MBS policies: Are a threat to the Washington-led Global Order or not?
Amid the Ukraine crisis, Riyadh’s policy towards Washington took a bitter shift. The years-long loyalty of Riyadh towards Washington began to tremble. The Riyadh did not condemn Moscow’s attack on Kyiv, nor it fulfilled the Washington’s expectations by refusing to OPEC Plus’ decision of not increasing the oil production. Whether Moscow’s valiant attempt of opening war against Kyiv, against the will of Washington and NATO, inspired the KSA to take an unpredictable position or Riyadh’s policy shift is owing to its economic and strategic interests, it is quite debatable. This shift not only triggered the minds of researchers worldwide but also caused Biden’s eyebrows to rise. In addition, Riyadh also showed its willingness to join BRICS. In case, Riyadh joins BRICS to ensure its economic and strategic interests; it will challenge the supremacy of petro-dollar, as Saudi Arabia is one of the largest oil exporters. As a whole, it will affect US economy drastically, hence posing serious threats to the Washington-led Global Order.
The wake of the Ukraine war wreaked havoc throughout the globe by destabilizing the global economy. Moreover, this eruption of the conflict increased food and energy insecurity vertically and horizontally. Being a global leader, Washington stepped forward to discourage Moscow and compelled it to withdraw its troops from Kyiv. As a result, Moscow decided to cut off the energy supply to the west. This was just an initiation of the devastation. The clash of interests between Moscow and Washington led to the American use of so-called institutional power, freezing Moscow’s assets. Contrarily, Moscow’s denial to supply energy gave rise to energy insecurity caused by the rising oil and gas prices. Following the primacy doctrine, the global hegemon America took the responsibility to curb this energy insecurity leading to global economic instability. Continuing the long tradition, Washington intended to exercise the influence on the Middle Eastern partners KSA and UAE to supply the energy resources abundantly to fill the energy supply and demand gap.
This time the results were unpredictable, as both of these states defied to enhance their energy production. The unprecedented stance of the Saudi Monarch was to comply with OPEC Plus’ decision to decrease production and increase the prices of energy products. This denial of Riyadh was taken as a serious gesture by Washington. It was perceived that Riyadh’s refusal was a gesture for having goodwill for Russia, consequently creating the situation of “Either you are with us or against us.” In other terms, we may conclude that it was a shift in loyalties.
The whole debate revolves around the question, “Whether Riyadh’s policy has strength to shake the foundations of prevailing Washington led global order or not?” Is the global order a volatile structure to be transformed so easily just by shifting a policy of one state, or does this policy shift have some potential challenges? Before directly coming to the horror impacts of this policy, we should better discuss the worth of energy security and its irrefutable importance for the stable global economic system. If the fuel prices aren’t lowered, it will halt or lower the industrial processes of major industrialized states, including the U.S., consequently drastically affecting the states’ GDP and Per capita income. The vulnerabilities in economic position will surely lead to chaos and internal instability.
The other facet of this debate, “Whether Riyadh is shifting towards Russia or not? Is Russia capable enough to serve the strategic interests of Riyadh? If not, then what does this policy shift mean?” The ultimate strategic interests of Riyadh always centered on attaining regional hegemony by countering Tehran. At the same time, Moscow is already enjoying better diplomatic ties with Tehran. Moscow will adopt a balanced approach between Riyadh and Tehran. Contrarily, there may be some possibilities of extension of this Riyadh-Moscow cooperation from energy to Economic and military cooperation because Russia is capable of providing the defense technology to Riyadh but unable to provide security in the region. Most importantly, Washington’s institutional hold can be used against Riyadh. These threats still can restrict Riyadh from standing up with Moscow.
The other important frontier of this debate is KSA’s willingness to join BRICS. As the world’s largest oil exporter, Saudi Arabia has played a central role in the Petrodollar system. The country has used its vast oil reserves to maintain a strong influence on the global economy and has largely adhered to the practice of only selling oil in exchange for U.S. dollars. This has helped to ensure the continued global demand for U.S. dollars and has contributed to the dollar’s status as the dominant global currency. One potential outcome is that Saudi Arabia and other BRICS countries could agree to use a different currency for oil trade, such as the Chinese yuan or a new currency specifically for use by BRICS countries. This could lead to a decrease in global demand for U.S. dollars and potentially negatively affect the U.S. economy.
Saudi Arabia’s recent policy shift towards BRICS and Russia has raised questions about the stability of the current global order, particularly about the stability of Petro-dollars and global energy security. While it is debatable whether the shift is motivated by economic or strategic interests, it is clear that this move is a serious concern for the United States and has the potential to impact the contemporary Washington-led global order significantly. It remains to be seen whether Saudi Arabia will follow through with its potential decision to join the BRICS group and how this will affect its relationships with other countries, particularly Russia and the United States. In a nutshell, major global order changes are expected to occur if Saudi Arabia joins BRICS because it will affect the supremacy of Petro-dollars and consequently lead to the decline in U.S. economic power.
The Reality of Multipolarity in the Middle East
Middle Eastern states have always welcomed China’s involvement in economic fields. China’s total trade with the region has increased dramatically since the beginning of the twenty-first century, and it is growing steadily, rising from $180 billion in 2019 to $259 billion in 2021. On the other hand, the total Middle East trade with the United States has declined from $120 billion dollars in 2019 to $82 billion in 2021. China is still working to consolidate its economic ties, transcending regional divisions, which contributes to strengthening its position as the largest trading partner for regional powers such as Egypt, Iran, Jordan, Kuwait, Saudi Arabia and the UAE.
China has historically avoided getting involved in regional conflicts or taking direct positions on thorny disputes. Instead of challenging the US hegemony and military supremacy in the Middle East in the post-Cold War era, China, as a secondary superpower, benefited from the US security cover without contributing to it, without incurring the same security cost as the US, and without facing same strategic dilemmas. However, this reality seems to be changing today. By mediating the agreement to resume relations between Riyadh and Tehran, Beijing is embarking on a new turning point based on expanding its involvement in the region by moving from economic exchange to negotiating dispute resolution.
The way China works to achieve negotiated solutions to disputes is an attractive factor for the states of the region, which have on several occasions since 2011 criticized successive US administrations for their strategic withdrawal from the Middle East, and resented the failure of US intervention in Iraq, Libya, Syria and other states. China may hail its brokering of the Saudi-Iranian deal as a diplomatic success short for the United States, but Tehran and Riyadh must first honor their commitments to it.
As China plunges into the midst of Middle Eastern politics and its complexities, it will face strategic challenges that will undermine its image as a neutral party, and the success of its new strategy in the region will depend on local realities on the ground. China, as it has been Iran’s largest trading partner for ten years, is in a unique position to get Iran to live up to its commitments, although China’s willingness to do so remains uncertain. But it is clear that it made an ambitious bet in its mediating role between the two states, and the future course of events will depend on the amount of pressure that China intends to apply, and to a much greater extent, on the behavior that Iran and Saudi Arabia choose to follow.
In the next stage, beyond mediation, China will have to decide what role it wants to play in the region: that of a diplomatic mediator, a military sponsor, or a distracted economic giant. It is still too early to anticipate the shifts that China’s regional stature may undergo, but its recent forays into Middle Eastern diplomacy suggest broader geopolitical interests. The best example of this is the Chinese-Arab summit, which was held for the first time in Riyadh last December, and the strategic partnership agreements that China signed with Iran on the one hand and some Arab states on the other.
It is not clear whether Beijing’s “zero conflict” policy can distance it from diplomatic pressure to define final geopolitical alignments. But it will have to navigate this new geopolitical atmosphere in measured ways. China, through its work to promote the Saudi-Iranian rapprochement, may cause the wrath of Israel, which is not enthusiastic about this rapprochement. And Beijing, as it continues to implement the “zero conflicts” approach, must not turn a blind eye to the permanent issue in the Middle East, that is, the Palestinian issue, if it wants to maintain its credibility among the Arab masses. In the face of these conflicting interests, China’s regional policy based on strategic hedging may inadvertently evolve into a comprehensive policy to balance power and ensure security in the Middle East. A rising China may hold prospects for global multipolarity in the Middle East, but it will have to face and overcome the same pitfalls that the United States encountered if it is to bring about tangible change in the regional status quo.
As for the United States, it should not view the expansion of Chinese involvement solely as a threat. Beijing cannot and does not want to usurp Washington’s role as the dominant military power in the region. Rather, the reality of the situation is that China’s expanded geopolitical involvement may open up avenues for increasing its cooperation with the United States, by investing in specific regional relationships that Washington lacks, the best example of which is the strong trade ties between China and Iran. Since these two great powers align on some of their core interests in the region, including ensuring the flow of global energy resources and freedom of navigation, the United States must act prudently by refraining from pressuring its Arab allies into exclusive partnerships. Instead of Washington fearing and contributing to a cold war in the Middle East, it should reassess its priorities in the region and look for ways to achieve positive and stabilizing outcomes from engagement with Beijing.
The Middle East may be preparing to become an arena for multipolar competition, but this competition may not be vertical and may not happen overnight. Therefore, the great powers must respond to the realities on the ground by listening to the local forces and adapting to the changing regional concerns. And as long as it is no longer possible to maintain American unipolarity, perhaps it is more appropriate for the United States to keep pace with the current changes to achieve its interests in the best way.
Unleashing an Iranian tiger
A Gulf investor with an analytical and artistic bent, Ali al-Salim pinpointed the long-term challenges Saudi Arabia faces as it reestablishes relations with Iran.
While most analysts focused on the immediate reduction of regional tensions and the possible opening for an end to the eight-year-long Saudi military intervention in Yemen as a result of a Chinese-mediated agreement to restore diplomatic relations between two Middle Eastern arch-rivals, Mr. Al-Salim is looking at Iran’s long-term competitive edge compared to the kingdom.
“As relations between Saudi and Iran begin to thaw, the logic for Saudi’s ambitious ‘Trojena’ ski resort will come further into question. Iran boasts world-class ski resorts an hour from Tehran and 90km of slopes. Oh, and it’s all natural, even the snow,” Mr. Al-Salim said on Twitter.
Mr. Al-Salim was referring to a yet-to-be-built resort on mountain peaks overlooking Neom slated to be home to 7,000 people by 2026 and annually attract 700,000 visitors. Trojena would be the Gulf’s first outdoor ski resort.
Neom is Saudi Crown Prince Mohammed bin Salman’s US$500 billion fantasia. It is a futuristic science-fiction-like new city and tourism destination along the Red Sea in a mostly unpopulated part of the kingdom.
Somewhat incongruously, the Olympic Council of Asia has awarded Trojena the right to host the 2029 Asian Winter Games.
In contrast to Iran’s up to 5,600-metre high, 600-kikometer-long Alborz mountain range that stretches along the Caspian Sea, snow falls occasionally on Trojena’s 2,400-metre high Sarawat mountains.
To compensate for its shortage, Trojena plans to create an outdoor ski slope by blasting artificial snow on the mountains. This slope would be powered by renewable energy.
In Mr. Al-Salim’s mind, Trojena appears to be emblematic of the broader challenge posed by an Iran that eventually is freed of the shackles of crippling US sanctions and has rebuilt its economy.
Unshackled and recovered, Iran brings to the table much that Saudi Arabia has and more. With a population close to 90 million, Iran is almost three times the size of the kingdom. It ranks as the world’s third-largest oil and second-largest natural gas reserve holder.
Beyond boasting one of the Middle East’s largest domestic markets, an innovative and technology-savvy youth, a deep-seated identity rooted in empire, and a battle-hardened military, Iran occupies strategic geography at the crossroads of Central Asia, the Middle East and Europe, and a coastline along the Arabian Sea, the western end of the Indo-Pacific.
To be sure, Iran has a long way to go to fully capitalize on its assets with no immediate prospect of its clerical regime doing what it would take to persuade the United States to lift sanctions, rebuild confidence with its neighbors, including Saudi Arabia, and introduce necessary political, economic, and social reforms.
As a result, Saudi Arabia has a first-starter advantage, which Mr. Bin Salman is bent on exploiting with his social reforms and efforts to diversify the Saudi economy to reduce the kingdom’s dependence on oil exports, of which Trojena is one building block.
Even so, the restoration of diplomatic relations with Saudi Arabia constitutes a first step to strengthen the Iranian economy. This would enable Iran to position itself as not just a formidable political rival but also an economic competitor.
“Evidently, de-escalation will reduce the cost of regional security for all parties and free up more potential for trade and cross-border investments and partnerships that the region needs,” said Bijan Khajehpour, a keen observer of the Iranian economy.
Iranian hopes have been buoyed by plans by the United Arab Emirates to boost annual trade with Iran to US$30 billion in the next two years, up from $20 billion in 2022, Emirati interest in Iranian infrastructure, including the strategic Arabian Sea port of Chahbahar, and prospects for Saudi investment in the Islamic republic.
Saudi Finance Minister Mohammed al-Jadaan recently told a private sector forum of Saudi Arabia’s sovereign wealth fund that investment in Iran could happen “very quickly.”
Optimistically, Mr. Al-Jadaan went on to say that “there are a lot of opportunities for Saudi investments in Iran. We don’t see impediments as long as the terms of any agreement would be respected.”
Mr. Al-Jadaan’s remarks did not refer to US sanctions, the elephant in the room. Instead, he hinted at Iran’s need to clean up multiple legal and operational ambiguities that pose obstacles to foreign investment, even without considering externally imposed restrictions.
Laying out a roadmap for Saudi and Gulf investment in Iran, Mr. Khajehpour suggested that initially, investors could target non-sanctioned industries, such as food and pharmaceuticals while developing “creative banking and financial solutions” that would enable circumvention of sanctions.
Furthermore, Mr. Khajehpour held out the possibility that the United States could provide waivers for investments that address water scarcity and climate change.
If and when sanctions are lifted, the sky is the limit.
Opportunities range from cooperation on petroleum products and petrochemicals, development of an offshore Saudi-Iranian-Kuwaiti gas field, and connecting electricity grids, to investment in transportation linkages, according to Mr. Khajehpour.
Saudi interest in getting in on the ground floor of Iran’s eventual reemergence extends beyond geopolitical, security, economic, and commercial considerations.
Economic cooperation has the potential to blunt the impact of an unleashed Iran by making the kingdom a partner.
“Iran’s rise is inevitable. When it happens, the Middle East will be a different place. Saudi Arabia knows that. It sees the short- and long-term benefits of recalibrating relations with Iran. Iran hasn’t quite thought that far but ultimately it will,” said a European official who closely monitors Middle Eastern developments.
The New Middle East: The Winners and Losers
The Middle East and the Gulf regions are experiencing a political and diplomatic movement that they have not witnessed in the last three or four decades.
Behind this movement are the influential states such as Saudi Arabia, Turkey, Iran and, to a lesser extent, Egypt. A few years ago, it was impossible to imagine any political or diplomatic rapprochement between Saudi Arabia and Iran, between Turkey and Egypt, and between a number of Arab states and Syria.
For decades, the US has been working on a “New Middle East” that embraces Israel, and then the circumstances tend towards a “new one that includes Iran!
What led to this movement, which will have repercussions on alliances and threads of differences?
There are several regional and other remote factors that are no less influential.
Domestically, it is clear that the region, with its leaders and people, is tired of wars and turmoil and is now envious of the world’s progress while it is mired in its endless complexes and crises.
Internationally, it is possible to talk about the US role and then the political and social changes in Europe coinciding with the rise of international powers on the periphery such as India, China and others, and finally the war in Ukraine.
The beginning was with the arrival of President Donald Trump and his resort to painful language in its frankness, which does not hide that the man does not respect the region and its leaders, but rather considers it a mere bazaar in which he markets whatever he wants without objection from anyone, and a mere ATM that withdraws from it whenever he wants and as much as he wants. Not to mention his frankness that he will not fight wars on behalf of a region he deems lazy and backward and refuses to rely on itself. Trump embodied this conviction when he refused to strike Iran in response to the dangerous Houthi attacks on oil facilities in Saudi Arabia in mid-September 2019.
This crude frankness and lack of respect led the Middle East and the Gulf region, especially states that considered the United States an eternal ally such as Saudi Arabia, to ask: What will the Democrats do to us if Trump, our Republican ally, disrespects us like this?
Then came their reply. The Democrats did not wait long after Joe Biden came to the White House to take an approach similar to Trump’s, but for other reasons and from a different mentality. In addition to the annoyance of Saudi Arabia and other states in the region about the issues of rights and freedoms hinted at by the Biden administration, there is the great confusion shown by this administration in dealing with the problems of the region, in contrast to Trump’s frankness, and its excessive interest in the conflict with China and later the war in Ukraine at the expense of the US’s allies traditionalists in this region.
The Trump and Biden administrations should be given credit for waking up the leaders of the Middle East and the Gulf, because their approaches were a wake-up call that it would be dangerous to ignore. The service provided by the two administrations to the staff of the region is that they are equal in their disdain for everyone: Saudi Arabia, Turkey, the UAE, Egypt, Jordan, with a keenness to further strangle Iran and Syria for well-known reasons.
In the midst of that labor, Russia’s war broke out against Ukraine to shuffle the cards across the world, but specifically in the Middle East and the Gulf regions due to its traditional strategic tensions and its richness in oil and natural resources, and the need for both conflict camps to gain its support for it.
As far as the Ukraine war and above all Europe, it constituted a wake-up call in the positive direction of the Gulf leaders. The Ukraine war was an outlet for these leaders on more than one level. It first gave them the opportunity to maneuver and express their displeasure with the US insults. And I gave them an alternative that is no less powerful than the traditional West, which they can deal with in better conditions and without insults, which is the camp of Russia, China and dozens of states that swim in their orbit around the world.
It would be a mistake to be overly optimistic about this multi-faceted movement. Realism requires acknowledging that the more exceptional it is, the more reasons for its failure it contains in the absence of sufficient sophistication and the required sacrifices from all parties. One of the weaknesses of this movement is that it is the result of pressure, driven by need, not by conviction. Iran is stifled by sanctions and the unstable internal situation. Saudi Arabia can no longer tolerate a single missile from the Houthis. The economy and financial situation in Türkiye is in dire straits. Egypt is not moved by anything other than “rice”. The regime in Syria wants to get out of its isolation, which will be the culmination of what it considers a victory over its opponents. The UAE wants to prove to US that it is not everything in this universe.
This is on the political level. On the practical level, there are many obstacles that will stand in the way of this movement, especially when it comes to Saudi Arabia, Iran, Egypt and Turkey. It is a good coincidence (and bad at the same time) that normalization (or lack thereof) between Riyadh and Tehran will be reflected far beyond the two states, and the same applies to Ankara and Cairo.
Saudi Arabia and Iran are separated by political, religious and strategic differences that are not easy to overcome. The theaters of confrontation between the two states are vast, including Yemen, Bahrain, Iraq, Syria and Lebanon, and inevitably there are other areas and issues that constitute points of contention.
Turkey and Egypt are stuck on many issues, most notably the Muslim Brotherhood, Libya and the energy fields in the Mediterranean. In addition to Egyptian foreign policy that is not completely independent and directed by the winds of the Gulf, Turkish foreign files, including normalization with Egypt, remain dependent on the results of the presidential elections scheduled in Turkey in late May.
It will also be necessary for the Arab and Gulf leaders who decided to engage in this movement, taking into account that the United States will not easily accept maneuvers behind its back in a region that it has considered guaranteed for more than seventy years. There is also the position of Israel, which will not accept the rehabilitation of the Iranian regime in the region, and will not easily swallow that the region has favored Iran.
The consolation is that this movement is not isolated from what is happening in the world, but is part of it. What is happening in the world outweighs the US and Israel and is happening against their will. It is an opportunity that will not be repeated easily if the region knows how to benefit from it for the benefit of all.
Ways to Overcome Afghanistan Crisis in Post-Republic Collapse
On August 15, 2021, the Afghan Republic government collapsed and the Taliban took over the Afghan capital city of Kabul....
Foreign Affairs: What sanctions on Russia can and cannot achieve
“U.S. policymakers began planning major sanctions on Russia in late 2021” (before the beginning of Ukrainian conflict!), recognizes ‘Foreign Affairs’....
Elsie Initiative Fund: call for proposals to continue investing in women’s meaningful participation in peacekeeping
At an event that brought together more than 350 representatives from Member States, UN organizations, academia and civil society, the Elsie...
What Beijing’s Iran-Saudi deal means
The agreement to reestablish diplomatic relations between Tehran and Riyadh was no “peace deal,” but the rivals did decide to...
De-dollarization is gaining momentum
Brazil and China have reportedly struck a deal to ditch the U.S. dollar in favor of their own currencies in...
Between Consensus and Efficiency: The Future of Multilateralism
The Multilateral world has been attempting to evolve for some time now. From Reformed to Effective Multilateralism, its struggles to...
Defining moments for geopolitics
A video of Xi’s departure on Wednesday was filmed with translators speaking for both men. “Right now there are changes...
Finance3 days ago
U.S. bank trouble heralds The End of dollar Reserve system
Americas3 days ago
Bulletproof Panama: An Isthmus of Stability Becomes a Magnet for Migration
Economy4 days ago
How Saudiconomy, is an economic-transformational miracle?
International Law4 days ago
Putin, Xi, the ICC, and the Demise of Global Judiciary
East Asia4 days ago
Japan-Indian Equalizer of China’s Rise
Middle East4 days ago
The New Middle East: The Winners and Losers
South Asia4 days ago
Pakistan’s Priority Ranking of SDGs
New Social Compact4 days ago
The Untapped Potential of Women’s Contributions to Peace building