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Any US sanctions against Saudis likely to target individuals, not oil

Increase font size  Decrease font size Date:2018-10-17   Views:424
Any US sanctions against Saudi Arabia springing from the Jamal Khashoggi investigation would likely target individuals, not crude oil or other trade flows, and the White House might have to warn Riyadh to temper its reaction to this limited action to avoid inviting economic blowback on itself, according to US sanctions experts.

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Sign Up Republican and Democratic leaders of the Senate Foreign Relations Committee have triggered an investigation under the Global Magnitsky Human Rights Accountability Act, directing the Trump administration to vet allegations surrounding Khashoggi's disappearance in the Saudi Embassy in Istanbul.

Riyadh has vehemently denied any involvement and issued a veiled threat that it was prepared to use oil as a political weapon in the conflict.

The White House has 120 days under the human rights law to respond to senators with findings from the investigation.

The response from Riyadh to such limited sanctions action will be key, given how the Saudis escalated what was seen as a mild critique by Canada into a harsh diplomatic feud in August, said Ellen Wald, author of "Saudi, Inc." and senior fellow at the Atlantic Council's Global Energy Center.

Wald said any Magnitsky sanctions leveled against Saudi Arabia may function similarly to those imposed on Russian individuals in 2012, with senators being able to point to specific penalties without disrupting economic activity.

"They can say they're sanctioning them, but overall it doesn't really have that great of an impact," Wald said. "I'm not sure the Saudis would see it that way.

"Perhaps that's where the Trump administration can come in and say, 'Look, you guys have damaged your credibility in a significant way, this is like a slap on the wrist. So if you know what's good for you, don't make a big deal about it.' Whether that's what they're going to tell them, I don't know."

AVOIDING TARGETING SENIOR OFFICIALS
Richard Nephew, a senior research scholar at Columbia University's Center for Global Energy Power, said the Magnitsky investigation might result in sanctions against one or two Saudis involved directly in Khashoggi's disappearance. But the White House would seek to avoid sanctions on Saudi Crown Prince Mohammed bin Salman or any other senior officials "as long as they could," citing sensitive sources and methods or the absence of concrete proof, he said.

"I absolutely believe the White House is going to try to smooth all of this over and hope that people forget, with other issues that will doubtless come to the fore and the risk, even if it is deemed slight, that the Saudis could retaliate with their own measures on oil or similar," said Nephew, who was former principal deputy sanctions coordinator in the Obama administration.

Nephew said there is a possibility that the Saudis overreact to any limited sanctions, but "senior Saudi and US leaders will seek to avoid that scenario, as it is in neither national interest -- seen very narrowly -- to let this escalate."

Oil analyst Joe McMonigle of Hedgeye Risk Management said he's watching what comes out of Secretary of State Mike Pompeo's trip to Riyadh as well as Saudi King Salman's announcement of the appointment of a special prosecutor to investigate.

McMonigle said the Trump administration "seems to be withholding judgment, but also keeping a realistic eyes-open approach."

The Global Magnitsky Act sprang out of earlier US legislation designed to punish Moscow for the death of tax accountant Sergei Magnitsky in a Russian prison in 2009.

The law says the president "may impose" sanctions "with respect to any foreign person the president determines, based on credible evidence, is responsible for extrajudicial killings, torture, or other gross violations of internationally recognized human rights committed against individuals in any foreign countries" who seek to expose illegal government activity or exercise human rights and freedoms.
 
 
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