The Treasury Department on Monday opened the curtain on one of our longest-lasting, and strangest, state secrets: how much U.S. debt does Saudi Arabia own?
The answer, as of March, is $116.8 billion. That may sound like a lot, but it places the Saudis only at 13th on the list of major foreign holders of treasuries. Leading the roll among the foreign holders of $6.3 trillion in securities are mainland China ($1.245 trillion) and Japan ($1.137 trillion).
The Saudi holdings have been concealed by the U.S. government since the mid-1970s, when they were folded into a bulk figure attributed to 15 “oil exporting countries.” The maneuver was regarded as a big diplomatic favor to the Saudis during the oil embargo, when the U.S. felt it needed as many friends as it could get among oil-producing countries.
The secretiveness long ago became an anachronism, in part because the need to curry favor with OPEC countries had ebbed. It became even more dubious last month, when the kingdom reportedly threatened to sell “up to $750 billion” in treasuries and other U.S. assets in retaliation for a bill in Congress that could increase its liability in court for the 9/11 attacks.
The report quickly morphed into a supposed threat to sell $750 billion in treasuries, even though it was obvious that the Saudis owned nowhere near that much. The holdings within the entire 15-nation oil exporting category came to only $281 billion in February, according to U.S. government figures. Saudi holdings could only be a subset of that, though how big a subset was still concealed.
Whether the Treasury’s figures of holdings in Saudi Arabia account for the kingdom’s entire stock of U.S. government securities is still unclear, since some securities might be held in custodial accounts in other countries. But it may not be significantly higher. Most of the kingdom’s foreign investments are presumed to be in the form of equities, securities of other countries, and assets such as real estate.
As we reported last month, the figure of $750 billion in U.S. assets may be a gross overstatement. The government’s SAMA sovereign wealth fund was worth about $750 billion in 2014, but has declined to less than $685 billion since then, in part because the oil-price slump has forced the Saudis to liquidate some of their holdings for cash. About $423 billion in assets were overseas securities, including U.S. Treasuries, as of November.