U.S. Appeasement of Iran Has Opened the Door to a Sino-Saudi Attack on the Dollar

Not long after Riyadh rebuffed the White House’s entreaties to pump more oil to offset the economic effects of sanctions on Russia, reports emerged that Saudi Arabia has entered into negotiations with China to begin selling oil in yuan. Such a shift to Chinese currency would undermine the dollar’s dominant status in global petroleum markets. Ed Morrissey observes:

This isn’t an energy problem, so it can’t be fixed by rapidly increasing American production—at least not directly. This is a diplomatic and strategic issue, one that Joe Biden’s pursuit of a renewed [nuclear] deal with Iran has exacerbated, if not almost entirely created. The Obama administration also bent toward Tehran at the expense of the regional Sunni states, but the Saudis et al. benefited from Donald Trump’s rejection of the [2015 nuclear agreement] and a focus on U.S. alliances [with Saudi Arabia, the United Arab Emirates, and Israel].

That’s the strategic outlook from the Saudi [perspective]. The strategic outlook from China is just as obvious, although an attack on the dollar would be risky for Beijing. They hold a lot of U.S. currency in reserve, after all, and that is one way they manipulate the yuan.

China could decide that the strategic value of dismantling [the global monetary policy established in 1944 at] Bretton Woods outweighs the damage they could do to themselves in the short run. As for the Saudis, they might end up noting that China has been facilitating the Iran deal, as noted by Putin’s interlocutor in the talks, Mikhail Ulyanov. [The Saudi discussions about the yuan] could just be a shot across Biden’s bow to deflect the White House from a very bad deal with the mullahs of Tehran.

As if to underscore Saudi grievances, yesterday Iran-backed Houthi guerrillas in Yemen launched missile and drone attacks at several fossil-fuel and water-desalination plants in the kingdom.

Read more at Hot Air

More about: China, Iran, Oil, Saudi Arabia, U.S. Foreign policy, Yemen


Iran’s Calculations and America’s Mistake

There is little doubt that if Hizballah had participated more intensively in Saturday’s attack, Israeli air defenses would have been pushed past their limits, and far more damage would have been done. Daniel Byman and Kenneth Pollack, trying to look at things from Tehran’s perspective, see this as an important sign of caution—but caution that shouldn’t be exaggerated:

Iran is well aware of the extent and capability of Israel’s air defenses. The scale of the strike was almost certainly designed to enable at least some of the attacking munitions to penetrate those defenses and cause some degree of damage. Their inability to do so was doubtless a disappointment to Tehran, but the Iranians can probably still console themselves that the attack was frightening for the Israeli people and alarming to their government. Iran probably hopes that it was unpleasant enough to give Israeli leaders pause the next time they consider an operation like the embassy strike.

Hizballah is Iran’s ace in the hole. With more than 150,000 rockets and missiles, the Lebanese militant group could overwhelm Israeli air defenses. . . . All of this reinforces the strategic assessment that Iran is not looking to escalate with Israel and is, in fact, working very hard to avoid escalation. . . . Still, Iran has crossed a Rubicon, although it may not recognize it. Iran had never struck Israel directly from its own territory before Saturday.

Byman and Pollack see here an important lesson for America:

What Saturday’s fireworks hopefully also illustrated is the danger of U.S. disengagement from the Middle East. . . . The latest round of violence shows why it is important for the United States to take the lead on pushing back on Iran and its proxies and bolstering U.S. allies.

Read more at Foreign Policy

More about: Iran, Israeli Security, U.S. Foreign policy