Summary: the first visit of a reigning Saudi king to Moscow. Syria/Iran, oil, business on the agenda. Some unpublished detail.
King Salman of Saudi Arabia arrived in Moscow yesterday 4 October for a visit which commentators rightly describe as historic.
There is a good summary of the history of relations on the Al Jazeera website by Leonid Issaev of the Moscow-based National Research University. Saudi-Soviet relations were good until the Soviet ambassador who had good personal relations with King Abd al-Aziz was murdered in the Stalin purges in 1938. Diplomatic relations were never restored with the USSR, but were established with the new Russian Federation in 1991. Future kings Faisal, Abdullah and Salman visited Moscow, and President Putin visited Riyadh in 2007, but this is the first visit to Moscow by a reigning Saudi king.
Of course even such historic events must be kept in perspective. Asked about this visit and the simultaneous visit of a US ally President Erdoğan to Tehran – were US allies moving away from the USA and forming new alliances? – the State Department spokeswoman sensibly replied “Last time I checked, foreign ministers and leaders from other parts of the world are allowed to get on airplanes and go meet with their counterparts in other countries. It’s called diplomacy. We do a lot of that, they do a lot of that.”
Crown Prince Muhammad bin Salman remains at home and in charge in the King’s absence, but Salman is accompanied by a large delegation, totalling 1,000 according to one anti-Saudi website quoting the Russian Sputnik website. The three main items on the agenda are expected to be Syria (and perhaps Iran), oil and business.
On both Syria and Iran Riyadh and Moscow have conflicting views, on Syria respectively against and for the regime, on Iran respectively for confrontation and for accommodation. The absence of MBS may limit the value of discussion of Syria/Iran, but Issaev writes “Undoubtedly King Salman and Vladimir Putin will be discussing the conflict in Syria… Russia has repeatedly stated that it highly appreciates the role Saudi Arabia played in the signing of the Cairo agreements which foresaw the establishment of a full ceasefire in Eastern Ghouta. In this regard, it is likely that at the end of this meeting, Riyadh will be able to convince Moscow to guarantee seats for opposition representatives loyal to Saudi Arabia in the future Syrian government.” The Russian Foreign Minister said yesterday 4 October “I would like to stress the relevance of the Saudi Arabian efforts to create an opposition delegation which could become a fair merit partner of the delegation of the Government of the Syrian Arab Republic at the talks under the UN auspices in Geneva.” On Iran, the respected Russia analyst Chris Weafer comments that “the Kremlin provides a back channel to Tehran and that may prove critical if a resolution to the Yemen crisis is to be reached.”
On oil Russia and Saudi Arabia have been key partners in the limitation of oil exports which has halted the decline in the oil price. Weafer comments that very few actually expected Russia to make any effort to comply, never mind to fully adhere to its commitment, but the deal is good economics and good business. “Russia and Saudi both earn close to $2.5bn per month more from exports at $54 oil than they would at $45…Saudi Arabia… now needs a much higher oil price, approximately $85, to balance its budget than Moscow does. The Russian federal budget needed $115 in 2013 but should balance at closer to $70 this year. The Fiscal Rule aims to cut this to $42 by 2022.”
On business, Issaev writes “Moscow is interested in strengthening the financial component of Russian-Saudi relations. The Russian leadership has repeatedly expressed its dissatisfaction with the fact that most of the agreements affecting economic, as well as military-technical cooperation remain at the Memoranda of Understanding (MoU) level… In Moscow, it is expected that King Salman’s visit will put an end to the era of non-committal agreements. The parties are expected to sign the first contract for the supply of Russian arms to Saudi Arabia. The general terms of this $3.5bn contract were agreed upon this summer. Another project in which the Russian authorities are interested, maybe the participation of Russia’s Rosneft in the partial privatisation of the Saudi Aramco, which was announced to take place in 2018. King Salman’s Moscow visit may also mark a turning point for the desired influx of Saudi investment into Russia. This summer, the Saudi ambassador to Russia, Ibrahim al-Rassi, visited a number of North Caucasian republics, where he assessed their investment attractiveness for the kingdom. Moreover, it is expected that the Saudi Public Investment Fund would launch its representative office in Russia following the results of the meeting.” In addition to these projects Weafer lists nuclear power and agriculture. Russia, he writes, will again be the world’s biggest exporter of wheat this year and Saudi Arabia is one of the world’s biggest importers of food “and has made billion-dollar investments in African and Central Asian states to secure supply. Investment in Russia… would move Saudi’s food supply to a more secure level.”
It is normal for large deals and investments to take time, and Russian dissatisfaction is understandable, but as often happens the visit marks the conclusion of negotiations which have been continuing for some years. According to the CEO of the Russian Direct Investment Fund more than seven deals have been finalised; “the quantum of investment is close to a billion dollars, and it is in growth sectors.” The Russian energy minister said investment agreements will be signed “worth more than $3 billion” including a $1.1 billion petrochemical plant to be built in Saudi Arabia by Sibur.
Further details of projects which have been under negotiation are contained in a leaked report (exclusive to Arab Digest) which according to the metadata on the file was submitted by an international consultancy to the Saudi Public Investment Fund on 23 Jan 2016.
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