Saudi fears of Iran, overproduction and Obama

A report in Foreign Policy discusses the fear felt by many in the House of Saud, “The true surprise about the Saudi-Iranian contretemps over the execution of Sheikh Nimr al-Nimr is that it caught so many people off guard in the first place. Anyone paying attention to Saudi Arabia knew that something like this was a long time coming. Unfortunately, not enough people were paying attention until it was too late. It’s impossible to understand the current situation without delving into Saudi politics and foreign policy. But it’s equally important to be honest about the limits of our knowledge. Very much like the Islamic Republic of Iran, it’s very difficult for anyone outside the highest reaches of government of the Kingdom of Saudi Arabia to really understand its fears and strategies”.

The writer argues that “it’s clear that Saudi policy has to be understood as an interweaving of Saudi internal and external interests, and right now those interests are overwhelmingly about fear. The external threats it seems to see are easier for Americans to recognise than the internal ones. But what we often miss is how the Saudis see external issues affecting their internal circumstances and creating domestic threats they find far more frightening than the external threat on its own. At the broadest level, when the Saudis in Riyadh look at the Middle East around them, they see a region spiraling out of control. Since 2011, they have witnessed a massive increase in general instability across the region”.

The writer notes that civil wars, terrorism and refugees have turned a placid region into one wrecked by chaos, “Indeed, both the civil wars and the spillover they generate have also produced a general mobilization of the Middle East’s Shiites, instigated and led by Iran. And that includes the Shiites in the Saudi kingdom. Officials in private and press reports occasionally note that hundreds of Saudi security service personnel have been killed and wounded in operations in the Eastern Province, the home to the vast majority of the kingdom’s Shiites. Americans tend not to pay attention to these operations because we see them as proof that the Saudis have things well in hand; but another way to look at it is that the Saudis are fighting pitched battles with someone in the cities of the Eastern Province. In other words, there seems to be a much higher degree of mobilization and violent confrontation among the Saudi Shiites than most realize”.

Implausibly he argues “Then there are Saudi fears about the oil market. Everyone seems to believe that the Saudis are purposely not cutting back production to kill off North American shale producers. But that is absolutely not what the Saudis are saying, either in private or public. Instead, they are saying that they can no longer control the oil market because there are too many other sources and all of the OPEC countries cheat like crazy whenever Riyadh tries to orchestrate a production cut. This has happened to them repeatedly over the past 20 to 30 years. They try to cut production to prevent oil prices from dropping, and the rest of OPEC takes advantage of it to pump as much as they can, contrary to what they promised and agreed to. The result is that there is no overall supply curtailment and the Saudis lose market share. This time around, they have stated that they cannot realistically control the OPEC oil supply, so they are not going to try to do so. Instead, they are going to fight for market share. But doing so means having to win a race to the bottom, with the result that their oil revenues are plummeting”.

Correctly he writes “the region’s civil wars have the Saudis so frightened that they have intervened in unprecedented ways. They have poured tens, if not hundreds, of billions of dollars into Syria and Yemen and to a lesser extent Iraq and Libya. They are pouring tens of billions more into Egypt, Jordan, Morocco, Algeria, and Bahrain to shore up their governments, prevent state collapse under the strain of the spillover from neighbouring civil wars, and thus prevent more civil wars on their own borders. But these increased foreign-policy costs coupled with reduced oil revenues have forced the Saudis to draw from their sovereign wealth fund at a rate of $12 to 14 billion per month — a pace that will wipe out those reserves in less than three years, but is likely to cause severe domestic political problems (including dissension within the royal family) long before”.

He ends noting “the Saudis feel frustrated and abandoned by the United States. Many Saudis and other Gulf Arabs consider President Barack Obama deeply ignorant, if not outright foolish, about the world and the Middle East. They evince out-and-out contempt for him and his policies. From their perspective, the United States has turned its back on its traditional allies in the Middle East. Washington is doing the least it can in Iraq, and effectively nothing in Libya and Syria, with the result that none of those conflicts is getting better. If anything, they are actually getting worse. Moreover, Saudi Arabia seems to differ over whether Obama is using the new nuclear deal with Tehran to deliberately try to shift the United States from the Saudi side to the Iranian side in the grand, regional struggle or if he is allowing it to happen unintentionally. The more charitable Saudi position is the former, because that suggests that Obama at least understands what he is doing, even if they think it a mistake and a betrayal. The latter view, for Saudis, sees him as a virtual imbecile who is destroying the Middle East without any understanding or recognition”.

For those who have argued that the Saudi’s have no where else to go during Obama’s term he argues “The depth of Saudi anger and contempt for the current American leadership is important to understand because it is another critical element of their worldview and policies, as best we can understand them. With the Middle East coming apart at the seams (in Saudi Arabia’s view), the United States — the traditional regional hegemon — is doing nothing to stop it and even encouraging Iran to widen the fissures. Since the United States can’t or won’t do anything, someone else has to, and that someone can only be Saudi Arabia. The dramatic increase in Riyadh’s willingness to intervene abroad, with both financial and military power, has been driven by its sense that dramatic action is required to prevent the region from melting down altogether and taking the kingdom down with it”.

He ends “the Saudis are scared of the rising tide of popular mobilization and Shiite mobilization; they are scared by their loss of control over the oil market and what that is forcing them to do domestically; they are scared by the spillover from the region’s civil wars and the costs that they are being forced to bear to try to prevent that spillover from affecting them; and they are scared that we are abandoning them for Iran”.

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