JEDDAH, 5 February 2003 — The Russians are coming. Not Russian tanks, but Russian businessmen, Russian companies, Russian products and Russian technology.
It is all a far cry from the old Cold War days when an impenetrable ideological wall kept the world’s two biggest oil producers firmly apart. The wall started to crumble with the fall of Communism, but even then issues like Chechnya kept them apart.
The ice finally started to break with the visit of Foreign Minister Prince Saud Al-Faisal to Moscow last April. Russian and Saudi views on a wide range of international issues are now close, and on the Middle East are virtually identical. Russia has endorsed Crown Prince Abdullah’s Middle East peace proposals and, more recently, both have said that an Iraq war should be avoided.
Perhaps the most important outcome of Prince Saud’s visit was a Saudi-Russian intergovernmental commission for technical, scientific and cultural cooperation. The commission held its first meeting in Moscow last October, led on the Saudi side by the Minister of Finance & Economy Ibrahim Al-Assaf and for the Russians by Energy Minister Igor Yusufov. It resulted in an agreement proposing a program of economic and technical cooperation, in particular on energy, telecommunications and construction. At the meeting Yusufov singled out the Gas Initiative. Russia’s gas giant, Gazprom — the largest gas company in the world — ought to be part of it, he said at the time.
Last month, the advance party arrived. Accompanying Yevgeny Primakov, the former Russian prime minister who was the star speaker at this year’s Jeddah Economic Forum, was the largest, most high-powered Russian business delegation ever to visit the Kingdom. It included captains of finance, the oil and gas industry, construction, mining, agribusiness and other leading Russian companies. By coincidence, Saudi Arabia’s top businessman, Prince Alwaleed ibn Talal, was in Moscow at the same time looking at investment opportunities there.
Georgy Petrov, vice president of the Russian Chamber of Commerce & Industry, told Arab News that the delegation aimed to make contacts and spot opportunities. It first met with a team from Jeddah’s Chamber of Commerce and then, before flying off to Dammam to meet with Saudi Aramco, met with a group representing all the GCC chambers of commerce.
One Russian company with an obvious interest in the Gas Initiative is Stroytransgaz, Russia’s leading pipeline construction company. Although no newcomer to the Middle East — it is building an oil pipeline in Algeria and last month signed a deal to develop Block Four in Iraq’s western desert once UN sanctions are finally lifted — it has never been involved in the Gulf region. Six months ago, however, it decided to explore opportunities in Saudi Arabia.
“We want to get involved in the Gas Initiative,” Stroytransgaz’s business promotion manager, Konstantin Dudarev, told Arab News. A memorandum of understanding was signed in October with Saudi Oger, one of the Kingdom’s largest construction companies, and in November the two were in Dammam for talks with Saudi Aramco.
Documentation has now been submitted for registration with Aramco, a similar application will be submitted to the Saudi Arabian General Investment Authority (SAGIA) and a consortium, Stroystransgaz-Saudi Oger, will be unveiled this month.
“We intend to work here,” he told Arab News.
There is also talk that Baltic Construction Company, one of Russia’s largest civil and industrial contractors, is about to win a contract here for a desalination plant.
What makes the big difference, the Russians say, is that there is now an economic as well as a political will to do business with them.
“The Saudi attitude to Russia has changed,” says Dudarev.
There is, however, still a long way to go. Saudi exports to Russia in 2001 were worth a paltry SR7 million, and Russian imports no more than SR384 million. But Saudi business is clearly now interested in Russian technology, and in becoming less reliant on Western companies.
Petrov and Dudarev point out that thanks to years of involvement in Algeria, Egypt, Syria and Iraq, Russian businessman are more likely than their Western counterparts to speak Arabic.
“Russia would like our relations with Saudi Arabia to grow at the expense of the Americans,” Petrov said with a wry smile.
