Читать книгу Financial Cold War. A View of Sino-US Relations from the Financial Markets онлайн

122 страница из 137

On an overcast morning in July 1974, the newly appointed Treasury Secretary boarded an 8am flight from Andrews Air Force Base to embark on a secret mission. The official purpose of his two-week trip was to conduct a tour of economic diplomacy across Europe and the Middle East. However, the real mission that he and President Nixon had agreed was to take place during a four-day layover in Jeddah, Saudi Arabia. His objectives were to neutralise oil as an economic weapon and to persuade King Faisal to help finance America's rising government deficits with his country's newfound oil wealth.

On the surface, the outspoken former bond salesman seemed uniquely ill-suited for such a delicate diplomatic assignment. Just a week before his trip to Saudi Arabia, Simon had publicly called the Shah of Iran, a close US ally, a ‘nut’. Nevertheless, his earlier career had given him an appreciation of the appeal of US Treasury debt and why this would be attractive to the Saudis.

Up until that point, Saudi Arabia had been parking its petrodollar surpluses in the Eurobond market. However, the emerging market government and corporate debt that featured prominently in that market exposed the Saudi Treasury to credit risks, and those securities were far less liquid than those issued by the US government.