Geopolemics.com :: Saudi Arabia

Countries: Saudi Arabia
Posted on Wednesday, February 24, 2010 - 02:35 PM
	Between Iran and Iraq Over the past few months, Newnations’s analysis of Saudi Arabia has focused on the risk of Yemen’s instability to the Kingdom. The Yemeni Za’idi Shiite revolt in northern Yemen, and the related Saudi military involvement that intensified last November, has started to wane in intensity. In February, the Yemeni government and the Zaidis have reached a ceasefire agreement and the Yemeni army has been focusing its attention to the rebels in the South, where alleged al-Qaida bases are also said to be located. Yemen, of course, is not Saudi Arabia’s only concern; indeed, recent developments in Iran and Iraq will have important long-term implications as we describe. Iran Saudi Arabia remains adamantly opposed to Iran’s nuclear technology; king Abdullah told visiting US secretary of state Hillary Clinton that Riyadh would support any option to prevent Iran from developing a nuclear weapon. The Iranian leadership from the minister of foreign affairs Mottaki to president Ahmadinejad reacted promptly: “shame shall cover those who support sanctions against us, they will regret it”. The comment targeted the Saudis, hinting a not so veiled “you will pay for this” kind of message to Riyadh. The president of the Iranian parliament, Ali Larijani, accused Saudi Arabia of “sacrificing Islamic cooperation in favor of adventurism”, further highlighting the rift between Riyadh and Teheran. An Iranian general named Faisal has decided to change his name as a symbol of his rejection of Saudi Arabia’s “betrayal of Islam’, accusing Wahabbism of being heretic and the Saudis of wanting to destroy the Shiite holy sites in Iraq and of having betrayed the aspirations of Palestinians. The US has increased the number of its military personnel in Saudi Arabia (now standing at 30,000) and the US Navy is patrolling the Saudi coast and the Persian Gulf; Saudi Arabia will also be deploying new anti missile batteries, recently purchased from the United States. It would appear that the Kingdom is increasingly becoming Washington’s most important ally in its dispute over Iran. Saudi Arabia is where Washington is concentrating its aggressive policy, the proverbial ‘stick’ while Syria will serve as the base for the ‘carrot’ or diplomacy (see Syria update). Of course, Saudi Arabia is not new to playing this role; in 1990, the problem was Iraq and the Kingdom paved the way for an unprecedented US direct military involvement in the Gulf. In Vienna, meanwhile, Russia, which had previously opposed sanctions against Iran, signed a letter sent to the UN International Atomic Energy Association (IAEA) clearly indicating that sanctions would now be an option in trying to persuade Iran to give up plans to enrich uranium to military grade (20%). Nevertheless, while western powers and Russia are pushing for sanctions through international diplomatic channels such as the UN, Saudi Arabia would prefer to see more bite. The Saudi minister of foreign affair has demanded “immediate solutions’, seeing Iran’s nuclear proliferation as a real and immediate threat. The Saudis claim they are not in favor of a military strike; rather, they have tied the Palestinian issue to Iranian nuclear enrichment efforts. Saudi Arabia wants the US to put pressure on Israel to make concessions that are more concrete in the peace process, in order to diffuse Iran’s rhetoric, and possibly, to isolate Iran in the region, seeing as it still maintains close ties to Hamas and Hezbollah. Iran Sanctions, Oil and Iraq The problem of pushing for international sanctions against Iran, which would ostensibly include limits on its oil exports (in the same manner as the sanctions enforced against Iraq in the 1990’s), is that China imports much of its oil from Iran. Of the great powers in the Security Council, China has been the most reluctant to support the use of sanctions. In order to persuade China to take a tougher line on Iran, Saudi Arabia would have to help make up the shortfall in Chinese oil supplies that would derive from the sanctions now being studied against Iran. The question remains whether the Saudis would accept the lower oil price that would inevitably result if they started to increase production. Certainly, if the US is serious about getting Riyadh to cooperate in helping to recruit China into the pro-sanctions camp, the Obama administration will have to make a greater effort in reviving the Middle East peace talks – as hinted by King Abdullah during Ms. Clinton’s visit. In addition, other Gulf states such as Bahrain and Qatar (both of which are in the Gulf Cooperation Council along with Saudi Arabia) are not especially interested in cutting ties to Iran, given the close trade, economic and cultural ties (Bahrain is 50% Shiite) they share. Iraq The Saudis may also be reluctant to increase oil production to help reduce China’s reliance on Iranian oil is compounded by concern that Iraq might soon be producing as much oil as Iran. The Iraqi oil industry has started to grow and while stability and security are still compromised, foreign investors have started to show greater interest. Saudi Arabia is deliberately producing below its capacity at about 8.9 million bpd; it says it could produce as much as 12 million bpd. Iraq is now producing 2.3 million bpd but has many untapped resources and could produce considerably more. The oil majors estimate that Iraq could soon start producing more than 7 million bpd and more than 12 million bpd by the end of the decade. This kind of oil producing capacity would bolster Iraq’s regional political influence, posing a serious challenge to Saudi Arabia’s current leadership in the Gulf region. In addition, Iraq, under the current government and administrative arrangements, has become more Shiite, having forged closer ties to Shiite Iran. In the shorter term, should the technical and engineering obstacles be resolved and a more stable socio-political situation be established (that is if Iraqis are finally satiated by the violence and insecurity of the past seven years), Iraq’s return to the oil market would put push oil prices down considerably, forcing significant production cuts. Much of the interest in Iraq’s oil is coming from China, which adds to the pressure Riyadh is already facing, about opening up more of its reserves to help meet its demand. Apart from the Chinese CNPC, Iraq has signed deals with BP, Shell, Exxon Mobil and Lukoil of Russia. The foreign companies agreed to very unfavorable terms to gain access to the potentially huge resources Iraq has to offer. And Iraq is eager to gain foreign currency to help rebuild the country and, coincidentally, improve political stability. More empowered, Iraq will also demand special production privileges in OPEC in order to make up for all the lost production in the sanctions and war periods; in fact, Iraq’s oil minister has asked OPEC to renegotiate its last quota, set in 1991 at 3 million bpd. Ironically, Saudi Arabia has an ally in Iran when it comes to Iraqi oil production. The Kingdom fears the resulting lower oil price; the Islamic Republic fears that Iraqi oil would help meet Chinese oil import quotas, facilitating the path to international sanctions, with or without Saudi Arabia’s support. Note: To read more, click here

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