Saudi-Russia Convergence – Analysis

Saudi Defence Minister, Crown Prince Muhammad bin Salman met Russian President Vladimir Putin on the sidelines of the 19th Saint Petersburg International Economic Forum (SPIEF 2015) on June 18, 2015 and discussed issues of common interest and cooperation between the two countries. The Crown Prince’s arrival marked the first visit since 2011 when relations between Russia and Saudi Arabia had soured after the conflict in Syria began. The Saudi media has hailed the visit as a milestone in Saudi foreign policy as it “establishes a strong and open line of communication between Riyadh and Moscow”.

Prince Salman’s visit to Russia comes at a time when the nature of US-Saudi relationship is seen to be taking a turn. Over the last one year the West’s economic sanctions on Russia over the Ukraine crisis has caused the rouble to tumble, investment in Russia slow to a trickle, capital flight to rise and the economy to slide into recession, with the falling oil prices adding to the woes. A close relationship between Riyadh and Moscow could soften the effect of the US and European economic sanctions, which have just been extended by another year. This article looks at this new Riyadh-Moscow dynamics including implications it may hold for India.

The Meeting

The talks between Putin and Prince Salman had focused mainly on bolstering bilateral relations and strengthening cooperation, particularly in the fields of peaceful use of nuclear energy, military and technical collaboration, housing, oil and gas sector and investment opportunities. Six agreements including significant ones on cooperation in the fields of military, space, and oil were also signed on the sidelines of the meeting. According to sources, Russia will assist the Saudis with technology and expertise in their plan to build around 16 nuclear reactors for peaceful purposes and generation of electricity. Also discussed during the meeting were the latest developments in the region and the efforts being undertaken by various stakeholders to resolve the situation.

The Saudi ambassador to Russia stated that there has been an agreement between the two countries on restoring the legitimacy of the government in Yemen. The two sides reportedly agreed on maintaining the unity and stability of Yemen. The Saudis want Russia to endorse their hardline stand against the Houthi rebels. Putin and Prince Salman also reportedly discussed Iran and the P5+1 nuclear deal. Syria too figured in the talks though Ukraine did not come up.

There is a view in certain sections that the fall of the Bashar al-Assad government in Syria is a matter of time and that it would be best if Russia worked with the Saudis to improve the chances of a “moderate” government to fill the void as opposed to an Islamic hardline one. Moscow’s continued support for the Assad regime is weakening the “moderate” rebels and making the situation in Syria more amenable for an ISIS or al-Nusra takeover. Saudi Arabia wants Russia to be on its side, ideally, before the fall of the Assad regime. Russian influence on Iran makes it an even more important player in the region.

From India’s point of view, besides the potential shift in geopolitical alignment in the Middle East, two issues would be of significance: the price of oil (both crude and refined) and the impact of Saudi-Russia convergence in India’s neighbourhood.

Oil

Ali Al-Naimi, the Saudi Arabian minister of petroleum and mineral resources, signed with Russia an executive programme to implement an agreement for cooperation in the field of oil. Saudi Arabia is the largest producer in the Organization of the Petroleum Exporting Countries (OPEC) and the world’s top oil exporter. On the other hand Russia, though not an OPEC member, is the second biggest oil supplier to the global markets. Saudi Arabia is producing oil at a record high as it focuses on keeping its market share, while the Russian output hit a post-Soviet high of 10.71 million barrels per day (bpd) in April. Saudi Arabia’s output rose to 10.31 million barrels a day in April from 10.29 million in March, making it the world’s largest producer for a second month in a row, displacing Russia which held the position in February.

Al-Naimi described the agreement with Russia as a new phase for cooperation and coordination which “will lead to creating a petroleum alliance between the two countries for the benefit of the international oil market”. It is significant to note that such a potential alliance between the two largest OPEC and non-OPEC oil producers is something that has eluded the oil producers of late and is touted as a major sticking point on the road to achieving consensus on oil production quotas and ultimately stabilising the global price of crude oil. Also any cooperation or agreement between Saudi Arabia and Russia on oil production and export could boost Russia’s struggling economy in the medium term.

Saudi Arabia’s massive oil production (with no plans to cut production) is pushing global crude oil prices lower while targeting shale oil production in the US and oil exploration elsewhere, including Russia, due to their high cost of extracting oil. However, there is another aspect that would concern India as a net exporter of refined petroleum products.

Saudi Arabia reduced crude oil exports in April as it used record supplies domestically for a growing refining industry. Crude oil exports fell to 7.74 million barrels a day from 7.9 million in March as the Saudis in April processed 2.22 million barrels a day in domestic refineries. The Saudi oil product exports rose by 44 percent last year. Therefore the Saudis appear to cap their crude oil exports without cutting crude oil production but by increasing refined volumes and their export. India at present is benefitting from both, low crude oil prices and export of refined petroleum products.

Pakistan Factor

A few days before the Saudi crown prince’s visit Pakistan’s Army chief General Raheel Sharif held ‘crucial’ talks with his Russian counterpart in Moscow. The two commanders discussed regional security, bilateral defence cooperation and high-level military exchanges. The three-day visit is also viewed as a Pakistani effort to reach out to stakeholders amid US and NATO drawdown from Afghanistan. On November 20, 2014, Pakistan and Russia had signed a defence cooperation agreement during the first-ever visit of a Russian defence minister to Pakistan in 45 years. Subsequently Moscow approved its sale of attack helicopters to Pakistan.

Saudis have maintained an interest in Afghanistan, partly as an extension of its rivalry with Iran. India would keenly watch how Saudis safeguard their interests, particularly after their disenchantment with Pakistan over Yemen. Would Russia articulate Saudi interests in Afghanistan or serve to bring together Pakistan and Saudi Arabia to a common agenda? Where would such a move leave Iran?

The Riyadh-Moscow ties since their restoration nearly 14 years ago have been quite restricted in their beat. Even as a section of analysts feel that the current bonhomie is mere tactical posturing by Saudi Arabia while the Iran deal is being worked out, others feel it may be different this time. They point to the land for Russia’s new embassy in Riyadh’s Diplomatic Quarter and the invitation to President Putin to visit Riyadh which the Saudi King may reciprocate.

Whichever trajectory the Riyadh-Moscow relationship may take it is only going to add to the strategic and security complexities of the Middle East as Riyadh seeks to broadbase its diplomatic engagements and security options in the wake of the US rapprochement with Iran and its stand-back policy in West Asia.

*Monish Gulati is Associate Director (Strategic Affairs) with the Society for Policy Studies. He can be contacted at [email protected] . This article was published at South Asia Monitor.