It seemed to be the beginning of a new era. In July, Mohammed Bin Salman (MbS), the Crown Prince of Saudi Arabia, received US President Joe Biden. They bumped their fists together – almost like two old friends – in front of the Al-Salam Palace in the port city of Jeddah. It was considered a symbol: it stood, as many believed at the time, for an end to the tensions between the two nations, for a new beginning.
The gesture was controversial. Finally, Western intelligence services suspect that Bin Salman had journalist Jamal Khashoggi, a columnist critical of the regime for the Washington Post, murdered. But Biden seemed ready to let the matter rest.
The US President had a different concern that day: he wanted to convince the Crown Prince to produce more oil. Because that, according to his calculations, should lower gasoline prices at home in America – and improve the chances of his Democrats in the congressional elections in November.
Now, around three months later, Biden’s fist-bump diplomacy has failed. The Opec Plus cartel, led by Saudi Arabia, announced this week that it would produce less oil instead of more oil.
The German Chancellor Olaf Scholz gave a wry smile when he shook hands with Crown Prince Mohammed bin Salman in Jeddah. That was probably less due to the scorching heat in the city on the Red Sea than to the signal sent out by the Chancellor’s visit. “These are difficult partners that we meet there,” said Scholz in the run-up to his trip. “Nevertheless, we cannot turn a blind eye to working together.”
The German government continued to try to put the Saudi crown prince in a friendly mood. Although all arms exports to the country have been stopped since the Kashoggi murder in 2018, Scholz approved the delivery of equipment and ammunition for fighter jets worth 36 million euros.
A decision that Foreign Minister Annalena Baerbock (Greens) called “extremely difficult”, but ultimately supported it. But turning away from one’s own values was in vain. Emmanuel Macron and Boris Johnson also jumped over the shadow of their own values and traveled to the Gulf. But now they have failed on both levels.
The Organization of Petroleum Exporting Countries and its allies (Opec Plus), led by Saudi Arabia, decided to cut oil production, which pushed up the price. Production is to fall by two million barrels a day. There hasn’t been a cut like this in years. It is a disaster for the US and their European partners – and a triumph for Russian President Vladimir Putin.
The Opec Plus is a group of 23 petrostates. It meets regularly in Vienna to decide how much oil should flow onto the world market – and thus influences energy prices around the world. The heart of the alliance are the 13 members of OPEC. In 2016, they joined forces with ten other sponsors, one of which is Russia.
Why is Opec Plus cutting production now? The group said it was a purely economic decision, ensuring that the price of oil does not fall further. A barrel currently costs around $90, around $30 less than in spring.
Russia is not an OPEC member. But the coordination between the Saudi decision-makers in Riyadh and the Moscow Kremlin in matters of oil has been so close for years that there is now talk of an Opec Plus. The truth is that Russia has been expanding its influence in the Middle East for years – and in the process is drawing traditional Western allies to its side.
That doesn’t mean that Putin has already won in the desert. But Europe and the US will have to work harder if they want to maintain their influence. Because even greater challenges are on the horizon.
There are emotional and very practical reasons for Putin’s rise to power in the desert. The practical ones also have to do with oil. The Arab petrostates have the same interest in high prices as the Russians. The latter have hardly any other sources of income, the former want to take what is still possible before the fossil fuel is used up in a few decades.
The market mechanism that has already brought the Soviet Union to its knees should serve as a means: In 1986, at the urging of the US, Saudi Arabia increased its oil production fivefold. The global price of the commodity then plummeted by two-thirds, costing the Kremlin 7.5 percent of its annual income. This contributed significantly to the bankruptcy of the country.
In addition to the geopolitical advantages of increased oil production, this would also relieve western consumers. Joe Biden in particular is dependent on this for domestic political reasons. Gasoline prices have recently fallen in the US, which also led to an upswing in the polls for the Democrats. In a month the important midterm elections will take place, which will decide the majorities in Congress.
For the German leader, too, the solution to the domestic energy crisis was the justification for the trip to Saudi Arabia. They want to develop a closer energy partnership with the country, it said. In the future, hydrogen should come from the Arabian Peninsula to Germany. Eleven top managers accompanied the Chancellor on his trip to Saudi Arabia, including the heads of Airbus, ThyssenKrupp and Siemens Energy.
Last month, the EU agreed on a price cap for Russian oil proposed by the G-7 countries. This is also to be used for sales to third countries, since Russian oil can only be transported by sea if it is bought at a certain price.
Trading companies that do not comply face sanctions. How high the cap is should depend on the market price, which will now rise after the OPEC decision. The US government was correspondingly angry. “It is clear that with this announcement, Opec Plus is allied with Russia,” the White House spokeswoman said.
What could the US administration do? A law called the No Oil Producing and Exporting Cartels Act, or Nopec for short, could become an effective tool against the cartel. It would allow the US Justice Department to sue Opec Plus members for antitrust violations in US courts and, if found guilty, seize their US assets. The Sherman Act of 1890 is to be the basis for this. Irony of history: Sherman once served as the basis for crushing John Rockefeller’s oil empire.
Biden may feel compelled to react quickly. Because little moves the US citizens, a people of frequent drivers and pick-up fans, just as much as the high gas prices. Biden is keen to make gas cheaper ahead of the this month’s elections that will decide who will hold a majority in Congress. America’s car owners, it seems, have a noticeable influence on world politics.
There are also milder measures. Biden has already taken one: He released another ten million barrels from the state oil reserve. It currently comprises around 420 million barrels, with this amount the US could cover its needs for almost a month.
The raw material is stored in Texas and Louisiana, in four former salt domes. The supply is actually intended for wars and natural disasters, as a last resort in times of need. Now Biden is trying to use the reserve to break the power of Opec Plus over oil.
A bill introduced by some Democrats in the House of Representatives would see troops and weapon systems withdrawn from Saudi Arabia and the United Arab Emirates (UAE). Influential US Senators made clear statements on the subject by declaring that the Saudi royal family has “never been a trusted ally of our nation” and that US foreign policy must be reconsidered “without the alliance with these royal traitors”. They also refer to “remaining open questions relating to September 11, 2001”.
And Russian influence in the Gulf region is presently a kind of success story. For some time now, Putin has been enjoying an enormous power gain in the Middle East and especially among the Gulf States, Syria and Iran are among Moscow’s most important allies in the region. Good relations with the Kremlin are therefore essential for Riyadh. The fact that Putin paid a price for his war against Ukraine is of secondary importance to the Saudi royal family – no matter how many favors the West does for him.
One scene between Putin and MbS could serve as dominant example of their relationship, it took place at the G-20 meeting in Buenos Aires in December 2018: Just two months after the assassination of Khashoggi, grinning Putin met the Saudi crown prince and raised his hand for a high five, they patted each other like buddies, as if Putin were congratulating MbS on both’s new role as outsiders – while the other heads of state tried to give the crown prince a wide berth. On the traditional “family portrait” bin Salman is at the very edge.
Putin embodies a type of man and ruler that many Arab leaders can identify with. One still remembers the touched looks of Egyptian President Abdelfattah al-Sisi when Putin presented him an original Kalashnikov AK-47 from Russian production during a visit to Cairo in 2015.
When Putin arrived in Saudi Arabia for a state visit in 2019, he was escorted through the capital Riyadh by a mounted escort on 16 noble steeds. And while the entire Grand Hotel Ritz Carlton had been vacated for US President Donald Trump two years earlier, Putin was given even more: the Russians were given an entire palace belonging to the ruling Al Saud family.
MbS not only seems to like Putin, he is “fascinated by him,” the Guardian quotes a British secret service representative who has spoken extensively with the crown prince about his Russia strategy. In the ruler of the Kremlin, bin Salman sees a more reliable partner he can count on, come what may.
And apparently the Saudi Crown Prince is not alone in his attitude towards Moscow. The influential President of the United Arab Emirates, Mohammed bin Zayed, paid a visit to Putin in St. Petersburg last month. Bin Zayed introduced himself as a possible mediator in the Russian war against Ukraine. In view of the protocol, the tone was friendly and familiar. Mohammed bin Zayed wished Putin a happy birthday, and the Kremlin chief replied with “Shukran”, the Arabic word for thank you. There seems to be a lot right now for which Russia’s rulers seem grateful to the rulers of the Gulf.
Flirting with Russia is primarily a means for Arabs to put pressure on their real main partners – Europe and US, because the West is still clearly superior to the Russians and Chinese, both financially and in terms of military technology. And thus the more important ally.
Oil price policy has never been a 100% indicator of the state of Arab-Western relations because it always involves a large part of the Gulf government budgets. And when it comes to security, the West is largely self-inflicted for its loss of influence.
But beside the Russian influence in the Gulf region, the new big actor China is playing its game, too. This already begun, invisible to the world, 34 years ago: The US Assistant Secretary of State for Near Eastern and South Asian Affairs must have been somewhat dismayed when he arrived at Prince Bandar Bin Sultan’s residence in Washington for political talks back in 1988. “Has Saudi Arabia bought nuclear missiles from China?” was the question the top diplomat asked the Saudi ambassador, later reported by the Washington Post. US intelligence services had just discovered in satellite images that the Chinese had delivered several Dongfeng-3 projectiles to America’s most important Arab allies on adventurous desert routes. The Saudi ambassador tried to placate the American who had turned up at his private home.
The Chinese had modified the warheads of the medium-range missiles in such a way that they could not be used to transport nuclear bombs, Prince Bandar explained. The US diplomat asked whether the Saudis would allow US experts to convince themselves of the non-nuclear orientation of the missiles. The answer: no.
At that time, the US were in the Cold War with Russia and China, and the Saudis were officially part of the western camp. But the US had denied Riyadh better weapons for years, hence the Chinese solution. The kingdom has always known how to use its friends’ sensitivities. This is also evident today. This time in relation to Russia.
The Chinese missiles, the subject of the discussion in 1988, remained invisible to world public opinion for decades. That suddenly changed in 2014, when the potential nuclear missiles from Beijing production drove openly through Riyadh in a big parade.
The presumed reason: It had just become known that Barack Obama’s US administration was negotiating with Iran to end international sanctions against the country in exchange for restrictions on Iran’s nuclear program.
That would be a massive win for Iran, the nemesis of Western allies in the Middle East, along with the Gulf Arabs and Israel. Obama’s successor, Biden, is still trying to save the relevant deal with Iran, even though Tehran already has enough highly enriched uranium to build several nuclear bombs within weeks.
Like Obama, Biden wants to scale back US involvement in the Middle East and focus more on dealing with China. This, in turn, is forcing the West’s Arab allies to look to other security partners. This search should still be understood more as a warning to the West.
But at some point it could also become serious – if the US and Europe withdraw further and the alternative powers are willing and able to become even more involved in the Middle East. Then it will not be structurally weak Russia that could become a competitor for the West, but China.
Despite everything, both sides are aware that they need each other. Saudi Arabia has also become involved as a mediator in Russia’s war against Ukraine – and helped set up an exchange of prisoners of war. It’s one way to calm US resentment. But the more the West suffers economically and the more brutal Putin is at work in Ukraine, the greater the pressure on the kingdom to position itself arises. The Saudi royal family could face an uncomfortable diplomatic winter.
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