The Agreement Between Saudi Arabia And Russia – Analysis

By Giancarlo Elia Valori*

In early October, King Salman of Saudi Arabia – with 1,500 members of his private entourage and 459 tons of luggage – landed at the Vnukovo airport for the first official visit of a Saudi king to the Kremlin. At military level, Saudi Arabia has already bought from Russia the S-400 Triumph anti-missile system (NATO reporting name: SA-12 Growler), already fully operational in China, which can intercept aircraft and missiles at a speed up to 4.8 kilometers per second (17,000 kilometers per hour) and has the ability of intercepting up to 36 targets at the same time.

In addition, the Saudi purchase of the anti-tank missile Kornet and other advanced weapon systems is already in an advanced phase of negotiations between the two countries.This is a deal worth 3 billion US dollars, but the sale of weapons is a fundamental strategic priority for Russia.

According to the 2016 data, the Russian Federation produces over one fifth of the weapons sold in the world while, also thanks to Russia, India and China have now almost reached technological and military self-sufficiency.

Hence Russia is looking for other markets to sell its weapons, with the consequent and immediate strategic and economic influences and constraints.

Currently everything works thanks to the unquestionable success achieved so far in Syria.

Hence Russia is looking for new markets in the Middle East, an excellent area for selling weapons.

At military level, however, the commercial relations between Russia and Saudi Arabia had already begun in 2012, when the latter had bought a C-300 missile system, with the tacit agreement that said supply would not be sent to Iran.

The C-300 is one of the most powerful anti-missile systems currently available.

In my opinion, Saudi Arabia is reemerging from the long phase of more or less explicit support to the jihad in the great arc of crisis stretching from Afghanistan to Syria.

In Afghanistan, Saudi Arabia is moving away from the well-known support for the Taliban, backed with the largest amount of funds.

On August 7 last, Mishari al-Harbi, the most prominent Saudi diplomat in Afghanistan, defined the Taliban as “armed terrorists,” while the Saudi Kingdom is seeking in all ways to block the private donations of its citizens to the Afghan “students”.

There is a fully rational reason underlying this new policy line: Saudi Arabia can no longer see a political advantage in arming and supporting the Taliban, but above all it wants to put a spoke in the wheels of the mediation, organized by Qatar, between the Kabul government and the above-mentioned “students” trained in the Pakistani Qur’anic schools.

At the beginning of jihad in Afghanistan, the United States and the other countries present there interpreted the Pakistani and Saudi support as a way to contain the Iranian designs in the Western part of the country, but now King Salman is radically changing the Saudi foreign policy.

Whatever happens, Afghanistan will have wide regional autonomy – hence the jihad to keep Iran and its regional allies out has no longer much reason to exist.

From this viewpoint the radical change, which has long been experienced in the relations between Israel and Saudi Arabia, is significant.

The meaning of this unusual manoeuvre is obvious, namely to join forces against Iran and its old and new proxies.

Nevertheless, as recalled by one of the leaders of the Afghani Mujahidin, before 2013 Saudi Arabia had strongly supported Qatar’s efforts to “open up” to the Taliban. But now that the relations of the “Afghan students” with Turkey, Egypt and the United Arab Emirates have weakened, Saudi Arabia is revising its preferential relations with the old supporters of the Afghan jihad (Turkey, the Arab Emirates and Egypt) and, above all, it is isolating Qatar, the only support left to the jihadist “students”.

It is a fact that the Taliban still collaborate with Iran and Qatar.

Hezb’ollah was born as a movement of Islamic resistance, without any preconceived idea vis-à-vis the various traditional factions of Islam.

However, can the support of these two countries replace the relationship with the Saudi private individuals and their Kingdom? Probably so.

In all likelihood, the Saudi efforts to separate the United States from Qatar – hosting its CENTCOM – could push the United States directly into Saudi hands, while Qatar is putting pressures on the US forces for a quick transfer of their Command, which could possiblybe moved to the Al Dhafra base in Abu Dhabi.

Reverting to King Salman’s State visit to Russia, he has understood that Russia – and no longer the United States – is now distributing cards in Syria and hence he acts accordingly.

In all likelihood, the now old King Salman is also promoting the Russian support for his son, Crown Prince Mohammed bin Salman, who is expected to inherit his throne.

An agreement to increase the oil price, which is essential for both countries, has been still discussed, but nothing leaks out of the Kremlin, while Putin has argued for the need to further use the Saudi sovereign funds in the Russian economy.

Out of the 10 billion US dollars promised by Saudi Arabia to Russia in 2015, only one has been provided so far.

The King’s visit to Russia had been promised in a phone call with Putin as early as March 2015, but it had been postponed many times.

Ironically, however, the USSR was the first to recognize the independence of the Kingdom created by King Abdulaziz.

The official relations between Russia and the Kingdom of Hejzah and Nejid – the official name of the Al-Sauds’ Kingdom until 1936 – started as early as 1926.

The strategic reason is obvious and is similar to the one which led Stalin to be the first to recognize the State of Israel, namely to be a thorn in the flesh in a region dominated by the British Empire, by favouring both the “quasi-friends” (Israel) and the “future enemies” (Saudi Arabia).

In 1938, however, following the “elimination” – during the Stalinist purges – of the Russian envoy to Saudi Arabia, Karim Kharimov, who was a personal friend of the King, the relations between the two countries were broken off.

Bilateral relations were resumed only in 1991.

An “Indian Spring”, the distance between Russia and Saudi Arabia, an extraordinary stroke of luck for the US strategic and economic interests in the Middle East – a stroke of luck that today, with the meeting between Putin and King Salman, is virtually over.

King Faisal, assassinated by his nephew Faisal bin Musaid in 1975, when he was Saudi Foreign Minister, visited Russia only in 1933, but it was a visit having scarce bilateral importance.

It is worth recalling that, after discarding the other three previous candidates, last mid-July Russia had provided to Saudi Arabia its agreement on the appointment of Ahmed al Wahishi as Yemen’s Ambassador to Russia.

Russia is interested in not making the conflict in Yemen turn into a war against Iran.

While for Iran the primary strategic interest of the Houthi insurgency in Yemen is to create an expensive, unpredictable, lasting and dangerous engagement for Saudi Arabia.

Well before the meeting between Putin and King Salman, an agreement had been signed between the two countries to further reduce the oil output, thus making the crude oil price increase.

After a long struggle to become China’s first supplier – won by Russia against Saudi Arabia in 2014 with the signature of a 30-year contract with China worth 400 billion US dollars only for natural gas – last year King Salman signed contracts to the tune of 13 billion dollars with Malaysia, Indonesia and Vietnam.

In October 2016, however, the Russian Federation purchased – through Rosnet – a 49% shareholding of Essar Oil, the first private Indian oil company having a 50% stake in Kenya Petroleum Refineries Ltd, which is fully owned by Essar.

India is the primary market where, in the future, Russia and Saudi Arabia will clash for their oil and gas.

Currently Saudi Arabia and Russia together produce a quarter of all the oil used in the world. Obviously, the agreement between the two countries to limit the extraction of crude oil is related to the new extraction of oil and gas in the United States, which is already a danger to all the old OPEC countries or the autonomous countries such as Russia (or Norway).

Reducing the crude oil price means potentially driving the US shale oil and shale gas out of business – and this is the first strategic goal uniting the Russian Federation and Saudi Arabia.

The Russia-OPEC agreement on the reduction of crude oil price has finally been postponed until March 2018, but said agreement will be probably extended at least until the end of 2018.

Saudi Arabia, however, still wants a closer relationship with the Trump’s US administration, which can provide technology to put an end to Saudi Arabia’s economic dependence on oil by the end of 2030, according to King Salman’s plans.

This is key to the current relationship between Russia and Saudi Arabia: the latter agrees with the winner in Syria, namely Vladimir Putin, to reduce the crude oil price and put the United States in trouble. Nevertheless the latter remains the primary market for transforming the Saudi economy – by force, taking the fast track, as was the case with the Soviet “five-year plans”.

Moreover, it is the same plan of the current Russian leadership that can achieve it only by signing effective agreements with all OPEC countries.

The magnitude of Saudi investment in the United States is still extraordinary and unique: last May Saudi Aramco signed a 50 billion dollar contract with the US oil companies, while Minister Khalid al Falih has finalized a further 200 billion US dollar contract to produce in Saudi Arabia goods and equipment that were previously imported from the United States.

King Salman’s plan, however, is to limit Saudi Arabia’s oil dependence and, in the meantime, to turn his country into an active trading platform for the Greater Middle East.

Hence no more trouble spots in Saudi Arabia’s neighbouring countries.

With the exception of Iran and its allies, at least for the time being.

They are the only oil, political and religious competitors capable of attracting and pushing the many Shiite minorities throughout the Sunni Middle East to rebellion – including the Saudi largest oil extraction region.

Another bilateral economic system, which was certainly not disrupted – at least for a short time – was that of military supplies between the United States and Saudi Arabia.

While, according to 2016 data, Saudi Arabia currently absorbs 35 billion US products and services, it is worth noting that the Saudi Kingdom is the fifth largest arms buyer in the world.

In 2017 the Saudi military spending alone has accounted for 61 billion US dollars, namely 21% of the country’s current budget.

As is well-known, the United States is currently the largest exporter of weapons in the world.

Hence it is by no mere coincidence that the first meeting between King Salman and Putin has been held precisely for the purchase of a Russian weapon system that the United States has not at such an advanced level and that could block its missiles.

Therefore Saudi Arabia fears the possible reactions of Middle East countries which have US-made missiles available.

A goal that defines Saudi Arabia’s utmost strategic autonomy from the United States.

Not to mention a globally important project – certainly designed by the Saudi leaders to “make money”, namely Aramco’s new presence on the stock market.

Next year Saudi Arabia is expected to start selling a 5% shareholding of Aramco on the market – the largest takeover bid in the stock market history.

The competition between the New York and the London Stock Exchange to obtain this transaction is already fierce, but – at this juncture – nothing prevents the Russian Federation from acquiring oil companies of the Saudi network.

Yet another level of contrast between the two old bilateral competitors, namely the old United States and the old Soviet Union, in the new guises prepared for celebrating globalization.

King Salman, however, does not want to put all his eggs in one basket.

In fact, last May the Crown Prince, Mohammad bin Salman, already visited Russia to discuss the Syrian and oil issues.

As far as Syria is concerned, Saudi Arabia recognizes the de facto victory of the Russian-led coalition and accepts the possible construction of the South Pars gas pipeline from the sea between Qatar and Iran across the Syrian territory- probably in exchange for a financial compensation.

In all likelihood, Jordan – a traditional ally of Saudi Arabia – will play a special role in the new gas pipeline.

Later Saudi Arabia and the Russian Federation signed a 3.5 billion US dollar military cooperation agreement, preceding the one previously mentioned, envisaging technology transfers that are extremely important for the new Saudi local industry.

With specific reference to Syria, it is worth recalling that, only thanks to Saudi Arabia, Russia could have a platform for the negotiations – through Egypt – between the Russian forces and the Syrian opposition for Ghouta East and Rastan – an agreement that would have never been possible without the Saudi mediation.

In short, King Salman does no longer want clashes around his country. He only wants a peaceful route for the new future trade that will characterize the Saudi non-oil-dependent economy.

Moreover, the rapprochement between Russia and Saudi Arabia is viewed favourably by Israel, which – as many people say – is Russia’s “silent ally” in the Greater Middle East.

It is worth recalling that Iran is using the clash in Yemen to push Saudi Arabia into a very long, expensive and unpredictable war.

Russia has no reason to support Iran in the Houthi insurgency against the Yemeni Sunnis. Russia does not need many clashes around its immediate strategic interests in the Middle East oil fields.

Not even in Syria, Russia and Iran shall have the same goals in the future.

Iran wants an allied and dependent Syria, while Russia does not want only Westerners near its military ports in the Mediterranean exercising hegemony over a traditionally friendly country like Syria.

Neither does it want Syria and any other Middle East country to be too closely dependent each other, because this would deprive the Russian Federation of its autonomous line of communication with its Mediterranean ports.

Not to mention the control of jihad – a contagion that could spread to Chechnya – and the creation of a rampart towards the Arabian peninsula.

Another Russian essential goal in Syria.

Obviously while Russia is particularly interested in a new relationship with Saudi Arabia from the oil, economic and strategic viewpoints, it has no reason to disregard Iran.

The common interests between Russia and Iran are decisive and inevitable in Afghanistan, Iraq and also in Syria.

Russia cannot certainly lose these strategic axes only to rush to embrace Saudi Arabia.

Hence the Russian Federation will maintain its ties with the Shiite Republic. It will accept some Saudi interests in the Middle East region, between Jordan and the Lebanon, but it will support Iran in the Central Asian system, which Russia cannot certainly neglect.

Nevertheless it will not even disregard the new oil and military system, established in the new agreements with Saudi Arabia, which could also be a stabilizer of Russian interests in the Middle East and an economic partner to be taken away from the United States.

If all goes well, Russia could create a strategy based on two options between Saudi Arabia and Iran, without either of them being in a position to threaten – too closely – the Russian interests stretching from the Greater Middle East to Central Asia.

About the author:
*Professor Giancarlo Elia Valori
is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “La Centrale Finanziaria Generale Spa”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title of “Honorable” of the Académie des Sciences de l’Institut de France.

Source:
This article was published by Modern Diplomacy


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