Saudi Arabia

In a bind

Print edition : May 27, 2016

Air Force One taxiing to a halt at King Khalid International Airport in Riyadh, Saudi Arabia, on April 20. President Barack Obama and King Salman met amid deepening tensions between their two governments over Iran, the fight against terrorism and the potential release of long-delayed documents said to implicate Saudi officials in the 9/11 attacks. Photo: STEPHEN CROWLEY/NYT

Deputy Crown Prince Mohammed bin Salman after the Cabinet agreed to implement a broad economic reform plan known as Vision 2030, in Riyadh on April 25. Photo: Reuters

The diplomatic and economic clout of Saudi Arabia suffers as its moves to back terror groups backfire.

The Kingdom of Saudi Arabia seems to be caught in existential throes. The last couple of years have seen considerable diminishing of its diplomatic and economic clout. The rot started with the Saudi establishment’s decision to stoke sectarian fires in the region through foolhardy gambits. Its bankrolling of Sunni militant groups that later transformed into terror outfits has backfired. The fighting in Iraq and Syria, fuelled to a great extent by Saudi money and sectarian propaganda, has led to unintended consequences. The secular government in Damascus not only has survived five years of horrendous civil war but is now on the offensive against the proxies of Saudi Arabia and the West. The Saudi army has been involved in an open war in Yemen for the last one year. It has led to the loss of thousands of civilian lives in the Arab world’s poorest country, and the Saudi army is far from achieving its goal of installing a friendly regime there. The country’s infrastructure may have been reduced to rubble, but the Saudis and their local allies are not anywhere near scoring a decisive military victory. The United States is unhappy with the never-ending war in Yemen. It is concerned more about the apparent indifference of the Saudis’ to the spread of Al Qaeda there than about rising civilian casualties.

The Saudi establishment had pushed the panic button after it became clear that the Barack Obama administration would sign the nuclear deal with Iran. The Saudi leadership, along with Israel, tried all the tricks in the book to scupper the deal. The U.S. was not happy with the machinations of the two countries. President Obama in a series of interviews with The Atlantic magazine has been critical of the role played by U.S. allies such as Saudi Arabia in the region, describing them as “free riders” eager to snare the U.S. into a sectarian war. He singled out Saudi Arabia for its failure to find an effective way to “share the neighbourhood and institute some sort of cold peace” with Iran.

After the peace deal with Iran was signed, the Saudi government, in an apparent act of pique, executed a leading Shia cleric, Ayatollah Nimr al Nimr, along with 46 others. That move led to widespread protests in Iran. International public opinion in Europe and elsewhere turned even more against the Saudis after the hanging of the popular cleric, who was a leader of the Shia Saudi minority. European countries were anyway upset with the Saudi support for Wahhabi and Salafist preachers who have been instrumental in the rise of groups like the Islamic State (I.S.) and Al Qaeda. Many of their own citizens were influenced by the Salafists and embraced extremist groups like Al Qaeda and the I.S. The terror attacks in Paris and Brussels were launched by European citizens influenced by the puritanical strain of Islamic theology.

After King Salman’s accession to the throne, his son, Deputy Crown Prince Mohammed bin Salman, seems to be pulling the levers of power. Unlike previous royal scions, the young prince seems to be a man in a hurry. He has been pushing for Saudi Arabia to lead from the front on military, political and economic issues. Going to war in Yemen is said to be his idea. He reportedly played a key role in scuttling the recent move by leading oil producers to curtail oil production in order to raise prices. At a meeting in Doha in the third week of April, the oil Ministers of the major oil-producing nations agreed to freeze their oil production at current levels. A draft agreement was ready for signing, but the Saudis withdrew at the eleventh hour after instructions from Riyadh. The Deputy Crown Prince’s hand was suspected in the last-minute volte-face.

Analysts attribute the move to the Saudis’ desire to retain the biggest share of the oil market and to punish Iran and Russia for supporting the government in Syria. The move is also against the shale gas industry in the U.S. Oil prices have to be high to make the production of shale gas and oil viable. After the start of the production of shale gas and oil, the U.S. has once again become an exporter of fossil fuel energy, impacting on Saudi Arabia’s global share. With low oil prices, shale oil production has been adversely impacted, but many American companies are still in business.

On April 25, the Deputy Crown Prince announced that Saudi Arabia was transitioning to an economy that would no longer be dependent on oil. He vowed to liberate the country from its “addiction” to oil by 2020. The government announced its “Vision 2030” in the last week of April. The Deputy Crown Prince, who is the Defence Minister and controls economic and foreign policy, wants the kingdom to develop its own services. The government has said that the private sector’s share of the economy will rise from 40 to 70 per cent by 2030 and that the kingdom will produce 50 per cent of the armaments it needs. Saudi Arabia is the world’s third largest defence spender. It currently produces only 2 per cent of the armaments domestically.

Many analysts predict that the Deputy Crown Prince’s ambitious goals will be difficult to achieve, given the kingdom’s overwhelming dependence on oil revenue. In the first week of April, he announced the decision to sell part of Saudi ARAMCO, the kingdom’s flagship oil producer and the world’s biggest oil company. He said that the proceeds from the sale, which he estimated at $2 trillion, would be transferred to the kingdom’s Public Investment Fund. Such a move, he averred, would “technically make investments the source of Saudi government revenue, not oil”. The Crown Prince’s dabbling in economics is said to be as popular among influential sections of the Saudi elite as his role in starting the war in Yemen. For the first time, Saudi Arabia has asked for a loan of $10 billion from abroad to offset a budget shortfall. The wars in Syria and Yemen have not come cheap for the Saudi royal family.

Obama, who was on a farewell visit to the region in late March, was given a cool reception when he visited Riyadh. The Saudi monarch was conspicuous by his absence at the airport when the U.S. President arrived. The arrival was not shown on state television. The Saudi monarchy has many reasons to be unhappy with the Obama administration. The Saudis feel that Obama is not doing enough to stop the U.S. Congress from passing a Bill that could hold the Saudi government indirectly responsible for the 9/11 attacks. Obama has in fact supported the release of documents relating to September 11 that were redacted by the previous administration but has cautioned against any conclusive evidence emerging of official Saudi complicity. The 28 pages of intelligence from a congressional report apparently name Saudi officials who had connections with those involved in the 9/11 attacks. Fifteen of the 19 hijackers involved were Saudi nationals.

The redacted pages, according to leaked information published in the U.S. media, contain names of Islamic charities and individuals in Saudi Arabia and even members of the royal family who used their funds to either indirectly or deliberately subsidise Al Qaeda activities before 9/11. Some of the money, it is alleged, went to the 9/11 hijackers. According to former Federal Bureau of Investigation (FBI) agents involved in the 9/11 investigations, the Bush White House ordered that all investigations into the role of Saudi diplomats and officials in the U.S. be closed. The top echelons of the Saudi leadership have been given the benefit of the doubt, but the redacted pages reportedly pointed a finger of suspicion at a Saudi diplomat and Saudi intelligence assets based in the U.S. at the time.

The Saudi government has warned that if the Bill is allowed, Riyadh will sell the $750 billion it has in U.S. treasury assets. The Saudis fear that U.S. courts might freeze their assets in the U.S. if the new Bill is passed. The Saudi Foreign Minister, Muhammad al-Jubeir, personally delivered this message to Washington during a trip in March. Such a move has the potential to damage the American economy and deprecate the value of the dollar. Obama administration officials said that any such move would affect the Saudi government more but at the same time assured the Saudis that the President would veto the Bill if it was passed by Congress. The Obama administration has lobbied against the Bill, saying that its passage will put U.S. citizens abroad in danger.

The U.S. State Department has so far given the kingdom “sovereign immunity” from prosecution. This privilege has not been accorded to Iran or the Palestinian Authority. Frozen Iranian assets worth $2 billion were recently ordered seized following a U.S. Supreme Court ruling that held Tehran responsible for terrorist acts in Lebanon in the 1980s and a 1996 truck bombing in Khobar, Saudi Arabia. The decision was based on claims by survivors of the attacks. U.S. intelligence agencies had blamed Iranian operatives for the attacks. Iranian Foreign Minister Javad Zarif has described the ruling as a travesty of justice. He said that Iran held the U.S. government responsible for “this outrageous robbery, disguised under a court order”. But the order would have no doubt sent shivers down the spines of the Saudi authorities. Relatives of 9/11 survivors could bring in multibillion-dollar suits against the Saudi authorities if the frayed political relationship between Washington and Riyadh reaches breaking point.

During his visit to Riyadh, Obama reassured the Saudi leadership that Washington remained committed to the security and well-being of the kingdom but made it clear that under his watch the U.S. would not embark on another military adventure in the region. At the same time, there has been no let-up in the sale of American arms to the kingdom. Saudi Arabia has been the recipient of the most advanced U.S. weaponry, along with Israel, for a long time. Since April 2015, the U.S. has sold weaponry worth $33 billion to the Gulf states, the bulk of it going to Saudi Arabia. In the first six years of the Obama administration, $50 billion worth of weaponry was sold to the kingdom.

Much of this weaponry, which includes banned cluster bombs, has been indiscriminately used in the war in Yemen, where schools and hospitals have been targeted by the Saudi-led military coalition. Some of the sophisticated weapons have found their way to jehadi groups supported by the Saudis and their allies in Syria and Iraq. The Americans still prefer to look the other way as weapons flow into the hands of extremist groups in the region. If the U.S. keeps on supplying its proxies in the region with arms, there is little hope for a peaceful settlement of the civil wars in Yemen and Syria.

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