Saudi Oil and the Fickleness of Friendship
The most effective international agreements do not rely on friendship but on the self-interest of each party to continue to receive the benefits of the agreement.
The decision by the OPEC+ oil cartel to cut production demonstrates not only the mistake of President Joe Biden’s trip to Saudi Arabia in July but also the wisdom and relevance of Lord Palmerston’s observation about nations having no eternal friends or perpetual enemies but only eternal interests. A corollary to Palmerston’s aphorism is that the starting point in setting policy toward any foreign state is to expect that in most cases that state will follow its own interests rather than any sentiments involving expressions of either friendship or enmity.
A persistent shortcoming of U.S. policy, through several administrations, toward the Middle East has been a very un-Palmerston-like tendency to view the region, often with Manichean rigidity, in terms of friends and enemies, rather than centering policy on the agile pursuit of U.S. interests. Already in the wake of the OPEC+ meeting, discourse about U.S. policy toward Saudi Arabia has shown signs of sinking into a simplistic “are they friends or are they foes” mode.
Saudi Arabia, despite such salient transgressions as the butchering of a U.S. resident journalist, an aerial assault on Yemen that was the biggest factor in turning that country into a humanitarian disaster, and severe human rights abuses within Saudi Arabia, has generally enjoyed a place in the “friends” column. This place partly reflects inertia—treating such a “friendship” as eternal—dating back to Franklin Roosevelt’s meeting with Ibn Saud on a ship in the Suez Canal in 1945. In more recent years, Saudi cooperation with Israel—even though Riyadh has not yet taken the same step as its Emirati and Bahraini colleagues in moving to full diplomatic relations—has added to the pro-“friend” camp the usual political forces in the United States that get energized over anything involving Israel.
The Saudi energy minister voiced a quite understandable and economically rational explanation, based on the financial interests of his government and the other OPEC+ members, for the production cut. He cited the growing risk of global recession and the desire to get ahead of any drop in demand for oil that would, at current production levels, precipitate a sharp drop in the oil price.
An eternal interest of Saudi Arabia is to maximize its revenue from oil sales. Exactly how that interest translates into policy has changed over the years with changing domestic and international circumstances. At times in the past, when Saudi Arabia’s population was much less than it is now and its budget surpluses were large, it was a pricing dove within OPEC. With its huge oil reserves, it wanted to sustain demand for oil over the long term and avoid the sort of big price rises that would hasten consuming nations’ turn to alternative energy sources. Whatever pricing restraint it exhibited was not just an act of friendship toward the West.
Today, with Saudi Arabia’s larger population, bigger domestic needs, and tighter finances, its strategy has become closer to that of traditional pricing hawks such as Iran. It wants and needs more revenue right now. It may also see the efforts of consuming nations to develop sustainable energy sources as proceeding more independently from oil prices than before, because of concerns about the environment and climate change.
The most effective international agreements do not rely on friendship, kumbaya, fist bumps, or anything having to do with friendship and warm feelings. They instead depend on the self-interest of each party to observe its obligations under the agreement in order to continue to receive the benefits of the agreement. This applies just as much to agreements between nations considered to be adversaries as to ones between those viewed as friends.
An example was the agreement, known as the Joint Comprehensive Plan of Action (JCPOA), that limited the nuclear program of Iran, Saudi Arabia’s cross-Gulf rival. Though multilateral, the critical bargaining was between the United States and Iran, which are widely considered to be adversaries. The agreement certainly was not based on friendship, or even on trust—but rather distrust, based on the critical part played by intrusive international inspections. And it was based on the self-interest of each party: Iran’s interest in gaining partial relief from economic sanctions, and the interest of the United States and the West in closing off all avenues to a possible Iranian nuclear weapon without having to give up anything in return apart from sanctions that had the negative effects of constraining U.S. business, imposing hardship on ordinary Iranians, and enriching elements of the Iranian regime such as the Revolutionary Guards with smuggling opportunities.
The JCPOA was self-enforcing by providing for an automatic end to benefits for each side if obligations were not meant. If Iran had violated its obligations, sanctions would quickly have snapped back. If the United States violated its obligations—as the Trump administration did in totally reneging on the agreement in 2018—Iran was released from the agreement’s nuclear restrictions.
Trump’s foolish reneging and turn to a policy of “maximum pressure” that proved to be a complete failure point to a necessary elaboration on the corollary to the Palmerston adage. The interests that a regime pursues may sometimes be more those of the ruler than of the nation he rules, which gets into domestic politics and issues of regime preservation. The interests of Mohammed bin Salman (MBS), the current ruler of Saudi Arabia, certainly are not identical with the national interests of Saudi Arabia, as is underscored every time MBS’s regime cracks down harshly on dissent by Saudi citizens. MBS’s short-term interest in consolidating his power partly with ambitious development projects may have contributed to the hawkish position on oil prices, perhaps partially in conflict with a continuing Saudi national interest in preserving a long-term market for oil.
MBS also is aware of the difference between a ruler’s interests and the national interest in the United States, and this has given him an incentive to interfere in American politics. MBS clearly was comfortable with fellow authoritarian Donald Trump, maintains a relationship with Trump’s family, and would love to see a return of his ilk to power in Washington. It is likely that the effects of the oil production cut on prices at gasoline pumps in America, and because of that on Biden and the Democrats’ political fortunes, were another part of the Saudi despot’s calculations.
Paul Pillar retired in 2005 from a twenty-eight-year career in the U.S. intelligence community, in which his last position was National Intelligence Officer for the Near East and South Asia. Earlier he served in a variety of analytical and managerial positions, including as chief of analytic units at the CIA covering portions of the Near East, the Persian Gulf, and South Asia. Professor Pillar also served in the National Intelligence Council as one of the original members of its Analytic Group. He is also a Contributing Editor for this publication.