by Bill O’Grady
(NB: Due to the Thanksgiving holiday, the next report will be published on November 26.)
Last week, we discussed the issue of succession in the Kingdom of Saudi Arabia (KSA). In Part II, we will begin with a discussion of the regional power rivalry between Turkey and the KSA, then outline Turkish President Erdogan’s actions in the wake of Khashoggi’s homicide. We will analyze U.S. policy goals in the region followed by our expectations for the resolution of this incident. As always, we will conclude with market ramifications.
Turkey versus the KSA
The Khashoggi incident and Turkey’s involvement should be understood within the context of a long-running rivalry. Both nations want to dominate the Sunni-aligned nations of the Middle East. Turkey sees this role as its natural “birthright” due to the nearly 600-year dominance of the Ottoman Empire. Saudi Arabia believes the role of leading the Sunnis in the region is part of its position as defender of the Muslim holy sites of Mecca and Medina. Both nations have sharply differing views of how that dominance should be exercised.