Oil, Iran and Palestine – what’s at stake for Saudi Arabia?

7 Apr

Madawi al-Rasheed tells Paul Jay that since the Arab uprising in 2011, we don’t hear the Saudis talking about the Israeli-Palestinian conflict; it has identified its enemy first as Iran –   The Real News, 6 April, 2015

Transcript:
Oil, Iran and Palestine – What’s at Stake for Saudi Arabia (3/3) [Peter Jay, Senior Editor, TRNN The Real News]: Welcome to the Real News Network. I’m Paul Jay.
We’re continuing our discussion about Saudi Arabia, what’s at stake for it in the current conflict in the Middle East. Now joining us again from London is Madawi al-Rasheed. She’s a visiting professor at the London School of Economics and Political Science.
Thanks for joining us again, Madawi.
MADAWI AL-RASHEED, Prof Middle East Centre, London School of Economics: Thank you.
JAY: So we were talking about Yemen, we’re talking about the sort of bigger picture of Saudi Arabia trying to become the leader of the Sunni world, and that’s important for them particularly domestically, to be able to present themselves as having that strength.
In the context of all of that, what does the current price of oil mean for Saudi Arabia? I mean, a lot of people thought the Saudis helped facilitate such a low price of oil. I don’t think they created the whole situation, but they saw oil prices coming down, partly through supply and demand equations. But they, what’s the word? ..’exacerbated’ it by not reducing their own production and not allowing OPEC to pull back on production, and thus helped oil go down maybe further than it would have otherwise.
Given all of that, how’s the low price of oil affecting Saudi Arabia? It’s certainly screwing Russia and Nigeria and Venezuela, and some other places.


AL-RASHEED: Yes, Saudi Arabia’s policy on oil, especially recently in the context of the OPEC meetings, it became very clear that they wanted to maintain their market share regardless of the price of oil, and they kept pouring oil into markets, without any kind of anticipation of how this is going to affect the price.
Saudi Arabia, in a way, is luckier than other oil-producing countries in the region. For example, Iran and Venezuela. Because they have a lot of reserves of cash, and they have accumulated over the past years, and therefore they could maintain their sort of income, at least in the short term.
But in the long term, there is a problem. And in a way, we talk about the Sunni-Shiite rivalry, Saudi Arabia and Iran, as if this is only a conflict that could be explained only in terms of ideological factors. But there is, the bottom line, is also a conflict about oil. Saudi Arabia wants to make sure that it remains the main producer in the Arab world, and it is at the moment. But it does not want to see neither Iraqi oil nor Iranian oil coming to the market.
And in that context of reaching an agreement over Iran’s nuclear program, in the discussion between the United States and the P5+1, Saudi Arabia is worried about lifting the sanctions on Iran, which means that there is more oil from Iran coming to the market. It will depress probably the prices even more, but Saudi Arabia’s determined to make that difficult, and it keeps pouring oil. At the same time, it didn’t anticipate the low demand.
There is another factor to this. Saudi Arabia was very, very worried about shale oil, and especially in the United States. And therefore, cheap oil coming from Saudi Arabia that is also cheap to extract helps the Saudis to maintain their market share. They do not want to see any other oil in the region coming to the market, because simply they will lose that market share. So the –
JAY: There’s also a lot of analysts who said, well, this is a market forces issue. A competitive issue. Also a geopolitical issue. That the Saudis were quite happy, and perhaps in connivance with the United States government to number one, as I said, screw up the Russian economy, and screw up the Iranian economy. The Saudis certainly have no love for Russia, given the support for Assad, and how much Russia played in keeping and thwarting, keeping Assad in power and thwarting the Saudi objective there.
And of course, screwing the Iranian economy is good geopolitically for the Saudis. How much do you think that was a factor?
AL-RASHEED: Yes, it is a factor, because Saudi Arabia felt the threat of Iran not only in terms of penetrating Arab society and getting closer to the borders with Saudi Arabia, especially in Iraq, and on the northern borders of the country. But cheap oil, and low oil prices also served Saudis foreign policy in terms of its relation with both Russia and Iran.
JAY: Now, you would think if you looked at this objectively, just in terms of pure economic interest, even geopolitical interest, you would think a Saudi-Iranian alliance would actually make a heck of a lot of sense for both of them. First of all, they’re both theocracies. They’re both theocracies that are, you know, contain a lot of billionaires and multi-multi-billionaires. Between them they would be a powerhouse. They would virtually control the price of global oil.
And they would balance American power in the region. Right now, I would think one of the objectives of the American rapprochement with Iran, assuming that it happens, is that it helps to balance Saudi and GCC power, and they get to play Iran and GC off against each other, which is good for the Americans.
But the objective interest here seems to be the Saudis simply want to be the lone, leading monarchy, and nothing else seems to matter to them.
AL-RASHEED: Well, I think the Saudis perceive their foreign policy and their status in the Arab and Muslim world as a zero-sum game. So if Iran is rehabilitated into the international community, this is interpreted as a loss for Saudi Arabia. Saudi Arabia does not trust Iran and Iran does not trust Saudi Arabia after 1979. There’s a long history of animosity.
Remember, the Iranian revolution has very, very sort of loud slogans wanting to spread Islamic revolutionary spirit across the region. And it did not happen, simply because Iran, as a country and as a mode of government does not appeal to the Sunni majority. Neither does Saudi Arabia. And therefore, the Arab world has become hostage to these rival theocracies that are determined to be, to be in a situation where each one of them is the winner.
But this is not possible, and at the end they are fighting these regional wars by proxy until the day comes when both leadership realize that it is, nobody’s going to win this war, and it is going to lead to more death and chaos, and possibly drain the resources of both countries.
Saudi Arabia started using its reserves as a result of the sheer drop in oil prices over the last six months. And if it continues to adopt a very aggressive military foreign policy abroad and also deal with the domestic demand, the welfare system that it started, it will have to draw on its reserves that are sitting in banks. And this is not good news for Saudi Arabia itself. Its population is increasing. There are still problems with employment. All the graduates that had been exported abroad to gain knowledge and education and skills are coming back, and they’re going to ask for jobs.
And at the moment, this war on Yemen that we talked about is actually creating a kind of hyper-nationalism that is very aggressive. So to channel all your problems, domestic problems, into an external enemy and fight a war, it has served the Saudi regime. Because those people who were very, very critical of the regime inside Saudi Arabia have postponed their criticism, and they are getting involved in this hyper-nationalism that is extremely dangerous.
JAY: Well it’s all, I would think, pretty good news if you’re in the Israeli government. Iran-Saudi conflict, or rivalry, has certainly taken the Arab world’s attention off the Palestinian question. I don’t remember hearing the words Palestinian question in quite a while from the Saudis. In fact, there’s quite a convergence of interest with the Saudis and Israel, and probably certain kinds of collaboration going on. How’s that playing out domestically in Saudi Arabia?
AL-RASHEED: Talking about any kind of Israeli-Saudi relationship is taboo in Saudi Arabia. Saudi Arabia maintains that it is going to liberate the occupied territories, and it takes Jerusalem as a symbolic city for all Muslims. Very much like Iran does, and they both use this issue.
But since the Arab uprising in 2011, we don’t hear anybody talking about the Israeli-Palestinian conflict or trying to push for a solution. Saudi Arabia identified its enemy first as Iran, then the Islamists, especially the ones who won elections in Tunisia and Egypt, and it passed anti-terrorism laws to criminalize those. And therefore, the Palestinian issue had been put on the shelf, as far as the Saudi leadership is concerned, and in fact most of the Arab region.
Of course, this is a situation that is beneficial to Israel, because it could actually keep then no solution as the solution.
JAY: I mean, I know the Israeli rhetoric about Iran is extremely high, but the truth is the American Israeli interest is to get all the major Arab and Middle East players, Persian and such, at each other’s throats.
AL-RASHEED: This is happening on the ground. I mean, it doesn’t really need any kind of foreign intervention, because we see it playing out in multiple locations from Iraq to Lebanon and now in Yemen and in Bahrain. It is an ongoing conflict that is actually used by leadership in both Iran and Saudi Arabia to cover domestic issues, and domestic challenges.
Remember, Saudi Arabia felt very nervous after the Arab uprising, because it felt that the domino effect of this uprising might reach Saudi Arabia. They poured money on the population in order to pacify it. Then now it seems to me that they are launching these military strikes for the same reason.
JAY: Now, one thing I’ve never really understood, why don’t they pour more money? For example, why didn’t they pour money into Yemen, including the Houthis? Why didn’t they improve their standard of living? Same thing with the Shia in Saudi Arabia. I mean, why don’t they pour money on the people that are poor, and wouldn’t that help their cause more than the kind of repression that’s leading to these kinds of rebellions?
AL-RASHEED: Well, in Yemen Saudi Arabia had poured a lot of money. But as I had mentioned, it is not really about identifying particular leaders in Yemen and giving them money to … it is about creating infrastructure. That strategy of identifying tribal leaders or ex-presidents and pouring money on them has backfired because those exercise their agency.
You know, when governments pay local agents to pursue a particular policy, it doesn’t guarantee that they will, because those actors have agency, which means that they have their local interest, domestic interest, and they have power struggles within their own community. And they’re happy to play one donor against another.
So therefore, pouring money is not the solution.
JAY: No, I meant pour — I meant putting money in a way that actually improved ordinary people’s living, well-being and living conditions.
AL-RASHEED: But Saudi Arabia hasn’t done that. In fact, where it has done any kind of educational development in Yemen, they set up Salafi schools in order to convert the Zaydis who are Shia into Salafis, and contributed to the friction between the original, local communities of Yemen.
JAY: Okay, just finally, how much do you think the arms merchants — mostly American but certainly not only, Europeans have a big role to play in all this — how much do you think they help drive all of this?
AL-RASHEED: Absolutely. Oil and arms are the drivers for this kind of conflict that is going on for several years now. Without oil, you wouldn’t be able to buy weapons. And without American and European and Chinese and Russian others willing to sell these arms, to make local economies in Europe and the U.S. more vibrant, because let’s face it, they’re all democracies, all Europe and the United States, now have all the arms. And you only need one deal that is worth millions of dollars to sustain an industry that is struggling in a time of economic uncertainty.
And they found a niche in the GCC countries. The arms company use their insecurities and play on those insecurities in order to sell them arms. And they are willing to buy them, simply because they want to appear more aggressive, and probably in a world where might is right, they want to appear as able to pursue their own policies independent of the United States or anybody else.
JAY: All right, thanks very much for joining us, Madawi.
AL-RASHEED: Thank you.
JAY: And thank you for joining us on the Real News Network.
End

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