Biden administration officials consider discouraging US companies from expanding business ties with Saudi Arabia

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WASHINGTON — Biden administration officials are considering trying to discourage U.S. companies from expanding business relationships with Saudi Arabia as part of a U.S. response to a recent Saudi-led push by countries oil producers to cut global output, said three current and former U.S. officials familiar with the talks.

The administration also will not send a U.S. official to Saudi Arabia’s annual Future Investment Initiative conference in Riyadh next week, officials said, though a senior administration official said the decision was made before the OPEC+ alliance announced on October 5 that it would cut oil production by 2 million barrels a day. The official said the administration was unable to plan the work to send a U.S. government official to the high-level conference, sometimes called “Davos in the Desert,” which has been a popular event for the leader. de facto Crown Prince of Saudi Arabia. Mohammed bin Salman.

Exploring ways to use US companies as leverage against Saudi Arabia comes as President Joe Biden says he is reassessing his administration’s relationship with the kingdom and considering how to retaliate against Riyadh following the decision to oil production. Current and former U.S. officials said no decision has been made on whether to pursue such an effort. They said it was just one of the options being considered as Biden considers how to balance the response without undermining some core US goals in the Middle East, namely the unification of Israel and the Middle East. its Arab neighbors against Iran.

The idea behind a decision to withdraw US business investment in Saudi Arabia is that it could influence the kingdom without directly affecting US security in the region, but it would also carry a risk that US companies won’t listen.

Going forward, US companies are expected to appear in force at next week’s Future Investment Initiative conference, which has drawn business executives, investors and government officials. The event was a platform for the Crown Prince, also known as MBS, to showcase business opportunities in the kingdom.

Officials acknowledged it was too late to influence the attendance of U.S. business leaders at this year’s conference, which begins Oct. 25 in Riyadh, even if the administration wanted to do so. The theme of this year’s conference is “Investing in Humanity: Enabling a New World Order”.

The Biden administration had already downgraded U.S. attendance at the conference from the Trump administration’s level of engagement. The Trump administration sent the Treasury Secretary to the conference, while last year the Biden administration sent Assistant Commerce Secretary Don Graves. The Commerce Department has confirmed that it will not participate this year.

Adrienne Watson, spokeswoman for the White House National Security Council, said the administration has not contacted American companies to discourage them from doing business in Saudi Arabia.

“We do not contact companies to make such requests,” Watson said in a statement. “As they do around the world, American companies will make their own decisions about where to go and where to invest, taking into account a range of factors, including legal constraints, the business environment and reputational issues that may arise. arise from public policy. choices made by host countries.

In addition to considering trying to squeeze Saudis in business, a senior administration official said the Biden administration plans to immediately recall diplomatic and military engagements with Riyadh, describing a cooling of relations that would likely last until the OPEC+ leadership holds its next official meeting on Dec. 4, the 34th OPEC and non-OPEC ministerial meeting.

The outcome of the December meeting will be key to the future of U.S.-Saudi relations, the official said. The meeting takes place the day before the entry into force of a set of European Union sanctions against Russia. The package will include a partial embargo on Russian oil and a ban on imports of Russian crude oil from the sea. The sanctions will prevent EU countries from reselling Russian crude oil and petroleum products.

“It’s going to be a key test, this OPEC meeting,” the senior administration official said. “EU sanctions will come into effect, and a few million barrels [of Russian oil] will be gone. Is OPEC doing nothing then?

‘Under pressure’

Biden is under pressure from Congress to take dramatic action, such as halting arms sales to the kingdom, and White House officials are furious with Riyadh only after intense US lobbying not to cut production oil, OPEC+ moved forward with an even bigger-than-expected cut. US officials said the decision would drive up gas prices and provide an economic lifeline for Russia – a major oil exporter – as it continues its brutal war in Ukraine. Officials have also accused the crown prince of forcing other members of the OPEC+ alliance to make the move.

Saudi Arabia said the decision did none of these things and stressed that it was made collectively by a group of countries.

US officials, including the president, have promised Riyadh a response, but so far none have been implemented, and officials said decisions would be made in consultation with Congress, which will not return. in Washington until after the midterm elections in November.

“The Biden administration seems to be scrambling a bit to come up with practical measures that could back up President Biden’s rhetoric that there will be consequences,” said Brian Katulis, vice president of policy at the Middle East Institute.

“One of the areas where the Saudi leadership is very interested in forging stronger ties with the United States is in the economic area and particularly private sector engagement,” Katulis said. “Saudi leaders are keen for American companies and investors to come to their country and make big investments to help them achieve the goal of diversifying its economy.”

Foreign investment in Saudi Arabia is central to the crown prince’s plan to diversify the kingdom’s economy.

Early last year, Riyadh announced that from 2024 only international companies with regional headquarters in Saudi Arabia could do business with the Saudi government.

The crown prince’s efforts were delayed after journalist Jamal Khashoggi was killed in October 2018. Under bipartisan pressure, Trump administration Treasury Secretary Steven Mnuchin canceled plans to attend the Future Investment Conference. Initiative held later that month. US intelligence agencies eventually concluded that MBS approved Khashoggi’s murder. The Saudi government has denied that the crown prince played a role in the murder.

Engagement with Saudi Arabia resumed, culminating in Biden’s visit to the kingdom, where he was pictured bumping fists with MBS in July.

Ahead of the OPEC+ decision this month, U.S. and Saudi officials spent hours discussing the future of oil prices, administration officials say.

The Saudis told the Americans they were ready to keep the production increase going until the end of the year, the senior administration official said, and that was the expectation of the United States and other OPEC countries for months.

But more recently, the Saudis presented the United States with an analysis that the price of oil was likely to fall and argued that they needed to cut production to avoid a price crater, U.S. officials said. The United States disagreed and presented evidence that prices would likely remain stable for another 30 days and that the production cut could wait until the next OPEC meeting, and they even argued that OPEC could alter production at any time if the price began to fall, they said. But, they said, the Saudis did not budge from their analysis and charts, saying a price crash was imminent.

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