The Limits of the Moscow-Riyadh Détente

06.24.17
RIA Novosti
World News /24 Jun 2017
06.24.17

The Limits of the Moscow-Riyadh Détente

The combination of low oil prices, high US output and stagnant demand seems to have brought together one of the most unlikely diplomatic pairings in recent years: Russia and Saudi Arabia. Earlier this month, top officials including Saudi Deputy Crown Prince Mohammed bin Salman and Russian President Vladimir Putin held several meetings in Moscow and St. Petersburg to discuss business deals and joint ventures in Asia and also Middle Eastern political and security matters. These meetings came after Russia and Saudi Arabia played a critical role in extending an agreement to prop up crude oil prices between OPEC and non-OPEC producers.

All of this would have been an unthinkable shift just two years ago when Russia was refusing to cooperate with OPEC and even openly questioned its value. The new collaboration between Moscow and Riyadh has been portrayed in some corners as more than just a shared need to drive up crude prices. Considering how fluid the international order seems to have become, could there be a major shift in relations between the world’s two biggest oil producers?

Probably not.

Shared dependence on oil is hardly a foundation for trust, let alone a budding alliance. In truth, this month’s meetings and the OPEC deal are the exception, not the norm. Fierce Saudi-Russian competition in other key areas and Moscow’s ties with Riyadh’s sworn enemies – above all, Bashar Al-Assad and Iran – have created a complex and understated rivalry between the two nations.

To be sure, there are strong incentives for at least a limited détente between Riyadh and Moscow. American shale has been hammering the economies of Saudi Arabia, Russia, and other key oil producers. For Saudi Arabia in particular, the twin blows of the shale revolution and a failed strategy to exploit a plunge in oil prices forced a major rethink in geopolitical and economic statecraft. The result was a new diplomatic initiative that focused on diversifying commercial ties while re-kindling old relationships and alliances.

Riyadh’s teamwork with Moscow on the latest OPEC deal is one concrete result of this initiative, but the two sides are still in direct competition over key markets. For instance, the competition between both countries to supply China’s voracious appetite for oil is a critical sticking point. The late King Abdullah’s 2006 visit led to a joint venture between Saudi Aramco and China National Petroleum Corporation; since then, the desert kingdom has continuously worked to increase oil sales to China. Most recently, King Salman’s latest visit to Beijing in March produced $65 billion in trade and investment agreements. Saudi Arabia has been courting China, among others, as a possible investor for the upcoming sale of a 5% stake of Saudi Aramco’s $2 trillion worth of shares. That IPO is a major part in the kingdom’s efforts to diversify its economy.

And yet, Saudi Arabia’s efforts to court China haven’t caught up with Russia’s first-mover advantage. Moscow reached out in earnest to Beijing after being hit with Western sanctions over the conflict in Ukraine in 2014. That year, Russia and China signed a 30-year deal worth an estimated $400 billion to supply natural gas to the world’s biggest emerging market.

Russia can claim the upper hand in China, but Saudi Arabia’s commercial diplomacy with traditional allies like the United Kingdom and the United States has produced major successes by any measure. Britain, for one, is in dire need of diversified commercial ties and clarity over its place in the global economy as it prepares to exit the European Union. Theresa May’s government has been pivoting towards Saudi Arabia, its biggest trading partner in the Middle East, as well as the other members of the Gulf Cooperation Council (GCC).

May has made two high-level visits to GCC countries in the past six months, calling repeatedly for expanding bilateral trade and security relationships and even bringing Xavier Rolet of the London Stock Exchange to Riyadh to pitch London as a home for the IPO. Outside of Donald Trump, the Gulf monarchies have been the most reliable outside backers for her Brexit policies.

Theresa May is not the only one who has found an eager partner in Trump. The American president’s visit to Riyadh last month, punctuated by his commitment to joint Saudi and American interests and his enthusiastic backing of a $110 billion arms package, mark a major reversal of fortune for the Saudis. Following a period of tension under the Obama administration, Saudi leadership had been cautiously optimistic about improving relations with his successor. Instead, Trump’s visit to Riyadh offered a ringing endorsement of the US-Saudi alliance. It also offered, in no uncertain terms, American support for the Saudi-led coalition of Sunni Arab states in their regional struggle with Iran. Trump’s address to an assembly of Arab and Muslim leaders focused on the threat of Islamist terrorism, but it also singled out Iran’s long-time backing for many of those groups.

Perhaps more than anything else, it is Russia’s warm relationship with Iran that scuppers any burgeoning friendship with Riyadh. The Sunni-Shia divide has been a longstanding source of tension between Riyadh and Tehran for decades, but it has only worsened since the beginning of the on-going proxy conflicts in Syria, Iraq, and Yemen. Faced with Western sanctions after its takeover of Crimea and invasion of eastern Ukraine, Russian goals have been converging with Iran’s in places like Syria. Between them, Moscow and Tehran are the twin pillars propping up the Assad regime in Damascus – putting Vladimir Putin’s Middle East policy in direct conflict with Saudi Arabia’s. Such convergence has culminated in recent bilateral arms deals worth up to $10 billion, as Iran seeks to modernize its military following the lifting of some of its own Western-imposed sanctions.

Those differences rule out any real “détente,” but economic imperatives ultimately won out to produce the OPEC deal. As long as Saudi and Russian shared interests in maintaining oil prices persist, the two will carry on with their apparent courtship…all while continuing more underhanded efforts to subvert one another.

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