by Nafeesa Syeed and Glen Carey
March 15, 2017
Saudi Arabia, seeking to breathe life into its decades-old alliance with the U.S., claimed “a historic turning point” in bilateral relations after President Donald Trump welcomed Deputy Crown Prince Mohammed bin Salman to the White House.
“Relations had undergone a period of difference of opinion,” a senior adviser to the crown prince said in a statement after Tuesday’s meeting. “However, today’s meeting has put things on the right track, and marked a significant shift in relations, across all political, military, security and economic fields.”
Sunni Arab leaders are embracing Trump with praise the president isn’t finding from other U.S. allies in the world, reflecting an eagerness to reset ties after feeling shunned by President Barack Obama, who crafted the 2015 nuclear deal with their Shiite rival Iran. The Saudi statement said Trump had a “great understanding” of the bilateral relationship. The president and the prince “share the same views on the gravity of the Iranian expansionist moves in the region,” the adviser said.
Only Rhetoric?
But while Trump has signaled his plans for a more aggressive policy against the Islamic Republic, political analysts say it’s unlikely he’d seek an open confrontation with Iran or deepen the U.S. role in Iraq, Syria and Yemen, which are serving as proxy battlegrounds between the regional rivals.
“The administration will give the Saudis the rhetoric they want on Iran -- more confrontational, emphasize the threat,” said Gregory Gause, a professor of international affairs at Texas A&M University and a Saudi specialist. “But in terms of specifics, I do not think that the Trump administration wants to get more deeply involved in Iraq, Syria or other places where the Saudis would want help in turning back Iranian influence.”
Saudi Arabia and its closest regional ally, the United Arab Emirates, are bogged down in a two-year war in Yemen against Shiite rebels they say are armed by Iran. Its leaders have openly complained about the rising Iranian influence in Iraq. In Syria, the Sunni rebels they have backed are losing ground against President Bashar al-Assad and Hezbollah, the Iranian-backed Shiite militant group.
Lunch Guest
At home, the kingdom is grappling with the impact of low oil prices. Economic growth is forecast to slow to 0.9 percent in 2017, according to a Bloomberg survey, compared with 10 percent in 2011 when crude prices topped $100 a barrel.
The U.S. and the Al Saud monarchy have been strategic partners since King Abdul-Aziz Al Saud, Prince Mohammed’s grandfather and the founder of modern Saudi Arabia, met President Franklin D. Roosevelt aboard the USS Quincy in 1945. Oil for security has underpinned the relationship between the countries.
Prince Mohammed, the 31-year-old son of King Salman bin Abdulaziz Al Saud and his country’s defense minister, is leading efforts to overhaul the economy and reduce its reliance on oil. The prince’s visit follows a trip he made to Washington in June after unveiling his post-oil blueprint, which includes a plan to create the world’s largest sovereign wealth fund and selling a stake in Saudi Arabian Oil Co., known as Aramco. Saudi officials have said they’re considering New York as a potential venue for a global listing.
The prince had lunch with Trump and aides at the White House on Tuesday. That’s a higher-profile meeting than an initially planned photo opportunity, according to Simon Henderson, a fellow at the Washington Institute for Near East Policy and director of the institute’s Gulf and Energy Policy Program.
The new administration sees Saudi Arabia “as a crucial part of the Middle East and an important country to have a positive relationship with -- even if there are irritants in the relationship,” said Henderson. “This is at odds with the Obama administration, so they want to make that clear distinction.”
‘Positive Anticipation’
In return, Saudi Arabia and the other Sunni-led Gulf Arab states have had “positive anticipation” toward the Trump administration, especially when it comes to containing what they see as Shiite Iran’s malign influence in the region, according to Kristin Smith Diwan, senior resident scholar at the Arab Gulf States Institute in Washington. In February, the Trump administration said it was putting the Islamic Republic “on notice” after it carried out a missile test days earlier.
Providing a talking point likely to be welcomed by Trump’s administration, the Saudi statement said Saudi Arabia doesn’t believe that the U.S. president’s restriction on travel from six mostly Sunni nations “is targeting Muslim countries or the religion of Islam” and is aimed at “preventing terrorists” from entering the U.S.
In a further sign of outreach to the Gulf allies, Secretary of State Rex Tillerson met at the State Department Tuesday with the foreign minister of the U.A.E., Sheikh Abdullah bin Zayed.
After the frustrations with Obama, Saudi Arabia and the Gulf states are now responding to Trump’s “more personalized foreign policy,” including his son-in-law Jared Kushner playing a prominent role with Gulf Arab allies, Diwan said during a speech in Washington.
Prince Mohammed’s visit is a sign that Gulf countries are “jumping on early in the boat to try to build those close ties that they think will serve them well,” Diwan said.
The meeting was notable in an another way, too. Trump is a man known for his lifelong desire to accumulate wealth and the lavish way that he puts that wealth to use. And in Mohammed bin Salman, he may have met someone rare: A foreign leader who is richer than he is.
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No Saudi Oil Says Trump; Saudi Arabia Fires Back
Tim Daiss
Nov 16, 2016
Imagine making the world’s largest oil exporter sweat it out, even before you take office. That’s exactly what Donald Trump is doing. The president-elect has said repeatedly that the U.S. needs to block all oil imports from Saudi Arabia.
During his campaign Trump vowed to secure U.S. energy independence from “our foes and the oil cartels,” while also creating “complete American energy independence."
However, on Wednesday, Saudi Arabia's oil minister fired back. Khalid Al-Falih, also the chairman of Aramco, said in an interview that “at his heart President-elect Trump will see the benefits [of Saudi oil imports] and I think the oil industry will also be advising him accordingly that blocking trade in any product is not healthy.”
“The U.S. is sort of the flag-bearer for capitalism and free markets,” Al-Falih added. “The U.S. continues to be a very important part of a global industry that is interconnected, that is dealing with a fungible commodity which is crude oil. So having equalization through free trade is very healthy for oil,” he said.
The Saudi oil minister added that Saudis are waiting for Trump’s presidency, as his presidential campaign had amounted to “50,000 feet announcements” that may change.
Despite the U.S. shale oil boom, which has made it the third largest global crude oil producer, the country still relies heavily on Saudi crude imports. Saudi Arabia is the largest Middle Eastern oil supplier to the U.S. with an 11% market share and has also invested heavily in U.S. downstream assets (refineries) to help lock in that supply. Around 31% of all U.S. oil imports are from OPEC members, while Canadian oil imports have a 41% share.
Saudi Arabia for its part, has been hit particularly by the more than two-year roil in oil markets. As oil prices have tanked from $115/barrel in mid-summer 2014 and are now hovering in the mid $40s range, Saudi Arabia has run record budget deficits of $98 billion last year and $87 billion forecasted for this year. Foreign reserves are also dwindling as the central bank props up the economy.
The downturn in oil prices and lost oil revenue is also forcing Riyadh to put in place politically unpopular austerity measures, as well as raising $17.5 billion in international bond sales last month, with little end in sight until OPEC and major non-OPEC oil producers can agree on a substantive and lasting oil production cut.
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We need to have a very healthy national reserve in case of a war or emergency. You don’t need to block imports, which may be harmful. For the last 40 years they have been working to undermine the markets by restricting oil production and forcing the price up.
The benefits of stimulating the economy, business must be equally good for both suppliers and consumers.
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