Putin’s Saudi and UAE Visits Should Set Off Alarm Bells in the West
There is little I love more than a cliché. The images from Vladimir Putin’s 6-7 December visits to the United Arab Emirates and Saudi Arabia are worth at least one thousand words. That was of course largely the point – as Putin’s long-serving lackey and press secretary Dmitry Peskov later told Russian state media, Moscow, Saudi and the UAE are keen to highlight their deepening ties but "Economic cooperation, despite all the interest, cannot be fully disclosed now, because there is a huge number of ill-wishers and a huge number of countries that want to put pressure on us”. A sly way of saying that Putin’s pariah status means that sanctions could follow if too many details were given publicly.
Firstly, the pomp and grandeur of both visits – with Putin receiving an aerial welcome and guard of honour from Sheikh Mohammed bin Zayed in the UAE and a similar reception from Crown Prince (and de facto ruler) Mohammed bin Salman in Saudi Arabia, who received a high-five-handshake from Putin – is a clear display of strength on behalf of both Abu Dhabi and Riyadh. Coming as the US and EU face crucial test points in their strategy for supporting Ukraine against Putin’s unprovoked and wanton invasion and as the wider West is struggling to update the Russian oil price cap introduced just a year before Putin’s visit, the message could not be more clear. Saudi Arabia and the UAE are too important and too powerful for the West to impose major costs on them for embracing Putin.
The two countries positions, however, are not the same.
The message could not be more clear. Saudi Arabia and the UAE are too important and too powerful for the West to impose major costs on them for embracing Putin.
In Saudi Arabia, Putin was keen to show off his entourage. Putin and MBS openly met alongside a number of senior Russian officials, including the sanctioned head of Russia's Foreign Direct Investment Fund, Kirill Dmitriev; the sanctioned Chechen warlord Ramzan Kadyrov; and the head of Russia's Central Bank, Elvira Nabiullina (who often gets far too kind coverage in Western media, which I have criticised before). Nabiullina, Kadyrov and Dmitriev were in attendance in the UAE as well, but the UAE controlled images of their attendance (though Russian state media put some out anyway). Just two weeks prior Bloomberg reported that the UAE was also finally moving to impose tighter restrictions on Russian entities in the country so perhaps MBZ wished to take a more cautious approach. But nevertheless, the meetings clearly signal that the UAE is still open to Russian money fleeing Putin’s war and sanctions – and that from the Russian state.
For Saudi Arabia and Russia, however, the meetings were even more significant. They are the world’s second and third largest oil producers, respectively, and key partners in OPEC+. I argued in my book Economic War that the tie-up is the most significant foreign policy success for the Putin regime of the last decade – you can find the excerpt here – and the meeting is clearly meant to signal that the relationship remains strong. This is not to be taken for granted, given the two sides did engage in a huge supply war at the beginning of 2020 in the COVID-19 pandemic’s early days, helping send oil prices negative for the first and only time.
At present both Russia and Saudi Arabia’s oil policies are strongly aligned, in that they want oil prices to go up and both are happy to constrict global supply to do so.
At present both Russia and Saudi Arabia’s oil policies are strongly aligned, in that they want oil prices to go up and both are happy to constrict global supply to do so. True, Russia is not always compliant with its OPEC+ cut quotas, but while Saudi Arabia cuts to drive price action, the Kremlin does so to drive its geopolitical interest. The cutting strategy has, however, not proven so effective this past year as the US continues to hit new records for monthly oil production (contrary to the common narrative about the Biden Administration).
There is no love lost between MBS’ regime and the Biden Administration given the president’s former labelling of MBS as a pariah (rightfully so given his involvement in the murder of journalist Jamal Khashoggi and brutal war in Yemen in my opinion) even if Washington has toned down its criticism of late. There is little doubt that MBS would like to see Donald Trump, who all-but-kowtowed to him and whose family has been bankrolled by Riyadh since his presidency ended, return to the White House.
Putin of course also wishes to see Trump return to office because he believes Trump will take a far less supportive approach to Ukraine. Although Trump has avoided talking about the issue in recent months, his allies in DC are leading the charge to stop such support. And oil prices are one of the most politically sensitive issues in the United States. The European Union and United Kingdom also hold elections next year. These are far more important for Russia than they are for Saudi Arabia, but further underpin the risk that the Kremlin will take major action to try to spike prices – including potentially engaging in its own unilateral cuts to exports.
Of course, other matters were also on the agenda, including the ongoing Saudi-Iranian reconciliation (Putin jetted to Tehran after Riyadh) and the Israel-Hamas War, but I think the oil market risks is far-and-away the main takeaway. Saudi had been seeking to sign a deal with Tel Aviv, as the UAE already has done, just before Hamas’ attack, and is not going to do anything significant to upset the regional apple cart, no matter how brutal the situation in Gaza becomes (this could change if violence spreads to the West Bank).
Another reason to worry about what Putin may have been laying the ground work for in is that we have already seen him use inflation to try to undermine Western unity and support for Ukraine (with his shutting off gas markets in 2022). Oil price spikes would risk reversing all the painful work high interest rates have done to tame inflation.
Putin’s all-out dedication to his war on Ukraine and the international order isn’t over, and the Gulf, and in particularly Saudi, relationship is going to be key to his strategy.