Russia and Saudi Arabia Are Headed for a Showdown
Today, the Middle East is one of three regions that will define world politics for years to come. While the other two—Europe with its EU problems, and East Asia with simmering Chinese ambitions—have an incremental and more protracted effect on international relations, the Middle East is an arena of violence, sophisticated diplomacy and an unceasing flow of events with global significance. However deliberately regional players and global powers prepare their moves here, an event at any given moment can completely change the strategic picture. One of the most momentous dynamics at the current moment is being created by the relationship between Russia and Saudi Arabia. The potential for a full-fledged confrontation between two countries has accumulated during the last three to five years, and such a showdown could significantly affect several spheres of international relations.
Current tensions between Moscow and Riyadh have two main dimensions. The Russian and Saudi positions differ, first, on the fundamentals of global energy relations, and second, on counterterrorism. Both dimensions have factors that obscure the full understanding of these differences.
OPEC has become a distracting factor in discussions on global energy. The overwhelming majority of analyses suggests that the clearest manifestation of the current differences between Russia and Saudi Arabia on how to manage global oil markets was the breakdown of April’s talks in Doha. According to this reasoning, Russia is eager to coordinate the freezing of oil production together with OPEC. However, Saudi Arabia is not interested, and OPEC cannot act because of the rivalry between Saudi Arabia and Iran. In reality, the gap between Moscow and Riyadh’s approaches to the global oil market goes deeper than the paralyzed OPEC talks.
Thorough analysis of Russia’s energy policy, especially Moscow’s position on global energy security, provides a far more instructive perspective. Indeed, Russia is concerned with the smooth functioning of global energy markets, including oil markets, and security of supply as well as security of demand. In official Russian documents, one can find a developed approach to global energy security, which basically includes Russia’s interests in a framework of stable international energy relations. This approach does exclude an unilateral strategy aimed at harming the interests of other participants in global energy relations. The reason for this is simple: Russia does not humanely preach universal friendship and coexistence, but instead rationally emphasizes the common need for energy producers and consumers to develop cooperation, because aggressive moves without considering the interests of others may amount to throwing stones in the glass house of the global energy system.
At the same time, Saudi Arabia currently seems more concerned with improving its market position, while implementing the so-called Saudi Vision 2030, aimed at moving away from an “addiction to oil.”
In this regard, the barely alive OPEC is a place where the clash of visions between Russia and Saudi Arabia is unfolding. Russia’s national energy-security policy mixes elements of energy security of both energy consumers and producers, with a substantial additional potential for energy transit. Being dependent on world energy markets for its economic development, Moscow has spent the last decade promoting dialogue between energy producers and consumers, as well as between producers, aimed at improving the functionality of world energy markets. The Gas Exporting Countries Forum, a mostly Russian initiative, emerged during this decade as an example of a successful international energy organization that fundamentally differs from OPEC. While OPEC was created as a cartel, advancing exporters’ interests against those of importers, the GECF is a industry-specific organization aimed at improving the efficiency of global gas production through dialogue among professionals. It is very difficult to argue that such an improvement of efficiency is adverse to consumers’ interests.
Riyadh is choosing a different path. OPEC, for decades essentially an extension of the Saudi oil industry, has been hung out to dry, while Saudi Arabia continues to pump more oil in order to crush all its competitors. To quote Bloomberg Businessweek on the Deputy Crown Prince Mohammed bin Salman, a son and confidant of the king, and demiurge of the current policy, “the likely future king of Saudi Arabia says he doesn’t care if oil prices rise or fall. If they go up, that means more money for nonoil investments, he says. If they go down, Saudi Arabia, as the world’s lowest-cost producer, can expand in the growing Asian market. The deputy crown prince is essentially disavowing decades of Saudi oil doctrine as the leader of OPEC”.