US-Saudi Arabia Relationship ‘On The Rocks’

US-Saudi Arabia Relationship ‘On The Rocks’

The Kingdom’s is reaching out to other partners and that indicates that its relationship with the US is being reappraisal because of the nuclear accord with rival Iran.

After visiting Russia and France last month, Deputy Crown Prince Mohammed bin Salman returned home with $23-B of aircraft and energy contracts.

“Trust between Saudi Arabia and the US has been damaged by the Iran nuclear deal,” said a Middle East specialist at Georgetown University in Washington. “Many in Saudi Arabia feel abandoned by the U.S.”

The US led cooperation with Iran raises the possibility of a major shift in the Middle East that the Saudis have not had to contend with since the Y 1979 Islamic Revolution in Tehran.

For the Saudis, business with Russia can dilute dependence on the US, while for the more isolated Russians it is all about winning friends and getting investment, the opportunities are ripe

Changes made to the Saudi royal court by King Salman marked a shift toward the younger generation and underscored its more assertive role as the Middle East sees growing turmoil.

Mohammed bin Salman, 29 anni, was elevated to deputy Crown Prince after taking the post of minister of defense in January and leading the campaign against Houthi rebels in Yemen.

So, considering the unprecedented turmoil in the Gulf region, expect the Saudis to keep all options open.

Like Iran, Russian President Vladimir Putin is an ally of Syrian President Bashar al-Assad, whose opponents in a 4-year civil war are backed by the Saudis. Mr. utin’s support is seen in Riyadh as wavering according to some analysts.

During the deputy Crown Prince’s visit to St. Petersburg in June, the Public Investment Fund agreed to jointly spend $10-B with Russia on projects involving infrastructure, agriculture, medicine and logistics. In prior years, the Saudi fund did not openly pursuing FDI (foreign direct investment).

After meeting with Putin, he flew to Paris, where EUR12-B ($13.3-B) in contracts were signed. They included a EUR 3-B export finance accord between credit insurer Coface SA and the Public Investment Fund. The 2 nations also agreed to feasibility studies for 2 nuclear reactors, and Saudi Arabia agreed to buy 30 Airbus A320s and 20 Airbus A330s for EUR 8-B.

Saudi Arabia has looked elsewhere before to show it is not dependent on the US.

US Defense Secretary Ashton Carter met with King Salman and Prince Mohammed on 22 July in Jeddah, where he tried to reassure them that the US was not wavering in its security commitment.

Saudi Arabia had the biggest percentage increase among the Top 15 spenders on defense worldwide last year, according to the data. Outlays rose 17% to $80.8-B. That’s as the halving of oil prices from 12 months ago reduces government revenue.

Saudi Arabia will not engaging in dollar diplomacy, as it is one biggest assets.

Stay tuned…

HeffX-LTN

Paul Ebeling

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