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Saudi Arabia: the birth of a superpower in the desert with petrodollars

2023-05-28T10:57:10.638Z

Highlights: Crown Prince Mohammed Bin Salman uses money from oil sales to transform the country's economy with pharaonic projects. Saudi Arabia seeks to transcend in all possible areas, with a hegemony that goes beyond the purely regional. Cristiano Ronaldo plays for Al Nassr at a rate of $200 million a year; Lionel Messi flirts with Riyadh's other big club, Al Hilal, which offers him almost twice as much. After Qatar 2022, they are now the ones who aspire to organize the World Cup in 2030.


Crown Prince Mohammed Bin Salman uses money from oil sales to transform the country's economy with pharaonic projects while weaving a new network of geopolitical alliances


Almost always oblivious to the big spotlight, although making a lot of noise at every step, a country and a family want to fish big in the tumultuous waters in which the global order sails. Saudi Arabia and the dynasty that gives it its name – the Saud – have gone in a short time from a situation of relative fragility, with their vast oil wells running at half bellows, to prolonging their status as a fossil power to a multitude of fields completely unrelated to energy... and economically. Riyadh seeks to transcend in all possible areas, with a hegemony that goes beyond the purely regional. And the chosen form is the same as always in the Gulf: at the stroke of a checkbook and thanks to the immense returns of crude oil.

Wherever the reader's imagination reaches, the petrodollars of the desert dictatorship will have arrived sooner, in which King Salman bin Abdulaziz long ago handed over the keys to the future to his son and crown prince, Mohamed bin Salmán, a thirty-year-old lover of technology and determined that his country – closed, very closed; unequal, very unequal; and repressor of human rights at home—take a giant leap in the ever-contested international showcase.

Diplomacy? Riyadh is moving away from aggressive interventionism in neighboring countries to prioritize soft power, bolstered by its revamped checkbook. This tactic is part of the strategic approach to China – its best client – the occasional alliances with Russia to control oil prices and winks to other emerging powers, such as Brazil or South Africa. Also the recent reestablishment of relations, broken since 2016, with its nemesis on the other side of the Persian Gulf: Iran; peace talks with the Houthis to exit the war in Yemen and the push for the return of their former enemy, Syrian President Bashar al-Assad, to the Arab League. Objective: to achieve an appeasement that allows it to concentrate on its internal reforms. Defense? Its military budget, the fifth largest on the planet, and its second position in the ranking of the largest buyers of weapons on the planet speak for themselves.

Keep letting your imagination run wild. Sport? Cristiano Ronaldo plays for Al Nassr at a rate of $200 million a year; Lionel Messi, who is already a tourist ambassador for the Desert Kingdom, flirts with Riyadh's other big club, Al Hilal, which offers him almost twice as much. After Qatar 2022, they are now the ones who aspire to organize the World Cup in 2030. In parallel, they have put their own golf circuit into orbit and host a Formula 1 grand prix in Jeddah. Culture? The bid to host Expo 2030 is accompanied by a hose of billions of dollars to create a powerful museum environment in Riyadh, in the style of Parisian, New York or London. Science? There are the payments of the King Saud University to dozens of Western scientists to artificially climb positions in the classification of the best educational centers on the planet, revealed by EL PAÍS. Media? If successful, its own English-language news channel, a natural rival to Qatar's Al Jazeera, will soon be on the air.

There's more. A bit of urbanism, perhaps? On the border between futurism and the possible is Neom, a city-wall the size of Belgium that will rise in the middle of the desert through which not a single car will circulate. Also the multimillion-dollar plan with which he intends to give a huge facelift to Riyadh, a city at serious risk of being left behind in front of other Gulf capitals, such as Dubai or Doha, and that aspires to attract a tourism today simply non-existent outside the holy places of Mecca and Medina, where only Muslims can penetrate. The objective is for this sector to contribute 10% of Saudi GDP by the end of the decade, a figure similar to that of Spain and Italy and higher than that of France. As Qatar Airways and Emirates have shown, attracting visitors and opening up to the world requires airlines. And there too Bin Salman has plans: both Saudia and the newly launched Riyadh Air have embarked on a fleet growth operation that will shape their yearnings for globality thanks to subsidized kerosene. There is no area that is left out of this renewed ambition of a country of just under 40 million inhabitants that has found in the oil boom the shot of money so that its desire for international power crystallizes into something tangible, real. And durable.

"Saudi Arabia has been seven years since the launch of its Vision 2030 strategy, immersed in a process of rebranding that projects to the rest of the world," Sanam Vakil, director of the Middle East and North Africa program at the London-based think tank Chatham House, said by telephone. "Its objective is twofold: to diversify its economy to anticipate a future in which oil will be residual and to achieve an internal change of mentality, with a certain social liberalization and an increase in the participation of women in the labor market." This strategy, he says, follows in the footsteps of the Qatari and Emirati model, albeit "on a much larger scale."

The fact that Riyadh is gradually liberalizing some things in the social field should not lead to misunderstanding: "They are opening their hands with some freedoms and offering more entertainment options to win the support of young people, who until now had to go to Bahrain or go to Europe. But always keeping everything under control and without any substantial improvement in human rights," recalls Martin Hvidt, professor at the Center for Contemporary Near Eastern Studies at the University of Southern Denmark.

Circuit of the F1 Grand Prix of Saudi Arabia in Jeddah, on March 19. Clive Mason (GETTY IMAGES)

"They are not becoming a democracy, nor are they promising parliamentary elections, nor are they adopting Western values: what they are doing is simply promising reforms to strengthen the political authority of the royal family," Vakil said. For now, Bin Salman seems to be achieving his purpose: as Bradley Hope and Justin Scheck write in their magnificent book Blood and Oil (Peninsula, 2023), the heir already accumulates "more power than any other member of the Saud family since the founding of the kingdom". With some arts, yes, at least dubious, in which intimidation and repression of those who go outside the official line is still common.

Marginalization of women

The limited openness initiated in recent times can be seen in some specific day-to-day issues of the Saudis. There is, for example, the elimination in 2018 of the ban on women driving, a step that responds more to the need – included in the Vision 2030 roadmap – to expand employment in the private sector, which requires the female workforce, than a genuine conviction of the autocrat. Until the ban was lifted, many Saudis had to hire a driver to get to work, making it even more difficult for them to access the labour market. Without statistics or official poverty lines – some estimates put it at 20 per cent of the population – it is known that many low-income households are headed by a woman. Poverty and growing unemployment among women and youth undermine the social contract on which the Saudi rentier state is based: the redistribution of economic well-being from oil manna in exchange for support for the absolute monarchy of the Saud.

In an external key, a variable to which the country gives more and more importance, the long-awaited image washing happens through the international community "seeing Saudi Arabia in a different way, leaving behind the label of conservative kingdom and linked to religious radicalism," in the words of Vakil. A process that, according to the specialist of the Chatham House, "will not be short-term, but several generations", and that has as a priority objective the 70% of the population that is 30 years or less, a group "much more enthusiastic with the reforms".

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Like the timid internal changes, the regime's shift in foreign policy follows a pragmatic approach, linking regional security with development. The "ambitious" strategy embodied in the Vision 2030 project, says Luciano Zaccara, a professor at the Center for Gulf Studies at Qatar University, "requires stability and internal consensus," two conditions impossible to achieve with the "constant threat" represented by the confrontation with Iran and the costly military intervention in Yemen. Agrees Anna Jacobs, senior Gulf analyst at the International Crisis Group: "Riyadh has seen the best way to support its national economic development and internal security objectives is to ease regional tensions through more dialogue and diplomacy, especially with rivals such as Iran," she writes by email from Doha.

Eighty-five years after the drilling machines came face to face with the first oil deposits, forever changing the fortunes of the then poor Persian Gulf, the state oil company Aramco – the third company in the world by market capitalization after Apple and Microsoft, with a value of more than two trillion dollars – continues to take huge amounts of crude from the underground day after day. And so it will continue to do for a few more decades: if there is a certainty in the always volatile oil cenacles, it is that the last barrel consumed in the world will almost certainly come out of its subsoil.

With the global market constrained by the toxicity of Russian crude in the West, Saudi Arabia – the world's largest exporter and second-largest oil producer, after the United States – has found in Russia's invasion of Ukraine a golden opportunity to sell its most abundant commodity under conditions it would not have dreamed of a couple of years ago. when the pandemic was still weighing on both prices and volumes. And that, for an economy and a society literally structured around the fossil, is much more than a conjunctural opportunity: in the midst of a change in the global order, as China preaches – to whom it is united by an increasingly explicit harmony – Riyadh wants to play in another league. In the major league.

"The Vision 2030 plan was conceived at a time of cheap oil and its initial objective was to make welfare less dependent on price. Ironically, it has been the rise in crude oil that has driven many of these mega-initiatives," said Kristian Coates Ulrichsen, Middle East specialist at the Baker Institute. The consequence of this is that now the regime "needs" that the price of this raw material remains high in order to finance these projects. Above all, according to Ulrichsen, because after the historic – and spectacular – anti-corruption purge undertaken at the end of 2017 by Bin Salman at the Ritz-Carlton hotel in Riyadh, in which an important part of the Saudi economic elite fell out of favor, "the levels of foreign investment have fallen sharply".

The assault on the skies orchestrated by the petro-state is seasoned by an extra ingredient that few could even glimpse: the estrangement of its historical protector, the United States, with whom the tensions are more than evident. The murder of journalist Jamal Khashoggi in the Saudi consulate in Istanbul (Turkey), at the end of 2018, was the first trigger for a crisis that has spread to other areas, especially after the victory of Democrat Joe Biden in 2020, with whom relations are anything but fluid.

Less than a year after that crime, which the CIA – even with its ally Donald Trump still in the White House – attributed to a direct order from Bin Salman, the Saudis saw Washington's willingness to reduce its involvement in the Persian Gulf. In September 2019, two key Aramco oil facilities in the east of the country had to halt production after suffering a drone and cruise missile attack. The Houthis claimed responsibility for the attack, but Riyadh directly blamed Iran. To the disappointment of the Saudis, there was no military retaliation from Washington against Tehran.

"This strategic distancing" of the United States from the Middle East, argues Jacobs, "has played an important role in the reformulation of the foreign policy of Riyadh, which is convinced that the United States will not come to its aid in times of crisis," after which he judged an "insufficient response" for those attacks. In the absence of "a reliable U.S. security guarantee, Riyadh concluded that dialogue and diplomacy would be necessary to mitigate regional tensions and thus secure its development goals," Jacobs said.

Although the Biden Administration has tried to redirect its relationship with Saudi Arabia – the Democratic president visited the country in July 2022 – the tension did not disappear in a trip whose tension was evident with the icy clash of fists with which the crown prince greeted the US president in Riyadh. That distrust has worsened in recent months, in which the expanded version of the Organization of the Petroleum Exporting Countries (OPEC+, which leads together with Russia) has tried the impossible to keep the price of crude high, with severe supply cuts that have pitted it against the West. All "a declaration of independence, a reassertion of Saudi power on the world stage, amid the kingdom's ongoing efforts to redefine itself through its foreign policy," an analysis by the Gulf Arab States Institute, a Washington-based think tank, noted last October.

Honeymoon with China

That the March 10 pact to normalize Saudi relations with Iran was announced in Beijing – the main destination for Saudi exports – is equally significant, according to Zaccara, since China "has not been a big factor in the signing of this agreement, which had been negotiated since 2019 in Oman and Iraq." In his opinion, both Tehran and Riyadh, which signed a three-way statement with Beijing, "decided to give part of the credit to China as a message to the West." One more example of the role that Riyadh wants to play in the change of global order that Xi Jinping proclaims.

The rapprochement with Beijing, its occasional agreements with Russia and the interest shown in joining the group of emerging powers of the BRICS (China, Russia and three non-aligned countries: Brazil, India and South Africa) confirm the diversification of Bin Salman's alliances. The 2022 edition of the Future Investment Initiative, a non-profit organization run by Saudi Arabia's leading sovereign wealth fund (the Public Investment Fund), brought together more than 6,000 investors under one eloquent slogan: "Establishing a New World Order."

In parallel to economic power, for Saudi Arabia "working more in the field of mediation and conflict resolution is a way to raise its global profile and improve its reputation," says Jacobs. The state that Biden defined as a "pariah" in 2019 and that faced "significant international protests over its war in Yemen, the murder of Jamal Khashoggi and other human rights issues" is now trying to "cool the temperature in the region and try to turn the page on years of conflict." The new face of a mediating country and even provider of regional stability sought by the kingdom of the Saud found its iconic image just a month ago: the photograph of a Saudi soldier with a sleeping baby in her arms. The boy was one of thousands evacuated by ships from that country following the latest outbreak of violence in Sudan.

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The oil powers are installed in a sort of cyclothymic dichotomy between a buoyant immediate present and a future in which the die is cast... against him. The energy transition will also imply a loss of relative weight of those who until now had a mine of money in their subsoil in favor of those with greater renewable potential. Until then, however, it is time to savor the honey of an unsuspected period of high oil prices. Riyadh also has two powerful cards to try to win that game. The first has to do with its low pumping cost, derived both from its huge reserves and from its well-oiled extraction process: Aramco's monopoly still has many years ahead of it making money in spades. The second, with its enviable natural position for solar energy: almost unlimited land in the desert and sunshine of justice practically every day of the year.

"In 2020 we will be able to survive without oil," proclaimed the crown prince in the launch of his diversification strategy. It was 2016. Three years after the date marked on the calendar, it is clear that this is not the case. But his strategy not only continues, but has taken a new momentum, in a kind of double or nothing. "The challenge facing Bin Salman is that 2023 is already halfway to 2030 and many of the megaprojects are still at an early stage of development," Ulrichsen urges. "He has to show results soon."

Aramco oil facility south of the Saudi capital Riyadh in a 2019 image. FAYEZ NURELDINE (AFP/GETTY IMAGES)

Chronology

  • September 1960. The OPEC cartel is born, with Iran, Iraq, Kuwait and Venezuela.
  • October 1973. Oil crisis, which shoots up its price.
  • April 2016. Riyadh launches its Vision 2030 strategy to diversify its economy.
  • November 2017. Mohammed bin Salman strikes a blow with an anti-curruption purge at the Ritz-Carlton hotel in Riyadh.
  • October 2018. The regime murders journalist Jamal Khashoggi in the Saudi consulate in Ankara, Turkey.
  • September 2019. Cruise missile and drone attacks on Aramco's key oil facilities in Abqaiq and Khurais in eastern Saudi Arabia. Yemen's Houthis claim responsibility for the attack, but Riyadh blames Iran.
  • April 2020. The pandemic cripples the world economy and brings oil to negative trading for the first time. The Saudi economic model, in the air.
  • November 2020. Joe Biden wins the elections in the US after an election campaign in which he comes to describe Saudi Arabia as a "pariah".
  • March 2022. The war sends the price of crude soaring to nearly $130 a barrel, its highest level in more than a decade, and offers a powerful oxygen balloon to the Desert Kingdom.
  • March 2023. Saudi Arabia and Iran announce the restoration of their diplomatic relations, broken for seven years, under the auspices of China.


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Source: elparis

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