Loading...
You are here:  Home  >  Civics 101  >  Current Article

Saudi Arabia’s Pivot to Asia

By   /  Tue 26 Dhul Hijjah 1440AH 27-8-2019AD  /  No Comments

    Print       Email

Saudi Arabia was once the linchpin of the Trump administration’s plans for the Middle East. The country was President Donald Trump’s first foreign destination after taking office. Trump’s son-in-law and senior adviser, Jared Kushner, struck up a close relationship with the crown prince, Mohammed bin Salman. And both the U.S. and Saudi Arabia pledged to work together to contain the kingdom’s longtime regional rival, Iran.

But in the wake of international scandals, drifting geopolitical interests and new economic opportunities, Saudi Arabia has more recently pursued close ties with one of the U.S.’s foremost rivals: China. And it’s found a willing suiter.
Beijing and Riyadh made waves in February by signing a $28 billion trade deal that included plans for Saudi Arabia to build a $10 billion petrochemical complex in China that will refine and process Saudi oil. Last year, Saudi Arabia supplied more than 12% of China’s oil – and in the past year alone, its crude exports to Beijing have roughly doubled.
“Is China playing a bigger role in the Gulf? Absolutely,” says Randolph Bell, director of the Global Energy Center at the Atlantic Council, a think tank in the nation’s capital. “Those relationships are growing deeper.”
Much of this is the result of economic pragmatism: The U.S. is no longer Saudi Arabia’s top customer for oil. Between state and federal efforts to make vehicles more efficient to address climate change and an oil and gas boom that’s transformed America into the world’s top oil producer, the U.S. imported less crude in 2018 than it did 20 years earlier. And while the U.S. will remain dependent on imports for the foreseeable future due to refineries that were built decades ago – long before the domestic oil and gas renaissance – to process types of oil more often found overseas, imports last year dropped by nearly a quarter from their peak in 2005.
“The (United States’) special relationship with Saudi Arabia is gone, and it’s been deteriorating for a while.”
“It’s really being driven by, on the one hand, Chinese economic growth and on the other hand the dependency of the Middle East on oil and gas revenues,” says Antoine Halff, director of the program on global oil markets at the Columbia University Center on Global Energy Policy. “There are clearly concerns about a shift away from oil in the West, and there is a very deliberate strategy of locking in market share in Asia, investing in downstream industrial capacity to secure an outlet for oil in that region for the future.”

 

The roots arguably stretch to the Obama administration: Leaders in Saudi Arabia were outraged by the nuclear deal signed with Iran in 2015, and they felt further slighted by the White House’s “pivot” to Asia the following year. Trump, upon taking office, pledged to repair the breach, but wider splits soon emerged.
The crown prince, who forcefully asserted his authority during arrests of potential rivals in June 2017, has found himself increasingly isolated from the West: The Saudis have faced international condemnation for the indiscriminate killing of civilians in Yemen. A Saudi-led coalition intervened in Yemen’s civil war in 2015 on behalf of its internationally recognized government against Iranian-backed Houthi rebels who had taken the capital and ousted the country’s president. But the Saudis, who employ U.S.-provided weapons and intelligence, oversaw the deterioration of humanitarian conditions that were already considered to be dire.
[ READ: U.S.-China Trade War Already Rippling Across Other Countries’ Economies ]
And the crown prince’s decision to order the gruesome assassination of Washington Post columnist Jamal Khashoggi in a Saudi consulate in Turkey in October sparked widespread outrage. Congress earlier this year passed resolutions that would have halted arms sales to Saudi Arabia, though Trump vetoed the measures.
“The special relationship with Saudi Arabia is gone, and it’s been deteriorating for a while,” says Frank Verrastro, senior vice president for energy, national security and foreign policy at the Center for Strategic and International Studies, a think tank. “The concerns in the Congress over Saudi activity in Yemen, the Khashoggi fallout, threatening to revoke missile sales and arms sales – there’s less of a strong relationship than there was before.”

 

Saudi Arabia, faced with what it regards as divergent goals and flagging U.S. interests in the region, is hedging its bets.
“There are a number of power brokers around the world, and you want to have relationships with all of them, and you don’t want to be in bed with just one,” Verrastro says.
Recent U.S. policies have, meanwhile, accelerated the expansion of economic ties between China and Saudi Arabia. Where China was once seen as one of the most lucrative markets for surging U.S. exports of oil, it’s been made all but off limits as Chinese companies, jittery because of the trade war and perhaps pressured by Beijing, have instead sought oil elsewhere as President Donald Trump and Chinese President Xi Jinping have exchanged tit-for-tat rounds of tariffs.

“When the trade dispute started, the Chinese were careful not to put additional tariffs on oil and gas. That was a signal to the United States that they were willing to negotiate,” Verrastro says. “In the last six months, even in the last year, Chinese companies have been wary, as the trade dispute has escalated, to enter into long-term contracts with suppliers that way.”
China’s gains in the region – or advances by any other nation – aren’t inherently U.S. losses: Saudi Arabia, the United Arab Emirates and other American allies in the region maintain close economic ties with the U.S., and they tend to share similar security concerns. And some of the most recent Chinese actions in the region surely have not endeared Beijing to Saudi Arabia: While U.S. allies have worked to contain Iran, for example, the country remains a trading partner of China. Beijing has continued to buy oil from the Islamic Republic but has kept it in tankers at sea and in ports, just outside customs, so as not to violate international sanctions against doing business with Iran.
[ MORE: Why China Hasn’t Raised Tariffs on U.S. Oil ]
“I don’t think it should be looked at as a zero-sum game, that growing close to China doesn’t mean that every relationship unit – whether that’s a dollar spent or a diplomatic trip or however you want to think about a relationship with any country – is taking something away from the U.S.,” Bell, of the Atlantic Council, says. “The U.S. still matters from a security perspective, the U.S. still matters vis-a-vis Iran. And I suspect that the Saudis are not terribly happy with China stockpiling Iranian oil in storage. Once it gets released it has the potential to drop oil prices even further.”
However, the newly energized relationships between China, Saudi Arabia and other Gulf nations may signal a considerable realignment – one that may harden as the trade war between the U.S. and China continues, and if leaders in Saudi Arabia and the U.S. see their nations’ interests as diverging.
“Does this lead to a change in geopolitical alliances? If trade is better there’s stronger ties between the two countries,” Verrastro says. Meanwhile, “once you sever a relationship, you find an alternative. And if you find acceptable alternatives, then maybe you don’t go back to the first guy. I think we’re getting dangerously close to that.”

Alan Neuhauser, Staff Writer
Alan Neuhauser covers law enforcement and criminal justice for U.S. News & World Report. He … Read more
Tags: China, Saudi Arabia, world news, foreign policy, oil

    Print       Email
  • Published: 3 weeks ago on Tue 26 Dhul Hijjah 1440AH 27-8-2019AD
  • By:
  • Last Modified: August 27, 2019 @ 12:55 am
  • Filed Under: Civics 101
  • Tagged With:

Leave a Reply

Your email address will not be published. Required fields are marked *

You might also like...

Meet America’s Patriots

Read More →