Saudi Arabia and the Common Knowledge Game

An historic night it was.A pleasure to have a private dinner with the Crown Prince of Saudi Arabia,
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  1. Avatar for cbeirn cbeirn says:

    “and then everything returns to ‘normal’”.

    And so it may. Of course, normal for Saudi Arabia means old school Wahabi fundamentalism which leaves little room for Mssrs. Iger & Rock and other purveyors of infidel corruption. MBS has more enemies than your average tyrant and you may be sure that all of them are looking for ways to exploit this situation.

  2. Ben, I think both you and Rusty are right. This will go back to normal on the surface, but below the surface, no one will forget. It will also likely have a reaction function in SA. In order to bolster their “rouge” hypothesis, or whatever other face saving story allows the world to paper over this act, they are going to be on their best behavior. That might end up including some actual reforms.

  3. After spending fifteen or so hours on my high horse after reading your piece (about a third of them asleep) - “how can we go back to supporting SA after this! / how did we partner with them before this! -” the realpoltik of the MidEast broke in to my comfortable moral cocoon - “there are no good choices.”

    As a liberal democracy that supports individual and minority rights through genuine rule of law - with all the flaws every even-good country has - I understand our support for Israel, but after that, the choices in the MidEast get slim.

    So do we just abandon the MidEast? Give up any influence and leave it to its own devices / or to Russia’s / or to an aborning China’s? Would that be better or worse for its people / its future / our present / our future? Or do we continue to partner with what we think is the least-bad strategic country and try to do our best working from within the belly of the beast?

    Is having some influence to “nudge” (doesn’t that word echo ominously in ET terms in this case) the MidEast in a better direction worth the moral tradeoffs? Or is a bigger-picture view of staying above it morally and practically a better approach - i.e., do the right thing morally where the rewards are that we get to do the right thing morally until a better opportunity to help and improve the MidEast arises?

  4. Will it go back to “normal” or will “normal” be redefined? Masayoshi Son got $45B of his $100B Vision Fund from Saudi. PE gets a significant proportion of their funds from the Saudis. Maybe the new normal is just a bit more abstraction? If Masayoshi Son raises $100B every 2 years or so, how much of that will be Saudi money?

  5. Avatar for Cimba Cimba says:

    You may have already hi-lited this in an earlier writing but I am struck by the parallels between the common knowledge game and Malcolm Gladwell’ s Tipping Point.

    It’s different because common knowledge is something “everyone knows” whereas a Tipping Point is where a new idea gains credence, but the acceptance by the main stream is the same concept.

    More important is how to use this information to affect change.

  6. Avatar for cbeirn cbeirn says:

    As the nattering nabobs of the Nejd are wont to say: there are old royals and there are bold royals, but there are no old, bold royals. If Ladbrokes starts making book on the Crown Prince’s longevity, I’ll take the under.

  7. How do “real assets” line up in a world where The Narrative is shifting to Axis vs Allies? We’re seeing the unprecedented cohesiveness of world governments for the past 10 years starting to disintegrate into Axis v Allies. If we’re moving into that polarization or even beggar thy neighbor, that isn’t the same dynamic as the old “rising tide” of the past. That’s going to make winners and losers out of each asset on a country by country (or more likely an Alliance vs Axis) basis as opposed to a “commodity boom”. Right?
    For instance oil. The US, despite it’s current virtue signaling tsk’s at MBS’s behavior, is making it very clear that it is staying staunchly in the Saudi camp (the Alliance). That (along with a healthy dose of US sanctions) forces Iran into the camp of those that refuse to follow the sanctions (the Axis). Same with timber, steel, or uranium. In that scenario the global price of the asset is relevant, it’s the price asset relative to its alliance that matters. Finding those imbalances in the asset ledger of each alliance would be interesting.
    Oil is probably a hard one to arbitrage in advance as that’s the easiest one to place importance on. The non-sexy and currently easy/cheap to obtain thanks to global cohesion and super long supply lines but oh so fundamental assets are probably where it’s at in that scenario. Thoughts?

  8. Is it wrong to want desperately to make money off human nature being human nature? It’s a bit of a cathartic process if done right. I wrestle with this from time to time.

  9. Avatar for ET82 ET82 says:

    Making money off human nature being human nature in order to finance our own human nature…

    Reminds me of the circular snake eating itself. Sure does taste good all the same.

  10. Avatar for ET82 ET82 says:

    In a month or so we should expect a fresh announcement of some additional philanthropic giving from SA. Reminds me of similar mishaps like United Airlines smashing the front teeth of that Vietnamese-American doctor. UA is still flying and so too will SA.

  11. Avatar for bhunt bhunt says:

    I think you’re right, Chris. And even if the over wins, there are ZERO advantages for the US to be “friends” with MBS. That’s true whether your goals in SA are mercantilist (Trump) or reformist (Friedman et al).

  12. Avatar for bhunt bhunt says:

    I would go even further. The ONLY reforms that can happen in SA are those driven by an internal reaction function, and being a “friend” of the regime muffles whatever inputs go into that reaction function.

  13. Avatar for bhunt bhunt says:

    I wrote an entire note in response to this thoughtful comment, Mark. (

    The skinny: We must continue to engage with SA, but not as “friends”. It’s an arms-length transaction to achieve non-myopic long-term national interests. National interests which include, btw, pressuring for internal liberalization. But stop with the nudging! Stop with the hypocrisy!

  14. Avatar for bhunt bhunt says:

    Normal will be redefined. I think SA is THE Greater Fool in private equity mega-deals today. I also think it is this fact that is the strongest tie to the West today.

  15. Avatar for ET82 ET82 says:

    The backing which this good Prince received from liberal media and entertainment elites gives me flashbacks to the support that Hillary received during the 2016 run up. In the same manner that they attempted to rewrite HRC’s story as the highly qualified ascendant to the White House, MBS was branded as an earnest Aladdin hungry for positive reform by the same scribblers and commentators.

    It is powerfully comedic that America’s cultural figures now must seek as far afield as SA for some iteration of the centrist mantra which has lost much of its political momentum at home. It is also deeply saddening that they largely ignore the countless homegrown voices who are doing their damnedest to try and organize positive political changes around renegotiating healthcare, worker protections, energy infrastructure, and so on. Of course, not a single one of those homegrown voices is backed by any billionaire stacks like the Saudis. Unsurprisingly, individuals with almost non-existent leadership abilities like Michael Bloomberg are being amped up in elite circles as the only rational choice for 2020.

  16. Avatar for bhunt bhunt says:

    And even more important is recognizing how these game dynamics are used to affect change in YOU.

  17. Avatar for bhunt bhunt says:

    Hate the game, not the player. You, Eric, are a player.

  18. Avatar for bhunt bhunt says:

    chudson: Right?
    me: Right!

  19. Avatar for ET82 ET82 says:

    The idea of leadership is what this latest reveal about SA brings up for me. The notion that America’s vaunted cultural elites have to seek out their desired brand of liberal viciousness in Saudi Arabia seems very telling. Shares in the death trap Clinton fund went to zero and they seek for ways to recover in foreign markets. Yet, following the same populist trend we are experiencing in the USA, the only brand of global leadership that can sustain its political legs is increasingly authoritarian or radical in nature. Bolsanaro in Brazil sounds to be the next Duterte. Modi in India is getting brutal where deemed necessary. And holy Huey Long, the UK is driving along the cliff edge of installing an actual leftist.

    Who among our entertainment gods now wants to hang out with shabby demi-gods like Macron and Merkel? The point being that the smug facade of liberal democracy is having a tough time adopting any fresh figureheads who are not already identified as part of the gang of brutal global governance. The benevolent brand of Hollywood liberal fantasies is coming up short on credible real-life applications for its high-minded values. But I would not expect many of the fashionistas to break class and actually support those values among the scruffy organizer movements.

    The frightening part is that despite all of the ridiculous falsehoods, outright ineptitude, and proven crimes that the Trump administration or Saudi royals commit, I think it is apparent that far left or right powerbrokers are providing the only salient type of leadership that qualifies as real to many seeking to survive in a fallen world. The centrist triangulaters persistent offer to lead “forward” amounts to nothingness. So any brand of leadership that actually leads will do. Even if it has to bring out the occasional bone saw for Halloween.

  20. Avatar for rguinn rguinn says:

    I would not take the other side of this bet.

  21. Avatar for robh robh says:

    I find this whole story a bit perplexing— you don’t need to send a 15 person hit squad on two private jets to assassinate a private individual. If assassination is your goal, why do it your own consulate where you have no deniability? Why would you include an MD with a bone saw on your squad? How do we even know that?

    I have to assume that this was a rendition attempt that went awry resulting in an accidental death and a subsequent cover-up attempt. Clearly, not OK, especially against a journalist but, let’s be honest, there is no shortage of regimes around the globe that partake in assassination, rendition or extra-judicial disappearances of deemed “enemies of the state”.

    So to answer Rusty’s question of Why am I reading this now? I have to pivot to Cui Bono? In this case, a lot of people–

    1. The Turks – Challengers of Saudi for leadership of the Sunni world with no shortage of their own human rights PR problems
    2. The Russians – Would love to screw with US Middle East policy and wouldn’t mind an oil price spike to boot
    3. The Iranians – Saudi’s chief Middle Eastern rival has much to gain from Saudi faltering, higher prices and a higher global cost to embargo them
    4. The Chinese – A Saudi/US schism might make an opening for them
    5. The Democrats – In our zero sum world, a US foreign policy failure is bad for Trump, good for them
    6. The West Wing Tea Partiers – In our zero sum world, a loss for Jared (and the NY contingent) is a win for them
    7. The Saudis – MBR pissed off a lot of people on his way up. All those sheikhs who spent three months of house arrest at the Ritz Carlton Riyadh and the clerics who just got their wings clipped are all going to be gunning for him hard
    8. The Press – Obviously very focused on the plight of journalists, they will not let this one go easily, especially the Washington Post and NYT.
    9. Opponents of Israel – US backpedaling in the Middle East hurts Israel more than just about anybody else.

    For these reasons, I think this is a story that is not going to go away anytime soon.

  22. Avatar for cbeirn cbeirn says:

    “The ONLY reforms that can happen in SA are those driven by an internal reaction function”

    Exactly correct. Saudi Arabia is a shame culture, and there are severe consequences for anyone who brings dishonor on his/her family or tribe. But it’s essential to understand that a Saudi can only be effectively shamed in the eyes of another Saudi. The opinions of Westerners and infidels are irrelevant. The drip, drip, drip of shameful news and supporting evidence from another Islamic nation like Turkey is highly damaging to the house of Saud’s internal standing.

  23. Rob - I agree there are a lot of Cuis who Bono, so your last line is spot-on, but I quibble with your opening paragraph for one reason: insular hereditary oil kingdoms do not breed competence. Also, I would not discount the possibility that SA/MBS carried out this murder in an unsubtle way precisely because of the message it sends. If you are a self-interested king with many enemies, killing the weakest among them and hanging the body from a public gallows might seem like a rational signalling tactic. See also Novichok.

  24. Avatar for ET82 ET82 says:

    Certainly worth remembering how many others stand to benefit from exploiting outrageous norm breaking events. This tweet from a WaPo reporter signals as much:

    But this example also belies the non-response to power that is endemic on Team Elite. Their words never amount to more than a tepid, “How dare you, sir.” And appropriate actions in response are non-existent. Hence the strong assumption that SA will not be penalized for what happened. If invading Iraq on false premises or crashing the economy in '08 earned no rebuke, why should this?

  25. Thanks, hard to wrap my head around how second level thinking applies in this new world.

  26. This discussion just became a whole lot more relevant based on the Trade Wars! meme.

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