Sunday, September 22, 2019

Aramco Attack a Defining Moment in US-Saudi Alliance

By Melkulangara Bhadrakumar - September 22, 2019 at 04:05PM

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A series of interviews of Democratic presidential candidates opposing President Trump in the 2020 election by the Council of Foreign Relations in New York reveal that the perceptions regarding US-Saudi ties have dramatically changed in the Washington beltway.  

Two issues during the past one-year period made all the difference — the brutal killing of Jamal Khashoggi and the war in Yemen where Saudi atrocities have come into focus. 

Trump’s argument to remain committed to the Saudi ally had boiled down to a single point, namely, that the Saudi regime is a milch cow — making huge investments in the US economy and creating hundreds of thousands of American jobs and buying weaponry from the US in multi-billion dollar deals. 

In turn, the Saudi strategy has been to pin down the US as an ally by literally throw money at the Americans. 

But this back-to-back deal between Trump and the Saudi regime is coming unstuck. There is hardly any influential voice in the US these days defending Saudi policies. 

Beyond Khashoggi and Yemen, the are hidden factors too. One significant development is that the US is steadily emerging as one of the world’s top oil exporters. The head of the International Energy Agency Fatih Birol said on September 13 at a press conference in Washington that the US will “clearly” overtake Saudi Arabia and Russia as the world’s largest oil exporter in the next few years amid an “unprecedented” energy boom. 

As he put it, “They [US, Russia and Saudi Arabia] will be neck to neck in the next few quarter and years, but It is only a matter of time before the US will be clearly the top oil exporter of the world.” Birol added that through 2024 the US will experience “huge production growth unprecedented in the history of oil up to now,” opening the door for greater exports. 

That is to say, not only will the US’ dependence on energy imports from the Middle East be on the wane but there is going to be conflict of interests as regards the oil market once the US exports compete for greater market share and will impact the price of oil. Brent, the global benchmark, is presently trading at $62 a barrel, well below the $80-$85 that Saudi Arabia requires to balance its budget. Saudi Arabia has big stakes in keeping the oil prices high at this juncture when Saudi Aramco’s IPO sails into view. 

Clearly, the geopolitics of oil has brought Saudi Arabia and Russia into a close partnership. The OPEC+ platform is a manifestation of this. To be sure, President Vladimir Putin’s scheduled visit to Saudi Arabia next month promises to be a landmark event. The Saudi-Russian relations are ripe for a surge. 

Putin’s bold remarks last week offering the S-400 missile defence systems o Saudi Arabia signals the trust and confidence in the partnership. At a press conference following the recent Russian-Turkish-Iranian summit in Ankara on Sept 17, Putin stated: 

“We are ready to help Saudi Arabia protect their people. They need to make clever decisions, as Iran did by buying our S-300, as [Turkish President] did by deciding to buy the most advanced S-400 air defence systems. These kinds of systems are capable of defending any kind of infrastructure in Saudi Arabia from any kind of attack.” 

Meanwhile, a senior source at the Russian Defense Ministry alleged on Thursday that the Saudi air defence systems of US manufacture failed to repel last week’s attack by drones on the Aramco plants because they fall short of the declared parameters. TASS quoted the source as saying, 

“The question arises how come such a strong air defence let through dozens of drones and cruise missiles? There can be only one reason for this: the much-advertised US systems Patriot and Aegis fall short of the officially declared parameters. Their effectiveness against small air targets and cruise missiles is low.”

It seems Russia is trolling Trump and trying to persuade Riyadh that working with Moscow is more effective than cooperating with the US. There is some nervousness in the US already. Bloomberg commented wryly, “One could regard it as a kind of mafia-style protection offer: The new, more aggressive gangster on the block is making a bid because the current king of the streets has grown lazy and risk-averse.” 

Interestingly, the day after the press conference in Ankara, Putin telephoned the Saudi Crown Prince Mohammed bin Salman. According to the Kremlin readout, “The sides reviewed the situation on the global hydrocarbons market, including the implementation of agreements in the OPEC+ format. They voiced their mutual determination to continue close coordination with the aim of stabilising global oil prices.” 

Without doubt, Russia factors in that the US-Saudi alliance is unraveling and the Aramco attack could be a defining moment. In the circumstances, it is highly improbable that the Saudis would opt for a New York IPO for Aramco (which is billed as the mother of all IPOs.) Trump had strongly pitched for a New York IPO. 

The point is, turning to the New York Stock Exchange would come with certain litigation risks that the Saudis may want to avoid at this juncture. With an eye on the rising anti-Saudi feeling in the US, the Saudis are worried that American citizens would sue Riyadh for compensation for the 9/11, 2001 attacks, leading to Aramco IPO being targeted. 

Clearly, the US diplomacy has been put on the defensive. En route to Riyadh on Sept 17, US secretary of state Mike Pompeo felt compelled to publicly offer an explanation of the failure of the Patriot system deployed in Saudi Arabia: “We’ve seen air defence systems all around the world have mixed success. Some of the finest in the world don’t always pick things up. We want to work to make sure that infrastructure and resources are put in place such that attacks like this would be less successful than this one appears to have been.” 

On the other hand, after talks in Riyadh, while heading for Washington, Pompeo switched tack: “I was here (in Riyadh) in an act of diplomacy. While the foreign minister of Iran is threatening all-out war and to fight to the last American, we’re here to build out a coalition aimed at achieving peace and a peaceful resolution to this. That’s my mission set, what President Trump certainly wants me to work to achieve, and I hope that the Islamic Republic of Iran sees it the same way. There’s no evidence of that from his statement, but I hope that that’s the case.” 

In this poignant backdrop, Trump’s decision to make an additional deployment to Saudi Arabia can be seen as a belated attempt to shore up the US-Saudi alliance. The Pentagon said the deployment would involve a moderate number of forces – not numbering thousands – and would be primarily defensive in nature. It may be too little, too late to assuage the sense of disappointment in Riyadh. 

Reprinted with permission from Indian Punchline.

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