Dear Saudis, Play Safe, Bring Your Money to Brazil
If I were the Finance Minister of Saudi Arabia, I would be cashing in, and moving most of Saudi Arabia's assets out of the US for safekeeping. Doing otherwise would be foolishness. Confiscation of Saudi money by the US seems imminent. Brazil is a good place to put at least part of the 2 trillion dollars, which are now in American hands.
By: Ricardo C. Amaral
When the Crown Prince of Saudi Arabia did meet President Lula in Evian, France on June 1, 2003, he invited Lula for a visit to Saudi Arabia later in the year. Here are some of the reasons why the crown Prince of Saudi Arabia was so friendly towards Lula—in a nutshell: Brazil is one of the major options available to Saudi Arabia to invest a large portion of the money, which will leave the United States for a safer haven.
We are talking about 2 trillion dollars, an amount twice the value of the entire Brazilian economy. We don't know how much money the Saudis will transfer from the United States to invest in Brazil.
To many readers this article might seem to have very little to do with Brazil, but the truth is: Brazil has a good chance of getting a piece of the 2 trillion dollar Saudi Arabian pot of gold. A major point that Lula has to convey to the Saudis, is that the Brazilian government will guarantee that in the future, the Brazilian government will not freeze or confiscate the Saudi's assets under any circumstances.
Another victory for bin Laden
The United States government ordered a U.S. military pullout from Saudi Arabia. On April 29, 2003, the decision was confirmed by US Defense Secretary Donald Rumsfeld during a joint news conference with Saudi Defense Minister Prince Sultan. The United States is capitulating to one of Osama bin Laden's central demands by pulling almost all American military forces out of Saudi Arabia by the end of the summer.
This is another major victory for Osama bin Laden and the Al Qaeda network. The US government claims that bin Laden was responsible for the attacks on the Pentagon and the World Trade Center on September 11, 2001, in which 15 of the 19 suicide hijackers were Saudi nationals. The US military presence in Saudi Arabia was the main grievances given by Saudi-born Islamic militant Osama bin Laden to justify attacks against the United States.
Why is the US government giving into bin Laden's demand? Because it is impossible for the United States to win the war on terrorism—a small group of terrorists can cause a lot of damage such was the case on September 11, 2001. These people did not have an army—with big guns, the biggest bombs ever made by human beings, including nuclear bombs, or the most advanced missile and communications systems available today. The terrorists came armed with low-tech box cutters and a little ingenuity and imagination, and look at the amount of damage—material, economic, and psychological—these people were able to inflict in the United States.
The US spent 1 trillion dollars in defense in the last three years, and 2 trillion in the last eight years. Even with these very large amounts of defense spending the US could not prevent the attack by 19 terrorists armed with low-tech box cutters.
Why is the US overreacting and is spending so much money on defense?
The sad thing is that the American people have been misled to believe that they can be protected from a terrorist attack by increasing defense spending. When the reality is: it is an impossible task for the government to protect the American people against most kinds of terrorism attacks in US soil.
It is impossible to stop terrorism, because acts of terrorism can be performed by a very small group of people—in some cases by only one person. The United States can spend 50 trillion dollars in defense (an amount equivalent to 5 years of the entire US gross national product), and the US still will not be able to stop in the future, a clever terrorist attack on its soil.
Saudi Arabia Collapse
On April 29, 2003, the Asia Times Online had an article by Syed Saleem Shahzad saying that: "Over the past few months, sections of the Saudi media, some circles of the royal family and the clergy and intellectuals have speculated that after Iraq, the United States is determined to bring Saudi Arabia to heel.
"…This will not entail military action, rather political pressure brought to bear in the wake of the new circumstances that have arisen in the region with the fall of the Saddam Hussein regime in Iraq. Such pressure would include increased action against Al Qaeda members or sympathizers—15 of the 19 September 11 hijackers in the US attacks were identified as Saudi citizens, a review of the main pillars of power in Saudi society, as well as its relations with the world.
"…Since the 1991 Gulf War, US troops have been in the country under the pretext of being a part of Operation Southern Watch, which enforced a no-fly zone over southern Iraq. But the US troops have become a potent symbol of Washington's role in the region, and many Saudis see them as proof of the kingdom's subservience to America.
"…Saudi Arabia is home to some of Islam's holiest sites, and the deployment of US forces there is seen by many—notably by Osama bin Laden—as an historic betrayal . This is one of the main reasons given by the Saudi-born Osama to justify violence against the US and its allies.
"…Being the most holy land of Muslims around the world, it would be difficult for the US to deal with Saudi Arabia as it has with Syria—with threats of war….Once the US troops leave Saudi Arabia, the religious segment of Saudi society can be expected to be more outspoken….The Iraq war has already added fuel to the fire and fanned extremism in the country. As a result, Saudi authorities are now caught between the devil and the deep blue sea.
"…In the past 50 years, Saudi Arabia has maintained a balance in its policies concerning its internal affairs and its external affairs, despite the fact that they were at odds—internal policies have been traditionalist and Islamic, while external ones have been liberal and pro-Western. It will become ever more difficult for Saudi Arabia to maintain this balance in the future."
The most interesting article about the coming collapse of the government in Saudi Arabia was published in the May issue of The Atlantic Monthly. The article is called "The Fall of the House of Saud" and was written by former CIA field officer Robert Baer. The article describes in detail the current predicament of the Saudi royal family.
The article starts by saying that: "The day of reckoning is here for our corrupt, dangerous, and untrustworthy allies, the Saudi royal family. Americans have long considered Saudi Arabia the one constant in the Arab Middle East—a source of cheap oil, political stability, and lucrative business relationships. But the country is run by an increasingly dysfunctional royal family that has been funding militant Islamic movements abroad, in an attempt to protect itself from them at home. A former CIA operative argues, that today's Saudi Arabia can't last much longer—and the country is on the verge of collapse—and much of the global economy could collapse with it."
This article describes in detail many of the problems that will bring the Saudi royal family down in the near future. In the last 30 years, there were many sweetheart deals between Saudi Arabia and US companies. The article said: "Just to make sure that no one upsets the workings of this system, perhaps by meddling in internal Saudi affairs, Saudi Arabia now keeps possibly as much as a trillion dollars on deposit in US banks—an agreement worked out in the early eighties by the Reagan Administration, in an effort to get the Saudis to offset US government budget deficits. The Saudis hold another trillion dollars or so in the US stock market. This gives them a remarkable degree of leverage in Washington. If they were suddenly to withdraw all their holdings in this country, the effect, would be devastating."
Robert Baer is a former CIA analyst who specialized in the Middle East for more than 20 years and who has just written a book about the region. He's warning that we should be prepared for the eruption of mass instability and terrorism in the Middle East in a very short timeframe, and that instability in Saudi Arabia alone could trigger a collapse in the world economy.
The Inquisition
I would like to suggest that people read a book by Edward Burman called The Inquisition to learn about the economic and cultural effects that the inquisition had in Europe. Quoting from this book: "...Mariano da Alatri has argued that among all the punishments used by the Inquisition that of confiscation had the greatest social repercussion, and we shall see how the obviously attractive elements of such a policy were soon to be perverted for political motives. One of the most disastrous aspects, especially for wealthy suspects, was the widespread practice of confiscating property even before a trial had taken place....inquisitors held the important privileges of being able to sell goods confiscated from heretics...the possibilities for corruption are evident".
Many wealthy people became a target of the Inquisition, and the goal was to confiscate their assets and property. Don't we ever learn any lessons from past history? I guess not!
The US and Asset Confiscating
On March 20, 2003 The White House and the Office of the Press Secretary issued a press release that affect and should make many governments from around the world very nervous— the governments that have investments in the United States.
This new policy should put everybody on alert, and raises a big Red Flag, because the US economy is an economy in distress today. Not only the US economy has 8 trillion dollars of cumulative government debt (and continuing to grow), but also the local economies of most states in the United States are not doing well. The most important states in the US economy are California and New York, and their economies are in shambles. It is estimated that the states in the United States will have a combined budget deficit of about 100 billion dollars during the year 2003.
According to the Federal Reserve's latest figures, outstanding state and local debt rose to almost $1.5 trillion dollars. When you take a good look at the health of the American economy the total debt of the federal, state and local government with its combined 9.5 trillion dollars debt, it looks like the American government is on its way to become a banana republic. With this kind of debt load, I can see why the US government has adopted a new "Asset Confiscating Policy."
Here is an actual example of this new policy, when the United States confiscated over $ 2.5 billion dollars in Iraqi assets here in the United States. The reader can see the document released on Friday, 21 March 2003, by the White House: Executive Order: Confiscating and Vesting Certain Iraqi Property, on the following website: http://www.whitehouse.gov/news/realeses/2003/03/20030320-10.html
Confiscation can also happen to Saudi Arabia's assets in the US and the Saudi Arabia government probably knows that. The US is a country deep in debt and it is very tempting to confiscate the 2 trillion dollars pot of gold. Remember, Saudi Arabia keeps as much as a trillion dollars on deposit in US banks, and another trillion dollars or so in the US stock market.
The Saudi's assets are very tempting. Saudi Arabia would be an easy target for the US, even easier than Iraq. It would be much easier to justify to the American people the confiscation of all Saudi Arabia's assets here in the US, since the US government claims that Osama bin Laden was responsible for the attacks on the Pentagon and the World Trade Center on September 11, 2001, in which 15 of the 19 suicide hijackers were also Saudi nationals.
If I were the Finance Minister of Saudi Arabia, I would be cashing in, and moving most of Saudi Arabia's assets out of the US for safekeeping. As soon as a revolution starts in Saudi Arabia, I will not be surprised to see the US government freezing and confiscating all kinds of assets owned by the Saudi Arabian government and the assets of the members of the Saudi royal family. You know, to protect these assets and return them, sometime in the future, to the Saudi Arabian people. The entire business will be done with good intentions and wishful thinking in mind.
I want to remind the Saudi royal family that the US government has changed many of its policies since 9/11, related to the international court, respect to international law, the United Nations has been declared an obsolete institution, NATO also became obsolete, freezing and confiscating foreign assets became an acceptable policy, and the law of the jungle has been adopted—survival of the fittest.
If the Saudis have not grasped as yet the implication and the impact of all these changes on their assets, and if they don't move their assets out of the US to protect them against confiscation, then they deserve to lose it all, because they are a bunch of fools.
In the mean time, the US government has to go on record and give all kinds of assurance to the Saudis that such a thing will never happen.
Billions of Saudi Arabia's money will be moved out of the US for safekeeping. Maybe some of the money will be moved to Brazil?
Billions of dollars will leave the US, because of the economically repressive environment created in the US with the passage of the US Patriot Act and the Homeland Security Act of 2002, plus massive fraud on Wall Street—Enron, Worldcom etc, etc. And to make things even worse, the latest development is the policy of freezing and confiscating assets of foreign governments. These billions of dollars will find its way to a more friendly, and safer capitalist haven. Could that new option be Brazil?
Brazil proved that it has a real democracy today, with many political parties giving voice for most groups of the population. Brazil has a free market and capitalist economy. The major ingredient that is still missing for the Brazilian economy to blossom in a spectacular fashion: is a strong and stable currency such as the Euro.
If Brazil adopts the Euro, Brazil will finally have a chance to become one of the major world economic powers. It is imperative that Brazil adopts the Euro as its new currency to give monetary stability to the country and to give confidence to people to invest in Brazil.
There are two other steps necessary for Brazil to take to become a major player on international affairs, and become a country able to attract the 100's of billions of dollars that will be leaving the US for a safer place.
The first step for this strategy to work: Brazil needs to be able to defend itself from any other country. Brazil needs nuclear weapons to be accepted as a major nation. Without nuclear weapons Brazil will never be able to reach its potentials and become a player among the world leaders.
Since I wrote articles on Brazil needing nuclear weapons, I received many emails and spoke with many people about that subject. And I can tell you that the perception is that Brazil don't have the capable minds and the know how to produce such weapons. Most people laugh about Brazil being able to produce nuclear weapons—I have been told a number of times that Brazil is about samba, Carnaval, and soccer. And that is it.
I believe that if very poor countries such as India and Pakistan are able to build nuclear weapons, then Brazil also must be able to build them. Even very poor North Korea with a starving population has nuclear weapons.
Before the war, I thought that Iraq had a very weak and small army—the leftover of the 1991 war, which was no threat to the countries of the Middle East. But it turned out that they had an even weaker and smaller army than anyone could expect.
The US attacked Iraq because it was an easy prey, and also because Iraq did not have nuclear weapons to defend themselves. In the other hand, the United States is not attacking starving North Korea, because they are afraid of the North Koreans nukes.
The second step for the strategy to work: Brazil needs to bring crime under control. I will write an article about that subject in the near future.
For Brazil to be able to take advantage of this unique opportunity and benefit from the money that will leave the US for safer havens, Brazil needs to adopt the Euro as its new currency, acquire nuclear weapons, and deal with the crime problem.
Ricardo C. Amaral is an economist and author.You can reach him at brazilamaral@yahoo.com
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