Beware Soviet-Saudi Rapprochement

Article excerpt


As the Bush administration prepares for the summit with Russian President Vladimir Putin, it should monitor the new geopolitical tectonic plate shift, after Crown Prince Abullah of Saudi Arabia completed his little-noticed visit to Russia Sept. 1-2.

Moscow and Riyadh, old rivals, now claim to have found a common agenda, which spans oil, terrorism and arms sales. After the Iraq war, Riyadh is looking to balance U.S. influence in the Persian Gulf. It also hopes to diversify its sources of weapons, and signals to Washington that it keeps all geopolitical options open. No longer sure of its close relationship with Washington, the Saudis are reaching out to the former empire it helped the U.S. to defeat in Afghanistan only 15 years ago.

Moscow, on its part, wants to intercept money flowing to the Chechen rebels from the Gulf, sell arms and attract Saudi investment.

Russia is the third-largest weapons exporter after U.S. and Great Britain; its military sales topped $6 billion in 2002. In 1997, Russia sold a sophisticated $4 billion air defense system to the United Arab Emirates, and would like to open the lucrative Saudi market to its formidable arms industry.

Saudis also recognize that Russia, as the largest producer of oil outside the Organization of Petroleum Exporting Countries (OPEC), the second-largest exporter and the largest producer of natural gas, packs a big punch in the global energy markets. Saudi Arabia, like the U.S., wants its own "energy dialogue" with Moscow.

Saudis are concerned that the more efficient Russian private sector-driven oil industry development model may spread to the Middle East. Riyadh traditionally considered itself the market-maker of oil, and wants others to follow.

A five-year oil-and-gas cooperation agreement will allow the two fuel giants to coordinate supply of oil to the global markets. Russia will not even need to join OPEC to do so, although the U.S. State Department sources believe Washington "will not be excited" if Moscow considers joining the cartel.

Moscow, on its part, is driven toward a partnership with Saudi Arabia for a combination of geopolitical and geoeconomic reasons. It is looking to compensate itself for the loss of influence in the Gulf with the demise of Saddam Hussein, the old Soviet client.

Russia's traditional influence and markets in secular Arab countries - such as Iraq, Syria and Libya - have been in decline.

Russian energy companies, flush with cash, are looking for joint ventures in the Middle East, including in Saudi Arabia, while Saudis may invest in the Russian natural resources sector, including energy, and in real estate and aerospace. …