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The Tactical Failure of the Qatari Blockade

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By Marie Chetcuti

Recently, Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain have launched draconian measures against Qatar, charging their Emirate neighbour of funding terrorism, maintaining intimate relations with Iran, and for their partisan reporting through the state-owned channel Al-Jazeera. In order to understand the dimensions and motivations of Qatar’s diplomatic blockade, it is necessary to address the long-standing history of regional discord between Qatar and Gulf nations. The current diplomatic rift represents a severe manifestation of such disagreements. However, rather than draw Qatar back within the Gulf fold, the blockade has produced a contradictory effect on curbing Qatar’s behaviour.

History of Tensions

Despite the severity of the current situation, Qatar is no stranger to such diplomatic rows, having weathered similar measures as a consequence of its previous foreign policy actions. The current situation follows years of growing tensions between Qatar and other Arab Gulf states around Qatar’s intimate association with the Muslim Brotherhood, its maverick reaction to the Arab Spring, and the partisan reporting through Al Jazeera.

Tensions between Qatar and Saudi Arabia have long aggravated the diplomatic relations between these two countries. In 2000, then Crown Prince Abdullah bin Abdul Aziz of Saudi Arabia threatened to boycott the Organization of the Islamic Conference summit held in Doha in protest of Qatar’s continued trade relations with Israel. In response to the pressure, Qatar shut down the Israeli trade mission. In 2002, Saudi Arabia recalled its ambassador from Doha following controversial comments made against the Saudi ruling family on Al Jazeera.

In the post-Arab spring era, Al Jazeera’s editorial lines were sympathetic to the Muslim Brotherhood - a group branded a terrorist organisation by Saudi Arabia and the United Arab Emirates - subjecting Qatar to the disillusioned and indignant reactions of Gulf nations. On 5 March 2014, Saudi Arabia, the United Arab Emirates and Bahrain suspended ties with Qatar over its relationship with the Muslim Brotherhood and accused it of harboring ‘hostile media’ and interference in the affairs of GCC states.

The Siege of Qatar

On 5 June 2017, four Arab nations—Saudi Arabia, the United Arab Emirates, Bahrain and Egypt—announced a diplomatic severance from the state of Qatar, triggering a crisis in the Persian Gulf. The Arab nations charged Qatar of funding terrorism, maintaining intimate relations with Iran, and supporting the antagonistic reporting of Al Jazeera. The Gulf countries accused Qatar of destabilizing the region through its support for Islamist groups and evasion of its commitments.

The accusations seem to be a reprisal against Qatar’s regened commitment to the 2013 Riyadh agreement. The first agreement laid out commitments to avoid interference in the internal affairs of other Gulf nations, including barring financial or political support to ‘deviant’ groups. The agreement explicitly cautions against supporting the Muslim Brotherhood as well as supporting groups in Yemen that could threaten neighbouring countries. The diplomatic rift prompted the Arab nations to halt air, land and sea travel, eject Qatari diplomats and recall own diplomats stationed in Qatar, and order Qatari citizens to leave the Gulf states within 14 days. Qatar has also been expelled from the Saudi-led coalition operating in Yemen. These diplomatic moves come two weeks after four Arab countries blocked broadcasting of Al Jazeera’s news channel.

No Formula for Resolution

Nearly seven weeks on and the draconian measures of the diplomatic blockade have not reconciled the Gulf crisis. On 11 July 2017, through the mediation of Kuwait, the Arab nations produced a 13-point list, spelling their demands for Qatar to end the crisis. Yet, Qatar remained unwilling to capitulate to the Arab demands, clarifying that certain elements will not be the basis of any negotiations.

Qatar is poised financially to withstand the blockade’s pressures with finance minister Ali Sherif al-Emadi reassuring “Qatar is extremely comfortable” with its financial position. In terms of GDP per capita, Qatar is one of the world’s richest countries. Asia remains Qatar’s largest consumer of Qatar’s lucrative oil and gas exports and academics expect that the current rift will not adversely affect the OPEC agreement to limit oil production.

Though Arab nations aspired to isolate and punish Qatar for its actions, the results have been far from what was intended. After the blockade, Turkey and Iran quickly pledged assistance by shuttling food aid by air and sea. Turkey also dispatched a small battalion of troops and armoured vehicles. The actions taken by Iran, especially, in defence of Qatar could drive closer ties between the two countries, rather than reduce diplomatic ties. The conflict could undermine the power of Saudi Arabia and shift power towards its regional competitor, Iran. The Gulf’s behaviour has undermined the GCC’s penchant for regional stability and commerce as Oman and Kuwait (also members of the GCC) are not participating in the boycott. The fractured responses by GCC states could provoke its disintegration.

Though the severity of these draconian measures is unprecedented, it remains to be seen whether such measures can have a constructive effect on Qatar’s behaviour. The comfortable position of the Qatari economy and the material assistance provided by Iran and Turkey seem to shelter Qatar from the pressures the Arab nations sought to exert. As Qatar refuses the 13-point list, the conflict seems to be at an impasse.

The status of the blockade and hitherto counterproductive measures provide ample reason for the Arab nations to redefine the conflict’s parameters. The 13-point list should be redrawn to offer more reasonable demands, and remove contentious ones - such as the closure of Al Jazeera or the Turkish military base. Such actions could represent a way out of the current impasse and generate progress towards a constructive resolution.

Marie Chetcuti is a postgraduate in International Relations at King’s College London. Her academic interests center on conflict and peace resolution in the Middle East, contemporary conflicts, and human rights.

Image source:

Image 1: http://en.axar.az/news/world/180939.html

Feature image: Istock Photo from http://forward.com/opinion/politics/374026/explanations-for-the-qatari-diplomatic-crisis/

Why is Saudi Arabia Helping Iran’s Hardliners?

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By: Alexander Decina

Iranian_presidential_election,_2009,_protests_(2)
Protester’s in Iran’s presidential elections on 13 June, 2009. Source: Wikimedia

There is an abundance of Middle East analysts and experts drawn to the idea of eternal conflicts. After the 2003 U.S. invasion of Iraq, they learned the words “Sunni” and “Shia” and decided that this “1,400 year-old fight” is the defining conflict in the Middle East, disregarding the nuance of the important issues of the region. As Saudi Arabia and Iran recently rowed over the execution of a prominent Shiite sheikh and the subsequent storming of the Saudi embassy in Tehran, and as the two countries continue their proxy war in Syria, the experts have re-invoked the Sunni-Shia conflict, positing that Saudi Arabia and Iran—the purported champions of Sunnism and Shiism respectively—have always hated each other. This grand sentiment distracts from what is actually a petty fight: Saudi Arabia is giving Iranian hardliners ammunition to undermine the moderates and prevent Iran from getting close to the West, thus protecting Saudi Arabia’s place in the region.

Saudi Arabia and Iran have indeed been rivals since well before the 1979 Iranian Revolution. From the days of the shah, the two countries argued over regional dominance and oil policy—the same issues they continue to squabble over today. But just because these countries have been rivals it does not mean they have always been mortal enemies. Even after the Iranian Revolution, there have been multiple periods in which Riyadh and Tehran have worked to improve relations and attempt rapprochement—all in the midst of ongoing tensions and conflicts.

In the mid-1980s and throughout the 1990s, Ali Akbar Hashemi Rafsanjani—a prominent opponent of Supreme Leader Khamenei—worked with then-King Fahd and then-Crown Prince Abdullah of Saudi Arabia to increase the number of Iranian pilgrims on the hajj and to improve Iran’s relations not only with Riyadh but also with the other countries in the Gulf. In the late 1990s and early 2000s, then-President Khatami made more progress than Rafsanjani, holding amicable talks on oil policy and even forming a security pact in April 2001, pledging to cooperate in fighting terrorism and to keep out of each other’s internal affairs.

As Rafsanjani and Khatami have reached out, they have always been constrained by Iran’s hardliners in the Principalist party and the Supreme Leader. With the Supreme Leader’s veto power over every move they might make, the moderates’ attempts at rapprochement have only existed to the extent that Khomeini and now Khamenei have allowed. The Supreme Leaders’ decisions on this have been based on ensuring their own survival. Today, Khamenei wants to do whatever he can to reduce the level of volatility against him and the clerical establishment in Iran. He balances improving oil policy and Iran’s economy, which keeps protestors off the streets, with appeasing Iran’s hardline Principalists, who have always viewed him skeptically due to his lack of religious credentials.

Khamenei’s biggest appeasement to the hardline Principalists was entering the fray in support of Mahmoud Ahmadinejad in the 2005 presidential elections. This backfired after 2009 when demonstrators protested not only against the president but also against the Supreme Leader himself—a rare sight in Iran.

Khamenei could have nullified President Hassan Rouhani’s surprise win in 2013. Rouhani’s plans for moderation and rapprochement with regional neighbours and the West were, and still are, a threat to the hardliners in Iran. But with the combination of the possibility of sanctions relief and fear that quashing Rouhani would lead to demonstrations like the ones in 2009, Khamenei allowed Rouhani to take office. Iranian forces loyal to the Supreme Leader could surely have put down another round of protests, but at what cost? A repeat of 2009 would have led to even more animosity directed at Khamenei and the establishment.

Since coming to power, Rouhani and his foreign minister, Javad Zarif, have made attempts at outreach similar to those of Rafsanjani and Khatami. The two have made requests for official visits and have urged dialogue with the other Gulf countries. And yet Saudi Arabia has been far less receptive to their efforts than it has been towards the previous Iranian leaders—especially since King Salman took power. Rather than entering talks in earnest as it did in decades past, Saudi Arabia has taken more aggressive Syria and oil policies to bleed Iran. The Gulf monarchy has also engaged in an extensive campaign in Yemen to open a new front against its rival (though Tehran’s support of the Houthi rebels in Yemen has always been fairly inexpensive, so the Saudi-led campaign does very little to actually hurt Iran).

Why is Saudi Arabia rebuffing Rouhani and Zarif? After last year’s nuclear deal, Saudi Arabia believes that Iran, for the first time since 1979, stands a real chance to reintegrate into the international community—possibly giving the United States and the West the option of another powerful ally in the Middle East besides Saudi Arabia. The likelihood that Iran’s moderates will be able to accomplish this is still quite low. Nonetheless, Saudi Arabia perceives this as a real enough possibility that it is willing to act on it to protect its standing.

Calling reform and moderation in Iran an uphill battle is an understatement. The Saudis, of course, know this and are using it to their advantage. In its aggressive Syria, Yemen, and oil policies, and now in executing Shiite cleric Nimr al-Nimr, Riyadh is strengthening the position of Iran’s hardliners, giving the clerical establishment ammunition to undermine Iran’s moderates without inciting protests against it like the ones in 2009.

This ammunition gives the hardliners good footing for the upcoming Majlis and Assembly of Experts elections on February 26. They are able to frame the moderates’ efforts to improve Iran’s relations with the world as weakening the country at a time when the region is more unstable than ever before. Furthermore, if lower oil prices undermine the benefits of sanctions relief on the economy, they can argue that the moderates have weakened Iran’s position with no real payoff. The announcement that Iran’s Guardian Council—which is controlled by the hardliners—has just disqualified an unprecedented number of moderate and reformist candidates, including the late Supreme Leader Khomeini’s grandsons, Hassan Khomeini and Morteza Eshraghi, shows the hardliners are feeling particularly bold—a bad sign for Iran’s moderates.

The Saudis are all too happy to strengthen Iran’s hardliners and have shown they can do so successfully, but they do this at their own peril. If Saudi Arabia continues its aggressive Syria and Yemen policies, it will create more radicalism and more terrorism that will spill out of those countries and will affect not only other countries and the West, but also the kingdom itself. According to the IMF last October, if Riyadh continues its aggressive oil policies and keeps the price below $50 per barrel, it will run out of cash reserves in fewer than 5 years. Earlier this month, crude fell below $30 per barrel, the lowest it’s been since 2003. Saudi Arabia’s new direction under King Salman is recklessly shortsighted and is making its traditional allies in the West and in the region uncomfortable—even if they’re not ready to voice this publicly yet. If Riyadh is truly worried about maintaining its positioning, it should look on itself rather than Iran.

 

 

Alexander Decina is a research associate at the Council on Foreign Relations, where he focuses on U.S. foreign policy in the Middle East. He previously worked for the Tripoli, Libya-based Sadeq Institute and for the Sustainable Democracy Center in Beirut, Lebanon.

Operation Decisive Storm: when Riyadh calls on Islamabad

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By Zoha Waseem:

SAUDIA-PAKISTAN

With Iran-backed Houthi rebels advancing in Yemen, the Kingdom of Saudi Arabia (KSA) has called upon its trusted and indebted partner Pakistan for support in so-called ‘Operation Decisive Storm’. There has been much speculation over the last few days as to what sort of support Islamabad is considering on providing Riyadh, with whom it has both a military partnership as well as an ideological relationship.

Reports from Saudi Arabia were quick to suggest that Pakistan may be joining the Riyadh-led coalition against Houthis. Pakistan’s Defence Minister Khwaja Asif did all but deny this when he said, ‘Pakistan has pledged to defend Saudi Arabia in case of a threat to the territorial integrity and security of a friendly country’. Foreign Office spokesman Tasnim Aslam took the podium to ease tensions within the country, only to admit that such an option was still under examination. Following a high-profile meeting between Prime Minister Nawaz Sharif, COAS Raheel Sharif, DG ISI Rizwan Akhtar, and Khwaja Asif, it was revealed that a ‘threat to Saudi territorial integrity would evoke a strong response from Pakistan’. To add to the confusion, it was also reported that Pakistani and Saudi forces have been conducting joint military exercises near the Yemeni border. Furthermore, a graphic of key players involved in ‘Decisive Storm’ released by Saudi media, suggested that Pakistani warships and air support have already been provided to KSA.

A delegation inclusive of the Defence Minister, the National Security Advisor Sartaj Aziz and representatives of the Pakistani army, arrived in Saudi Arabia on 31 March. Last week, Khwaja Asif had backtracked on the gravity of the situation, stating that the government is still undecided and that the Parliament will be taken into confidence, all the while stressing Pakistan’s brotherly relations with Saudi Arabia. For its part, the Parliament appears to be leaning towards a ‘no boots’ stance.

At this stage, it is difficult to argue that Islamabad is leaning towards neutrality in the Saudi-Iran-Yemen nexus and it is being suggested that Pakistan may provide logistical support: training, weapons, and possibly aerial muscle, if it has not done so already. Given the history between both countries, neutrality seems highly unlikely. And it is because of this history that it is unsurprising that Saudis have called upon Pakistan to provide assistance.

There is a long-standing economic and military partnership between both states. Pakistan has been receiving aid from Saudi Arabia since as early as the 1960s, and the latter has supported Pakistan during its conflicts with India, as was seen most evidently during the 1971 war. In 1969, Pakistan Air Force fighters flew Saudi jets over South Yemen during the Battle of Sharoora. In the face of Ayatollah Khomeini’s growing power in Iran in 1979, Pakistani troops were deployed in Saudi Arabia. In the 1980s, Saudi Arabia (along with the US) provided funding for Pakistani madrassas and mosques to create and sponsor the Mujahideen to fight against the Soviets in Afghanistan. This led to the expansion of the Deobandi ideology and the rise of Wahabism in Pakistan, creating ideological ties between the two countries and mushrooming jihadi groups that Pakistan has utilised in Afghanistan and Kashmir. And in the 1990s, when Pakistan was slapped with economic sanctions following the development of its nuclear programme, it was Riyadh that provided barrels of oil to Islamabad free of cost.

In 2013, Pakistan and KSA entered into an unofficial nuclear agreement, with Saudis allegedly investing in Pakistan’s nuclear projects, and in return Islamabad pledging nuclear support to Riyadh should it be needed. Last year, a 17-member Saudi defence delegation travelled to Pakistan to strengthen bilateral cooperation.

Nawaz Sharif’s relationship with the Saudi royal family is even more personal. In 1999, when Sharif was sent into exile after General Pervez Musharraf’s coup, it was Saudi Arabia that provided him with shelter. In return, the PM is indebted to the Kingdom and has made frequent visits over the past few months. Sharif visited the late Saudi King Shah Abdullah when he was unwell, then again to attend his funeral, then on 5 March when he was personally received by King Salman at the Riyadh airport with a red carpet reception. It was during this last visit that talks of Saudi demands for military troops from Pakistan began surfacing, but had probably been brainstormed for some time.

That said, the Pakistani state appears to have very little clarity on the matter – or so it has been portrayed. Updates on the situation suggest that possibilities of supporting Saudis are being ‘examined’, ‘considered’, and ‘assessed’. This has created an atmosphere of panic and frustration within the country where the consensus – barring certain religious groups – is to stay out of Yemen. Social media is roaring with opinions and analyses with very little information at hand. Since last week, most analysts, columnists and political commentators – regardless of their stance on the Pakistani army and its operations – have advised against interfering in the Middle East. It is because of this confusion – will they, won’t they – that 500 Pakistanis in Yemen boarded the first flight back home, with over 170 awaiting their turn.

On the civilian side, political parties including Pakistan People’s Party (PPP), Pakistan Tehreek-e-Insaaf (PTI), Muttahida Qaumi Movement (MQM), and Awami National Party (ANP) have all advised against deploying Pakistani troops in Yemen. Shia groups such as Majlis-e-Wahdat-e-Muslimeen (MWM) and the Shia Ulema Council (SUC) took out separate rallies in Karachi against Saudi Arabia’s decision to attack Yemen. At the same time, the notorious Jamaat-ud-Dawa, led by Hafiz Saeed, staged demonstrations in Lahore and Islamabad, declaring their support for the Kingdom. According to one report, Ahle-e-Sunnat Wal Jamaat (ASWJ), a Sunni political party with alleged links to the terrorist group Lashker-e-Jhangvi, has also backed Saudi Arabia’s operation in Yemen. On the other hand, Sunni political organisations such as Sunni Tehreek and Sunni Ittehad Council have called for peaceful resolutions.

More importantly, ISI’s media-arm, Inter-Services Public Relations (ISPR), has been silent on the matter. Ultimately, it is the military that will be calling the shots and they will bear in mind that Pakistan and KSA are not just ‘brothers’; this is an intimate business relationship. While it has been suggested that within the Pakistani army there are talks of not getting involved in the Middle East because of Pakistan’s own internal and regional security dynamics, Pakistan could see an alliance with Saudi Arabia financially beneficial. It is unlikely that the Army will agree to providing assistance to KSA without a hefty package in return and this might be on military terms.

In 2015, KSA is expected to spend an estimated US$9.6 billion on importing defence equipment. According to IHS’ annual Global Defence Trade Report it has already surpassed India to become the world’s largest importer of defence equipment, as well as the USA’s top trading partner. KSA’s budget and defence spending has increased dramatically since the Arab Spring. In fact, the Middle East is reported to be the world’s fastest growing defence market with the US being ‘the biggest beneficiary of this market’. It could be that Pakistan is considering contributing to the defence market, for which Saudi Arabia would be a generous consumer and buyer.

But this is still early speculation. The only opinions expressed in agreement across the board concern the repercussions that interferences in the Middle East could have on Pakistan’s growing sectarian polarization. The sectarian conflicts of the Middle East have never been detached from Pakistan. Indeed, the Saudi Arabia-Iran rivalry, that has found a new front in Yemen, has been playing out in Islamabad’s neighbourhood for some decades now. The primary concern within the country is the exacerbation of Shia-Sunni violence. According to the South Asian Terrorism Portal database, 210 people were killed in 92 incidents of sectarian violence in Pakistan in 2014, and over 140 have died this year (until 22 March 2015).

What is also being discussed now is the rise of sectarianism in urban areas like Karachi, where sectarian attacks claimed 100 lives last year alone. Karachi has been recognised as one of ‘four sectarian hotspots’ and the province of Sindh, which has a history Sufism and deep respect for Shias, is routinely subjected to sectarian violence. Earlier this year, on 30 January, over 60 Shias were killed in Shikarpur, six hours north of Karachi. With Karachi police and paramilitary forces already engaged in operations against ‘crime and militancy’, the city will suffer greatly from increasing sectarian divides.

For the time being, Pakistan does not appear to be in a position to send boots on the ground, both because of militancy at home - for which it needs troops and resources to continue counter-terrorism operations - and also because there can be no easy exit strategies following such a deployment. It further needs to keep its focus on the instability at its western border with Afghanistan, and hostility on the Line of Control. But events are still unfolding and Nawaz Sharif is likely to be under tremendous pressure to cooperate with the royal family. How this cooperation will be justified in the face of Pakistan’s internal security concerns remains to be seen.

Zoha Waseem is a doctoral candidate at the Department of War Studies, King’s College London, researching urban security and policing in Pakistan. She tweets at @zohawaseem.

Why won’t the USA leave the Persian Gulf? The story of the ultimate ‘frenemies'

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By Mazhid Kat:

The US Secretary of Defence meets with the Minister of the National Guard of Saudi Arabia in Washington DC (21/11/14). Photo: Adrian Cadiz

In 1945 Franklin Roosevelt was the first President to admit that the United States had become oil-dependent.[i] This occurred because the American government had introduced a ‘conservation policy’ aimed at reducing the production of domestic oil and saving reserves for future generations by substituting it with imports.[ii] As a result, Roosevelt and King Abdul Aziz Ibn Saud – of Saudi Arabia – signed the Quincy Pact, which included the promise of an American monopoly to develop oil fields in exchange for protecting Saudi Arabia from external threats.[iii]

During the Cold War period, the Persian Gulf represented an important region for US strategy against the Soviet Union.[iv] In order to contain Soviet influence in the area, the Truman Doctrine was elaborated,[v] followed by the Eisenhower Doctrine in 1957, which stressed the importance of the Middle East in terms of a global strategy against the expansion of ‘international communism’.[vi] For states like Saudi Arabia, the US became an ally, always willing to support resistance against any possible leftist advance, like the internal opposition in the Saudi royal family represented by the ‘Red Prince’ Talal bin Abdulaziz Al Saud in the 1960s, who was inspired to see Saudi Arabia developing in a similar way to Egypt with its Arab socialist ideology.[vii]

At the same time, Saudi Arabia (and its local satellites) and the US became the ‘ultimate frenemies’. This term points to the contradictions inherent in America’s relations with these states, specifically the tension between Wahhabism and American liberalism. Wahhabism is the religio-political movement that constitutes the basis of Saudi foreign policy. It is a doctrine which resists the idea of democratization and modernization; instead emphasizing the role of Islam in society. This principle is at odds with the democracy-promoting policies of Washington.[viii] Therefore, the American support for liberal values in the region has always been fighting against the ‘dark side’ of oil and security matters, which results in Washington opposing democratic changes, viewed as a threat to the status quo in the Persian Gulf.

At the beginning of the 21st century, President George Bush uttered a famous phrase: ‘America is addicted to oil’.[ix] Although the major U.S. oil suppliers are in the Western Hemisphere, the Persian Gulf countries accounted for about 25% of the total U.S. crude oil imports in 2013.[x] In addition, Saudi Arabia provided discounts on oil for the U.S., amounting to $8.5 billion from 1991 to 2003.[xi] Partly as a result of this, currently U.S. troops are deployed in Kuwait (13,021), Bahrain (3,227), Qatar (592), Saudi Arabia (332), United Arab Emirates (313), Egypt (267) and Iraq (750).[xii] However, in recent years domestic oil production in the United States has significantly increased as the result of the shale revolution.

During Obama’s tenure in office, large shale oil deposits have reduced America’s dependence on Middle Eastern oil, gradually eliminating the need for such a considerable military presence to help their Gulf allies. This has provided Washington with greater flexibility in its relations with the Gulf monarchies to solve the conflict with Iran. Sanctions have led to Iran showing a willingness to let observers inspect their nuclear facilities in exchange for the supply of uranium being enriched to 20%.[xiii] This means that the United States may accept the ‘threshold status’ of Iran, which would be an important milestone in the thawing of relations between the two countries.

Above all, the shale revolution alleviates American dependency on foreign oil: imported fuel now accounts for 30% of overall oil consumption compared to 60% in 2005.[xiv] The U.S. government has minimized risks of exogenous oil shocks, and so the recent turmoil in the Middle East did not significantly affect oil prices.

Nevertheless, the new trends in the oil industry are not all rosy for the USA. American oil reserves constituted only 2.6% of the world’s total reserves at the end of 2013,[xv] suggesting that the shale revolution will not completely eliminate American energy dependency. That is part of the reason why the US-Saudi coalition has neither been weakened, nor strengthened, by the Shale revolution.

In addition, Washington still needs the support of Riyadh to affect the global oil market through its domestic production and alliance with Saudi Arabia. Some experts argue that the recent drop in the oil price level is an American attempt in cooperation with the Saudis to put pressure on Russia and Iran.[xvi] (This was discussed in Strife a couple of weeks ago.) That is what happened in 1985 when Saudi Arabia increased oil exports from 2 million barrels per day to 10 million, dropping the price from $32 to $10 per barrel. As a result, the Soviet economy lost approximately $20 billion per year.[xvii] This development undermined the ability of the USSR to continue its anti-Western strategy. Another example is when the United States used energy supplies as a mechanism of control over Japan during the Cold War. The ability to manage oil exports to Japan was a unique method of imposing restrictions on Japanese industrial and military policy.[xviii]

Part of the reason why Washington wants to maintain its strong influence in the Persian Gulf is to secure diminishing but still substantial oil imports. But, most importantly, retaining the ability to affect the global oil market represents a tool to increase the bargaining power of Washington in relation to Moscow and Tehran. Of course, Russia and Iran are quite sustainable today, but the continuing trend of low oil prices can weaken their positions.

At the same time, oil can be used by the American government to improve internal governance, civil rights and increase transparency in the Islamic monarchies, thanks to the increased flexibility over the issue of oil supplies. This can shrink the social base for terrorist organizations, which often emerge in response to petro-dictatorships. It is a crucial measure against transnational terrorism because, for example, the majority of hijackers on 9/11 terrorist attack were Saudis. Although they were not working from within Saudi Arabia, they were members of al-Qaeda, and as Hilary Clinton indicated in 2009: “Saudi Arabia remains a critical financial support base for al-Qaida, the Taliban, LeT and other terrorist groups”.[xix] The only question is whether the current administration is willing to begin a transformation to make its allies in the Gulf more democratic and to eliminate the ‘dark side’ of its foreign policy.

Mazhid Kat is an MA student on the International Political Economy programme at King’s College London. His research interests include the political economy of the Middle East and the Post-Soviet region.

 

[i] Colin S. Cavell, America’s dependency on Middle East oil, Global Research, April 11 2012 http://www.globalresearch.ca/america-s-dependency-on-middle-east-oil/30177

[ii] Wallace F. Lovejoy, Oil conservation, producing capacity, and national security, Natural resources journal, January 1970

http://lawschool.unm.edu/nrj/volumes/10/1/05_lovejoy_oil.pdf

[iii] Louisa Dris-Aït-Hamadouche and Yahia H. Zoubir, The US-Saudi relationship and the Iraq war: the dialectics of a dependent alliance, Journal of Third World Studies, 24(1), 109-135, Spring 2007

[iv] Michael J. Butler, U.S. Military Intervention in Crisis, 1945-1994: An Empirical Inquiry of Just War Theory, The Journal of Conflict Resolution, 47(2), 226-248, April, 2003 http://www.jstor.org/stable/3176168

[v] Pierre Tristam, The Truman Doctrine and the Middle East, About.com http://middleeast.about.com/od/usmideastpolicy/a/truman-doctrine-explained.htm

[vi] Salim Yaqub, American Orientalism: The United States and the Middle East since 1945, by Douglas Little, Reviews in American History, 31(4), 619-625, December 2003 http://www.jstor.org/stable/30031381

[vii] Sandra Halperin, The Post-Cold War Political Topography of the Middle East: Prospects for Democracy, Third World Quarterly, 26(7), 1135-1156, 2005 http://www.jstor.org/stable/4017808

[viii] Febe Armanios, The Islamic Traditions of Wahhabism and Salafiyya, CRS Report for Congress, December 22, 2003

http://iglhrc.info/crs_country/CRSReportTheIslamicTraditionsOfWahhabismAndSalafiyya(December22,2003).pdf

[ix] Michael T. Klare, Blood and oil, Media Education Foundation, 2008 https://www.mediaed.org/assets/products/124/presskit_124.pdf

[x] U.S. Energy Information Administration (EIA), http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbbl_a.htm

[xi] Jennifer R. Peck, Do Foreign Gifts Buy Corporate Political Action? Evidence from the Saudi Crude Discount Program, Job Market Paper, 1-51, October 2012

[xii] Total Military Personnel and Dependent End Strength By Service, Regional Area, and Country, Defense Manpower Data Center, 2014 https://www.dmdc.osd.mil/appj/dwp/getfile.do?fileNm=SIAD_309_Report_P1406.xlsx&filePathNm=milRegionCountry

[xiii] Iran dilutes enriched uranium stockpile, Aljazeera, July 21, 2014 http://www.aljazeera.com/news/middleeast/2014/07/iran-dilutes-enriched-uranium-stockpile-201472111930102600.html

[xiv] Christian Berthelsen, U.S. Oil Exports Would Lower Gas Prices, Government Report Says, Wall Street Journal, October 20, 2014

http://online.wsj.com/articles/u-s-oil-exports-would-lower-gas-prices-government-report-says-1413820500

[xv] BP Statistical Review of World Energy 2014, British Petroleum http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-report.pdf

[xvi] Thomas L. Friedman, A Pump War?, The New York Times, October 14, 2014 http://www.nytimes.com/2014/10/15/opinion/thomas-friedman-a-pump-war.html?ref=opinion&_r=1

[xvii] Ibid

[xviii] Noam Chomsky, After the Cold War: U. S. Foreign Policy in the Middle East, Cultural Critique, No. 19, The Economies of War, pp. 14-31, Autumn, 1991

[xix] Declan Walsh, WikiLeaks cables portray Saudi Arabia as a cash machine for terrorists, The Guardian, December 5, 2010 http://www.theguardian.com/world/2010/dec/05/wikileaks-cables-saudi-terrorist-funding

Until the last drop (…of oil)

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By Eugenio Lilli:

Photo: Carsten ten Brink (creative commons)
Photo: Carsten ten Brink (creative commons)

Eight percent: that is how much the price of oil fell after OPEC’s decision last Thursday to maintain its oil output unaltered. This sharp drop was only the latest development in a trend that has seen oil prices on the world market tumble by nearly 40 percent since mid-June. At one point, the international crude benchmark even traded below $70 a barrel, the lowest since May 2010.

The current situation is the result of a combination of factors. On the one hand, a slowdown in the Chinese and European economies has led to a decrease in demand for oil. On the other hand, the so-called “fracking revolution” in the United States, added to an ahead-of-target OPEC production, has generated an increase in oil supply.

Despite a clear situation of overproduction, and repeated calls for a cut, OPEC, and especially Saudi Arabia, decided to keep its production ceiling unchanged. Given the undeniable strategic importance of oil for modern economies, such a decision is likely to have far-reaching implications. Here, we limit our discussion to the relationship between Saudi Arabia and the United States: a time-honored relationship that has come under pressure recently due to openly divergent opinions over events like the Arab Awakening and US-Iranian nuclear negotiations.

Experts have given several interpretations of Saudi Arabia’s decision to convince OPEC to adopt a policy that contributes to the ongoing fall in oil prices. Two of these are particularly worth noting.

The first interpretation depicts Saudi Arabia’s decision as being in line with US interests in the region. According to this view, Saudi policy to keep the price of oil low is part of a wider strategy to help the United States put meaningful economic pressure on Russia. In fact, according to the Financial Times, Russia needs to sell oil at a price of at least $110 a barrel to guarantee stability to its economy and financial system. An oil price at $70 a barrel therefore has the potential to further slow Russia’s embattled economy, since around half of the country’s annual budget revenue comes from oil and gas exports.

The current decline in oil prices has also affected the value of the Russian currency - the ruble. Since the beginning of the year, the ruble has weakened by 34% against the US dollar. A weak ruble makes it harder for Russian companies – including the energy giant Rosneft – to pay the interest on their foreign debts. In other words, by keeping oil prices low Saudi Arabia is actively contributing to the Obama administration’s effort to rein in a recalcitrant Russia.

A second interpretation takes the opposite view and describes Saudi Arabia’s decision as a foreign policy tool to test US shale production. According to this interpretation, a policy of cheap oil is primarily aimed at challenging US shale operators and driving out the highest-cost producers. In fact, the break-even price required for shale oil developments in the United States ranges between $40 and $115 a barrel. A Saudi strategy for a long period of low prices may therefore push many US producers out of the market and slow down the development of these new energy sources. In other words, Saudi Arabia may be assertively resisting the US’ steady rise to being the world’s top oil producer.

Certainly, the above interpretations are not mutually exclusive. In fact, the Saudis could be cooperating with the Obama administration against Putin while, at the same time, they could be challenging the United States for supremacy in the global oil market. However, a Saudi policy mainly based on a rationale of “cooperation” instead of one of “competition” could be a revealing sign of where the US-Saudi relationship is heading.

 

Eugenio Lilli is a PhD Candidate at the Defence Studies Department, King’s College London. His research focuses on US foreign policy toward the Greater Middle East, in particular on the Obama administration’s response to the Arab Awakening. Eugenio is also the founding chairperson of the King’s College London US Foreign Policy Research Group. You can follow him on Twitter @EugenioLilli