King Salman Goes to Southeast Asia

L
ast week, Saudi Arabia’s King Salman bin Abdulaziz Al Saud kicked off a month-long tour in Asia in a bid to win over one of the fastest growing regions in the world. Responding to the steady decline of American influence in the Middle East, the scrapping of the Trans-Pacific Partnership, and China’s expanding clout, Saudi Arabia has been hedging its bets over the past few months by deepening its commercial and political relationships with countries like the United Kingdom and Japan.

Over the long term, this makes it more likely Riyadh will turn away from its traditional relationship with Washington and build new partnerships with Asia’s emerging powers, but given Beijing’s stance on hot-button issues like Syria, this new set of alliances are likely to pose an entirely different array of geopolitical challenges.

King Salman’s timing for the trip to Asia is not coincidental. His kingdom’s economy is wrestling with deflation, falling oil prices and growing budget deficits. In response, the country has unveiled Vision 2030, a plan to diversity its economy (which is heavily reliant on revenues from oil) and attract foreign investment. Fully realizing those ambitions – which many analysts have taken with a grain of salt – won’t be possible without Asian investors on board. East Asia is already Saudi’s biggest energy market and the one with the greatest potential for growth.

The king’s tour of the region has already been accompanied by new agreements. Last week, the Saudis sealed two major deals in Malaysia and Indonesia: national oil champion Aramco signed a $7 billion agreement with Malaysia’s PETRONAS on Tuesday and concluded a $6 billion deal for a range of refinery projects with Indonesia’s PT Pertamina the day after. Salman’s delegation will be looking for even more significant deals in Japan and China, where he is due to touch down later this month.

The Saudi king is expected to arrive in China after the end of the annual parliamentary session in Beijing on March 15th. Trade between the two countries has grown from roughly $1 billion in 1990 to more than $70 billion in 2013, surpassing Saudi-US trade. In early 2016, President Xi Jinping traveled to Riyadh as part of his first official visit to the Middle East since he came into office in 2013. During his stay, the two countries agreed to create a more comprehensive strategic partnership that would include collaboration in the economic, political, and security fields. More recently, in August, Riyadh signed 15 preliminary agreements with Beijing, covering projects ranging from oil storage to housing construction. The deals were sealed during a high-profile visit by Deputy Crown Prince Mohammed bin Salman – the monarch’s son and the power behind the throne overseeing Vision 2030.

Although plenty of commercial opportunities await in China, Beijing’s other foreign policy objectives have left it at loggerheads with the Saudis. While it’s true that China has taken a utilitarian approach to the Middle Eastern monarchies by sweeping human rights concerns under the rug, Beijing has nonetheless vexed Gulf states by aligning itself with Iran in Syria. From a Saudi point of view, this position is far more egregious than any perceived American missteps, even former president Obama’s refusal to enforce the “red line” he drew on Bashar al-Assad’s use of chemical weapons. Saudi Arabia is one of the primary actors backing the Syrian opposition, and China’s positioning on the conflict is sure to be a sore spot.

In reality, Saudi Arabia’s pivot away from the US and toward China is far from clear-cut. The crux of the matter is that Western support remains invaluable for Saudi Arabia, regardless of the potential opportunities that exist in the Asia-Pacific. Despite increased tensions between Riyadh and Washington, the bedrock of their partnership – oil for security – is expected to remain intact for some years to come. Nor are the Americans the only Western partner the Saudis rely on: by opening a new Royal Navy base in Bahrain and spelling out their support for the Gulf Cooperation Council (GCC) against Iranian security threats, the UK has reversed its longstanding “east of Suez” policy and reinvested itself in the stability of the Persian Gulf.

Prime Minister Theresa May’s participation in the GCC summit last December culminated in a number of deals to strengthen security and trade ties with Saudi Arabia and its neighbors. After the summit, May said the UK would invest more than £3 billion in defense spending in the region over the next decade, in part to help counter Iran’s influence. Nor is Britain’s renewed commitment to regional affairs purely focused on matters of defense: the two sides also outlined plans to further boost trade between Britain and the GCC, which totaled £30 billion in 2015. May’s visit came in the context of the UK’s drive to solidify existing trade ties and build new ones ahead of Brexit, and her commercial diplomacy happens to dovetail especially well with Riyadh’s push to diversify its own economy.

All of these developments, from Salman’s travels to Theresa May’s GCC outreach, are part of a fundamental restructuring of regional alliances that date back to the Cold War. With American influence and interest in the Middle East waning, it’s in Asia that Riyadh will find the investors and business partners it needs to survive in a post-oil world. The Saudis will need to decide whether they are willing to hold their nose faced with Beijing’s comparatively close ties with Syria and Iran, even if the reward is continued economic viability.

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