Saudi Arabia, Russia coordinate positions
    International events on Caliber.Az

    ANALYTICS  10 December 2023 - 13:15

    Mikhail Shereshevskiy

    Russian President Vladimir Putin's visit to the UAE and Saudi Arabia has attracted international media outlets’ attention. What goals did the Kremlin pursue? Why are these meetings important for the Saudi leadership and the Emirati authorities?

    The media outlets disseminate cautious comments that the sides discussed the continuation of investment cooperation, the situation in the energy market and cooperation in OPEC+. However, important events are hidden behind these vague discussions.

    First, the Kremlin needs to demonstrate that it is not in international isolation. According to Forbes, “after the International Criminal Court (ICC) in The Hague issued an arrest warrant for President Putin in March 2023, any foreign trip of the Russian president becomes an event”. The Russian leader's lavish meeting and talks with the leaders of the two most powerful and richest Gulf Arab states should highlight the Kremlin's international significance.

    Secondly, the aspect related to energy is also important. The agreements were reached between Russia and Saudi Arabia before the visit to reduce oil production. These deals have been agreed upon with OPEC+ countries. Saudi Arabia will continue reducing supplies by one million barrels per day in early 2024, while Russia will reduce export by 200,000 barrels per day. Such transactions bring the sides profit worth billions of dollars. However, these agreements create a problem for their participants. The high cost of oil enriches the US oil companies, including those involved in the development of shale oil (66 per cent of the US market). Having received additional financial support thanks to high prices, high-tech US shale companies are increasing investments in new technologies, thereby reducing their costs and increasing production. This factor increases competition in the oil market and potentially threatens US and Gulf producers.

    There is another aspect of the energy cooperation. The UAE and Saudi Arabia buy Russian oil at a price with big discounts and then resell it and gain a huge profit. Crude oil purchased at a discount is re-exported, undermining Western anti-Russian sanctions. Although Russia is losing billions of dollars due to sanctions, it is demonstrating the humiliation of the West, which is currently unable to stop its oil export.

    Thirdly, the UAE and, in the future, perhaps Saudi Arabia, are important for Russia as a convenient platform for investors and for circumventing Western sanctions. Russia's trade turnover with the UAE increased by 68 per cent in 2022, reaching $9 billion, and continues increasing rapidly. Like Türkiye, the UAE are becoming a safe country for Russia’s capital in its attempt to avoid sanctions, a platform for various financial and trade transactions. Moreover, the UAE is a major investor in the Russian economy. The investments in the non-oil sector have grown by 103 per cent over the past year. Trade turnover with Saudi Arabia is rather less, reaching only about $1.5 billion.

    As for Saudi Arabia and UAE, besides economic benefits, cooperation with Russia gives them additional political advantages. Both countries repeat the foreign policy of Turkish President Recep Tayyip Erdogan, pursuing a balanced policy.

    US President Joe Biden has repeatedly verbally attacked Saudi Arabia's de facto leader, Prince Mohamed bin Salman, accusing him of killing opposition journalist Jamal Khashoggi and threatening to cut off supply of weapons. The US also imposed sanctions on Türkiye after it acquired Russian S-400 missile systems, removing it from the F-35 fighter jet production and acquisition programme.

    However, Ankara's rapprochement with Moscow, including the growing economic partnership (trade turnover between Türkiye and Russia has increased by more than twofold over the past two years, amounting to $70 billion), has forced Washington to correct its policy, and today the US is discussing the supply of other new aircraft to Türkiye - F-16 Block 70\72.

    The rapprochement of Saudi Arabia and the UAE with the US geopolitical opponents, namely, Russia and China, forced the Biden administration to change its attitude. When Saudi Arabia began to strengthen its economic partnership with Moscow, it refused to comply with the US demand to increase oil production, because it was not interested in reducing its cost. Moreover, Riyadh restored diplomatic relations with the US's enemy - Iran through China’s mediation.

    Then the US attitude changed. Now Washington is offering Riyadh a huge deal that includes bilateral diplomatic recognition of Saudi Arabia and Israel through the US mediation, the creation, with US help, of new transport infrastructure (ports and railways) worth $17 billion that will connect Saudi Arabia, the UAE and Israel and, simultaneously with India and the EU, supplies of the latest weapons and assistance in the development of civil nuclear energy.

    Therefore, Saudi Arabia and the UAE will continue pursuing their multi-vector policy. Amid rivalry among the countries, it is possible to say to their rulers “we are ready to be friends with you, but if you put pressure on us, we will come up with similar proposals to your competitors. Therefore, be extremely polite and careful with us, take our interests into account”.


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