Weekly Geopolitical Report – Moving Fast and Breaking Things: Mohammad bin Salman, Part III (December 11, 2017)
by Bill O’Grady
In Part I of this report, we began with a brief background of Mohammad bin Salman (MbS) and discussed the surprise arrests of many leading figures in Saudi society, including several members of the royal family, that occurred the weekend of November 4. In Part II, we examined the forced resignation of Saad Hariri, the missile attack on Riyadh and the crackdown on the clerics, which all took place the same weekend as the events discussed in Part I. This week, we will analyze how these events fit into the broader geopolitics, discuss the drift in American foreign policy and conclude with market ramifications.
The Broader Geopolitics
It is important to view the actions being taken by MbS within a specific context that partially explains some of his behavior. After WWII, the U.S. took on the superpower role; for most of the period, it shared that role with the Soviet Union.
President Truman, using the theoretical construct from George Kennan’s “long telegram,” made containing communism the key element of American foreign policy. The American public generally accepted this position and supported it. However, there were four other elements of foreign policy that were not acknowledged and were, in fact, hidden within the rubric of containing communism. These involved “freezing” potential conflict areas and providing the reserve currency.