US Protects Saudis From Terror Suits, Backs Suits Against Iran

Intense debate and international diplomatic blackmail has dominated the discussion of the Justice Against Sponsors of Terrorism Act, a bipartisan bill which would open up civil lawsuits against any foreign nations if they are found to be involved in the funding of a terrorist attack occurring on US soil.

It’s not totally clear what the bill’s authors initially had in mind, but with the text explicitly started the liability under the act at 9/11/01, it is quite clear that the September 11 attacks in New York City are the big, obvious use of this bill, particularly since there aren’t exactly a lot of major terror attacks within the US since then, lat alone ones in which foreign nations are implicated.

The bill puts a big target on Saudi Arabia’s back, however, and the Saudis don’t like that. Foreign Minister Adel Jubeir was reported to have informed administration officials on Sunday that, if the bill was allowed to pass, Saudi Arabia would immediately move to sell $750 billion in US treasury assets, an amount which would cause US interest rates to spike, badly damaging the US dollar and the American economy.

It was all the Saudis had to do, it seems, because by Monday the White House was talking about vetoing the bill to protect "taxpayers," and there was growing opposition within Congress, with Sen. Lindsey Graham (R – SC), a co-sponsor, putting a hold on the bill, citing concern that the bill would come back to "bite us."

In the middle of all this debate about terror funding bills, the Supreme Court announced on April 20 that Americans are free to seek nearly $2 billion in frozen Iranian assets related to the allegations of Iranian involvement in the 1983 Beirut bombing.

The How of Iran

At present, under the Foreign Sovereign Immunities Act, Americans are barred from suing foreign nations for virtually any reason, apart from some very narrow exemptions. Indeed, the Justice Against Sponsors of Terrorism Act is designed explicitly around widening the exemptions to include general state sponsors of terrorism.

In theory this makes lawsuits related to terror attacks impossible. In practice, however, lawsuits against states either formally listed as "the enemy" or states in which an "international economic emergency" is said to exist can be targeted in some limited ways. In this case too, however, lawsuits against foreign central banks are forbidden, excluding any assets explicitly singled out by the US president as vulnerable to such lawsuits.

Iran is not "the enemy." Indeed, the only official "enemy" of the United States right now under which the Trading With the Enemy Act applies is Cuba. President Jimmy Carter, however, put the state of "international economic emergency" over Iran in 1979, related to the hostage crisis.

36 years after the resolution of that crisis, the "emergency" is still in effect, and President Obama put a freeze on some assets of the Iranian central bank, the near $2 billion related to the lawsuit, to pay the lawsuit.

This had been a matter of no small legal significance, and the courts had been reticent to allow the looting of a foreign central bank to pay for a terrorism lawsuit, until Congress passed a law explicitly singling out Iran as a target and confirming that those specific assets were valid to target. The Supreme Court ruling today, ultimately, was just to recognize those laws as in place, and apart from the insanity of using the 1979 hostage situation as an excuse, there doesn’t seem to be much Iran’s central bank can do about it at this point, leaving Iran stuck contesting the question of whether or not they had any involvement in the 1983 Beirut blast.

Not so, Saudi Arabia

Even though 9/11 is considered an "international economic emergency," Saudi Arabia was never singled out by either the Bush or Obama Administrations as a target for lawsuits, and targeting their huge assets within the US would right now be impossible, since the president hasn’t designated any of them as officially available to pay for lawsuits.

It’s pretty clear that’s a shady way of deciding things, giving the sitting president basically unilateral powers to decide which foreign nations can be sued and which cannot, with no legal recourse for victims looking to file suit.

Saudi Arabia’s huge economic holdings in the US, and by extension their virtual stranglehold on the US treasuries market makes them effectively immune as things sit, because it is unthinkable that a president would dare to poke the Saudi hornets nest.

The Justice Against Sponsors of Terrorism Act

Given the status quo, then, the Justice Against Sponsors of Terrorism Act obviously closes a huge loophole, and ends the ability of sitting presidents to protect certain state sponsors of terror while facilitating lawsuits against others.

It’s unsurprising that President Obama would be averse to this idea, and not just because of what Saudi Arabia could do to "punish" America for it. During his administration Obama has repeatedly resisted laws which attempted to curb the powers of the president, even if those powers were plainly unreasonable.

It’s hard to imagine that the average America could be convinced that it is within the president’s purview to protect a state from legal consequences for involvement in 9/11, and if the public battle over the bill continues, it risks a major public backlash.

The whole concept of sovereign immunity rests on the patently absurd suggestion that sovereign nations can "do no wrong," a notion that has only survived as long as it has because governments like having having immunity from their many, many crimes.

That’s only one reason to be interested in the Justice Against Sponsors of Terrorism Act. The real issue is Saudi Arabia’s ability to exercise a de facto veto on a bill in the US Congress, based around their massive holdings of American debt.

Deficit spending on America’s many wars and massive nuclear weapons arsenal has made the United States a huge debtor nation, and by extension given its creditors huge leverage.

Saudi Arabia’s attempt to flex its muscles with respect to its support for terrorism is a precedent with potentially huge ramification, as Saudi Arabia is only the third largest US creditor. China is the largest, with roughly 3 times as many assets as the Saudis have.

If the White House feels the need to tuck its nail between its legs at the first sign of Saudi displeasure, all their posturing with China seems even sillier, since the Chinese government could not only do equal damage to what the Saudis are threatening, but many times more.

Congress’ eagerness to continue borrowing money to cover runaway military spending, so often presented as "keeping America strong," is actually exacerbating America’s growing weakness, its economic vulnerability.

Author: Jason Ditz

Jason Ditz is news editor at