Once again, Saudi Arabia is becoming an epicentre of geoeconomics. The country, which helped the United States impose its currency on the world by agreeing to sell its oil only for US dollars, is now causing frustration for the US due to its changing policies. The petrodollar system, which has exponentially increased the dominance of the US over the world since the 1970s, is under threat because of tectonic shifts in the global political system. It was clear when the top diplomat of the US returned from Riyadh with an empty pot.
US Secretary of State Antony Blinken’s recent three-day visit to Saudi Arabia ended in a serious setback for US interests. The visit not only exposed the diminishing power of the US in the region but also turned out to be a platform for Saudi Arabia to clarify its long-term plans, which are mainly stressed on its relationship with China. The changing attitude of America’s once-friendly nations is evidence of why neo-conservative, liberal democratic one-size-fits-all policies are disastrous in foreign policy. In other words, the “friendly” nations of the US were waiting for the rise of another axis in global politics to escape from Uncle Sam’s dictates.
The World Is Not a Binary Setup
Since the Cold War, the foreign policy of the US has mainly been based on dividing countries into two categories: countries with the US and countries against the US. This means that any country pursuing its own socio-economic-political affairs without the “consent” of the US will naturally fall into the second category. If a country is rich in resources, located in a geopolitical chokepoint, has anti-free market autarky economies, or violates the “rules-based order” established by a few Western countries, it will be the target of Western intervention. Historically, it is evident that any nation challenging the hegemon(s) or challenging the status quo established by the hegemon(s) will increase its probability of going to war against each other. Since the invention of weapons of mass destruction (WMD) such as nuclear bombs, any great power fighting war against each other will enter into the quagmire of mutual assured destruction (MAD). The post-Hiroshima Nagasaki era made it clear that a zero-sum game is not going to destroy one country or party, but it will be the beginning of the end of human civilization itself.
The difference between the foreign policy of a nation-state like the US and a civilizational-state like China shows us how to deal with each and every nation by respecting its differences rather than imposing the one-size-fits-all approach. That is why the win-win approach by BRICS is now attracting many countries, including the once-friendly nations of the US. It was visible in South Africa’s Cape Town when they hosted the ministerial meeting of the “Friends of BRICS”. During the meeting, Prince Faisal mentioned the growing trade relations with the BRICS countries. Saudi Arabia is the largest commercial partner of BRICS in the Middle East. In 2017, the total value of bilateral trade with the countries of the BRICS was $81 billion. It increased to $128 billion in 2021 and exceeded $160 billion in 2022. The growing total value of bilateral trade is the result of the growing relationship between Saudi Arabia and the BRICS countries.
The same tone was also resonated in the joint news conference by US Secretary of State Antony Blinken and Saudi Foreign Minister Prince Faisal bin Farhan. On June 8th, Prince Faisal clarified that Saudi Arabia’s relations with both the US and China were not a zero-sum game. He also added that Saudi Arabia is capable of having multiple partnerships and multiple engagements, and the US does the same in many instances. As the largest trading partner, it is natural to have countless interactions and intersections with China. A few years ago, it was unimaginable to have this kind of statement from Saudi Arabia. And the statement is clear: Saudi Arabia will decide its own foreign policy, and it no longer needed the decree from the White House.
Nothing Above National Interest
West Asian countries are desperate to diversify their economies, which have mainly relied on oil. To achieve that, they know exactly what to do and to whom they should approach. Realizing the current situation of the US and its allies, it would be a very risky gamble to rely on them. Instead, they are now building new networks and trying to resolve the issues they had with the nations they tried to destroy before. Syria’s return to the Arab League, the recent diplomatic success between Iran and Saudi Arabia, the ceasefire in Yemen, and the compromise between Egypt and Turkey are monumental efforts to establish peace in the region. The main takeaway is that before entering into big deals, it is important to establish peace and resolve conflicts so that the sociopolitical and socioeconomic stability of West Asia will not be at stake.
Countries have reached agreements because they realize it is impossible to continue with the Cold War mindset and engage in never-ending brutal wars. That’s why they are coming together and allying with countries such as China, Russia, and India. In the last week of May, Saudi Arabia started talks to join the New Development Bank (NDB), the financial establishment of BRICS that was started to counter the IMF and World Bank. Countries such as the United Arab Emirates and Egypt are already members of the NDB, which means it is certain that KSA will become the third member from West Asia. The entry of Iran and Saudi Arabia into the Shanghai Cooperation Organization will further develop the security apparatus in West Asia.
Right now, these countries are slowly but steadily transitioning to other modes of exchange, which is further expanding the de-dollarization process. As JP Morgan said on June 5th, “de-dollarization is evident in FX reserves where the USD’s share has declined to a record as the share in exports declined, but it is still emerging in commodities.” One of the main reasons behind the decreasing demand for the greenback is that central banks, especially the central banks of developing countries, are now on a gold rush. If things continue like this, the yellow metal may reach $2,100 per ounce by the end of 2023. By the beginning of the next financial year, it may reach $2,200. The Union Bank of Switzerland said in May that they believe central bank buying gold will continue due to geopolitical concerns and rising inflation. No country wants to go through the miserable situation of sociopolitical and socioeconomic instability. The main interest of a nation is to protect its stability, and that’s why countries are pursuing a win-win formula, speaking the language of diplomacy, and setting aside their animosity while weaving new networks.
Either Cherish or Perish
The US decision to freeze Russian forex reserves is now starting to impact the behaviour of other countries. They are afraid that if a great power country like Russia has to face consequences like these, then what will happen to them if they start going against the West? All these developments have prompted them to come together and consider alternatives rather than sticking to a single party. The main reason why the European Union and Britain are suffering from the current global crisis is mainly because they failed to build diverse networks and fell into the trap of Cold War 2.0 rhetoric.
Sometimes, it is good for the West to remember the saying of Martin Luther King Jr., “We must learn to live together as brothers or perish together as fools.” If the US and its allies do not abandon their neo-conservative zero-sum mentality, it will ultimately end in disaster.