How the JASTA override on Saudi could Bite Americans in the Ass

By Juan Cole | (Informed Comment) | – –

President Obama vetoed the Justice Against Sponsors of Terrorism Act, but Congress has for the first time in his presidency over-ridden his veto. This is a disastrous law with potentially ruinous effects on the US economy and US policy.

Individual tort suits against other countries had been forestalled by a doctrine of sovereign immunity, from which the United States and other countries also benefit. JASTA removes sovereign immunity for any state found to be practicing terrorism anywhere, apparently as defined by US court judges.

Saudi Arabia is extremely unpopular in the US, more especially on the Left, but also among right wing Islamophobes. But however appealing it is to let the 9/11 victim families sue Riyadh for the attacks, it is wrong-headed every which way from Sunday.

First of all, Saudi Arabia did not back Usama Bin Laden as of the Gulf War of 1990-1991, because King Fahd chose US troops to kick Saddam’s tanks out of Kuwait, and Bin Laden and al-Qaeda objected that bringing non-Muslim troops into the Arabian Peninsula was contrary to Islamic law. The Saudis therefore withdrew Bin Laden’s passport and he went into exile in Sudan. Saudia put pressure on Sudan to expel him, so he returned to Afghanistan. The Saudi government was angry at and afraid of Bin Laden.

The Saudi government and most high officials are heavily invested in the US stock market and have other American investments. Anyone could have predicted that an attack like 9/11 would wipe out the value of those investments, and it did. The Saudi government was not behind them and did not know they were coming. If they had suddenly pulled a lot of money out of the market, the SEC would have known about it. People complain that George W. Bush let Saudis vacationing in Florida leave the US. But what blockhead would vacation in the US in September of 2001 if he or she knew what was about to happen? Bush was afraid there would be mob action against these innocent Saudis.

Bin Laden got his start fund-raising for the Reagan administration’s jihadis (Mujahideen) in Pakistan and Afghanistan. The US was acting completely outside international law and an impartial court might well have considered the Reagan jihad against the Soviet occupation of Afghanistan material support for terrorism.

Saudi Arabia will be sued, and it might well lose in court; our judges are not Middle East experts and most of them couldn’t tell you the difference between a Sunni and a Shiite or a terrorist and a Salafi. A US court already found Shiite Iran complicit in al-Qaeda, which is like accusing the Unionists of Northern Ireland secretly supporting the Real IRA. American domestic institutions, including the FBI, and the courts, have often committed gross miscarriages of justice when it comes to the Middle East, out of a combination of ignorance and misplaced vindictiveness.

What country would be stupid enough to park almost a trillion dollars in the US if it thought that the courts might unfairly confiscate it? The Saudis have already said that they will take their investments elsewhere if JASTA passed.

Sovereign wealth funds are a big part of finance in today’s world, and they are most at risk from this overturning of sovereign immunity.

A lot of foreign governments and concerns invest in the US or park their money here, which helps the US economy enormously. One study found that “foreign multinational firms that invest in the United States are, alongside US-headquartered American multinationals, the most productive and highest-paying segment of the US economy. These firms conduct more research and development, provide more value added to US domestic inputs, and export more goods and services than other firms in the US economy.”

But the vague wording of the law (one person’s terrorist is another person’s freedom fighter) will allow all kinds of people to sue all kinds of governments. Irish-Americans could sue the UK for injuries during the Troubles in Northern Ireland. Palestinian-Americans will line up to sue Israel, and Jewish Americans will likely sue Palestine. Ukrainian-Americans will sue Russia. Old Pro-Gaddafi Libyan elites now in the US could sue France and Britain for supporting terrorist groups in Libya. Kenyan victims of the British colonial suppression of the Mau-Mau now in the US could sue Britain.

But why stop there? Why shouldn’t Saudi Arabia now let Saudi citizens sue the US over US support for the Israeli squatter terrorists on the West Bank? Or what if Pakistan lets the US be sued for its unilateral drone strikes, which often kill civilians, on Pakistani soil? Or Greek courts could, on the model of JASTA, allow Pakistanis in Greece to sue the US over strikes on Waziristan.

Instilling this fear in governments (and in corporations that have any government connections) could cause a fall in Direct Foreign Investment around the world and provoke a downward spiral of the world economy.

The US benefits from having the world’s reserve currency, but those at risk of being sued may well not only take their money out of the US but denominate it in Euros or Renminbi.

And after the judgments against Saudi Arabia and the hard feelings they will create, the next time the US goes to Riyadh and says, we need your help to track down so-and-so in al-Qaeda, they might get the cold shoulder.

Bin Laden deliberately packed the 9/11 hijackers with Saudis (he had volunteers from lots of countries) in hopes of driving a wedge between the US and Saudi Arabia, to make both countries more vulnerable to terrorism. He had failed until the US Congress decided to help him succeed.

Congress has done a lot of stupid things. But this one takes the cake. Ordinary Americans will suffer for this unwise law.

Related video:

Euronews: “Obama slams vote to override his veto of 9/11 legislation”

56 Responses

  1. Thank you again , Juan, for your analysis. You close with some very strong words.

    The stupidity and shortsightedness of the American “political consensus” is great enough, at times, that it can never be underestimated. But if the threat to the financial structure is so clear, why weren’t all the hedge fund guys and other financial industries talking against this? Do they buy into the generalized American ignorance of the Middle East so much that they cannot see any threat to their livelihoods from JASTA?

    • There’s money to be made in a bear market, too. Remember the guy who made big bucks by betting the housing prices would fall? I’ll bet the financial guys are shorting stocks where the Saudis have big holding right now.

    • The US neither needs nor wants Saudi oil money; it has been a nasty distorting effect on our politics for decades. Get rid of it.

  2. “The Saudis have already said that they will take their investments elsewhere if JASTA passed.”

    And if the Saudis have half a brain, which they clearly do, they will put their money in a place unreachable by the long arm of American law. Is this the move that will finally make China the world’s preeminent financial superpower?

    • The Saudis are not going to pull their investments out of the American market. It was empty talk to try and influence the Congressional veto override vote. The Saudis are astute and smart enough to know that their national interests lie with the American dollar.

      The Chinese Renminbi (or “Yuan” as it is commonly called) is nowhere near becoming a world currency worth investing in. And China is far from becoming the world’s preeminent financial superpower. The Saudis realize this and know where their national interest lies.

      • An agreement signed yesterday in Pekgin between Saudi/UAE and Chinese monetary institution to convert KSA Riyal and UAE Dirham free from US $.

        • An agreement between Saudi Arabia and China regarding currency conversion is just that, nothing more. It has nothing to do with Saudi Arabia’s dollar-denominated investments, both in the U.S. and around the world.

          The agreement does not mean the Saudis are going to replace the dollar with the Renminbi (Yuan). In fact, although the Yuan is used in the basket of currencies by the IMF, that is because China has become a major trading partner. Nevertheless, the Yuan is not even fully convertible against many of the world’s currencies.

          It will be a long time, if ever, when the Yuan replaces the dollar as the world’s reserve currency.

  3. Are you saying many in the Saudi Royal Family (not necessarily the Gov’t) don’t support Wahhabi movement? Or possibly the hijackers?

    • Right on Mark. Saudi Arabia might not have liked Bin Laden personally, but it did nothing and continues to do nothing to prevent the spread of the intolerant Wahhabi-Salafist strain of Islam that is the core material of groups like ISIS and Al Qaeda. By building so many fundamentalist Wahhabi madrasas and sending so many imams abroad, Saudi Arabia assured that Bin Laden would have a vast pool of recruits with which he could implement 9/11 and they need to be held accountable for that.

  4. 9-11, as horrific as it was, dwarfs in comparison to the PNAC policy enacted by Bush/ Cheney to remove Saddam. We now know there was no threat from Saddam’s rag tag military and that he had no ongoing nuclear program yet Bush pushed congress to authorize his use of our military to settle old scores.

    Using a similar law one might conclude Iraqi families could sue the US for turning their country into a Mad Max hell for no viable reason other than….Bush knew he could.

    Not to overuse the word “Dwarf” but imagine several million Iraqis suing the US for damages.

  5. Yes, Jasta will affect everyone as you said. It will keep the U.S. From toppling foreign governments, which for some strange reason it feels entitled to do. And perhaps Pakistan citizens will sue the US for drone killings. They should have this right too. Maybe the US will stay home and stop policing the world.

    • Why is this point being framed in a negative light in every single article. If indeed this will reign in the war criminals in Washington how is that a bad thing? I share your sentiments

      • I agree, but the problem as Juan stated is that the courts have given ignorant rulings in the past. And we all know that the ability to win a case is dependent more on having very good (expensive) lawyers than having a legitimate case. I doubt we’ll see any cases where USA government pays out large amounts of money for crimes committed abroad.

    • Agreed. It would be one of the last hopes for the US if it worked. But US courts will claim insufficient evidence regardless, (1) because the Saudis are rich and judges want the bribes and promotions from the right wing, and (2) because the Saudis help the US fight socialism and get Israeli bribes. I have much experience with the federal judiciary: Juan is right that they will do nothing right, but that means that they will not allow any prosecution regardless of evidence. And is not a grounds for keeping cases out of court, it is grounds for fixing the courts.

  6. In what way is this different from Iran being sentenced to
    pay $10.5 billion for the attack against WTC just for finding the process so ludicrous that they didn’t bother to show up in court:
    link to bloomberg.com
    Or to pay $813 million for the Beirut bombing:
    link to yourmiddleeast.com
    Or Libya being blackmailed to pay compensation for the Lockerbie bombing despite no evidence the Libyan government was behind it? Or US courts fining foreign companies doing business abroad on the flimsiest of connection to USA?

  7. You’ve just stated the establishment case for not letting the families sue Saudi Arabia. Let the Saudis take their filthy money elsewhere. The US will not fall apart. There’s been enough appeasing of Saudi Arabia, and the US is helping it obliterate Yemen. What you wrote is fear-mongering nonsense. And if the US is sued for its criminal actions abroad, all the better. It needs to be held accountable for indiscriminate killing in the Middle East and South Asia. Not to worry though. This is just Congress posturing before the election to win some points with the people it doesn’t represent. This law will be overturned very, very soon. The real power will assert itself to prevent this law from taking effect.

    • Indeed there is much evidence that the Saudi money is filthy, whether or not they had direct involvement. US Courts will do the corrupt thing, going whichever way the rightwing political winds and currents of bribery take them, and they will never make a very public decision against the wealthy without sufficient evidence. They will decide to exempt the Saudis because they help the US oligarchy attack socialism and gain bribes from Israel.

    • what is the behavior ? we will not allow Iran militia in Yemen to take over the power & possess modern Jet & ballistic missiles near our border. We are defending our self, those theocratic militia in Yemen are firing missiles toward Saudi town & we have all the right to defend our self & our land whether U.S or its NEW friend Iran like it or NOT.

      • Saudi Arabia invaded Yemen to support one of the four sides in the civil war, and proceeded to commit war crimes.

        There is no Iranian involvement in Yemen, that’s just a Saudi lie. There are four competing local Yemeni groups. This dates back to the merger of North and South Yemen, which was a mistake.

        • Houthi’s miltias is directly supported from iran this inarguable and they tried to overtake the yemeni official government and then the saudi’s step in to avoid another syrian crisis in the region

        • This seems like a wish not reality, several times the Arab collation caught a vessel full of weapon going to pro Iran militia in Yemen, Iranians themselves announce they have took Sana’a after Baghdad & Damascus. call what ever makes you comfortable the Houthis are small portion of north Yemen cant/will not rule Yemen & thread its neighbors.

        • Iranian support for Zaidis in Yemen, who are 1/3 of the country and a majority in the North, has been minor. Most of their weapons are American and come from regular army units who defected to them. Since Yemen has launched only minor attacks on any of its neighbors, in response to heavy and steady bombardment and military invasion from several other countries, the source of the threat seems to lie elsewhere.

        • Elsewhere.. where? they are launching ballistics missile toward populated Saudi cities , do you see this is minor? or because it is Saudi Arabia. I know that you are not happy with what we are doing against your partner Al Houthie & your new friend Iran, you can make shameful humiliating deal with Iran but not on our account. good luck

  8. This is the sort of thing that can happen when you conduct an expansionist foreign policy on the back of what is primarily a domestic constitution. This is particularly true of the US constitution which owes much to the principles of the French Revolution and the Gracchi brothers. The UK Prime Minister has more authority than the US President because it progressively devolved from an absolute monarchy. The same applies to Russia and China since from the point of view of the citizenry there is not that much difference between Putin and a tsar or Xi Jinping and an emperor. The same dichotomy evolved in Rome, and was one of the underlying causes of the end of that Republic since the citizens were increasingly neglected in favour of the defence of the frontiers and exploitation of the provinces, corruption became rife, the rich got richer and deployed multitudes of slaves so there was little work for ordinary folk whose disgruntlement was exploited by a succession of populist leaders, and eventually Caesar. I am not suggesting the US will follow that path but a lot of the ingredients look similar.

    • I think a side-by-side of Donald with Caligula is more appropriate than a comparison with Julius.

    • Yes, Rome also made a lot of enemies with its imperialist exploitation, and ultimately was surrounded by its victims, who defeated it. Both internal weakening and external opposition. Both are in progress at higher speed against the US. Making the US subject to international law, however poorly upheld, is one of its last hopes.

  9. The current majority in Congress has been in a kind of Brexit mode since the 2010 elections. This bad law is just the next chapter in the hole it is digging for all of us.

  10. A good example of why Congress should not make foreign policy. Often in the past here posters have criticized Obama and Clinton for our pro-Israeli policy. If it were up to Congress, US support of Israel and its ruinous policies would be even more uncritical and wholehearted. When it comes to Middle East policy, most in Congress don’t have a clue.

    • Only the legislative branch can make law. Its errors are not corrected by letting the executive assume dictatorial powers: the correction is to fix the legislative process, largely by removing economic power over elections and mass media.

  11. Could this be challenged in court as changing the rules after the fact: the constitution has statement on ex-postfacto rulings. Normally this provision seems to apply to criminal acts.

  12. I don’t much care about any potential “fallout”. I’m sick of the US , along with so many others, kowtowing to the corrupt and duplicitous Saudis. Let them eat sand.

  13. Ben Stormer

    first, no sane person thinks Saudi’s can hurt US financially. Second, litigating military support and war is a good thing. #JASTA

  14. The choice was to vote for what was morally correct or for economic self-interest. The senators chose the morally correct path; although, they probably voted for their own perceived self-interest with elections coming up and not a belief in what was morally right. They probably also anticipated this: The truth about the Saudi bill: Provision to issue a stay on the lawsuits can range from six months to “indefinitely” despite the Congress passing it. – link to aljazeera.com

    • Yes, the morally correct path is to subject all nations to the same standard, to oppose the hypocrisy of presumptions of rights to violate international law.

    • the political environment now in US is affected by Trump propaganda against anything not White American & depend on Primitive superficial emotions for the white people, the Senates vote for JASTA because of political environment mentioned above. think about it,,

  15. As Paul Krugman has been pointing out, having the world’s reserve currency is a sword which cuts both ways and is nowhere near as essential to America’s economic well being as is commonly believed.

    And believe it or not, as big a number as a trillion dollars sounds, in the sheme of the American economy, it is not a huge amount of assets.

    And I, for one, would be happy to see the US government subject to lawsuits for its misbehavior around the world.

    • Do you really think flabby lawsuits that drag on for years or decades is going to end FP misbehavior. That is an illusion.

      • Yes, it is not a solution, but it is a start, to public recognition that even the US is subject to law, or must explicitly exempt itself without cause.

  16. The clock ran out on me — exacerbated by a computer problem at my end — as I went back to edit my comment above about the value of Saudi assets in the US.

    I wanted to add that despite threats, Saudi Arabia isn’t going to move assets wholesale out of the US. Those assets did not come here in the first place out of Saudis’ tender feelings for us. No, they are here because this is the safest harbor for them, and that isn’t going to change anytime in the foreseeable future.

    Moreover, with falling oil prices, the Saudi economy is is suffering badly, giving Saudi Arabia even less latitude for economic posturing.

    Saudi Arabia’s economic threats are hollow.

  17. The clock ran out on me — exacerbated by a computer problem at my end — as I went back to edit my comment above about the value of Saudi assets in the US.

    I wanted to add that despite threats, Saudi Arabia isn’t going to move assets wholesale out of the US. Those assets did not come here out of Saudis’ tender feelings for us. No, they are here because this is the safest harbor for them, and that isn’t going to change anytime in the foreseeable future.

    Moreover, the Saudi economy is tanking with falling oil prices, so Saudis will be even more protective than before of their precious financial assets.

    It’s just empty posturing: Saudi Arabian threats to remove Saudi assets from the US are hollow.

  18. It’s overdue for the US to be sued in US courts for the US’s own acts of terrorism, which are well documented. This would be the best possible outcome.

  19. Occam’s razor says this is just a Punch & Judy show to help defuse some unfortunate and almost-unprecedented recent anti-Saudi sentiment. There is no way this would have received so many votes if it was likely to actually impact the Saudis (or Israel). Don’t forget that most of the same people recently voted to give megatons of weaponry to support the Yemeni apocalypse, none of them are really anti-Saudi – just cheap kabuki actors.

  20. Why, Juan, do you take a position against innocent victims and for murderous governments? Every one of the governments you mentioned deserves, at a minimum, to face litigation for their crimes. Why should governments enjoy such immunity?

    Anyway, no sense in getting worked up about it; Congress likely already has legislation in the wings to roll back JASTA. It’s just for show.

    • You know, the best thing about IC is that Juan believes in what a Chinese saying calls ‘seeking truth from fact’ – not emotion.

  21. First, 9/11 families should sue the agencies that collect their tax money and failed in protecting them against 19 members in 2 planes!!!.
    Second, How would taking filthy Saudi money will make those graving families feel better!!!..

  22. The JASTA law will allow all kinds of people to sue all kinds of governments. Native-American will sue the USA Government, African-American will sue The USA for slavery and Irish-Americans could sue the UK for injuries during the Troubles in Northern Ireland. Palestinian-Americans will line up to sue Israel, and Jewish Americans will likely sue Palestine. Raqi will sue USA for the invasion and distraction of Iraq, Ukrainian-Americans will sue Russia. Afghani will sue the USA for Invasion and distraction of Afghanistan. Kenyan victims of the British colonial suppression of the Mau-Mau now in the US could sue Britain. Citizens of the world will sue the USA-CIA for all the trouble and turmoil in the world.

  23. “Irish-Americans could sue the UK for injuries during the Troubles in Northern Ireland. Palestinian-Americans will line up to sue Israel, and Jewish Americans will likely sue Palestine. Ukrainian-Americans will sue Russia. Old Pro-Gaddafi Libyan elites now in the US could sue France and Britain for supporting terrorist groups in Libya. Kenyan victims of the British colonial suppression of the Mau-Mau now in the US could sue Britain.”

    None of these statements are correct. The bill only allows US Nationals to sue and the action must be based upon:

    “… physical injury to person or property or death occurring in the United States and caused by—

    “(1) an act of international terrorism in the United States”.

    So claims regarding foreign terrorism are not allowed. In addition the term “international terrorism” is defined in 18 USC Section 2331 so it will not be applied based solely on what some judge thinks.

    I am not saying that this limitation makes the act more palatable. Just correcting the facts.

  24. So Juan, letting people sue governments for killing, bombing, lying and war profiteering is a bad thing? Yeah that’s a real kick in the ass. What right do the people have to know what the governments are doing? Those 911 families are amazing. They just will not give up.

  25. Anybody thinking this bill is good because the 9/11 families have received no financial compensation should realize that on average the US government paid them $1.8 million each, which is not too shabby. I also note that current Saudi finances are not doing so well due to low oil prices, with them having recently cut all government salaries by 20 percent. For a bit more, here is me on this at Econospeak, link to econospeak.blogspot.com .

  26. Most of the Americans think we are happy with 11 September and that is totally untrue. we really feel bad about the victims and sympathy for them but we have never ever back who killed others for stupid reason. Do you know that prophet Mohammad’s wife was Christian?
    how could those kill someone our prophet forbidden that for us?
    simply, it policy issue masked by a religions

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