Is Saudi Arabia serious about weaponization of oil?
By Ammar Younas
Now many news agencies are claiming that the disappearance of journalist Jamal Khashoggi will end up with a news of his murder by Saudi authorities. The Saudis are facing their greatest reputational crisis in the United States since 9/11. During last year, Saudi were trying to project a progressive, innovative and rather liberal image of the Kingdom. After the recent news about the killing of Khashoggi, US Secretary of State went to Saudi Arabia to meet with the King. CNN calculated the Secretary of State Mike Pompeo met with Saudi King Salman in Riyadh for approximately 15 minutes early Tuesday, following his 12-hour-plus flight to the kingdom. U.S. President Donald Trump has already threatened “severe punishment” if it turns out Khashoggi was killed in the consulate. The Kingdom also affirms that if it receives any action, it will respond with greater action, and that the Kingdom’s economy has an influential and vital role in the global economy.
According to an opinion piece written by the general manager of Saudi Arabia-based Al Arabiya television, Turki Aldakhil, the oil prices could surge to all-time highs if the U.S. imposes economic sanctions against Saudi Arabia. He claims that the US sanctions can lead to an economic disaster that would rock the entire world. “It would lead to Saudi Arabia’s failure to commit to producing 7.5 million barrels. If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure “, He said. Turki also mentioned about the possibility of using Chinese Yuan instead of American dollars for Saudi Oil deals. “ US sanctions will throw the Middle East, the entire Muslim world, into the arms of Iran, which will become closer to Riyadh than Washington. Riyadh would stop buying weapons from the US. Riyadh is the most important customer of US companies, as Saudi Arabia buys 10 percent of the total weapons that these US companies produce and buys 85 percent from the US army which means what’s left for the rest of the world is only five percent; in addition to the end of Riyadh’s investments in the US government which reaches $800 billion. At a time where Hamas and Hezbollah have turned from enemies into friends, getting this close to Russia will lead to a closeness to Iran and maybe even a reconciliation with it. The US will also be deprived of the Saudi market which is considered one of the top 20 economies in the world.” On the other hand, Trump has publicly claimed that he has already informed to the Saudi King that US is protecting him.
Will US sanction Saudi Arabia and can Kingdom react as it claims? I think, Yes. At this point, the recent Saudi confrontation with the Qatar and Kingdom’s projection of its wealth can help to explain that how far Saudis can go.
The Saudi Crown Prince had started a crackdown against corruption and locked up his close relatives and one of the wealthiest people of the country. USA is just a country and Trump is not liked by most of the Saudi population. The Saudi crown prince is already trying to convert Saudi Arabia into Dubai and planning to make its country a technological innovation and recreational hub for international community. He gave rights to Saudi women, allowing them to drive which is a very bold step in Arabian context. He promised to reform the Saudi labor force and introduced a value added tex. In addition to that Saudi Prince has very strong and influential friends all over the world. He had announced the 500 billion dollars project of building a mega economic zone named as NEOM in the border region of Saudi Arabia, Jordan, and Egypt.
It is the part of Muhammad Bin Salam’s “Saudi Vision 2030”. He wanted to decrease the Kingdom’s dependence on oil, diversify its economy, and develop public service sectors. In 2016, he bought a $500 million yacht of a Russian tycoon while holidaying in the south of France. Besides this, the young prince had done two more luxury deals in 2017.
Last year, Salvator Mundi, a painting of Christ by Leonardo da Vinci was sold for a record-breaking price of $450 million. The New York Times reported that the Prince Bader bin Abdullah bin Mohammed bin Farhan al-Saud, member of the Saudi royal family placed the final bid. According to U.S. intelligence officials who keep a close eye on the kingdom’s young and powerful crown prince told the Wall Street Journal that Bader was just a proxy for crown prince Mohammed.
Also the last year, Prince bought “the world’s most expensive home”, The Chateau Louis XIV, a 50,000 sq ft palace near Versailles that Kim Kardashian once considered as a potential wedding location for around $400 million.
People around the Middle East find this luxurious shopping of Prince MBS very astonishing especially when whole Muslim world is talking about Palestinian people and Jerusalem. Tweets from Qataris suggested that MBS could spend this money on his own people by offering them tax cuts and by providing better housings for ordinary Saudis. People from other Muslim majority countries had also raised their eyebrows on the spending of the MBS. Many people consider Saudi Arabia as leader of Muslim world and expect reasonable action by its side especially at the time when whole Muslim World was worried about future of Palestine. Tweets from Qataris and others were suggesting that the money could have been spent better on housing ordinary Saudis or offering them tax cuts. Same reaction was coming from Muslims outside of the Gulf. But Saudis didn’t care at all.
If we look at Saudi rival Qatar, Qatar is one of the rising powers in the Middle East and beyond, a prominent figure of century world politics. Qatar is much smaller than Saudi Arabia and has a population of 250,000. It has comparatively weaker army or limited military capabilities, but it has been very successful in demonstrating its Soft Power. It has proved that if Saudi Arabia can do its boycott, they can still beat Saudis in other spheres. It is the matter of “ Arabic Honor”. Qatar has applied intensively active diplomacy in regional conflicts, invests strategically in shares of international companies, controls the most influential Arab news channel – Al-Jazeera– and succeeded to be awarded hosting rights to the International Federation of Association Football (FIFA) World Cup 2022.
Soon after the Saudi – Qatar diplomatic crisis, Qatari owned French football club Paris St-Germain signed Brazilian superstar Neymar by paying $330 million. Then there is the player’s contract itself. Several media outlets are reporting that Neymar is expected to sign a five-year deal worth more than $818,000 a week. That’s over $42m a year just in wages. It was a message for Saudis that no matter you are trying your best to isolate us, but we have money and we can buy anything. Previously, Qatar Royals had paid £158.4m for Paul Cezanne painting just like MBS. Besides President Donald Trump accusations of terrorism Qatar was able to lighting up the Empire State building in its national colors to celebrate 10 years of flights into the United States.
Similar Soft Power concept describes the splashing money strategies of Saudis and Qataris to demonstrate their international influence. But more than international influence, both of these countries dodged each other. Both of these countries provided empirical evidences for the IR theories that power is not purely military power but also includes material and financial resources as well as diplomatic skills. Saudis have money and they use it. In recent reputation crises, Saudis will use their oil money as an instrument or not, it is too early to predict but possibilities are there.
According to the TRTWorld, America is in the heat of the US midterm elections. After November, the campaign season for the 2020 elections will effectively begin. The Yemen war will face tougher congressional scrutiny—especially by contenders for the Democratic presidential nomination. Pro-Israeli voices and anti-Iran hardliners in Washington, however, will stick with Riyadh. This is a critical juncture for their campaign to force Iran to agree to a tougher nuclear deal and roll back its regional influence. This is impossible without Saudi Arabia, with its influence over oil production and pricing. The Iranian claims sarcastically that It’s looking more likely that neither the US nor the rest of the Western world will do much to punish the world’s most important oil exporter. Whereas Turki has already informed about the possible Saudi reaction that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh. Saudi Arabia can prefer Russian and Chinese weapons and they will be more than happy to sell their weapons to the Kingdom. Saudis already have a strong weapon, “ oil” which they can use very efficiently, and they have mastered on it by practice.
