What is the deal with the US, Canada, the UAE and the Saudi government?
By now, we’ve all heard the story of the US-Saudi Arabia deal that was supposed to open up $100 billion worth of oil in the Persian Gulf.
The deal was signed in August 2016, but was not implemented.
Instead, the US and the US government were supposed to receive about $4.7 billion each.
As the Washington Post explains, the deal was supposed a way to open oil production in the region to more Western countries, but the White House and the Obama administration were forced to reverse course after Saudi Arabia and its allies objected.
A lot has changed since then, but it looks like the deal is not going to get done, at least for now.
The Washington Post reports that “the US and Saudi Arabia have been locked in a bitter dispute over how much oil the two countries are allowed to receive.
The Saudis have demanded $100bn, which Washington has said it will pay, while the US has refused to pay at all.
Now, it appears that the two sides may be on a collision course, with the Saudis reportedly demanding $2.5 billion.
The US Department of Commerce has said the agreement was made with the express understanding that the US would receive $100b of the money, but according to the Post, the Saudis have since changed their mind.
According to the report, the $2 billion the Saudis were demanding was for the sale of oil and natural gas from offshore projects in the United Arab Emirates and the UAE, but also for oil and gas produced in the Gulf and in other countries.
The $2bn is in addition to $1.6 billion that the United States was supposed be receiving.
Saudi Arabia has repeatedly demanded $1 billion in payments for oil exports from the deal, according to US officials.
“After the deal fell apart in the weeks after the election, the White Street Journal reported that the White Houses and the Commerce Department had discussed the possibility of paying Saudi Arabia $2,500 each, or about $2 million per barrel of oil. “
The Saudis are now demanding the US pay $1bn more, saying that it would help it make up for what it said was a shortfall in its share of the $100.2 billion in total payment,” the Post reports.
“After the deal fell apart in the weeks after the election, the White Street Journal reported that the White Houses and the Commerce Department had discussed the possibility of paying Saudi Arabia $2,500 each, or about $2 million per barrel of oil.
But the Saudis balked, saying it would not help them make up the $1,700 shortfall.”
So, why was the US not paid $100 billions of dollars in the deal?
Well, it’s not really clear what happened.
According the Post: “Under the terms of the agreement, the United Kingdom will receive $1 million per day, or $1 a barrel.
The United States will receive about the same amount.
The UK will also receive $5 billion from the contract, but is unlikely to pay any more than $1 per barrel, a Saudi official told the Wall Street Journal.”
In other words, the UK has not been paid any money for any oil exports or for the purchase of oil that is produced in Saudi Arabia.
It is possible that the UK government will try to claim some of that money, and then try to argue that the deal didn’t include enough money to pay the entire US$100 billion.
But that’s just not happening, as we have previously reported.
The Wall Street Journa l is reporting that the government will attempt to use an appeals court ruling that the Bush administration’s previous attempt to block the deal in the Supreme Court was “misleading.”
The US government had argued that the court’s decision to strike down the deal violated the Constitution, but that argument was later dropped by the Supreme Judicial Court, and the case was thrown out.
Now that the administration is trying to claim it has “no power to withhold payment from a sovereign nation,” it will be hard for the US to get out of paying any of the Saudi money.
So, if the US wants to keep its oil, then it has to come up with the $4 billion it promised in the first place.