Why the west’s view of the Saudis is shifting


The rise of Isis, human rights concerns and less dependence on Arab oil are triggering change
James Ferguson illustration, Saudi West, Arms and ammunition
Something is changing in the west’s relationship with Saudi Arabia. You can read it in the newspapers. You can hear it from politicians. And you can see it in shifts in policy.
Hostile articles about the Saudis are now standard fare in the western press. On Sunday, the main editorial in The Observer denounced the UK’s relationship with Saudi Arabia as an “unedifying alliance that imperils our security”. Two days earlier, the BBC ran an article highlighting an “unprecedented wave of executions” in Saudi Arabia. A couple of months ago, Thomas Friedman, arguably the most influential columnist in the US, labelled the terrorist group, Isis, the “ideological offspring” of Saudi Arabia.

Politicians are taking up similar themes. Sigmar Gabriel, Germany’s vice-chancellor, has accused Saudi Arabia of funding Islamist extremism in the west and added: “We have to make it clear to the Saudis that the time of looking away is over.” In the UK, Lord Ashdown, a former leader of the Liberal Democrats, has called for an investigation into the “funding of jihadism” in Britain and pointed at Saudi Arabia.

The sudden increase in concern about Saudi Arabia is driven, in large part, by the rise of Isis.
Western policymakers know that the battle with jihadism is as much about ideology as guns.
When they look for a source of the Isis worldview, they increasingly trace it back to the Wahhabi philosophy promoted by the Saudi religious establishment.
Saudi influence in the west has also been weakened by other developments. The “shale revolution” in the US has made the west less dependent on Saudi oil. Meanwhile, the turmoil in the Middle East has shone a harsh light on Saudi foreign policy , with particular criticism aimed at the high level of civilian casualties caused by Saudi military intervention in Yemen, and Riyadh’s role in crushing an uprising in Bahrain in 2011.
For the moment, however, all this criticism has led only to modest adjustments in western policy. For the Saudis themselves, the most alarming change has been President Barack Obama’s determination to secure a nuclear deal with Iran, facing down fierce opposition from Saudi Arabia. Beyond the Iran deal, however, there have been only small, symbolic gestures, such as Britain’s decision, driven by human-rights concerns, to pull out of the bidding for a contract to provide training for prisons in Saudi Arabia.
Western critics of Saudi Arabia want to see the gloves come off. They accuse the governments of the UK and the US of being in thrall to Saudi money. Lord Ashdown has pointed to the influence of “rich Gulf individuals” in British politics. Saudi Arabia also remains a crucial market for western arms manufacturers. Over the past 18 months the US has approved the sale of more than $24bn of weaponry to Saudi Arabia.

There are also solid reasons, that have little to do with money, for continued western co-operation with Saudi Arabia. The past five years have demonstrated that when bad governments fall in the Middle East, they are often replaced by something far worse. The most powerful internal critics of the Saudi monarchy are not liberals but hardline Islamists. The fear that Saudi Arabia could become yet another failed state haunts the west. One senior UK diplomat warns: “Get rid of the House of Saud and you will be screaming for them to come back within six months.”

Saudi Arabia’s relationship with jihadism is also complex. It is true that Islamists in Saudi Arabia have provided ideological and sometimes financial support for jihadis around the world. But it is also true that the Saudi royal family itself has been targeted by both Isis and al-Qaeda. At the same time, intelligence provided by the Saudis has been critical in thwarting some terrorist plots in the west. As one western counter-terrorism official puts it: “The Saudis are sometimes both the source of the problem and the best antidote to it.”

Some western strategists daydream about ditching the Saudi alliance in favour of a rapprochement with Iran. If international politics were a chess game, this might look like a clever gambit.

In the real world, any western alliance with Iran is still a distant prospect. There is no guarantee that “moderates” will ever truly gain control in Tehran and, in the meantime, Iran continues to supply radical armed groups, such as Hizbollah, and to destabilise neighbouring countries. Allying with the largest Shia power would also effectively alienate Sunni Muslims — fuelling groups such as Isis.
Human rights activists might note that Iran executes even more people than Saudi Arabia.
Acknowledging that there are still good reasons for the west to work closely with Saudi Arabia is, how­­ever, not the same as saying that nothing should change. Religious tolerance is the right issue on which to press the Saudis.

There has long been something repellently craven about the western approach to the Saudi monarchy.

The Europeans and Americans have accepted a blatant double standard, in which the Saudis are allowed to fund their own brand of religious intolerance while banning the organised practice of other religions inside Saudi Arabia.

Perhaps it is time to give the Saudis a choice: agree to allow churches, Hindu temples and synagogues to open in Saudi Arabia, or face the end of Saudi funding for mosques in the west.

American jihadists

The home-grown threat

Despite the attack in San Bernardino, America’s defences against jihadism are high

YOU do not need to be Donald Trump to be confused by the massacre Syed Rizwan Farook and his Pakistani wife, Tashfeen Malik, carried out in San Bernardino, California, on December 2nd. The couple responsible for the deadliest act of terrorism in America since 2001 were well-educated, affluent and unknown to the police. Mr Farook earned $70,000 a year as a government inspector; his brother served in the navy. Unlike ne’er-do-well European jihadists, with their uncouth accents and mugged-up theology, the killers were quiet, unremarkable middle-class Muslims.

Their target, a get-together of Mr Farook’s colleagues at a suburban health centre, was so banal investigators at first suspected the massacre of 14 people was a case of workplace rage.

Even the fact that the couple turned out to have kept an arsenal at home and practised on gun ranges was only alarming in retrospect. Millions of Americans do the same. A few minutes before going postal, they dropped off their six-month-old daughter with Mr Farook’s mother, claiming to have a doctor’s appointment: Mr Farook and Ms Malik were the jihadists next door.

There are two starkly opposed ways of understanding this banality. The first, exemplified by President Barack Obama, is to find it almost reassuring. In an address from the Oval Office on December 6th he said the attack reflected America’s success in preventing more spectacular terrorist violence. While promising one or two security measures—including checks on the fiancé visa on which Ms Malik entered America—he also urged Americans to see the killing in the context of an already violent society: “As we’ve become better at preventing complex, multifaceted attacks like 9/11, terrorists turned to less complicated acts of violence like the mass-shootings that are all too common.” The best way to foil them, Mr Obama added, was to keep calm and carry on. “Our success won’t depend on tough talk, or abandoning our values, or giving into fear. That’s what groups like [Islamic State] are hoping for.”

The alternative, demonstrated by Mr Trump, is to conclude that, since such Muslim maniacs are hard to detect, all Muslims must be considered suspect. “We have to look at mosques. We have no choice. We have to see what is happening because something is happening in there.

Man, is there anger!” mused the front-runner for the Republican presidential nomination. His solution was a perfect rebuke to Mr Obama: Mr Trump called “for a total and complete shutdown of Muslims entering the United States until our country’s representatives can figure out what is going on”.

The facts are with the president. Since 9/11, over 400,000 people have been killed by gunfire in America and 45 by jihadist violence, of whom half died in two shootings: one carried out by a Muslim army doctor in Texas in 2009, the other in San Bernardino. France has so far suffered seven fatal jihadist attacks this year, costing 150 lives; America has suffered nine at home in 14 years. And though the government has raised its threat levels, fearing San Bernardino could augur an uptick, that is partly a matter of due diligence. “I see the threat as being relatively consistent since 9/11,” says Raymond Kelly, who served as New York’s police commissioner between 2002 and 2013, and now works for a corporate snooper, K2 Intelligence.

Three things account for America’s relative security. The first is its distance from the Middle East; the second is decent law enforcement, especially by the FBI, which since 2001 has partly turned itself into the internal spy agency America lacked. Its counter-terrorism staff, whose number has grown by 2,000, are investigating links to IS in 50 states. By far the most important reason, however, is that American Muslims are less interested in being radicalised than their European counterparts.

They are richer, better educated and altogether better integrated into the mainstream. Though less than 1% of America’s population, they account for 10% of its doctors; in 2011, less than half said that most of their closest friends were Muslims. Plainly, IS, which has flooded the internet with jihadist propaganda, represents a new test to that moderation. Yet, as a rule, American Muslims are probably less tempted by a genocidal medieval revival act than any others in the West. While more than 5,000 Europeans have joined IS, fewer than 250 Americans are thought to have tried to—of whom, estimates Peter Bergen, author of a forthcoming book on American jihadists, only two dozen succeeded.

This also makes American Muslims unusually likely to report suspected jihadists to the police.

According to Mohamed Magid, a Virginia-based imam who has advised the administration on radicalisation, 42% of the jihadist plots rumbled since 2001 were reported by suspicious Muslims. That includes a recent case within his own congregation, in which the parents of a 16-year-old youth, Ali Amin, reported his interest in IS. He was sentenced in August to 11 years in prison after pleading guilty to fund-raising for IS and helping another American teenager, Reza Niknejad, join it. Mr Amin was radicalised online by IS agents in Canada and Britain. “It doesn’t matter where the recruiter is so long as there is internet,” said Mr Magid. “But thank God his parents came forward.”

That is why Mr Trump’s demagoguery, occasioned as much by a bad poll for the blow-hard in Iowa as the massacre in California, is so dangerous, as well as wrong. Americans are lucky.

Their defences against jihadism are high. But that is provided Muslims are manning them, which Mr Trump has already made less likely.

At an Islamic Centre in Jersey City, whose large Muslim population Mr Trump had previously accused, mendaciously, of celebrating 9/11, people are rattled. “When we heard about the Paris and California attacks, first thing that comes to our mind is, ‘Oh God, please don’t let it be a Muslim’,” says Ahmed Shedeed, the centre’s president. “The good thing is we look like Latinos,” he adds.

Given how Mr Trump once denigrated Mexicans as rapists, that shows how his campaign has moved on.

European Satellites

How Islamic State Takes Its Terror To the Web

By Nicolai Kwasniewski

An Islamic State propaganda video Shows fighters marching at an undisclosed location.

An Islamic State propaganda video Shows fighters marching at an undisclosed location.

Islamic State is a master at using the Internet to spread propaganda. SPIEGEL ONLINE research indicates European companies may be providing the terrorist organization Internet access by satellite dish.

No terror organization uses the Internet as successfully when it comes to marketing itself and recruiting supporters as Islamic State (IS) does. But how is it able to do so given that the group operates in a region where telecommunications infrastructure has been largely destroyed?

The answer to this question is an extremely problematic one for Europe, for it is European companies that provide the terrorists with access to the platforms they use to spread their propaganda. It remains unclear whether the companies knowingly do so, but documents obtained by SPIEGEL ONLINE show that they may very well know what's going on. And the documents show that the companies could immediately cut off Islamic State's Internet access without much effort.

If you need to get online in Syria or Iraq, the technology needed to do so can be purchased in the Hatay province -- a corner of Turkey located between the Mediterranean Sea and the Syrian border. In the bazaar quarter of the regional capital of Antakya, peddlers hawk everything from brooms and spices to pomegranates, wedding dresses, ovens, beds and all kinds of electronics. Antakya has served as a crossroads for numerous trade routes for thousands of years. Wares continue to flow through the region's relatively porous borders even today.

Thousands of dishes have been installed in the region allowing users to access the Internet by satellite. There has been a huge surge in recent years in the satellite Internet business. Instead of the usual landline cable connection, all one needs is a satellite dish with a transmission and reception antenna and a modem. The result is top-speed Internet access, with downloads at a rate of 22 Megabits per second and uploads of 6 Megabits.

Accessing the Internet by satellite is easy, but it isn't cheap. The equipment needed costs around $500 in Syria right now. On top of that are the fees charged by Internet service providers, which run at about $500 for six months for a small data package and customer service provided by email.

A Blessing

The technology is a blessing for people who live in rural areas lacking infrastructure. It enables them to maintain contact with friends, family and the rest of the world using email, Facebook or Instagram. It also provides them with access to all the entertainment and information services. For members of the political opposition and activists in non-democratic countries, the Internet is the most important means of communication. Aid organizations also use satellite-based Internet access to coordinate their work.

The problem is that terrorist organizations also rely on the technology, which allows them to connect from even the most remote, infrastructure-barren regions, providing them with the means they need to upload their propaganda, exchange information and possibly even plan attacks.

In Antakya, the demand for satellite technology on the other side of the border has fueled a boom in business. Two of the numerous dealers based here say independently of each other that they each have about 2,500 users in Syria and that they have monthly revenues of around $100,000. When asked who, specifically, they are selling their equipment and services to, they cautiously answer that they provide them only to commercial partners. They say they don't know who the end customers are.
That's not implausible. In theory, anyone with the money can buy and install a satellite dish for Internet access. But in regions ruled by Islamic State, IS exerts extensive control over Internet access.

Syrian media activists with Aleppo24 and Deirezzor24 tell SPIEGEL ONLINE that in cities with stronger IS presences, like Raqqa or Deir-al-Zor, only technicians affiliated with the terrorist militia are permitted to install satellite dishes.

Local IS leaders, known as emirs, decide whether private individuals are allowed to have Internet access. In some regions, they have cut the area off entirely, whereas in others, access is given to currency-exchange stands, at Internet cafés or even in the form of neighborhood Wi-Fi networks. But no Internet access is possible without the Islamic State's permission.

Syrian activists claim that satellite dishes are located all over the place -- on the rooftops of IS media centers and on top of the private homes of members of the terrorist militia. Without them, IS would be cut off from the outside world.

A Lucrative Business

Most of the satellite dishes going to the Middle East make their way through Rotterdam, the world's third-largest port. It's here, among the 12 million containers processed annually, that the satellite technology and modems arrive in Europe. Most of the manufacturers are located in the Far East, with their customers based in Paris, London or Luxembourg.

A number of distribution firms are involved in the sales chain of the technologies required to obtain satellite Internet access. At the beginning of this chain are the major European satellite operators, led by France's Eutelsat, Great Britain's Avanti Communications and Luxembourg's SES. Among the most popular brands are Hughes by Avanti and, especially, Tooway by Eutelsat. The French company has been in business for years and offers almost complete global coverage with its satellites.

Distribution firms then buy facilities and satellite capacity from the big companies and resell it to corporate or private customers. They also work together with additional companies like the German firm Sat Internet Services based in the northern city of Neustadt am Rübenberge.

It's a lucrative business for company CEO Victor Kühne, who expanded distribution to Turkey a few years ago. His problem is: the market for satellite Internet technology is limited in the European Union because of near blanket coverage of standard broadband Internet connections on the continent. Sales in Turkey are fairly slow too, because satellite connections are more expensive than classic DSL access.

The satellite operators don't provide data on the number of customers they have, but there is anecdotal evidence. In Turkey, for example, those seeking to access the Internet using a satellite dish are required to register with the government's BTK telecommunications authority.

According to the most recent data available from the agency, there were 11,000 registered satellite Internet users in Turkey during the first quarter of 2015, only 500 more than the previous year.

But during 2013 and 2014, alone, Neustadt-based Sat Internet Services exported more than 6,000 dishes to Turkey, customs agency documents obtained by SPIEGEL ONLINE show. It is likely that most of those satellite dishes did not remain in Turkey, and there's a strong chance a good deal of them ended up in Syria. The Syrian market has a decisive advantage in that there is no alternative Internet access available, meaning prices can be set very high.

What Firms (Might) Know

It's unlikely that any of these companies are deliberately trying to help or support the Islamic State, and it is also unclear if they really know who their equipment is ultimately delivered to.

One source who has observed sales in Antakya describes some of the transactions, saying that bearded men often visit the stores in the city, wearing only flip-flops. They pull bundles of cash from their pant pockets and order dozens of satellite dishes at a time -- often also buying radio communication devices with a range of several Kilometers.

Is this evidence that the Islamic State uses middlemen to purchase satellite equipment in Turkey?

SPIEGEL ONLINE solicited comment from all the companies concerned, with only SES and Eutelsat providing responses. Officials with Luxembourg-based SES said they only sell their services to major dealers who have been reviewed and that they do not sell to end customers.

SES officials say they have no knowledge of users in areas of Syria controlled by Islamic State.

The company says that if it were to find this to be the case, it would use all means at its disposal to immediately stop access.

Officials at France's Eutelsat offered more reserved comments, saying that modern satellite terminals are very small, compact and mobile and that they could thus not rule out any possible illicit use.

Eutelsat officials say the company has none of its own service providers in Syria and that it has no direct contact with end customers. Avanti's German lawyers issued vague warnings but said little about the content of the story and said they could not be quoted. But it doesn't appear that their practices are different from SES and Eutelsat.

Surely some information gets lost in the long distribution chain. When a dealer in Antakya or in a Syrian city like Aleppo makes a sale, it's not possible to determine which company exported the goods from Europe to Turkey, the companies say.

But is that true? Satellite operators and their distribution partners generally can determine the location of the equipment they are supplying. When they install satellite dishes and configure Internet access, their customers are required to provide their GPS coordinates. If the wrong information is provided, then customers are either unable to access the Internet or they end up with poor connections, the documents show. GPS data obtained by SPIEGEL ONLINE from 2014 and 2015 clearly indicate that satellite dishes were in fact located in precisely the places that are under Islamic State control.

Many of the satellite dishes are located in Aleppo, Syria's second city, which isn't completely under the control of the terror regime, but other locations of the dishes include Raqqa, the unofficial IS headquarters, al-Bab, Deir al-Zor and along the Euphrates River into Iraq and the IS-occupied city of Mosul.

Why Don't Companies Take Action to Stop It?

Given the high investments costs of the required infrastructure, the general business practice of the satellite operators is to gain as many customers as quickly as possible. Although most satellite operators do not publish their internal figures, industry analysts say it costs between €300 million and €400 million to build a satellite and to launch it into orbit. Costs associated with operating a satellite must also be factored in. There's an additional aspect as well: The average operating life of a satellite is only 15 years, meaning that the investment must be recouped as quickly as possible.

Does that explain why satellite operators might be willing to accept the fact that they provide the infrastructure needed by a terrorist group to communicate, disseminate their propaganda and possibly plan attacks? For the satellite operators, it's technically relatively easy to cut access to networks.

Using the web portal OSS, it only takes one click to eliminate access. In cases where they harbor suspicions, operators would also have the technical ability to see what kind of data is be transmitted or received by the satellite dishes.

It may be true that the companies simply want to used their technology to increase the reach of television stations -- in the way recently described by Eutelsat CEO Michel de Rosen as he presented an award sponsored by his company to SPIEGEL TV (ironically enough for a documentary film about the Islamic State). Or perhaps the companies simply want to pursue their business goals without checking precisely to see who is profiting from the services they provide.

Or perhaps the companies have full knowledge of who is using their services and are sharing that information with intelligence services. When asked, neither the companies nor intelligence services were willing to comment.

That would mean that intelligence services have been listening in for years, even as IS continued growing in strength. It wouldn't be difficult for intelligence services to tap the connections either, given that the ground stations used to feed the satellite signals into the cable networks are also located in European countries, including Cyprus (Avanti) and Italy (Eutelsat).

Possible connections linking Eutelsat with Syria could be particularly uncomfortable for the French government, which indirectly holds a 26-percent share in the satellite operator through the state-owned Bank Caisse des Dépôts.

Dissensus, the Spirit of Our Age

Donald Trump could arise only in an atmosphere that is itself soaked in political derision.

By Joseph Epstein

Photo: Getty Images/Blend Images RM

We are living in a time of great dissensus, when political arguments are not merely rife but emotionally and verbally, if not actually, violent. People who are certain of the urgency of climate change often treat doubters as if they were hopelessly stupid flat-worlders. People who oppose abortion tend to consider those who feel otherwise as little less than murderers. Run down the list of the leading issues—and an issue, recall, is a subject still in the flux of controversy—and one discovers similarly tempestuous reactions, pro and con, everywhere.

Not that I am without my own political views. The English historian A.J.P. Taylor once claimed to have “extreme views, weakly held.” My own position is moderate views, extremely held. Whenever the subject of politics comes up in one or another of my social circles, I always jump in to offer a label warning: “I have never lost a political argument,” I say, adding, “which would be more impressive if I didn’t have to admit that neither have I ever won one.” As Jonathan Swift averred, one cannot hope to reason people out of those things they haven’t been reasoned into, which often enough includes politics.

Politics is a subject that barbers, salesmen and people in search of love do best to steer clear of. It can also be hell on friendships. I once gave a talk at the American Enterprise Institute in which I made the point that one shouldn’t expect a perfect congruence of one’s own political opinions in friends.

I quoted from V.S. Naipaul’s novel “Guerrillas” his description of a woman who had a great many opinions, but these, taken together, didn’t add up to a point of view. One should instead, I argued, look for something larger than mere congenial opinions in friends; one should search out an interesting point of view, an amused take on the world combined with a certain seriousness.

At dinner after my talk, Irving Kristol, a man of great civility who had strong opinions firmly held, said that he agreed completely with me about a point of view being more important than matching opinions in one’s friends. “Except,” he said, “for Israel-Palestine.”

Quite right, alas. Some opinions even in good friends are unacceptable. I shouldn’t want a racist for a friend, or an anti-Semite, or a misogynist. On the other hand, neither would I want a friend with a perfectly aligned set of politically correct opinions. Nor could he or she bear me.

Yet opinion just now is riding high in the saddle, and fire-breathing political opinions most of all.

The effect of such endemic—better perhaps to say epidemic—opinionation is on view in the current presidential campaign. A figure as deliberately divisive as Donald Trump could arise only in an atmosphere that is itself soaked in political derision. At a time of international crisis and domestic turmoil, where cool heads are called for, Mr. Trump brings a hot head and a loose lip and a level of coarseness hitherto unseen in a presidential campaign. That so many people appear to be not merely amused but enthralled by his crude views is no cause for celebration.

I wonder what my long-gone father would make of Donald Trump. One of my father’s favorite apothegms was that “you can’t argue with success.” I suspect that Mr. Trump would cause him to rethink this. My father held strong views but was also a reasonable man—though, as he would admit, not always.

Like many Jews, my father was an ardent supporter of Franklin Roosevelt. So much so that in the 1930s he wouldn’t allow the then-isolationist Chicago Tribune TPUB 0.31 % in the house. My father’s dislike of the paper was so fierce that once, when he had a flat tire in a snowstorm and the driver of a Tribune delivery truck pulled over to help, my father told him to bugger off. “That,” he used to say when telling the story, “shows you how stupid politics can make you.”

In 1952, during the first Eisenhower-Stevenson election campaign, I asked my father for whom he was going to vote, fairly certain of the answer ( Adlai Stevenson). He surprised me by saying that before making a decision he was waiting to see which way the columnist Walter Lippmann was going. Lippmann, though he would have much preferred to lunch with Stevenson, went for Eisenhower. He did so because he thought the great war hero had a better chance than Stevenson of closing down Sen. Joseph McCarthy’s Communist witch hunt.

Is there anyone today waiting to see what a newspaper columnist thinks before deciding how to vote?

Is there a political columnist in America not already lined up, his or her leanings unknown and unpredictable? Is there anyone in the country, period, not intransigently locked into his or her opinions? What would it take for any of us to make a Lippmann-like move, rising above personal preference and partisanship, to cast a vote for the good of the country instead of against people we loathe?

Maybe it doesn’t matter. After all, we have only our national civility to lose.

Mr. Epstein’s books include “Masters of the Games: Essays and Stories on Sport” (Rowman & Littlefield, 2015).

Read This, Spike That

What Are Negative Junk Bond Returns Telling Us?

Is weak performance in the high-yield market foreshadowing a downturn in stocks?

By John Kimelman

Thus far this year, stocks have eked out a slight gain when dividends are included in the returns.

Not so for their cousins, high-yield—or junk—bonds, which have lost several percentage points even after their interest payments are factored in.

“U.S. corporate high-yield bonds are down 2% this year, including interest payments, according to Barclays PLC data,” wrote The Wall Street Journal this past weekend, adding that junk bonds have posted only four annual losses on a total-return basis since 1995.

The Journal points out that the declines are worrying Wall Street because junk-market declines have a reputation for foreshadowing economic downturns.

If junk bonds lose value this year, it will be the asset class’s first down year since 2008. During the summer of that fateful year, junk bond prices fell sharply, just ahead of the big drop in the stock market following the collapse of Lehman Brothers in early September. Heeding that warning from junk might have saved stock investors a big percentage of that year’s losses.

According to the Journal, some of the junk bond selling has spread beyond energy firms hit by weak commodity pricing.

But here’s the good news for risk assets: Comparisons between now and 2008 are limited at best.

That year, the junk bond market lost a quarter of its value, while now it’s down just a few percentage points year-to-date. And the U.S. economy this year, despite the drag from the energy sector, is generating more than 200,000 jobs a month and running near the standard definition of full employment.

Speaking of the energy sector, there are a few articles that suggest that trouble remains both for energy stocks and, more particularly, the midstream pipeline sector, which has fallen hard this year.

A piece in the Financial Post, a Canadian business publication, discusses the five reasons it’s still too early to buy commodity stocks. All of these reasons apply to the energy sector and collectively comprise a strong headwind against this asset class.

Among those reasons are a likely rise in an already strong dollar, oversupply of commodities, weak inflation, and expected “tax-loss selling,” in which poor performing stocks including energy names are sold before the new year to offset any capital gains.

Perhaps the biggest surprise this year is the extent to which high-yielding energy pipeline stocks, many of which are structured as master limited partnerships, have fallen. This drop in the sector has come despite a widely-held belief that these so-called midstream companies were impervious to upstream pricing concerns because they were simple “toll collectors” in the energy transportation infrastructure.

The best-known of these pipeline stocks, Kinder Morgan (ticker: KM ), has fallen to $16.42 a share, 63% from its all-time high reached in April.

The stock lost 29% last week alone following reports the company would have to cut its dividend.

In a story over the weekend in Barron’s, associate editor Andrew Bary wrote that at their beaten-down price “downside in the stock, now $17, seems limited.”

But he adds that “the shares, however, don’t look like a bargain trading for about 17 times estimated 2015 earnings (based on generally accepted accounting principles), adjusted for a tax benefit, and for about 11 times projected 2015 Ebitda (earnings before interest, taxes, depreciation, and amortization). These aren’t low multiples for a leveraged, capital-intensive business that is showing no growth in underlying cash flow.”

Writing Monday for Bloomberg, columnist Liam Denning argues that if the company ends up flattening, or cutting, the dividend, it will be the clearest signal yet that the industry must heed the message coming from the public markets.

Denning concludes: “Kinder Morgan’s current dividend yield of 13% and the Alerian MLP Index’s yield of almost 10% roughly translates as: We don’t believe you can afford this.”