Late last week, in a move largely ignored by the US press; Saudi Arabia, Turkey and Pakistan signed the Mecca Joint Defense Agreement (MJDA), declaring that an attack on any one of these countries is an attack upon the other (more on this below as this declaration is actually pretty porous…), in a geopolitical gesture that under its surface warrants far more attention than being given.
As described elegantly by the Middle East Political and Economic Institute in its August 8th “The Mecca Joint Defense Agreement (MJDA) and the Limits of Gulf Strategic Autonomy”, the MJDA does not “invent a new alliance so much as merge two bilateral relationships (these countries have been working militarily together through separate arrangements for years…) that were already converging.”
Upon closer inspection, the MJDA does not actually represent the equivalent of a “NATO” for the Mid East, as some were quick to claim, as no signatory of the new agreement is legally required to take actual military action if another is attacked. This vagueness is the point as specific wording requires specific action, whereas imprecision allows the flexibility of allowing all three countries to claim solidarity on a Mid-East concern, such as Israel being recognized as a destabilizing force in the region (not Iran…) while “retaining the option to do very little” is diplomatically sophisticated.
But additionally, underneath its seemingly benign profile referenced above, is the larger fact that the MJDA was signed in Mecca, where formalizing a mutual defense pact in Islam’s holiest city; Saudi Arabia, Turkey and Pakistan “elevated a strategic military alliance into a historic pan-Islamic event” according to the Northeast Times.
Beyond being a rallying cry for Islam, The Jerusalem Post’s “’A paper tiger’: Iran sees Saudi, Turkey, Pakistan defense pact as a major win, expert tells ‘Post’” sees additional weight in last week’s treaty by acknowledging an obvious but crucially ignored point.
To defend itself in its surprise war with the US, at Israel’s behest, Iran not only shut down the vital Strait of Hormuz but also fired upon more than 10 neighboring countries in the Mid East, including Saudi Arabia, to expand the economic pain of the war as a strategic tactic. It is on this last point that a tacit additional agreement appears to have formed where the “attacked” countries in the Mid East accept Iran’s defensive actions at face value and instead see Israel as the destabilizing force in the region that needs to be countered.
In everything you have read so far, what country is missing?
The United States along with the Soviet Union emerged as the world’s two new superpowers in the wake of WWII. In support of their respective and diametrically opposed governing ideologies, both sovereigns have had an enormous impact on the world we live in today. For the Soviets, a massive expansion of territory and proxy states such as Poland, East Germany, Czechoslovakia as a “buffer” to protect against another western invasion was one byproduct of the post WWII world. In contrast, the US, through clandestine or other means, did its part to try to stymie the additional global spread of communism but pursued such action with an awareness that it had to stop short of starting a nuclear war with the Soviet Union.
Today’s Middle East was not spared by the Cold War dynamics referenced above. Given the bounty of its oil resources, it couldn’t be. Consider the case of Iran, for example, where its democratically elected and nationalist and neutralist Prime Minister, Mohammad Mossadegh (Mossadegh won over 90% of the vote during his election…) was overthrown in a joint coup (executed by the US CIA and British intelligence (MI6) in 1953. Mossadegh was replaced with a military backed pro-Western Iran’s monarch, Shah Mohammed Reza Pahlavi (the Shah of Iran) who “denationalized oil, crushed all political dissent (with help from the US CIA) and widened social inequalities through his economic policies.”
With Mossadegh out of the way, “The Baghdad Pact of 1955”, a security alliance formed by Turkey, Iraq, Great Britain, Pakistan, and Iran was created. And while the US was not officially part of the agreement (it couldn’t be as a new upstart Israel was already making waves in determining US foreign policy and didn’t want the US being an official part of this arrangement…) , the United States and Britain structured this geopolitical arrangement “to prevent communist incursions and Soviet expansion into the Middle East.”
But beyond this stated intent were two additional understandings; whatever the US said as the “West’s” superpower was how it was going to go in the Mid East and secondly, allies such as Great Britain, helping the “cause”, would get rewarded. With regard to Iran, for example, it was Great Britain and its new oil champion, British Petroleum, who were to benefit handsomely from the oil resources now opened by the newly installed Shah of Iran.
Fast Forward to today…
It is through the lens of history that last weeks’ announced formation of the MJDA becomes remarkable as not only does the United States play no part in this agreement, it also appears that Israel gains attention as a source of destabilization in the Mid East and not…Iran.
It is this crucial change in juxtaposition that has everything to do with the US and Israel being humbled in the illegal war these countries have waged on Iran this year. The reasons for this unexpected outcome are many and have been written about by this writer since the outset of this conflict (please see theknowldgefoundation.net for an archive of this content…).
But beyond the why ? are now greater realities. Iran just did more than stand up to the world’s preeminent superpower, it is also now forcing the US to now physically leave the Mid East. And in so doing, Israel, with its close connections to the US, is now no longer militarily light years ahead of everyone else in the Mid East.
In terms of those who recognize the material nature of what the MJDA formation means includes the Qatari news organization, Al Jazeera, that sees the pact as giving Saudi Arabia a powerful new layer of protection beyond its longstanding security partnership with the United States amid growing regional doubts over whether Washington can still be relied upon to protect its oil-rich Gulf allies.
The Middle East Monitor, meanwhile, has its eyes on a changing balance of power in the region. If the American role recedes, the danger lies in who may fill the vacuum it leaves behind. The Mecca pact is best understood as an early attempt to build a third pole — a bloc that does not need to fight either power, but one that has enough weight to deny either a monopoly over the region. Source: Middle East Monitor
And CNN’s take on MJDA is that America’s most important Gulf ally and one of the largest holders of US Treasuries — has just formalized its hedge against American unreliability. This is not a subtle diplomatic signal. It is an explicit institutional acknowledgment that the US security umbrella is no longer dependable.
It is on this last mention of the US’s most important Gulf ally, Saudi Arabia, that brings this week’s note to a close.
Bottom Line – It is a time to read the “tells” of the Trump administration
Saudi Arabia and the United States share an interest driven rather than a traditional friendship. This distinction, especially right now, is important as the US and Saudi relationship remains defined as an historical exchange of US military protection for regional stability and oil market cooperation. As such, the relationship relies on strategic leverage rather than shared values. And right now, US military might is in question, which also means that last week’s action by Saudi Arabia, from a Saudi perspective is pragmatic.
But from a US (and aside from the Trump administration…) perspective, material questions exist when one evaluates a close relationship with Saudi Arabia and its brash Crown Prince, Mohammed bin Salman (MBS), its de facto leader. Consider that MBS swept into power with a mission to reshape Saudi Arabia through aggressive foreign policies, major economic shifts and strict crack downs on critics.
With regard to critics, it is under MBS that the murder of highly regarded and vocal critic of the kingdom, Jamal Khashoggi, occurred in brutal fashion and without any incrimination. And let’s not forget that of the 19 well trained terrorists that executed 9/11, 15 were Saudi nationals.
Here it gets interesting as President Trump’s son in law who formerly managed US policy in the Mid East, developed a fast and deep relationship with MBS. In terms of the depth of this relationship, it was Kushner that privately advised the Crown Prince to “weather the storm” on questions swirling around the death of Khashoggi, while defending Saudi Arabia publicly wherever he could.
For Kushner this “loyalty” has had its rewards as he was able to:
- Leverage magically appearing Saudi backing for the Abraham Accords that were an attempt to normalize diplomatic relations between Israel (Kushner is definitively pro-Israel) and several Arab nations.
- Gain a $2 billion investment, despite pushback from its oversight panel and despite Kushner’s lack of experience in the private equity space, from the Saudi Public Investment Fund (PIF), which makes up the lion share of capital managed by Kushner’s firm, Affinity Partners.
Once structured, the reach of this partnership then deepened. Consider that Kushner’s Affinity Partners and the Saudi PIF recently finalized a $55 billion leveraged buyout of video game giant Electronic Arts that took the maker of The Sims and Madden NFL private.
While not an official part of the second Trump administration it remains a matter of fact that despite what is a King Kong scale of conflict of interest that Jared Kushner has, he has nevertheless remained as a central fixture in foreign policy negotiations for the Trump administration. On this specific point, Google Gemini offers the following insight:
“Jared Kushner is arguably the most central. Non-cabinet figure in Donald Trump’s foreign policy framework. Across both the first and second Trump administrations, Trump has bypassed traditional State Department channels to position his son in law as a “closer” for high stakes international negotiations…His role is defined by an unconventional, transaction-style approach to diplomacy that operates outside traditional bureaucratic norms…”
Back in the 1950’s powers of that that time were willing to go along with a bad US plan to overthrow a democratically elected leader in Iran because the US was the only non-communist geopolitical game in town.
Today, the US absence from the above referenced Mecca Pact did not happen in a vacuum. Instead, it also appears as a geopolitical consequence of years of transactional, conflict-ridden diplomacy that prioritized Kushner’s business relationships over coherent strategic interests.”
Beyond a compromised Kushner, the US is now on the hook for what increasingly looks like a lost war with Iran and a multitude of other questions which also means that a very different geopolitical framework has emerged where the world and its specific regions are beginning to move forward without the US.
And one only needs to read the “tells” of the Trump administration to confirm this and other grim realities that come with what is an ignominious outcome for the US in Iran that attributes to gross incompetence at its executive level.
Last week, the writer penned in the article attached below that Scott Bessent’s uncharacteristic smear of Wall Street Journal economics Wall Street Journal’s chief economics correspondent, Nick Timiraos was a “tell” which reinforces questions around higher US interest rates in a world moving away from US military “protection”.
Treasury Secretary Bessent just exhibited a “tell” – we should all pay heed
An additional tell from this administration appeared in the Oval Office last November when ABC News Chief White House correspondent Mary Bruce bravely addressed the Saudi Crown Prince, MBS, with a question on why he was even in the oval office when Saudia Arabian “fingerprints” appeared so prominently on the execution of 9/11.
Ms. Bruce also asked about the release of the Epstein files while also asking about conflicts of interests that exist with the Trump administration’s dealings with Saudi Arabia. It is a contentious exchange that is addressed with a characteristic, Trump response, “who are you with ?, you are fake news, you are a horrible person…”
So where is the tell ? The tell can be seen in the scale of the rebuke from President Trump, the style of which has been sadly normalized during his time in office. With this said, the bottom line remains that the nastier the response from this administration when under questioning is a clear signal to dig aggressively deeper…
ABC News: Mary Bruce questions Trump and MBS
Before leaving the ABC clip above, President Trump’s claim in the interview of $21 trillion coming into the US in conjunction with the wild economic success of the US under his administration does not foot with a national debt that has grown almost 30% during his specific years in political office and has just eclipsed $40 trillion…
Final thought
Right now markets are pricing yen intervention as a currency story, higher US rates as a temporary oil story and the Mecca Pact as a geopolitical footnote and all as separate stories. What markets are not pricing in is the cumulative strategic meaning of these developments when taken together because they are all connected.
US military hegemony in the Mid East and globally has been disrupted – Those sovereigns who have held significant US Treasury positions as geopolitical insurance are now questioning the underwriter of that policy, the United States. Higher US rates are here to stay.
The realization of permanently higher rates in the US introduces volatility into US equity markets this fall as a VIX in the range of 15 is questioned.
And while higher US rates typically are not a favorable backdrop for gold prices, questions around a nation spending recklessly on defense but unable to achieve results in actual engagement whose motives are now openly questioned on the world’s stage provides a unique rationale for why to include gold in asset allocation today.
Other concerns that exist at this precarious moment of peak domestic equity markets but failing US geopolitical status and exploding national debt include:
- Pakistan’s nuclear dimension in the MJDA is underappreciated. Turkey has the second-largest military in NATO behind only the US, while Pakistan is the only nuclear-armed Muslim nation. Markets have not begun to price what it means for regional nuclear dynamics that the Gulf’s new security architecture now includes a nuclear-armed state that is not the United States or Israel. Source CNN
- China, meanwhile, prudently waits. Three middle powers are taking steps to reduce their reliance on US-dominated security architecture. Such independent alliances among middle powers have been rare since the early Cold War, making the pact a potential model for other countries. The South China Morning Post notes China waiting in the wings — and Beijing has every incentive to deepen its relationship with all three Mecca Pact signatories as the US footprint recedes.
The geopolitical tectonic plates that the world has rested upon since the end of WWII are in motion. Ignore their direction at one’s own peril. Meanwhile, come this November, please vote as if your life depends on it…because it does.
Have a great week !