabia’s human rights record, promotion of Wahhabism – an austere form of Islam tied to militancy and failure to do more to ease the international refugee crisis.

On September 21, the Senate voted on an important resolution on whether to stop a $1.15 billion arms sale to Saudi Arabia. While the resolution ultimately did not pass, an unprecedented number of senators voiced concerns about providing new weapons to Saudi Arabia. The resolution ultimately received the support of over a quarter of the Senate, including over half of the senators from the President’s Democratic Party. It reflects significant concern about Saudi Arabia's role in the Yemen’s conflict.

The alliance with Saudi Arabia has frayed in recent years. The Saudis strongly opposed the US-brokered nuclear deal with Iran perceiving it as a pivot toward the kingdom’s regional rival in the midst of recriminations between American and Saudi officials about the role that both countries should play in the stability of the Middle East. There are problems with the kingdom’s involvement in the civil war in Yemen, and disagreements over the Syrian conflict. President Obama criticized the Gulf countries in an interview earlier this year, despite their support for the US-led fight against the Islamic State group in Iraq and Syria.

The kingdom can retaliate. The measures can include curtailing official contacts. It’s possible to suspend permissive rules for overflight between Europe and Asia. Gulf Cooperation Council (GCC) member states could be influenced to scale back economic and military cooperation, including the activities of US Air Force. The United States military operations in the region are directed and supported from Qatari Al Udeid air base in Qatar – the largest US facility in the Middle East accommodating approximately 10, 000 troops. The GCC can act more independently of the United States in Yemen, Bahrain, Egypt and elsewhere. Saudi Arabia and its Gulf partners can suspend information exchange to hinder the US intelligence gathering effort.

Riyadh can also make good on its economic threats. Saudi foreign minister Adel al-Jubeir said in March that if the JASTA bill became law, the kingdom would be forced to sell $750 billion dollars of US Treasuries and other assets to keep them from being frozen by US courts. In May, the US Treasury revealed that the Saudis hold $117 billion in Treasuries, a figure probably half of what is in offshore accounts and that appears only in data of other countries.

Saudi Arabia is one of America’s largest foreign creditors.

The kingdom might consider unpegging the dollar from its national currency - the riyal - and no longer denominate the price of oil in dollars to impact on the dollar’s position as the world’s reserve currency.

Private Saudi money is widely invested in the United States. The investors could start moving assets out of the country for fear that they could get frozen in the future by court order.

The Saudi leadership is pursuing the opening months of the Kingdom’s fifteen-year Vision 2030 program.

Major US companies are planning major investments in the kingdom. Now they may be losing this opportunity.

After all, Saudi Arabia is one of the world's largest oil exporters with the biggest economy in the Persian Gulf. It also has other business partners to choose from in Europe and Asia.

Saudi Arabia is resolute enough to use its influence and fight back when attacked. For instance, last year Sweden's Foreign Minister Margot Wallstrom strongly criticized Riyadh for its violations human rights. The kingdom fought back to undermine Stockholm's standing in the region. It also threatened Swedish business interests in the Persian Gulf. Sweden had to eventually backpedal.

In 2015, Saudi Arabia, Bahrain and the UAE imposed unprecedented pressure on Qatar to punish it for sponsoring the Muslim Brotherhood across the Middle East and North Africa (MENA). Doha had to give in.

Opening the Pandora’s Box by the lawmakers was like shooting oneself into the foot. The JASTA law actually targets the United States. And it’s not the US-Saudi, or US - GCC relationship only. By allowing Americans to sue a foreign country in their civil courts, the law abrogates the principle of sovereign immunity to alarm other nations. The Dutch parliament wrote to House lawmakers ahead of a July 14 hearing to warn them that JASTA would represent a «gross and unwarranted breach of Dutch sovereignty» that could result in «astronomical damages».

Other countries will retaliate with their own versions of JASTA. That would cause quite a headache for the United States given the military and the CIA activities in other countries with everything from drone strikes to foreign surveillance and backing foreign militias. US assets abroad will be seized upon the rulings of foreign courts. The diplomats and military personnel will be sued in other countries, according to their national laws.

In a broader sense, JASTA coming into force is just part of a trend. The US footprint in the Middle East is fading after Washington has failed in Iraq, Libya and Yemen. Now the US is losing in Syria, especially in view of its inability to live up to its commitments according to the agreement reached with Russia to prevent the Aleppo bloodshed. Saudi Arabia is gradually distancing itself from the United States. It has formed its own coalition of 34 states to counter terrorism. Saudi Arabia is fostering closer ties with Egypt, the largest Arab Sunni state dissatisfied with the US policy. Its king is expected to visit Moscow soon. A new president will not have many cards left to play if he or she decides to change the tide. Actually, the Middle East is not the only region where the US special role is melting away.