The Saudi Aramco logo pictured at an oil facility in Saudi Arabia. Photo: Reuters

Opinion

Asian Angle

by Tom Hussain

Asian Angle

by Tom Hussain

‘Not just oil and cash’: from Riyadh to Abu Dhabi, Arab rulers get tough on regional aid amid rising influence

Gulf monarchies have grown tired of being used as a doormat by so-called allies in the West, and have adapted their policies and resources
Their influence can be seen with recent cut in oil production by Opec+, as well as Qatar’s World Cup and its ambitions to buy Manchester United

Tom Hussain

Published: 4:00pm, 8 Apr 2023

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For the longest time, Saudi Arabia and its Gulf neighbours have been viewed by the world at large as little more than sources of oil and money.

They could not defend themselves from the Gulf’s historic power Iran, irrespective of whether it was led by the Shah or the revolutionary Ayatollahs who deposed him in 1979.

So they struck an oil-for-security deal with then US President Jimmy Carter, and over the decades since the Gulf states have propped up the authoritarian governments of friendly regional nations with large militaries such as Egypt, Iraq, Pakistan and Sudan to keep themselves safe.

Not unlike criminal protection rackets, these transactional geopolitical relationships command obscene prices and have proved highly unreliable.

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After waging a brutal nine-year war against Iran in the 1980s, largely funded by Gulf Arabs, Iraq’s Saddam Hussein turned on his financiers by invading Kuwait in 1990.

When the US and its allies came to the sheikhs’ rescue, the bills began to mount. In fact, it’s fair to say that without Gulf Arab defence purchases since the 1990s, some of the mainstays of Western military power – such as the advanced block 50/52 version of the F-16 warplane – may never have made it beyond the drawing board.

None of this, however, bought the Gulf Arabs “respect”.

They are still viewed with disdain by their Western protectors’ politicians and media.

To this day, Western voices describe the Gulf Arabs’ collective decision to remain neutral vis-à-vis the war in Ukraine as a betrayal tantamount to siding with Vladimir Putin.

The Arabs’ refusal to pump more oil at lower prices invoked American fist-shaking about most of the September 11 terrorists being Saudi nationals.

Iran and Saudi Arabia agreed to reestablish diplomatic relations and reopen embassies after seven years of tensions, thanks to help from China. Photo: China Daily via Reuters

Similarly, Saudi Arabia’s decision last month to enrol China as the fair arbiter of attempts to normalise diplomatic relations with arch-rival Iran has been widely misrepresented as a geopolitical shift into Beijing’s orbit.

In fact, all the Gulf Arab monarchies have done is reassert their long-standing multipolar foreign and economic policies, as have other regional US allies including India, Israel and Turkey.

The Gulf Arab states have endured similarly bittersweet relationships with their regional allies.

The many billions in cash grants doled out by Saudi Arabia, the United Arab Emirates and Kuwait to unpopular authoritarian regimes in Egypt and Pakistan – among other places – over the last 50 years have done precious little to boost their security.

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Instead, Gulf money was abused by rentier elites whose massive corruption and misgovernance have now driven the economies of Egypt and Pakistan into the ground.

Neither country answered the calls of Riyadh or Abu Dhabi in 2015 for them to join a military alliance against the Iran-backed Houthi militias who had seized control of much of neighbouring Yemen.

So instead of buying protection, the Gulf Arabs ended up paying to prevent the economic collapse of their unreliable allies.

Meanwhile, Iran’s nuclear programme and region-wide network of proxy militias pose a greater threat than ever to the Gulf monarchies.

Gulf monarchies have grown tired of feeling insecure and being used as a doormat by their so-called allies in the Middle East and the West

Tehran still exercises veto power over who rules Iraq and Lebanon, and its key ally Syrian dictator Bashar al-Assad has survived all attempts to dislodge him from power.

Unsurprisingly, the Gulf monarchies have long grown tired of feeling insecure and being used as a doormat by their so-called allies in the Middle East and the West.

So they are adapting their policies and marshalling their trillion-dollar resources accordingly.

The surprise Opec+ announcement on Sunday to further cut oil production was not merely about maintaining high prices to finance the ambitious economic diversification programmes undertaken by Saudi Arabia, the UAE and Qatar, as many analysts have posited.

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Oil prices set to rise after Opec+ group agrees to larger-than-expected production cut

Rather, it was a crucial step in wresting control of the oil market from Western speculators trying to profit by shorting the market.

Similarly, Riyadh and others informed their regional allies that there will be no more free money.

Egypt’s state-dominated media initially reacted angrily and nationalistically when the bad news was announced by the Saudi finance minister in January.

But Cairo’s bravado quickly faded once it was forced by the International Monetary Fund to enact extremely painful reforms needed to prevent its economy from imploding.

Saudi Crown Prince Mohammed bin Salman. Photo: Saudi Royal Palace via AP

Egyptian President Abdel Fattah al-Sisi paid Saudi Crown Prince Mohammed bin Salman a brief, unannounced visit on Monday to accept Riyadh’s new terms for financial help. Rather than cash, this assistance will take the form of equity stakes in existing moneymaking state enterprises and investments in new industrial ventures tailored to service the diversifying manufacturing base of the kingdom.

Pakistan’s Prime Minister Shehbaz Sharif is expected to arrive in Saudi Arabia on April 11 to hold a similar albeit lengthier conversation.

All of this underlies the widespread need of Gulf Arab states to reduce their economies’ dependence on oil and liquefied-natural-gas revenues as their key customers in Asia and Europe try to become carbon neutral in the coming decades.

As improbable as it may sound, the Gulf Arab states are in the process of emerging as genuine middle powers

Rather than fearing it, the Gulf Arabs are deeply invested. Saudi Arabia and the UAE have set themselves competing goals of securing 25 per cent of the global renewables market, and their energy companies are working fast with governments and corporations worldwide to achieve these targets.

The sporting investments of the Gulf Arab states should be viewed through a similar lens.

Rather than an attempt to somehow “sports wash” its political credentials, Qatar’s staging of the 2022 Fifa World Cup and its bid to buy English Premier League side Manchester United is about harnessing its existing economic advantages to achieve long-term social and economic goals.

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The same is true of the huge sums of money that Saudi Arabia is investing in the futuristic city of Neom and the UAE’s deep focus on cutting-edge information and communications technology.

As improbable as it may sound, the Gulf Arab states are currently in the process of emerging as genuine middle powers on the global stage.

Their outreach is comparable to that of Emirates airline, the world’s largest long-haul carrier, and DP World, one of the top three port and free-zone operators.

And they are doing so in partnership with all comers while remaining firmly ensconced within the security umbrella provided by the US.

Tom Hussain is a journalist based in Islamabad who has covered South Asia and the Middle East for the past three decades.