A lot of people who wonder why the US is so seemingly subservient to SA (vs other Middle East countries) don’t know about this:

* In 1974, Washington and Riyadh struck a deal by which Saudi Arabia could buy US treasury bills before they were auctioned. In return, Saudi Arabia would sell its oil in dollars—not only enlarging the currency's liquidity but also using those dollars to buy US debt and products.*

[0] https://www.google.com/amp/s/qz.com/2143450/saudi-arabia-wan...

So in exchange to gaining access to US treasuries (debt) before action, they had to buy US treasuries? How is that a concession made by the KSA if that’s what they wanted in the first place?

SA gets a good deal on treasuries (basically a bribe) in order to sell oil in dollars and then use those dollars to buy treasuries.

US forces nearly all countries to buy USD that eventually get returned as SA-owned debt (huge monetary policy benefits). SA gets more or less bribed by the worlds largest military.

Awkwardness is when SA wants to do stuff that’s is against US morals (like murdering journalists) or when China firmly but politely asks to buy in RMB (like it has recently).

US generally sees petrodollar regime as second only to the military (as evidenced by their eagerness to invade Iraq and gain leverage over SA).

They also got US aid (economic and weapons). See https://www.nytimes.com/1974/06/09/archives/milestone-pact-i....

I think there also was the (possibly implied) promise of military protection by the USA

There was the threat of military action and regime change if they didn’t. See Libya and Iraq after they decided to sell oil in Euros.

You mean Libya that was bombarded by France and other European militaries with relatively small US involvement? The same Libya that bombed planes[0][1], killed people in front of embassies[2], helped prop up monsters like Idi-Amin[2], waged war against Chad[4] and Egypt[5] and suggested breaking up Switzerland because dictators son brutalized his servants[6]?

The country which was in midst of protests which their government, dictatorial btw, decided to violently suppress?[7]

Yeah, nice guy all around that Gaddaffi. Oils the only reason anybody would want him gone.

[0]https://en.wikipedia.org/wiki/Pan_Am_Flight_103

[1]https://en.wikipedia.org/wiki/UTA_Flight_772

[2]https://en.wikipedia.org/wiki/Murder_of_Yvonne_Fletcher

[3]https://en.wikipedia.org/wiki/Uganda%E2%80%93Tanzania_War

[4]https://en.wikipedia.org/wiki/Chadian%E2%80%93Libyan_conflic...

[5]https://en.wikipedia.org/wiki/Egyptian%E2%80%93Libyan_War

[6]https://en.wikipedia.org/wiki/Libya%E2%80%93Switzerland_rela...

[7]https://en.wikipedia.org/wiki/First_Libyan_Civil_War

[8]https://en.wikipedia.org/wiki/West_Berlin_discotheque_bombin...

Oh yes, perfect excuse to kick a country and its people back into the stone age.

Defensive military alliance - NATO - go!

Gee, I wonder how many similar incidents we can count among NATO states going back from 1988

>> * In 1974, Washington and Riyadh struck a deal by which Saudi Arabia could buy US treasury bills before they were auctioned. In return, Saudi Arabia would sell its oil in dollars—not only enlarging the currency's liquidity but also using those dollars to buy US debt and products.*

> So in exchange to gaining access to US treasuries (debt) before action, they had to buy US treasuries?

I have no knowledge about this besides what's been written in this thread, but I assume that having the ability to buy before the auction means they get a good deal.

> The euro is just another second tier currency backed by the european central bank which is extremely fragile.

Which currencies are as strong or are in a better position, and are backed by stronger economies than the euro?

I think the whole point is that would be the dollar

"Which currencies are as strong or are in a better position, and are backed by stronger economies than the euro?"

Easy, initial answers are the Swiss Franc and the Norwegian Krone.

Expanding the thought experiment a bit, it's possible that CAD is, big picture and long term, in even a better position. Probably AUD as well.

> Easy, initial answers are the Swiss Franc and the Norwegian Krone.

The GDP of .ch and .no put together are 6% of the EU's.

I'm sorry, but they just aren't significant in the large picture.

My parent didn't ask that. My parent asked:

"... are as strong or are in a better position, and are backed by stronger economies ..."

... and I would argue that .ch and .no are in quite a bit better position and are backed by stronger economies.

the us dollar is quite fragile too. Remember that it had to invade libya and iraq to stop them from selling oil in other currencies.

If the saudi and other arab nations' deals with china and their acquiring of yuans are significant, it could signal the end of the petroldollar.

I highly doubt they will stop using it now, but if any big producers from the middle east stop using the dollar its basically worthless overnight.

At least the euro can't be insta-killed by some dude half-way across the world.

The dollar is on a house of cards, its a dumb way to structure the currency's worth.

> it had to invade libya and iraq to stop them from selling oil in other currencies

Sounds like a propaganda meme, at least for Iraq that I know a little about.

Iraq was invaded for failure to fulfill WMD disarmament requirements, which was known and very _legal_ reason for invasion, according to the agreement made after Desert Storm. Iraq not just failed to prove that it destroyed all WMDs and precursors, it actively and blatantly prevented UN investigations, which is documented in UN resolutions in 1992, 1995, 1996, 1998 and 2002.

Note it's not just US, those are UN resolutions.

The propaganda meme keeps floating around because UN weren't able to find WMD after invasion, but the point is that the reason was not whether they find or not. It was Iraq's responsibility to provide proofs of WMD destruction, but instead they actively interfered with that. Who knows, maybe there are still WMD stockpiles, hidden somewhere in the vast country.

Worth considering that OPEC members hold ~80% of known crude oil reserves.