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Turkish financial crisis adds to region’s chaos

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More than coincidence accounts for the visit to Iran by Turkish Prime Minister Recep Tayyip Erdogan on January 28, the same day that his economic policy collapsed in a most humiliating way.

As the Turkish lira collapsed to levels that threatened to bankrupt many Turkish companies, the country’s central bank raised interest rates, ignoring Erdogan’s longstanding pledge to keep interest rates low and his almost-daily denunciation of an “interest rate lobby” that sought to bring down the Turkish economy. Erdogan’s prestige was founded on Turkey’s supposed economic miracle.

Hailed as”the next superpower” by John Feffer of the Institute for Policy Studies, and as “Europe’s BRIC” by The Economist, Turkey has become the Sick Man of the Middle East. It now appears as a stock character in the comic-opera of Third World economics: a corrupt dictatorship that bought popularity through debt accumulation and cronyism, and now is suffering the same kind of economic hangover that hit Latin America during the 1980s.

That is not how Erdogan sees the matter, to be sure: for months he has denounced the “interest rate lobby”. Writes the Hurriyet Daily News columnist Emre Deliveli, “He did not specify who the members of this lobby were, so I had to resort to pro-government newspapers. According to articles in a daily owned by the conglomerate where the PM’s son-in-law is CEO, the lobby is a coalition of Jewish financiers associated with both Opus Dei and Illuminati. It seems the two sworn enemies have put aside their differences to ruin Turkey.”

US President Barack Obama told an interviewer in 2012 that Erdogan was one of his five closest overseas friends, on par with the leaders of Britain, Germany, South Korea and India. Full disclosure: as the Jewish banker who has been most aggressive in forecasting Turkey’s crisis during the past two years, I have had no contact with Opus Dei on this matter, much less the mythical Illuminati.

Erdogan was always a loose cannon. Now he has become unmoored. Paranoia is endemic in Turkish politics because so much of it is founded on conspiracy. The expression “paranoid Turk” is a pleonasm. Islamist followers of the self-styled prophet Fetullah Gulen infiltrated the security services and helped Erdogan jail some of the country’s top military commanders on dubious allegations of a coup plot. Last August a Turkish court sentenced some 275 alleged members of the “Ergenekon” coup plot, including dozens of military officers, journalists, and secular leaders of civil society.

Now Gulen has broken with Erdogan and his security apparatus has uncovered massive documentation of corruption in the Erdogan administration. Erdogan is firing police and security officials as fast as they arrest his cronies.

There is a world difference, though, between a prosperous paranoid and an impecunious one. Turkey cannot fund its enormous current borrowing needs without offering interest rates so high that they will pop the construction-and-consumer bubble that masqueraded for a Turkish economic miracle during the past few years.

The conspiracy of international bankers, Opus Dei and Illuminati that rages in Erdogan’s Anatolian imagination has triumphed, and the aggrieved prime minister will not go quietly. As Erdogan abhors old allies who in his imagined betrayed him and seeks new ones, the situation will get worse.

One of the worst ideas that ever occurred to Western planners was the hope that Turkey would provide a pillar of stability in an otherwise chaotic region, a prosperous Muslim democracy that would set an example to anti-authoritarian movements. The opposite has occurred: Erdogan’s Turkey is not a source of stability but a spoiler allied to the most destructive and anti-Western forces in the region.

It seems unlikely that the central bank’s belated rate increase will forestall further devaluation of the lira. With inflation at 7.4% and rising, the central bank’s 10% reference rate offers only a modest premium above the inflation rate. About two-fifths of Turkey’s corporate debt is denominated in foreign currency, and the lira’s decline translates into higher debt service costs. Turkey is likely to get the worst of both worlds, namely higher local interest rate and a weaker currency.

Now Erdogan’s Cave of Wonders has sunk back into the sand. Few analysts asked how Turkey managed to sustain a current account deficit that ranged between 8% and 10% of gross domestic product during the past three years, as bad as the Greek deficit during the years before its financial collapse in 2011.

The likely answer is that Turkey drew on vast amounts of credit from Saudi and other Gulf state banks, with strategic as well as financial motives. Data from the Bank for International Settlements show that Turkey financed a large part of its enormous deficit through the interbank market, that is, through short-term loans to Turkish banks from other banks.

Western banks report no such exposure to Turkey; the Gulf banks do not report regional exposure, and anecdotal evidence suggests that Sunni solidarity had something to do with the Gulf states’ willingness to take on Turkish exposure.

Relations between Turkey and the Gulf States are now in shambles. Saudi Arabia abhors the Muslim Brotherhood, which wants to replace the old Arab monarchies with Islamist regimes founded on modern totalitarian parties, while Erdogan embraced the Brotherhood. The Saudis are the main source of financial support for Egypt’s military government, while Ankara has denounced the military’s suppression of the Muslim Brotherhood.

Whether the Gulf States simply ran out of patience or resources to support Erdogan’s credit binge, or whether their displeasure at Turkey’s misbehavior persuaded them to withdraw support, is hard to discern. Both factors probably were at work. In either case, Erdogan’s rancor at Saudi Arabia has brought him closer to Teheran.

Turkey should have restricted credit growth and raised interest rates to reduce its current account deficit while it still had time. Erdogan, though, did the opposite: Turkish banks increased their rate of lending while reducing interest rates to businesses and consumers.

Given the country’s enormous current account deficit, this constituted irresponsibility in the extreme. Erdogan evidently thought that his mandate depended on cheap and abundant credit. The credit bubble fed construction, where employment nearly doubled between 2009 and 2013. Construction jobs increased through 2013, after manufacturing and retail employment already had begun to shrink.

I predicted the end of Erdogan’s supposed economic miracle in the Winter 2012 edition of Middle East Quarterly, comparing Erdogan’s boomlet to the Latin American blowouts of the 1990s:

In some respects, Erdogan’s bubble recalls the experiences of Argentina in 2000 and Mexico in 1994 where surging external debt produced short-lived bubbles of prosperity, followed by currency devaluations and deep slumps. Both Latin American governments bought popularity by providing cheap consumer credit as did Erdogan in the months leading up to the June 2011 national election. Argentina defaulted on its $132 billion public debt, and its economy contracted by 10 percent in real terms in 2002. Mexico ran a current account deficit equal to 8 percent of GDP in 1993, framing the 1994 peso devaluation and a subsequent 10 percent decline in consumption.

In the meantime, Turkey has entered a perfect storm. As its currency plunges, import costs soar, which means that a current account of 8% of GDP will shortly turn into 10% to 12% of GDP – unless the country stops importing, which means a drastic fall in economic activity. As its currency falls, its cost of borrowing jumps, which means that the cost of servicing existing debt will compound its current financing requirements. The only cure for Erdogan’s debt addiction, to borrow a phrase, is cold turkey.

The vicious cycle will end when valuations are sufficiently low and the government is sufficiently cooperative to sell assets at low prices to foreign investors, and when Turkish workers accept lower wages to produce products for export.

One might envision a viable economic future for Turkey as the terminus on the “New Silk Road” that China proposes to build across Central Asia, with high-speed rail stretching from Beijing to Istanbul. Chinese manufacturers might ship container loads of components to Turkey for assembly and transshipment to the European and Middle Eastern markets, and European as well as Asian firms might build better factors in Turkey for export to China. Contrary to conventional wisdom, Turkey’s path to Europe lies not through Brussels but through Beijing.

That is Turkey’s future, but as the old joke goes, it can’t get there from here.

Turkey has a small but highly competent professional class trained at a handful of good universities, but the Erdogan regime – the so-called “Anatolian tigers” – have disenfranchised them in favor of Third World corruption and cronyism. The secular parties that bear the faded inheritance of Kemal Ataturk lack credibility. They are tainted by years of dirty war against the Kurds, of collusion with military repression, and their own proclivity towards a paranoid form of nationalism.

Erdogan’s AKP is a patronage organization that has run out of cash and credit, and its fate is unclear. The highly influential Gulen organization has a big voice, including the Zaman media chain, but no political network on the ground.

No replacement for Erdogan stands in the wings, and the embattled prime minister will flail in all directions until the local elections on March 30.

The last thing to expect from Erdogan is a coherent policy response. On the contrary, the former Anatolian villager thrives on contradiction, the better to keep his adversaries guessing.

Turkish policy has flailed in every direction during recent weeks. Erdogan’s Iran visit reportedly focused on Syria, where Turkey has been engaged in a proxy war with Iran’s ally Basher al-Assad. Ankara’s support for Syrian rebels dominated by al-Qaeda jihadists appears to have increased; in early January Turkish police stopped a Turkish truck headed for Syria, and Turkish intelligence agents seized it from the police. Allegedly the truck contained weapons sent by the IHH Foundation, the same group that sent the Mavi Marmara to Gaza in 2010. The Turkish opposition claims that the regime is backing al-Qaeda in Syria. One can only imagine what Erdogan discussed with his Iranian hosts.

Some 4,500 Turks reportedly are fighting alongside 14,000 Chechnyans and a total of 75,000 foreign fighters on the al-Qaeda side in Syria. Ankara’s generosity to the Syrian jihadists is a threat to Russia, which has to contend with terrorists from the Caucasus, as well as Azerbaijan, where terrorists are infiltrating through Turkish territory from Syria. Russia’s generally cordial relations with Turkey were premised on Turkish help in suppressing Muslim terrorism in the Caucasus. There is a substantial Chechnyan Diaspora in Turkey, aided by Turkish Islamists, and Moscow has remonstrated with Turkey on occasion about its tolerance or even encouragement of Caucasian terrorists.

I doubt that Erdogan has any grand plan in the back of his mind. On the contrary: having attempted to manipulate everyone in the region, he has no friends left. But he is in a tight spot, and in full paranoid fury about perceived plots against him. The likelihood is that he will lean increasingly on his own hard core, that is, the most extreme elements in his own movement.

Erdogan has been in what might be called a pre-apocalyptic mood for some time. The long term has looked grim for some time, on demographic grounds: a generation from now, half of all military-age men in Turkey will hail from homes where Kurdish is the first language. “If we continue the existing [fertility] trend, 2038 will mark disaster for us,” he warned in a May 10, 2010, speech reported by the Daily Zaman.

But disaster already has arrived. In some ways Turkey’s decline is more dangerous than the Syrian civil war, or the low-intensity civil conflict in Iraq or Egypt. Turkey held the North Atlantic Treaty Organization’s eastern flank for more than six decades, and all parties in the region – including Russia – counted on Turkey to help maintain regional stability. Turkey no longer contributes to crisis management. It is another crisis to be managed.

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Turkey in the Kurdish Rojava

Giancarlo Elia Valori

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Since the beginning of clashes in Syria, Turkey has aimed at  annexing the left bank of the Euphrates up to Mossul, a strip of land about 500 kilometers long and 30 kilometers wide – an area which is large enough to accommodate the 3.6 million Syrian refugees who have entered Turkey since the beginning of the hostilities against Bashar el Assad.

 The above mentioned area between the Kurdish Rojava and Turkey was established by the latter, in agreement with the United States, in August 2019.

It is the area that was invaded a few days ago.

Since the beginning of the clashes in Syria, the United States has wanted the Turkish Armed Forces to be targeted directly against President Assad’s forces, so as to lead either to a splitting of Syria or to the creation of a new regime, open to US and Western influences.

President Erdogan, however, has never agreed to do all the “dirty” work against Assad’ Shiites on his own. He has always asked for the direct and equal support of the US forces.

Here the US and its allies’ operations in Syria have essentially stopped.

 The United States has quickly responded to this substantial refusal of Turkey to do the US work in Syria, by involving the Kurds and organizing a Force uniting the YPG Kurds and the Syrian Democratic Forces. It has done so with a military mechanism that – in principle-oversees mainly the areas already bombed by the US Air Force and by the coalition that supported the US dual struggle against Assad and the jihadists of the “Caliphate”.

In any case, however, Turkey does not want any Kurdish organization to monitor the borders between Turkey and Syria.

Hence, this is the dilemma. Turkey has already penetrated the Rojava area on the border with its country, while the Kurds –  be they from the PKK or the YPG, two often overlapping organizations – try to ally precisely with Assad, while there is also the concrete possibility of a further Iranian penetration between Mossul and the Southern area of the Kurdish Rojava.

 Turkey will also use its Syrian alliances, such as those of the Syrian Interim Government, to unite them with the Syrian National Army, which operates in the region north of Aleppo, and with the National Liberation Front stationed in Idlib.

 It should also be noted that President Erdogan knows the real reason for the recent electoral defeat of his AKP Party. Obviously Turkish voters are worried about the economic crisis and the monetary tensions on the Turkish lira, but they are mainly terrified of the pressure that the 3.6 million Syrian refugees on the ground put on the whole Turkish economic and social system.

 This is another political prospect for President Erdogan, namely becoming the protector – so to speak – of all Sunnis.

 In addition to the pan-Turkish project in Central Asia, President Erdogan knows that militarily Saudi Arabia is a giant with clay feet, while Egypt is unable to project itself onto Central Asia and the Islamic Republic of Iran is finally focused on its pan-Shiite project, with an inward-looking attitude.

 For some time now, the Turkish police has been monitoring and arresting a large number of Syrian, Christian or Shiite immigrants, while some leaders of the Syrian community have already been deported to Idlib.

It should also be recalled that the economic and financial effort to build at least 200,000 houses and services in the currently occupied Rojava area, mostly with non-Turkish funds, would be a major boost for the entire Turkish economy, which has long been floundering in a deep crisis.

Clearly, the inclusion of at least 3 million Syrians onto the Kurdish Rojava’s border with Turkey would greatly change the ethnic complexion of the area but, in the future, also of the whole Kurdish Rojava, with obvious positive effects for Turkey.

But there is also the other side of the coin, since there would be an increase of tensions between the Arab world, to which most Syrians belong, and the Kurdish and non-Arab universe that is alien to most of the political, religious and cultural traditions of the Shiite or Sunni Islam.

It should be recalled, however, that this has been the third Turkish penetration into the Kurdish Rojava since 2016.

As far as we can currently see, Turkey’s entry into the Kurdish country is limited to the “Kurdish canton” of Hasakah- Kobanè- Qarmishli.

The rest of the Turkish operation will obviously be calibrated on international reactions, especially of the countries directly concerned by Syria.

 The Kurds, however, with their structure of Syrian Democratic Forces, have been among the few real winners of the war in Syria.

 This has enabled them to stabilize the internal political structures and the borders of the Kurdish country, although no Kurdish leader has ever spoken of true independence of Rojava, but only of autonomy.

 Therefore, the Kurds’ optimal strategic equation depends on the US presence in the East and North-East of their area.

Otherwise- as indeed happened – Turkey would take the whole strip of land at the border.

 For the time being, the focus of Turkish operations goes from Ras Al Ain to Tell Abyad, in a span of about 100 kilometers.

As far as we know, in Tall Abyad, the Turkish penetration has been stopped by the Kurdish forces.

 This is an area, however, with a very high number of Arabs, that Turkey has already penetrated with its intelligence Services and its organizations.

 If the Kurds wanted to keep the territory already invaded by Turkey, there would be very hard clashes and it is not certain that they could win.

Pending the Turkish invasion, the Russian Federation has declared that Turkey has every right to defend its borders, but it has also added that the Syrian state and territorial unity needs to be preserved.

 Moreover, the invaded area is not yet under Assad government’s control, but the presence of the Turkish Armed Forces would trigger instability also for Syria, considering that the Kurds of Rojava were (and are) much more friendly with Assad than with the Turkish regime, which has often declared its intention to eliminate Assad’s power system.

 There were also massive gold acquisitions by the Turkish Central Bank immediately before the invasion of Rojava.

 From January to August 2019, Turkey’s gold reserves reached 362.5 tons (+109), for a total value of about 17.9 billion euros.

Obviously, the fear of sanctions and the concern for national security have currently pushed Turkey to become one of the world’s largest gold buyers.

 The above mentioned militiamen linked to the Turkish army are already 7,000, while the Kurdish ones operating in the area are at least 35,000, in addition to the 15,000 soldiers of Asaysh, the internal Kurdish security and intelligence organization.

 Too many, and too well trained, not to be a very tough nut to crack also for the Turkish Armed Forces.

The United States – apart from the troops already withdrawn – still have 1,500 soldiers in the area, including special forces, military advisers and Marines – not at the border, but within the area of Rojava, on the border with Turkey and Iraq.

 The US bases still operational in the area are ten, plus three aerial installations that allow to operate with transport vehicles, drones and helicopters.

Not to mention the French and British special forces that continue to operate in the area.

The operational assumptions are the following: President Assad could permit Turkey to take Rojava, in exchange for Syria’s green light on Idlib, still largely in the hands of the various forms of  sword jihad.

Needless to say, the oil resources of the area are still in Kurdish hands and that both Assad and the other countries of the region want to quickly put their hands on it.

In President Erdogan’ strategic equation the energy problem is not secondary at all.

 In Syria, in the Persian Gulf and -as we will see -also in Libya.

 The Turkish ship Yavuz will shortly leave for Cyprus to drill the seabed.

 The Northern Cyprus State, a direct emanation of Turkey, blocks any autonomous economic action by Cyprus and the Turkish Navy has sealed the Exclusive Economic Zone of Cyprus.

 Three large energy companies are interested in Cyprus’ natural gas, namely ENI, Total and Exxon-Mobil.

  The ship Saipem1200 was blocked by the Turkish Navy in February 2018, while in January 2019 the French Navy sent the ship Aconit for joint exercises with the Cypriot Navy, with the clear aim of opposing Turkey.

 The traditional lack of character – so to speak – of the Italian ruling class.

Turkey, however, has never accepted the UN Convention on the Law of the Sea (UNCLOS) and hence does not recognize Greece’s Exclusive Economic Zone, since it aims at acquiring the island of Kastellorizo, which is very close to the Turkish coast.

President Erdogan, the Head of a traditional land power that, indeed, was essential in the Cold War vis-à-vis the Caucasus and Southern Russia, wants to reach full military autonomy by 2023, according to the Turkish plan Vision 2023.

  But, in particular, it wants to turn Turkey into a great maritime power, with a view to controlling the whole Aegean Sea and most of the Mediterranean.

Greece, however, is becoming the new US military center in the Mediterranean. The United States will support the new Greek military build-up but, above all, will help Greece to explore the depths of the Aegean and Ionian seas, as well as Crete, for oil.

 In terms of migration, which is the EU No. 1 problem, President Erdogan skillfully exploits the EU weak presence and strategic irrelevance – if not non-existence.

 In 2016, the Turkish leader collected the 6 billion euros promised by Germany and paid by the whole EU to keep the refugees in his country.

Turkey, however, wants a new agreement, much more burdensome for the EU, claiming it has already stopped as many as 270,000additional migrants in 2018 and 170,000 in 2019.

 It is easy to predict that the silly Europe will give President Erdogan what he wants.

It is by no mere coincidence that boats of migrants leave the Turkish coasts – without any control – heading to the Greek islands of Kos, the ancient kingdom of Hippocrates, and Chios, the homeland of Homer and Lesbos.

Migration management is an indirect strategy technique.

 Reverting to the Syrian case, another example of this new project of Turkish grandeur, we wonder why – assuming that there was a moment “x” – the United States gave the “green light” to President Erdogan for his invasion of Northern Rojava.

 Probably the United States is thinking of a possible future clash between Turkey, Russia and Iran, which right now are organizing a Syrian Constitutional Committee, with the UN support.

Causing difficulties for Turkey in the Astana negotiations? It is a possibility, but much more would be needed to create tension around Turkey.

 Turkey, however, should also deal with the 60,000 “Caliphate” fighters, detained in the Kurdish prisons.

 It is not at all certain that Turkey wants to take care of them.

 Dropping a jihadist bomb would be a threat for which no one could say no to Turkey.

 A trace of Turkey’s current “policy line” can also be found in Libya.

Turkey has provided Fayez al-Sarraj’s Government of National Accord (GNA) with missiles, armored vehicles, drones and light weapons.

Probably Turkey has also favored the arrival of Jihadist militants from Syria to Libya.

 The real clash is, here, between Turkey and Egypt, supported by the Gulf States.

 Through their base in Niger, the Emirates support Haftar, who can thus control Fezzan.

Furthermore, through its support to the Muslim Brotherhood and other Islamist groups, Turkey wants to have a Libya divided between various areas of influence – as in Syria – with the aim of getting its hands – through al-Sarraj’s government – on the huge Libyan oil reserves: 48 billion barrels, plus the possible reserves from fracking, i.e. additional 26 billion barrels.

 Apart from the size of oil production, which is much more relevant in Libya, now we can clearly see it is the same project that Turkey is carrying out in Syria.

 Not to mention Misrata, where there is a tribe of Turkish origin, the Karaghla.

 In any case, Turkey will reach the maximum power of blackmail vis-à-vis the poor EU and, in the future, vis-à-vis the Atlantic Alliance itself, to play the game of Islamic radicalism in contrast with Egypt and the Gulf countries.

The starting point will be the Turkish presence in Syria, which will be used for a rational division of the spheres of influence.

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Has Assad succeeded in overcoming the Syrian crisis?

Mohamad Zreik

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A series of revolutions swept through the Arab region. The first torch was from Tunisia when protester Mohamed Bouazizi burned himself in opposition to the regime of Zine El Abidine Ben Ali. This wave of revolts led to the overthrow of many Arab regimes and leaders in Tunisia, Egypt, Libya and other Arab countries. There has been a state of destruction, displacement and economic collapse in the countries affected by the revolutions, a lot of killing, torture and political division, as well as the penetration of terrorist groups in the Arab world.

The revolution began in the form of peaceful protests, but soon developed using violence between the Syrian army and opposition groups. Over time, the Syrian opposition was divided into a peaceful opposition aimed at overthrowing the Assad regime through diplomatic means and the armed opposition, which was divided into several factions: the Free Syrian Army, Jabhat al-Nusra and ISIS, as well as other armed factions.

This difficult situation brought the Syrian regime into a stage of internal popular and military pressure, which led to a request for military assistance from Russia. Russia responded to Assad’s request and defended the Syrian regime in earnest. Russia, which had good relations with the Libyan regime, did not veto the UN Security Council in favor of the Gaddafi regime. In the Syrian crisis, however, Russia and China have vetoed the UN Security Council in favor of the Assad regime, and they defended the Syrian regime in international forums.

Russia, which has historical ties with the Syrian regime, regards Syria as an extension of its strategic interests in the Middle East. Evidence of this is the presence of Russia’s military base in Syria, which is Russia’s only military base in the Middle East. Iran also stood by the Syrian regime in its war, and there was constant coordination between the Syrian and Iranian leaderships. On the other hand, the United States, Saudi Arabia and Turkey demanded that Syrian President Bashar al-Assad step down and replace the existing regime with a new regime. The United States has repeatedly threatened military intervention to strike the Syrian regime, but the American threat has always been matched by a Russian willingness to retaliate, creating a balance of power on the Syrian battlefield.

Russia’s active support of the Syrian regime and its allies’ support led to Assad’s steadfastness, despite widespread international dissatisfaction with this outcome. Syria’s political position has not yet changed, but the Syrian-Russian-Chinese-Iranian alliance has been strengthened. Many military analysts believe that what happened in Syria cannot be repeated with other countries. The most important reason is Syria’s strategic geographic position and the need for a regime like Assad to govern Syria for the time being.

The Assad regime has not collapsed, but there has been an internal and international resentment that did not exist in the past. This is expected to happen because of the nature of the Syrian regime’s alliances and the division of the region between an eastern and a Western axis. But the Assad regime has been able to withstand and maintain its position in the face of the severe crisis in Syria.

The Syrian regime must work hard to involve the Syrian opposition in government and form a government that includes all strata of Syrian society so as not to feel a large segment of the Syrian people injustice, and must increase the margin of freedom in the country. These steps should change the perception that prevailed towards the Syrian regime, and lead to its acceptance internally and internationally in the next stage.

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Landing in Riyadh: Geopolitics work in Putin’s favour

Dr. James M. Dorsey

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When Russian President Vladimir Putin lands in Riyadh this week for the second time in 12 years, his call for endorsement of his proposal to replace the US defense umbrella in the Gulf with a multilateral security architecture is likely to rank high on his agenda.

So is Mr. Putin’s push for Saudi Arabia to finalize the acquisition of Russia’s S-400 anti-missile defense system in the wake of the failure of US weaponry to intercept drones and missiles that last month struck key Saudi oil installations.

“We are ready to help Saudi Arabia protect their people. They need to make clever decisions…by deciding to buy the most advanced S-400 air-defence systems. These kinds of systems are capable of defending any kind of infrastructure in Saudi Arabia from any kind of attack,” Mr. Putin said immediately after the attacks.

Mr Putin’s push for a multilateral security approach is helped by changing realities in the Gulf as a result of President Donald J. Trump’s repeated recent demonstrations of his unreliability as an ally.

Doubts about Mr. Trump have been fuelled by his reluctance to respond more forcefully to perceived Iranian provocations, including the downing of a US drone in June and the September attacks on the Saudi facilities as well as his distancing himself from Israeli prime minister Binyamin Netanyahu following last month’s elections, and most recently, the president’s leaving the Kurds to their own devices as they confront a Turkish invasion in Syria.

Framed in transactional terms in which Saudi Arabia pays for a service, Mr. Trump’s decision this week to send up to 3,000 troops and additional air defences to the kingdom is likely to do little to enhance confidence in his reliability.

By comparison, Mr. Putin, with the backing of Chinese president Xi Jinping, seems a much more reliable partner even if Riyadh differs with Moscow and Beijing on key issues, including Iran, Syria and Turkey.

“While Russia is a reliable ally, the US is not. Many in the Middle East may not approve of Moscow supporting Bashar al-Assad’s regime, but they respect Vladimir Putin for sticking by Russia’s beleaguered ally in Syria,” said Middle East scholar and commentator Mark N. Katz.

In a twist of irony, Mr. Trump’s unreliability coupled with an Iran’s strategy of gradual escalation in response to the president’s imposition of harsh economic sanctions in a bid to force the Islamic republic to the negotiating table appear to have moderated what was perceived as a largely disastrous assertive and robust go-it alone Saudi foreign and defense policy posture in recent years.

While everyone would benefit from a dialling down of tensions between Saudi Arabia and Iran, Mr. Trump’s overall performance as the guarantor of security in the Gulf could in the longer term pave the way for a more multilateral approach to the region’s security architecture.

In the latest sign of Saudi willingness to step back from the brink, Saudi Arabia is holding back channel talks for the first time in two years with Iranian-backed Houthi rebels in Yemen. The talks began after both sides declared partial ceasefires in the more than four year-long Yemeni war.

The talks potentially open the door to a broader Russian-sponsored deal in the context of some understanding about non-aggression between the kingdom and Iran, in which Saudi Arabia would re-establish diplomatic relations with Syria in exchange for the Islamic republic dropping its support for the Houthis.

Restoring diplomatic relations and reversing the Arab League’s suspension of Syrian membership because of the civil war would constitute a victory for Mr. Al-Assad’s main backers, Russia and Iran. It would grant greater legitimacy to a leader viewed by significant segments of the international community as a pariah.

A Saudi-Iranian swap of Syria for Yemen could also facilitate Saudi financial contributions to the reconstruction of war-ravaged Syria. Saudi Arabia was conspicuously absent at last month’s Rebuild Syria Expo in Damascus.

Mr. Putin is likely to further leverage his enhanced credibility as well as Saudi-Russian cooperation in curtailing oil production to boost prices to persuade Saudi Arabia to follow through on promises to invest in Russia.

Saudi Arabia had agreed to take a stake in Russia’s Novatek Arctic-2 liquefied natural gas complex, acquire Sibur, Russia’s largest petrochemical facility, and invest an additional US$6 billion in future projects.

Russian Energy Minister Alexander Novak predicted that “about 30 agreements and contracts will be signed during President Putin’s visit to Saudi Arabia. We are working on it. These are investment projects, and the sum in question is billions of dollars.”

In anticipation of Mr. Putin’s visit, Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF), said it was opening its first overseas office in Riyadh.

RDIF and the kingdom’s counterpart, the Public Investment Fund (PIF), are believed to be looking at some US$2.5 billion in investment in technology, medicine, infrastructure, transport and industrial production.

The Russian fund is also discussing with Aramco, the Saudi state-owned oil company, US$3 billion in investments in oil services and oil and gas conversion projects.

Saudi interest in economic cooperation with Russia goes beyond economics. Ensuring that world powers have an increasing stake in the kingdom’s security is one pillar of a more multilateral regional approach

Said Russian Middle East expert Alexey Khlebnikov: “Clearly, the recent attacks on Saudi Arabia’s oil facilities have changed many security calculations throughout the region.”

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