#39 - JRL 2007-39 - JRL Home
From: "Robert O Freedman" <rofreedman@comcast.net>
Subject: Essay on the Putin visit to Saudi Arabia, Qatar and Kuwait
Date: Thu, 15 Feb 2007

THE PUTIN VISIT TO SAUDI ARABIA, QATAR AND JORDAN: BUSINESS PROMOTION OR GREAT POWER MANEUVERING?
By Dr. Robert O. Freedman
Dr. Robert O. Freedman is the Peggy Meyerhoff Pearlstone Professor of Political Science at Baltimore Hebrew University and is Visiting Professor of Political Science at Johns Hopkins University. Among his publications are MOSCOW AND THE MIDDLE EAST, THE MIDDLE EAST ENTERS THE 21ST CENTURY, and the forthcoming RUSSIAN POLICY TOWARD THE MIDDLE EAST SINCE THE COLLAPSE OF THE SOVIET UNION.

Russian President Vladimir Putin's visit to Saudi Arabia, Qatar and Jordan had three major goals. The first was to demonstrate Russia's renewed power and influence in a region where American influence is on the decline. The second was to facilitate Russian economic relations with the countries he visited. The third goal was to continue Russia's effort to minimize Arab support for the Chechen rebellion against Russian control, a rebellion which the rebels are carrying out in the name of Islam.

Putin set the stage for his visit by taking a very anti-American position at the Munich Security Conference which took place just before he visited the Middle East. At the conference he lambasted the United States for its reckless unipolar policies and for its "almost unconstrained hyper use of force"---words that were well-received by the Sunni Arab States in the region which he visited where the US invasion of Iraq,with its resultant strengthening of both the Iraqi Shia and Iran,is deeply unpopular. Putin further enamored his hosts with his call for an International conference to settle the Arab-Israeli Conflict--a conference opposed by the United States--and for the Quartet to lift its economic sanctions against the new Palestinian Unity Government, even though it did not meet the Quartet criteria for the resumption of aid which required it to recognize Israel,renounce violence and accept all previous Israeli-Palestinian agreements. In taking these actions, Putin was not only demonstrating Russia's independent position in the world, it was offering the three Arab States an alternative to their alignment with the United States. While it is not clear whether this ploy will work---after all the US is the protector of last resort for the regimes in Saudi Arabia,Qatar and Jordan---the fact that Putin was received so warmly demonstrates that the Arab leaders saw both domestic and international benefits in at least appearing to draw closer to Russia.

The first stop on Putin's itinerary was Saudi Arabia. Putin had been cultivating the Saudis since the May 2003 terrorist attacks in the Kingdom, with Putin asserting at the time that Saudi Arabia was facing the same kind of terrorism that Moscow faced in dealing with the Chechen rebels, whom some Saudis were supporting. At the time of Crown Prince(now King) Abdullah's visit to Moscow in September 2003, Russian goals with regard to the Saudis were twofold. First, to get Saudi Arabia to legitimize Russia's hand-picked Chechen leader,Akhmed Kadyrov, and delegitimize the Chechen rebels who claimed they were fighting for the Islamic cause . The second goal was to open up business ties between the two countries. Putin was successful on both counts. Kadyrov(who,however, was later assassinated by the Chechen rebels) was invited to Saudi Arabia, and the Saudis also supported Moscow's bid for observer status in the Islamic conference,despite Chechnya. In addition, an agreement was signed between Saudi Arabia and the Russian oil firm Lukoil to prospect for oil. As relations grew closer, the Saudis turned to Moscow for help in launching their satellites and the Russians put seven in orbit.

The Saudi-Russian relationship was to hit its high point with the February 2007 Putin visit to the Kingdom, the first of a Russian leader to any Gulf Cooperation Council(GCC) State. In addition to praising King Abdullah for brokering the Fatah-Hamas Mecca agreement---an agreement which the US viewed negatively--Putin made a major effort to attract Saudi investment. He also offered Russian help in the construction of the nuclear reactors which the GCC States were considering. Putin also offered to expand Saudi-Russian space cooperation, noting that in addition to the seven satellites already sent into space, six others were awaiting launch, and he sought to attract Saudi investment for the GLONASS satellite navigation system.

In order to increase trade and investment---Russian-Saudi trade had reached a level of $400 million in 2005,up from $88 million in 1999---Putin made a number of offers. First, he invited Saudi banks to establish branches in Russia. Next he suggested Saudi participation in the proposed Russian free-trade zone. He also suggested further cooperation in oil and natural gas exploration, and, given both Lukoil and Gasprom's multi-billion dollar expansion programs, Putin obviously hoped they would attract Saudi investment.

A number of agreements were signed between Saudi Arabia and Russia during the visit to facilitate Saudi trade with and investment in Russia. These included an agreement signed between two Russian banks, Vnesheconobank and Roseximbank with the Saudi fund for development; an agreement on the prevention of dual taxation of income and capital; and an agreement for the expansion of air traffic between the two countries. There were also newspaper reports about the possible sale of Russian arms such as T-90 battle tanks to Saudi Arabia, but no such sale was announced during the visit.

Besides his business goals, Putin continued his efforts to Islamically delegitimize the Chechen rebels,while enhancing Russia's Islamic legitimacy. Thus Putin repeatedly emphasized Russia's Islamic credentials--an estimated 20 million Moslems live in Russia--and asserted that Russia was determined to enhance its cooperation with the Islamic world. To demonstrate this, he brought along with him Mintimir Shaimiyev, the Moslem head of Tatarstan, a Russian republic that was predominantly Moslem. King Abdullah responded in kind, awarding Shaimiyev the "King Faisal award for service to Islam", and praising Putin as "a statesman,a man of peace, and a man of justice"---all this despite Putin's brutal treatment of the Chechen Moslems.

As might be expected, given that both Saudi Arabia and Russia are major energy exporters, energy cooperation was also a subject of discussion during the Putin visit , with the Russian leader noting that the two countries were not only not rivals in the field of energy, but "in fact allies and partners".

Energy cooperation was also a major topic during Putin's next stop on his trip, Qatar, which like Russia, is a major exporter of natural gas. Even before the visit, Putin had hinted that Russia might be interested in a natural gas cartel---responding to an idea floated by Iran which hoped to improve relations with Russia after the Russian UN vote to sanction it for its nuclear activities, limited though the sanctions were. Iran and Russia are the two largest natural gas exporters in the world(although Iran is having increasing difficulty in maintaining export levels), and both have strong incentives to keep natural gas prices high, so dependent are they on gas(and oil) exports to finance their national budgets. Hence the idea of creating a natural gas cartel, as OPEC is for oil. However, there are major differences between oil and natural gas that make forming a gas cartel more difficult. First, most gas is sold on long-term contracts(20-30 years), which makes OPEC-like price manipulation far more difficult, unless the gas producers are willing to break their contracts. In addition, most natural gas travels by pipeline to specific destinations, making rapid changes in destination to get a higher price also very difficult. Furthermore, it is an open question as to whether Russia, which did not want to limit its freedom of action by joining OPEC, would be willing to limit itself by joining a gas cartel unless it could totally dominate it, a still unlikely prospect. Indeed, Russia's energy Minister,Viktor Khristenko, described the idea of a gas cartel as "fantasy". Nonetheless, during his visit to Qatar, Putin refused to rule out the idea, stating:

"Who said that we have rejected the idea of a cartel? I said it was an interesting idea. Whether we need a cartel, whether we will create such an organization, is a separate conversation. But of course we should coordinate our activities with other producers".

What Putin may have been referring to was the recent agreement between Russia and Algeria, another major natural gas producer, on coordination of investment and marketing. For his part, the Qatari Emir, Sheikh Hamed Bin Khalifa, seemed to play down the idea of a cartel noting that most natural gas is locked up in long-term contracts that won't expire for a long while. In addition, it is an open question as to whether Qatar would be willing to anger the United States, its primary defender, by entering into a gas cartel with Russia.

On other subjects, however, Russia and Qatar did reach agreement. These included a memorandum on mutual understanding in consular affairs, relating to visa-free travel;a governmental agreement to encourage and protect investment and investor profits; an agreement to establish a Russian-Qatari Business Council to promote trade and investment; and a memorandum of understanding between Lukoil and Qatari Petroleum on oil and gas exploration.

The final stop on Putin's itinerary was Jordan. Unlike Saudi Arabia and Qatar, Jordan is energy poor, but it is very important politically, particularly in the Arab-Israeli Conflict. Consequently, politics, along with business, dominated Putin's meetings in Jordan which included one with Palestinian Authority President Mahmoud Abbas. During the Abbas meeting Putin praised the Mecca agreement establishing the Palestinian Unity Government and expressed his hope that the international community would lift its boycott of the Palestinian Authority and that the agreement would lead to an end to the bloodshed that resulted from Palestinian infighting.

Jordan, unlike either Saudi Arabia or Qatar, actively sought Russian investment, and Russia has had a few projects in Jordan including a center for selling and servicing Kamaz trucks, hotels on the Dead Sea, and an agreement, signed in 2006, to assemble the KA-226 helicopter. During Putin's visit, Jordan agreed to buy six of the helicopters while Russia agreed to construct a plant to assemble Russian-made Lada automobiles. In addition, an agreement was signed on the protection of investments, and another on the establishment of a Russian-Jordanian Business Council. There were also calls to increase trade from the current(2006)level of $106 million dollars. Putin also pledged to build a guest house for Russian pilgrims who visit such sites as the St. John the Baptist Orthodox Church.

As far as the Arab-Israeli conflict was concerned, Putin repeated his earlier calls for an international conference to include the Lebanese and Syrian tracks---something opposed by the United States---, while for his part King Abdullah II praised the important role Russia was playing in the peace process.

CONCLUSIONS

Though brief, Putin's visit to Saudi Arabia, Qatar and Jordan was an important one. It highlighted differences between the Russian and US approaches to solving the Arab-Israeli conflict, with Putin's endorsement of the Mecca agreement, his call for the lifting of Quartet sanctions on the Palestinian Authority, and his call for an international conference to settle the Arab-Israeli conflict. On these three issues, the Russian position far closer to the Arab consensus than is the American. The visit also laid the groundwork for the expansion of economic ties, with the agreements on the protection of investments and the establishment of business councils aimed at facilitating investment and commerce. Whether Putin will get the large investments he has been seeking for Russia from Saudi Arabia and Qatar, however, remains to be seen, and the future of Putin's flirtation with the idea of a natural gas cartel is also unclear. Finally, Russia obtained from the visits further Islamic legitimacy in its conflict with the Chechen rebels.