Russia and Saudi Arabia: $200 Billion Dreaming
(Source: Radio Free Europe/Radio Liberty; issued Sept. 12, 20003)
When Crown Prince Abdallah Bin Abd-al-Aziz al-Sa'ud arrived in Moscow on 1 September, the press found ample reason to play up the three-day visit to Russia by the de facto ruler of Saudi Arabia. The last such high-level meeting took place back in 1932, and it was followed by decades of strained ties. In fact, diplomatic relations between the two countries ceased altogether between 1938 and 1990. Practical-minded observers noted that Saudi Arabia and Russia are today the world's top two exporters of crude oil.

That said, a mutual dependence on oil revenues is hardly the basis for a lasting partnership. Saudi Arabia is a key member in the Organization of Petroleum Exporting Countries (OPEC), which has a penchant for price control through quotas. Russia is not a member, and the country's mainly privatized oil companies have happily produced as much oil for export as they can in order to profit from high world energy prices.

Moreover, Russian-Saudi relations have hardly benefited from ongoing separatist violence in Muslim Chechnya, where Russian security forces suspect that Chechen rebels continue to receive financial support from well-heeled Saudi sympathizers. Leading Russian business daily “Vedomosti” summed up these concerns in a 3 September editorial, commenting, “It is difficult to find a greater conundrum for a diplomat than a rapprochement between Riyadh and Moscow.”

Not everyone agreed. As the crown prince met with top Russian officials in Moscow, prominent optimists from both countries engaged in strikingly similar “what-if” speculation. Russia's other leading business newspaper, “Kommersant-Daily,” ran a 2 September analysis by Aleksandr Reutov. Noting that many Saudi businessmen began pulling their money out of the U.S. economy after the “anti-Saudi campaign that broke out in the United States after 11 September [2001],” Reutov began to muse about “$200 billion looking for a new use.”

Warming to his theme, Reutov continued: “The $200 billion that Riyadh could invest, if things work out, in Russia's military-industrial complex would allow Moscow to make a tremendous leap forward. The combination of Saudi financial capabilities and Russian high-tech designs could add to the political map of the planet an entirely new center of power perhaps capable of returning the world to a bipolar system.”

Though cooler heads might be tempted to dismiss the preceding as fantasy, it is apparently a fantasy shared by more than one. An op-ed by Al-Sirr Sayyid Ahmad on 4 September in the Saudi-owned, London-based Arabic daily “Al-Sharq al-Awsat” also touted an investment-fueled Saudi-Russian push for bipolarity. After informing readers that “the volume of trade between Russia and the Arab world was $5.5 billion last year, although it reached $55 billion in the years before the collapse of the Soviet Union,” Ahmad boldly stated: “Russia can provide investment opportunities for the private Saudi funds that are still wandering the world's capitals in search of investment opportunities. Russia is tempting because of the unwelcoming, or even hostile, atmosphere for Saudi money in Western capitals.... Broadening the base of economic cooperation can give added impetus to cooperation in the political sphere in order to confront Washington's dubious intent to exploit its status as sole superpower to redraw the map of the Middle East.”

Judging by the results of the crown prince's visit, however, the march to a bipolar world is off to a slow start. Amid much talk of goodwill and common cause, the showcase event came in the form of a vaguely worded intergovernmental agreement pledging to stabilize world oil markets through -- you guessed it -- increased cooperation.

A few deals also emerged on the margins. Russian pipeline builder Stroitransgaz signed a strategic-partnership agreement with Saudi construction firm Oger Ltd., Prime-TASS reported on 3 September. Two heavyweight holding companies -- Russia's AFK Sistema and Saudi Arabia's Jeraisy Group -- signed an agreement on 3 September to produce Russian helicopters in Saudi Arabia, regnum.ru reported the next day. And a Smolensk diamond broker is apparently gearing up to sell gems in Saudi Arabia, “Vremya novostei” reported on 4 September.

The question lurking in the wings is whether Russia's foreign policy, with its inchoate longing for a multipolar world and its tendency toward ill-considered opportunism, can help to draw investment to non-raw-materials sectors of the economy that badly need it. The above-quoted musings from “Kommersant-Daily” and “Al-Sharq al-Awsat” indicate a shared readiness, on the rhetorical level at least, to entertain grand dreams of business serving a broader geopolitical agenda.

The modest results of the crown prince's visit show that much more will be required to translate rhetoric into reality.

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