page_title: Saudi Arabia–United States relations
section_title: Petrodollar power
hierarchical_section_title: Saudi Arabia–United States relations / Controversies / Petrodollar power
caption_attribution_description: Secretary of Defense Ash Carter meets with Saudia Arabia's Deputy Crown Prince Mohammed bin Salman Al Saud during a meeting of defense ministers of the Global Coalition to Counter ISIL July 20, 2016, at Joint Base Andrews, Md. The meeting was scheduled to include detailed discussion of priorities for the Coalition’s multiple lines of effort, including its working groups on political-military coordination, combatting foreign terrorist fighters, counterterrorist financing, counter-messaging, and stabilization of liberated areas, to increase the momentum of the campaign. (DoD photo by Air Force Tech. Sgt. Brigitte N. Brantley/Released)
context_page_description: Saudi Arabia–United States relations refers to the bilateral relations between the Kingdom of Saudi Arabia and the United States of America, which began in 1933 when full diplomatic relations were established and became formalized in the 1951 Mutual Defense Assistance Agreement. Despite the differences between the two countries—an ultraconservative Islamic absolute monarchy, and a secular constitutional republic—the two countries have been allies. Former Presidents George W. Bush and Barack Obama have close and strong relations with senior members of the Saudi Royal Family.
  Ever since the modern US–Saudi relationship began in 1945, the United States has been willing to overlook many of the kingdom's more controversial aspects as long as it maintained oil production and supported U.S. national security policies. Since World War II, the two countries have been allied in opposition to Communism, in support of stable oil prices, stability in the oil fields and oil shipping of the Persian Gulf, and stability in the economies of Western countries where Saudis have invested.
context_section_description: The United States dollar is the de facto world currency. The petrodollar system originated in the early 1970s in the wake of the Bretton Woods collapse. President Richard Nixon and his Secretary of State, Henry Kissinger, feared that the abandonment of the international gold standard under the Bretton Woods arrangement (combined with a growing US trade deficit, and massive debt associated with the ongoing Vietnam War) would cause a decline in the relative global demand of the U.S. dollar. In a series of meetings, the United States and the Saudi royal family made an agreement. The United States would offer military protection for Saudi Arabia's oil fields, and in return the Saudi's would price their oil sales exclusively in United States dollars (in other words, the Saudis were to refuse all other currencies, except the U.S. dollar, as payment for their oil exports).
caption: U.S. Secretary of Defense Ash Carter meeting with Crown Prince Mohammed bin Salman and his advisor Ahmad Asiri in 2016
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