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bull
29 Aug 06,, 11:07
Saudi Arabia’s Growing List of New Friends
V. Balaji Venkatachalam, Arab News —


DUBAI, 15 June 2006 — With oil prices hovering around $70, does this signal a new wave of foreign relations for Saudi Arabia, or it is just a natural aftermath of the 9/11 attacks? The visit of Custodian of the Two Holy Mosques King Abdullah to China, Malaysia, India and Pakistan was a landmark event after 50 years of limited engagement with India and China. The immediate reciprocal visit of Chinese President Hu Jintao to Riyadh shows how things are going to change in coming years. Riyadh it seems, has decided to give a new and more vibrant direction to its bilateral relationship with Asian countries in general and with China in specific.

For Saudi Arabia, the visit could herald the beginning of fruitful cooperation with one of Asia’s two “emerging economies”. As far as New Delhi and Beijing are concerned, the first visit by King Abdullah in more than 50 years could see the economic relationship blossoming into a strategic oil relationship. In fact, India’s economic interest in Saudi Arabia has been restricted to crude oil import and to the remittances made by Indian workers. By some estimates, 3.5 million Indian workers in GCC are remitting $6 billion every year to India, which is as good as the annual foreign direct investment India attracts.

However, there is a lot more to this newfound affection toward Asian countries. The visit of King Abdullah to Southeast and South Asia connotes a markedly softened approach towards these countries. New strategic alliances are being made and there has been an infinitesimal attempt by Saudi Arabia to create a new world order. Central to this are decisive but as yet undetectable changes in US-Saudi relations, US-Pakistan relations, Saudi-Pakistan-China-Iran relations, Russia-Iran-China-India relations, China-Pakistan-Bangladesh-Nepal-Bhutan relations, India’s moves for greater integration and role in East and South-East Asian affairs and trade and economic relations in the region.

The expanding of Saudi relations to new geographic territories was elicited by the Iraq issue, the unreservedly bad treatment of prisoners of war by the US in Abu Ghraib and Guantanamo, consequent growing Islamic jihadi attacks around the world and the growing resentment in the Muslim world against the West, the increasing death toll of Iraqi civilians in a war that doesn’t seem to end and, last but not the least, the political and economic embargo faced by the Palestinians.

Concerned over the increasing calls for protectionism in the US and the recent Dubai Ports imbroglio, Saudi Arabia isn’t sure how much longer it can count on the US as a favorable destination for its investments from oil revenue. Likewise, the recent call by President Bush to reduce America’s dependence on Middle Eastern oil in the coming decade explains the Kingdom’s new links with China and India as a logical progression after 9/11. American imports of Saudi oil have been falling since the invasion and occupation of Iraq. In his State of the Union Address in January 2006, Bush called for a need to minimize America’s dependence on oil from Saudi Arabia and the Middle East.

At the same time, Saudi Arabia is seeking new markets for its oil and new opportunities for its trading outfits, while China and India are on the prowl for new sources of oil and new customers for their accelerating industrial output. It was not without reason that the King Abdullah made a concerted effort to forge cooperation in energy sectors in both the countries during his visit. This in turn would have the long-term effect of putting into place a steady crude-supply chain, providing some measure of security to Saudi Arabia’s crude markets.

One of the strategic objectives of Saudi Arabia is to shift its economic focus from the developed West to the emerging economies of Asia, primarily in the interest of long-term market stability. King Abdullah’s visit is a major step in the process of a calibrated weakening of US-Saudi economic and political ties.

Looming in the background and often overlooked is the nuclear ambition of Iran, which is creating some sort of uneasiness in Riyadh. Saudi Arabia is worried about an Iranian program and the absence of any international pressure on Israel, which also has nuclear devices. Saudi Arabia does not regard Iran, a past adversary with which Riyadh has restored relations, as a direct threat. But it is unnerved by the possibility of Iran and Israel having nuclear weapons.

Iran, now the second largest supplier of China’s oil, has become a particularly important trading partner for China. As relations between the two countries have expanded, over the years Chinese has sold much military hardware and equipment to Iran.

China’s creeping influence and increasing presence in world affairs in general and with Iran in specific, has been seen as a right move by Saudi Arabia. China’s objectives are clear; it wants a unipolar Asia with itself as the only regional power and a multi-polar world with US, Russia China and Saudi Arabia as the four poles in the emerging world order. The US on the other hand wants a multi-polar Asia with India, China and Japan as regional powers, with Japan and India containing China and a unipolar world with itself as the lone superpower.

The obvious question is, why is this change being effected by Saudi Arabia at this juncture? One Indian official quoted by the International Herald Tribune says that a “fundamental driver seems to be a Saudi desire to move away from a monocultural situation, where they have one big friend, one big product, and they are based on one big idea, the Islamic idea.”

According to this view, the Saudi Arabia is now in the midst of a process of “looking at broad-basing their diplomacy.” But what precisely has gone wrong with the settled relationship that is now sought to be changed?

The paper quotes Arab and American experts who feel that India and China have an “additional significance for the Kingdom,” namely, that they are “low-maintenance customers that buy its oil without meddling — as Washington does — in Saudi affairs.”

Notwithstanding the recent attempts by Saudi Arabia to upgrade its bilateral ties, with both countries, various factors are bound to play a constraining role in the future. The most important of these is the China-Indian energy competition that is bound to emerge sooner, rather than later. As long as Saudi Arabia is able to deal with China and India without intruding on either’s interests, the present relationships of Saudi Arabia with both the countries can flourish. But once China and India start competing over energy resources, as they have started doing in various parts of the world, Saudi Arabia will be forced to make some complicated choices.

Today, China is the most obvious power on the rise. But it is not alone: India and other Asian states now boast growth rates that could outstrip those of major Western countries for decades to come. China’s economy is growing at more than nine percent annually, India’s at eight percent, and the Southeast Asian ‘tigers’ have recovered from the 1997 financial crisis and resumed their march forward. China’s economy is expected to be double the size of Germany’s by 2010 and to overtake Japan’s, currently the world’s second largest, by 2020. If India sustains a six percent growth rate for 50 years, as some financial analysts think possible, it will equal or overtake China in that time.

By using “purchasing power parity” India’s economy is now the fourth largest in the world, well ahead of Britain, Germany or France, and only a shade behind Japan. Within couple of years, India will overtake many countries if its economies grow at an average of 8 percent.

Of course, India’s wealth per head is very weak by the standards of the developed world. Its population, after all is twice as high as the USA, Japan, Germany, and Britain put together. Only one country in the world has a larger population than India — China. China’s citizens are also wealthier than India’s, and its economic growth is comparable too. So why do I suggest that India will one day eclipse many developed countries, and equal China too, in terms of its economy?

In the long term, it is partly a matter of population. China’s one child policy means that India will, before long, overtake China to become the country with the largest work force in the world. Not only that, in a generation’s time, China will have no way to support its massive senior population. By then, China’s population will be falling.

In the short term, however, the main reason that India will become as important as China is its large English-speaking population and also its software industry. India has more English-speakers than any other country in the world. English is the language of government, business, and the law, throughout India.

If the US is thrown in the matrix, the picture becomes all the more complicated. With the US viewing China as the most likely potential threat to its global supremacy, while at the same time helping India to emerge as a global player, the pressures under which Saudi Arabia will have to operate will only become stronger.

The recent new relations highlights the growing economic and strategic importance Saudi Arabia is according to China and India in the new global order, and the substantial role the Saudi Arabia wants to play in the development of these countries. But one thing should be kept in mind: That maneuvering two giant elephants will require a lot of skill and stamina.

— The author heads the research department in Forbes Arabia and the views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Forbes Arabia or DIT Publishing.

bull
29 Aug 06,, 11:14
Does Saudis have the guts to move out of the US umbrella?

Ray
30 Aug 06,, 11:20
The Saudi Kings are the greatest hypocrites and frauds that have walked Planet Earth!

Archer
30 Aug 06,, 15:02
I would put some of the leaders of the Muslim league and nearby dictators as the greatest frauds & hypocrites, but never mind.

GVChamp
01 Sep 06,, 00:02
Saudi Arabia gets advanced weapons from Europe and the US, the last time I checked. Those weapons are useful deterrents against both Iran and Israel, and make them a regional power, should they ever choose to be one.
Moving out of the Western Umbrella would be a very stupid move, IMO. However, it wouldn't be surprising if they flirted with opposing powers a bit, just to keep us on our toes and paying attention to them.

Ray
01 Sep 06,, 07:12
Saudis may have all the modern stuff from anywhere, but do they know how to use them? I believe they even required Pak pilots to fly their aircrafts!