Though seven-decade-old Saudi-US relationship occupies centerstage in international politics, it is the blossoming Saudi-Russian ties that look set to make headlines for some time to come.
Crown Prince Abdullah’s visit to Moscow, which began yesterday, is the most high-profile visit ever to Russia by a Saudi leader.
The two sides are expected to foster closer economic ties, particularly in energy development projects, which could reflect positively on the political spectrum as well.
The visit comes at a time when analysts are questioning the centrality of Saudi Arabia to US foreign policy and when Washington is looking to Moscow in order to reduce its dependence on Saudi oil.
Historically, relations between the two countries have suffered due to ideological considerations — both religious and political.
But with the collapse of the Soviet Union and, more intensively after the Sept. 11 attacks on New York and Washington in 2001 and the regime change in Iraq this year, that has changed.
Since the US and Saudi Arabia were at odds on the militants’ issue, it was only a matter of time before Saudi policy makers began looking for friends elsewhere.
Saudi Arabia — home to two of Islam’s holiest sites — was hesitant to forge close ties with the former communist country.
However, two factors convinced Riyadh to open up to Moscow: First, the scathing anti-Saudi US campaign over the alleged presence of Al-Qaeda sympathizers in the Kingdom, together with the allegations of terror financing and links between some Saudi officials and a few of the Sept. 11 hijackers; and second, the Russian stand against the US-led war on Iraq, which reflected the Kingdom’s opinion.
From the Russian point of view, the removal of Saddam’s Baathist regime in Iraq and the increasing isolation of its two other ideological and long-established allies, Syria and Libya, have made it inclined to look toward Riyadh — an influential player in the Islamic world.
Aiding the new strategic realignment are two common features of the Saudi and Russian economies and politics — oil and the war against terrorism.
Russia’s resumption of its leading role as a major oil-producing power after the relative stagnation during most of the 1990s has coincided with ongoing political and strategic changes after Sept. 11. Russia realizes that it can no longer afford to strut alongside the United States unless it regains its place as an economic force.
Meanwhile, the US has since 2001 sought to limit its own dependence on imported oil supplies, particularly from the Middle East.
In 2001, the member states of the Gulf Cooperation Council (GCC) supplied the US with 25.3 percent of its total oil imports. Russia’s oil exports to the US were insignificant in comparison.
However, 2002 and 2003 saw Russia quietly but persistently increasing its annual oil output at a rate of nearly half a million barrels per day — the largest single increment by any country in the world.
Russia and the Central Asian countries can easily continue to increase their oil output at this rate for years to come, and the economic victims of such an increase could be the GCC member states.
With Saudi Arabia as the balancing force for the Organization for Petroleum Exporting Countries (OPEC), which accounts for some 50 percent of the world’s oil reserves, and Russia boasting a further 14 percent, cooperation between the two countries holds the key to oil prices and world economic growth.
As both depend on oil exports as a key source of national revenue — 70 to 80 percent of Saudi Arabia’s overall revenues and between 25 to 30 percent of Russia’s — active collaboration would have substantial economic rewards for both.
Oil is helping Russia to the forefront of world politics once again, and oil will also help Saudi Arabia tidy up its economic problems, stabilize its domestic political scene as a result and keep its importance in international economic circles.
A recent economic study suggests that the Kingdom will earn more from its crude oil sales this year than at any time since 1981 due to higher output and prices.
Saudi Arabia is likely to produce an average of about 8.6 mbpd this year due to the US failure to restore pre-war production levels in Iraq, and the lost production from Venezuela and Nigeria.
With oil prices estimated to average $26 per barrel, Riyadh is expected to earn approximately $85 billion this fiscal year, a bonus of $30 billion that could create a 4.9 percent GDP growth.
Though analysts rule out any possibility of Russia and the Central Asian countries damaging OPEC’s influence in the long run, it is important that the Kingdom guards its influence by forging a healthy alliance with Russia.
An area that could significantly boost bilateral ties is trade.
The volume of trade between the two countries has not exceeded $160 million and Russia has been deprived of any share in Saudi Arabia’s massive foreign investments — the volume of joint venture projects over a decade was just $3 million.
Last year, the volume of trade between Russia and the Arab countries combined was estimated at $5.5 billion, including $2 billion with Iraq, but trade with Saudi Arabia amounted to just $120 million and Russian investment about 0.003 percent of what the Kingdom has attracted.
Now Russian companies hope for a bigger stake in Saudi oil and gas projects, and even aspire to enter into joint ventures with Saudi companies abroad.
Refining crude oil and selling oil products in the former Soviet republics and East European countries is one sector that could prove lucrative to both.
In a recent statement, the chairman of the Oil and Gas Industrial Union of Russia, Yuriy Shafranik, said there were good prospects for mutually beneficial cooperation between the two countries, especially in the oil and gas sectors.
Russian oil giant Gasprom wants to take part in the Kingdom’s gas initiative program.
The two countries are expected to sign a landmark energy accord during Prince Abdullah’s visit.
And, as emphasized by the GCC conference in Jeddah this year, there is ample scope for joint investments in basic industries such as petrochemicals, oil refining, energy services, gas industry, minerals, food, medicine, electricity and water.
The Iraq, Iran and Palestinian-Israeli crises would top the political agenda during Prince Abdullah’s meeting with President Vladimir Putin, the two governments are also scheduled to sign a number of conventions in the economic, scientific and educational fields.
But in the midst of these shared economic concerns lies an irritant. While some analysts suggest that Saudi oil policies held the bilateral ties hostage in the past, others allege that organizations like Al-Qaeda are now driving a wedge through support for Chechen militants.
If the tide of Islamophobia continues in Russia — which has some 23 million indigenous Muslims in the federation, with seven of its states home to Islamic majorities — Muslims face the risk of becoming further alienated.
Far from solving Russia’s separatist problems, this phobia has the potential of making matters much worse.
In the midst of the US-led “war on terror” setting aside differences and forging new ties will be in the best interest of both countries.
Better relations with Saudi Arabia will also allow Russia to enhance ties with other Gulf countries.
After the collapse of the Iraqi regime, Russia’s position in the region has weakened considerably — Russian companies had a direct interest in one-third of Iraqi oil and gas production.
As Washington holds the reins of the Palestinian-Israeli peace initiative and the departure of US troops out of Saudi Arabia, initial success of Saudi-Russian cooperation could be expanded to include the defense sphere as well.
During 1983-1990, the Soviet Union exported $55 billion worth of arms and military vehicles to Arab countries — Iraq had the largest share of $24 billion, Syria shared $11 billion and Libya $7 billion. After a decade-long lull, Russia re-entered the Middle East arms trade in 2002 after the Almaz Science and Production Association began negotiating a $4 billion deal with the United Arab Emirates for the development of a customized fifth-generation integrated multi-layer air defense system.
With the GCC making a collective effort to secure an anti-ballistic missile system, other Gulf countries may follow suit at the individual level too.
All the possibilities of ending an era of Saudi-Russian discontent and heralding a period of collaboration are, however, contingent on the role of a third country — the United States. It is likely that the new alliance will evolve only in a fashion that Washington deems fit so it can protect its interest in the region and its world hegemony.
— Abdulaziz Sager is a Saudi economic researcher and the chairman of the Gulf Research Center based in Dubai.
- Arab News Opinion 3 September 2003
