Jokes about America’s vast debt to China is a fixture in late night comedy shows, but how much money does the United States own another behemoth, the Kingdom of Saudi Arabia. It is a closely held secret of the US Treasury market dating back to the era, long ago, of oil shortages and a mighty Organization of the Petroleum Exporting Countries (OPEC) manipulating the value of petrodollars.
But now, with Saudi Arabia under pressure from plummeting oil prices and expensive conflicts in the Middle East, the question, which has persisted in a sort of limbo since the 1970s and has been kept tightly under wraps by the US Treasury Department, is once again on the table.
Faced with its biggest budget shortfall in 25 years, Saudi Arabia burned through some $100 billion of foreign exchange reserves just in the past year. Just how bad is it? For the first time in its history, Saudi Arabia has put one of its crown jewels, the state-owned oil company Saudi Aramco, on the block. The indications of strain are now prompting concern over Saudi Arabia’s outsize part of the world’s largest and most important bond market.
International markets are concerned that Saudi Arabia may have started selling off Treasury holdings, which are believed to be among the largest in the world, to raise needed cash. Another possibility: the Saudis may be buying, looking for safe harbor in the latest financial squall.
Whichever the case, the United States Treasury does not disclose Saudi Arabia’s holdings as a matter of policy and courtesy towards a longtime ally in the unstable Middle East, grouping it with 14 other mostly OPEC nations including Kuwait, the United Arab Emirates and Nigeria.
In the case of almost every other nation, over one hundred countries, ranging from China (yes, China) to the Vatican, the US Treasury provides a detailed breakdown of how much US debt is held.