The dynamics of relations between the United States and Saudi Arabia, and Washington’s plans to once again ramp up sanctions on Russia reflect the military-political and financial-economic factors underlying the Trump Administration’s foreign policy. The key aspects of President Donald Trump’s “business approach” are the lack of clear-cut, principled and comprehensive rules of the game and prioritization of specific trade and economic gains while politically downplaying areas that do not promise immediate financial bonuses and, therefore, can be sacrificed to domestic political considerations and hang-ups.
Suffice it to mention Washington’s response to the international scandal associated with the October 2 death of the Saudi opposition journalist Jamal Khashoggi at the Saudi consulate in Istanbul. The Turkish authorities blamed the journalist’s disappearance on a group of Saudi nationals. In wasn’t until October 20 that Saudi Arabia finally admitted Khashoggi’s death at its consulate, adding that he had died as a result of a “conflict.” Al Ekhbariya TV channel quoted Saudi Arabia’s Attorney General as saying that Jamal Khashoggi died “in a fight with people who were in the building” of the Saudi consulate.
Immediately after getting word about the disappearance of a Saudi journalist, US President Donald Trump, in his usual manner, threatened to “severely punish” Riyadh if the reports of Mr. Khashoggi’s murder were confirmed. However, just a few days later, Trump, without waiting for the results of the ongoing investigation and even before Khashoggi’s body was found, suddenly toned down his statements.
After a telephone linkup with Saudi King Salman bin Abdulaziz Al Saud, Trump suggested that the journalist could have been killed by “certain people” without Riyadh’s knowledge, since the Saudi monarch “assured” him that he was completely unaware of the incident. The next day, on October 16, US Secretary of State Michael Pompeo traveled to Saudi Arabia to meet the King and Crown Prince Mohammed Ibn Salman. After the meeting, the US State Department issued a statement thanking the Saudi monarch for his “desire to help in a thorough, transparent and timely investigation into the disappearance” of Jamal Khashoggi.
Still, the incident split the political elite of the United States with a separate investigation into the circumstances of the incident launched by the Senate, and a number of Congressmen demanding severe sanctions against Riyadh, including a ban on the sale of US arms.
Meanwhile, the Trump Administration clearly wants to stand up for Riyadh, even at the expense of alienating some members of Congress.
Trump has already made it clear that an arms embargo against Saudi Arabia is out of the question because such contracts are too important for the United States. Saudi Arabia is the first foreign country Donald Trump went to after his election. Following the talks, the sides inked a ten-year deal for the sale of $350 billion worth of US arms to the kingdom, with contracts worth $110 billion meant for “immediate implementation.” The agreement provides for the sale of tanks, air defense systems, radar installations, military communications gear and cyber security technology.
It is clear, however, that, despite President Trump’s efforts, US-Saudi relations will come under strong pressure in the United States itself.
In March, a proposal to suspend the implementation of arms deals with Saudi Arabia over Riyadh’s poor human rights record and its support for radical Islamists in the Middle East was put to the vote in the US Senate with 44 Senators voting for a freeze and 55 voting against.
However, according to The Wall Street Journal, many Senators, who previously supported Riyadh, have recently been reconsidering their position. The newspaper cites Senator Lindsay Graham as saying that Crown Prince Salman, who has concentrated in his hands all the key levers of power in Saudi Arabia, is “too toxic a figure. He can never be a leader on the world stage.”
“Mohammed bin Salman had paid millions of dollars to create a specific image of himself, and Jamal Khashoggi destroyed all this with just a few words,” Saudi journalist Azham Tamimi said in an interview with The New York Times.
In addition to major arms sales with Saudi Arabia which, according to the White House, will help create about 450,000 new jobs in the US, interdependence in oil is another reason why Washington does not intend to have a serious conflict with Riyadh. Currently, the United States is importing 800,000 barrels of Saudi oil a day and the Saudis have already hinted that they will reduce or even stop oil sales to the US if Washington attempts to impose sanctions on it. In this event, according to the most conservative estimates, the United States would lose about 5 percent of its energy resources.
Moreover, cooperation with Saudi Arabia in oil has a deeper geopolitical significance for the United States, because it allows Washington to exert influence on the world oil market and OPEC.
The United States “is getting used to the role of a regulator of the world oil market,” Rosneft CEO Igor Sechin said in his report to the Eurasian Economic Forum in Verona, Italy.According to him, the Trump Administration proceeds from “far from impartial” interests and uses “absolutely non-market methods” in an effort to secure its own financial and economic interests.
“Moreover, the US wants to become a major oil exporter. We are essentially talking about the emergence of a US-PEC structure, especially when we have in mind the impact of the recent events on the scope of relations between the US and Saudi Arabia, which are hard to overestimate,” Sechin emphasized.
Also important is the “Iranian factor” and the Turkish aspect in the US foreign policy. The Trump Administration does not want to undermine Saudi Arabia’s position as Tehran’s main adversary in the Middle East and play up to Turkish President Recep Tayyip Erdogan, who is competing with the Saudis for leadership in the Islamic world. Erdogan has already said that what is now happening to Saudi Arabia only proves that Turkey is “the only country, which can lead the Muslim world.
The Washington Post hit the nail on the head when it wrote that Jamal Khashoggi’s murder has changed the power balance in the Middle East.
According to available information, in the course of the tense US-Saudi diplomatic contacts of the past few days, the Trump Administration has been trying to persuade Riyadh to come up with a mutually acceptable formula to ease the scandal around the disappearance of the opposition-minded journalist and avoid endangering the strategic cooperation between the two countries. It was Washington’sscenario whereby the Saudi authorities acknowledge the death of Jamal Khashoggi during an interrogation at the Saudi consulate in Istanbul but blame it all on some Saudi intelligence agencies going too far. The impression is that Donald Trump is “helping cover up for Riyadh,” former CIA analyst told The Financial Times.
The White House’s stance on an event that grabbed international attention clearly contrasts with its obsessive desire to slap ever new sanctions on Russia for Moscow’s alleged meddling in the 2016 US presidential election and its equally unproved role in the recent poisoning incidents in Britain.
By covering up Riyadh, the Trump Administration proceeds primarily from financial and economic considerations, while by increasing pressure on Russia under far-fetched pretexts, it seeks to bolster its own positions ahead of next month’s mid-term Congressional elections.
Under the present circumstances, Russia has rightfully assumed a restrained position with regard to what is happening inside the Saudi-US-Turkey triangle, while simultaneously trying to safeguard its own interests. During their October 25 telephone exchange, President Vladimir Putin and Crown Prince Salman bin Abdulaziz Al Saud discussed further bilateral cooperation, including in energy. According to the Kremlin press service, the two “exchanged views on the conflict in Syria and the situation in the Middle East, as well as the murder of Saudi journalist Jamal Khashoggi.” The Saudi monarch reiterated his invitation for the Russian leader to visit the kingdom.
Vladimir Putin and Saudi king last met in Moscow in October 2017. During the visit, the two countries signed an agreement which, among other things, envisaged the establishment of a joint foundation by the Russian Direct Investment Fund and the Public Investment Fund of Saudi Arabia (PIF).
Russia and Saudi Arabia can build up their economic cooperation against the backcloth of Western companies’ refusal to participate in Saudi projects.
Saudi Arabia and Western companies planned to ink a raft of multibillion contracts at the three-day Future Investment Initiative international forum, which opened on October 23 in Riyadh. However, the IMF and World Bank executives, the leaders of JPMorgan Chase, Credit Suisse, Standard Chartered, BlackRock, EL Rothschild, Blackstone, Uber, Ford Motor, as well as Virgin Hyperloop One CEO Richard Branson, who was going to sign an agreement with Riyadh, backed off on the construction and launch of high-speed vacuum trains in Saudi Arabia.
With Western businessmen absent from the investment forum, Russia’s active participation in it, as well as China’s readiness to latch on to a number of relevant projects in Saudi Arabia, was not lost on Riyadh.
Therefore, it was agreed that the sovereign investment fund of Saudi Arabia would invest $500 million into the Russian-Chinese Investment Fund (RCIF), jointly created by the Russian Direct Investment Fund (RDIF) and the China Investment Corporation, to bring the RCIF’s capital to $2.5 billion.
“Three leading sovereign funds are coming together to jointly implement investment projects. Such an arrangement will not only bring together the expertise of investors in Europe, Asia and the Middle East, but will also allow the fund’s portfolio companies to simultaneously receive support in several key markets,” the Russian Direct Investment Fund’s head Kirill Dmitriev said. He added that the Russian-Chinese Investment Fund (RCIF) would now be renamed the Russian-Chinese-Saudi Investment Fund.
Kirill Dmitriev also said that Riyadh was ready to invest around $5 billion into the construction of NOVATEK Company’s Arctic LNG 2 liquefied gas production plant, as proposed by the new Saudi Arabian Energy Minister Khalid Al-Falih.
All this is in Russia’s best interest both in terms of strengthening ties with Saudi Arabia and its partners in the Middle East and the Persian Gulf region, and of a further diversification of their own trade, economic and foreign policy priorities.
First published in our partner International Affairs
Leftists make a comeback in Latin America
In Argentina and Uruguay, leftist candidates won the elections and Evo Morales could maintain his position as the president of Bolivia, but in Chile, people have protested against the U.S.-backed president.
The failure of the U.S.-backed candidate in the Argentinean election in recent days was a sign of the U.S. failure in Latin America. Leftist Alberto Fernandez, an opponent of U.S. interventionist policies, won about 48 percent of the vote in general election and was announced as the new president in the first round.
This is while countries such as Venezuela and Cuba have maintained their anti-U.S. sentiment. Although the U.S. has made an unceasing effort in the last two years to overthrow the current regime in Venezuela, it has not succeeded.
The New Left movement in Latin America, which was formed by the late Venezuelan president Hugo Chaves, has put Venezuela in many troubles but reduced U.S. influence in the region to the point that even experts suggested that Washington has lost its backyard.
The New Leftist governments emerged in Latin America in the late 20th century. Leftist leaders have distanced from some of traditional principles, but maintained the fight against American hegemony, just like their predecessors. Latin America, with rich sources of oil, gas, and uranium, as well as great opportunity for investment, has been of particular importance from a geopolitical, geostrategic and geo-economic perspective. The U.S. has put control over Latin America on its agenda since 1823 when then president James Monroe offered his plan known as the “Monroe Doctrine”.
The Monroe Doctrine emphasized that as long as the U.S. had not achieved real power and growth, it cannot be considered as an active element and main actor in world politics, thus it should obtain necessary economic growth in Western Hemisphere. The doctrine also stated that South America and Caribbean are areas with high security priority whose fate is tied to the U.S. fate, and the U.S. must have a strong influence in the region to provide its own growth and development.
In the late 20th and early present century, Latin America has witnessed new developments, including the New Left movement. The New Left in Latin America was founded and developed as leaders such as Chavez in Venezuela, Luiz Inacio Lula da Silva in Brazil, Evo Morales in Bolivia, Rafael Correa in Ecuador, and Daniel Ortega in Nicaragua came to power.
Opportunities and threats
The U.S. is concerned about the presence of its rivals, especially Russia and China, in Latin America and the cooperation of these two countries with leftist states in the region. To counter China and Russia’s influence, the U.S. has launched various plans to undermine leftist governments through economic crises and put its allied right-wing figures into power.
Washington’s comprehensive effort to topple the Maduro administration in Venezuela is an example. On the other hand, China and Russia’s approach to Latin America and the tendency of New Left countries to ally with Beijing and Moscow can be a major deterrent to the implementation of the U.S. plan in the region.
This is while the Trump administration is trying to redefine U.S. role and position in Latin America. From Trump’s point of view, the wrong policies of previous governments and developments have caused the U.S. to lose its control over Latin America and the Caribbean, and instead increased the influence of U.S. rivals, including China, in the region.
In an interview with Foreign Policy, following his recent visit to Colombia, Air Force Chief of Staff General David Goldfein said that the Trump administration is making a push to strengthen alliances across Latin America as part of an effort to counter rising Chinese and Russian influence in the United States’ backyard.
Goldfein said Colombia and other Latin American countries risked being locked out of U.S. and allied operations if they stopped buying military hardware from the United States and turned to other markets instead.
China has invested heavily in the region to reach Latin America’s oil reserves. Beijing has now become the largest trading partner of some Latin American countries, including Brazil, Chile, Cuba and Uruguay.
Russia also continues to sell billions of dollars in arms to Latin American countries. Unlike China, which seeks to use Latin American natural resources for its economic growth, Russia’s interests in this region are more strategic.
From our partner Tehran Times
Democrats take a gamble on Trump’s impeachment
Despite all ups and downs, Democrats finally brought impeachment inquiry into President Donald Trump to the House of Representatives, a move which made Trump’s prediction come true.
The House of Representatives passed a resolution on Thursday to launch an impeachment inquiry into Trump, thereby making formal investigations against him possible. The resolution was approved by a vote of 232 to 196.
Accordingly, the House of Intelligence Committee carries out the investigations into the impeachment and reports its findings to the Judiciary Committee that comments on the process of impeachment.
Trump has said that the House will get enough votes to impeach him, but he is certain that the Senate will acquit him of charges.
Investigations into Trump’s impeachment began on September 24 following the official order of Speaker of U.S. House of Representatives Nancy Pelosi.
The order came after reports about Trump’s telephone call with Ukrainian president for investigation into his possible rival Joe Biden.
During the conversation Trump asked his Ukrainian counterpart Volodymyr Zelensky for a “favor”. He pressured Zelensky to investigate Joe Biden, his possible Democratic rival for the 2020 presidential election, and his son Hunter Biden who was on the board of a Ukrainian oil and gas factory. At the time, Trump had suspended $400 million military aid to Ukraine as a quid pro quo.
Why Nancy Pelosi risks?
It should be noted that some Democrats have called for Trump’s impeachment since his first months of his presidency. The impeachment inquiry was popular among Democratic voters, with a recent poll showing that %73 of them favoring the impeachment.
But Republicans are strongly opposed to impeachment, and the country generally relies on Republicans. That is why Nancy Pelosi and other leading Democrats were first reluctant to officially begin an impeachment. Their calculations have so far revealed that impeachment against Trump will not have much effect on the opinion of Republicans and his supporters, a situation which will make it more difficult to remove him from the 2020 election.
Trump has described the impeachment as “fake”. Pelosi said that Trump has affirmed that he had asked the Ukrainian president to take actions in favor of his political position, claiming the measures of Trump’s administration were undermining U.S. national security.
“The release of the notes of the call by the White House confirms that the president engaged in behavior that undermines the integrity of our elections, the dignity of the office he holds and our national security,” Pelosi said in a statement.
House Intelligence Committee Chairman Adam Schiff also said that the president should prioritize national interests rather than his personal interests. Schiff added that they will study whether Trump has exploited military aid to Ukraine to meet his demands.
Consequences of Trump’s impeachment
Experts argue that Trump’s impeachment and lack of a decisive leader will make the U.S. more vulnerable to other countries’ plots. As Robert W. Merry recently said in The National Interest magazine, “When the president is weakened at home, then America is weakened abroad.”
However, Washington’s friends and enemies consider U.S. foreign policy insignificant due to political infighting at home. Instead, the great power players are seeking to limit the influence of the country rather than cooperating with it.
The recent accusations against Trump can be easily stated as a national security issue, which needs to be reformed immediately. Theoretically, military aid will be provided only if U.S. officials become convinced that they can achieve main security objectives of Washington. Therefore refusing to provide aid because of political reasons is a serious wrongdoing, showing that the personal interests of the president is superior to U.S. national interests.
Will the impeachment inquiry get the necessary vote?
Now that the House has launched an impeachment inquiry into the president, the Senate will play an important role in the process. In this case, the Senate will act as a court that decides on Trump’s dismissal or survival.
To oust Trump, the votes of 67 members of the Senate is needed, which would be two-thirds of their population. Currently, there are 53 Republicans and 47 Democrats in the Senate. Therefore, Democrats need the support of 20 Republican senators.
Since the Republicans have not supported Trump’s impeachment, it is highly unlikely that Trump’s impeachment leads to his dismissal.
Impact of the impeachment on the 2020 presidential election
The impact of Trump’s impeachment on the presidential election depends on his defense and the credibility of accusations against him. Democrats are well aware that accusing Trump of corruption and incompetence will not affect American voters. Democrats probably knew that those allegations were not strong enough to undermine Trump, but on the contrary they would undermine their positions.
By stating an issue related to U.S. national security, Democrats took the risk of impeachment. To make the impeachment strategy successful, Democrats should prove that the president has endangered U.S. national security and he may do the same in future. This claim can go beyond party politics and put unbearable pressure on Trump, Republicans and uncertain voters.
From our partner Tehran Times
Russian Involvement in Venezuela is Troublesome for Western Hemisphere
The U.S. Energy Information Administration (EIA) “projects that natural gas consumption in Asia will continue to outpace supply.” With the future growth of natural gas consumption concentrated in Asia the EIA “expects ‘non-OECD Asia’ to consumer 120 billion cubic feet per day (Bcf/d) by 2050, outpacing regional production by 50 Bcf/d.” China’s natural gas consumption will “triple between 2018-2050.” Most long-term natural gas infrastructure, global liquid natural gas (LNG) terminal(s) import and export, and demand projections are based on Asian growth.
Late October reporting in Russian media confirmed Russian energy conglomerate, Rosneft had plans to consolidate Venezuela’s National Oil Company PDVSA (Petroleos de Venezuela) under Rosneft’s corporate structure in exchange for debt relief. This counters U.S., Canadian and Mexican oil and natural gas firms from satisfying natural gas demand from non-OECD Asia. Additionally, it allows Moscow to use Rosneft acquiring Venezuelan natural gas as a geopolitical, soft power coercion tool by acquiring some of the largest recoverable oil and natural gas reserves in the world.
Venezuelan government sources, Rosneft and the Kremlin all denythe potential for a takeover of PDVSA energy assets to satisfy Russian bank loan requirements to the Madero regime. Russian energy experts have visited PDVSA to analyze the possibility of merging with Rosneft. The Russian energy giant buying out Venezuela’s best source of hard currency and domestic economic driver illustrate the “hard-hitting impact of U.S. sanctions.” The Venezuela regime-based economy predicated on oil and natural gas production is on the verge of collapsing.
Rosneft’s offer is the best way outside of western help for Venezuela to mitigate damaging sanctions, and “debt relief for a country that owes over $156 billion to external parties – and Venezuela’s debt is 740% higher than the value of its exports.” This is four times more than what is typical in emerging markets and economies according to The World Bank.
U.S. Special Envoy for Venezuela Elliot Abrams has pointed to Rosneft having joint projects with PDVSA where it took leading minority stakes, and how these ventures do not “breach” U.S. sanctions. This is positive news for average Venezuelan citizens suffering under economic malaise. Caracas’ debt to Moscow seemingly is being forgiven under the auspices of U.S. blessing. However, the Trump administration has been clear in its maximum pressure “sanctions policy towards Venezuela” that mirrors the sanctions-strategy towards Tehran. Retaliation from the U.S. could be the future of Washington-Moscow-Caracas tri-lateral relations if Rosneft tries to liquidate PDVSA assets, and release thousands of employees to skirt U.S.-led western sanctions.
The Maduro regime will also need to navigate the “$20-$60 billion in debt owed” to China. Will the Chinese have a stake in PDVSA? If so, how does that play into the current U.S.-China trade negotiations? What these geopolitical decisions points towards is a Rosneft-PDVSA merge bringing up more questions than answers.
It makes sense for Russia to be the power broker in Venezuela. This is similar to how Russia is the safe diplomatic choice in the Middle, post-Syrian civil war. According to Foreign Affairs, Russia is now “the Indispensible Nation in the Middle East.” Military troops and hardware were used to save the Assad regime, and now in Venezuela it will be oil, natural gas and petrochemicals that gives Russia a solid foothold in the western hemisphere. PDVSA is one of the “world’s most prolific oil companies” with the largest extractable oil and gas reserves in the world – estimated at 300 billion barrels and PDVSA’s estimated worth is “approximately $186 billion.”
Putting this energy portfolio under Kremlin influence gives Rosneft and other energy firms aligned with Moscow solid footing to control price and supply for global oil and petrochemical markets. The Maduro government wants to stay with previous joint venture contracts between PDVSA and Rosneft, and if the merger takes place, wants to “hand control over to Rosneft without having to go through privatization.” Financial questions arise from this arrangement; who is responsible for terms of debt, how is China able to value the deal, and would equity be defined as a public, private or some form of public-private entity? These are some of the larger issues that would need to be resolved.
Maduro can possibly work around these issues when he took over Venezuela’s Supreme Tribunal of Justice. This allows Maduro to ignore the democratically elected Legislature, the opposition-controlled National Assembly, and its leader, Juan Guaido. Mr. Guaido claims he is the legitimate leader of Venezuela, but likely Rosneft with Moscow’s backing will only negotiate with the Maduro government. The Supreme Tribunal of Justice can overrule the Assembly to assist the merger towards completion. Debt repayment is important to the Maduro regime, and return to financial health.
Citgo, a U.S. based company that is a valued asset for PDVSA is another area of concern for the proposed merger in tandem with U.S. sanctions.
American officials have implemented a freeze on all Venezuelan assets based in the U.S. Washington implemented an executive order coinciding with sanctions protecting “bondholders and other parties” mulling asset sales and seizures for unpaid debts. The international desire among government and financial officials is this move by the Americans facilitate diplomatic solutions over asset seizure. The downside is it strengthens Maduro over the elected Venezuelan legislature and Assembly leader Guaido.
Debt holders who own Citgo then have to negotiate with Venezuela and Rosneft. This will be tough for bondholders to receive repayment, or will it, as this could mean tougher going for international credit markets to lend money for future Rosneft/PDVSA projects. A Moscow-Caracas alliance is something Washington could believe will increase geopolitical tension between all three countries. Debt relief for Caracas, and control over the world’s largest oil reserves are likely to be the final push for Rosneft to acquire PDVSA over escalating tensions between Moscow and Washington with Caracas stuck in the middle.
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