Russia-Gulf Arab States: A Relationship of Convenience

March 7, 2017 | Leone Lakhani
photo: iStock.com/keithbinns

The United States and the oil-rich Gulf Arab states have long been traditional allies. But now the Gulf states – collectively known as the Gulf Cooperation Council (GCC) – are shifting some focus to the east and firming up ties with Moscow.

It started with Syria.

“One reason the GCC invested so much into Russia recently is because they were hoping it would change Russian President Vladimir Putin’s policy towards [Syrian President Bashar Al] Assad,” says Anna Borshchevskaya, Ira Weiner Fellow at The Washington Institute. “This didn’t happen.”

Russia did, however, emerge as the main power-broker in Syria, and the Gulf states took note.  

“Because of U.S. absence from Syria and a retreat from the Middle East in general, the GCC developed a begrudged respect for Russia, because it remained consistent and did what it said it would do,” says Borshchevskaya. 

Dennis Ross, speaking to The Cipher Brief  in December, agreed.  

“There’s an impulse in the region to adjust to those who exercise power. Power remains the fundamental currency of shaping realities in the Middle East,” he said. “The Russians, despite being a country without great resources, and even without enormous military wherewithal, affected the balance of power on the ground in Syria.”

Beyond Syria, the Russians may be looking to create a role in another major conflict in the region – Yemen – says Theodore Karasik, Senior Advisor at Gulf State Analytics. Earlier this month, Moscow appointed Sergei Kozlov as the new Russian ambassador to Saudi Arabia. Kozlov had previously served as Russia’s ambassador to Yemen.

“Changing the ambassador signals that there’s a potential for Moscow to become a negotiator in this process by engaging the Saudi leadership more directly,” says Karasik. Reaching an agreement in Yemen would amplify Moscow’s political prowess and power-broking powers in the Middle East.

“The Russians are carving out not only a strategic role for themselves in the Middle East,” says Karasik. “But they also want to be an integral part in the future of security in the region.”

That’s led many in the region to conclude that “they ought to find a way to take the Russians into account in the pursuit of their own interests,” said Ross.

Economic Strength, Political Muscle

One of the main interests for the oil-rich Gulf states is keeping their main adversary, Iran, in check. For them, Moscow may offer the channel to do just that.

Russia is building on its alliance with Iran, which stems largely from their military cooperation in Syria and joint support of Assad. They also share a vision on global order with mutual criticism of the West.

Now, the wealthy Gulf states are using their economic strength to flex their political muscle, digging into their deep pockets to invest in Russia at a time when Moscow’s embattled economy struggles with lower oil prices.

“Investments by Saudi Arabia, the UAE [United Arab Emirates], and Qatar into the Russian sovereign wealth fund RDIF [Russian Direct Investment Fund] is well into the tens of billions of dollars,” says Karasik. “Each of the three GCC states is using their investments as a political tool to get leverage, not only with Iran on Syria or Yemen, but also in Libya."

In December, the Qatar Investment Authority (QIA), the government’s investment arm, agreed to buy a 19.5 percent stake in Russia’s state-owned oil group Rosneft. The stake was worth an estimated $11 billion at market price. Meanwhile, Abu Dhabi’s Mubadala Development Company and RDIF already have a $2 billion joint fund in place to pursue opportunities in Russia.

It comes amidst the GCC’s longer-term goal to diversify its defense base, while Moscow aims to increase military exports to the Gulf region.

"In their arms purchases, the Gulf states have historically gone to the U.S., the UK, or other European manufacturers. But 10 years ago, they began to look north and east for equipment and weapons,” says Karasik. “Small but significant deals were concluded, including Russia's Pantsyr-1 sale to the UAE for the Emirates air defense system in 2000.” 

At the region’s largest defense fair, IDEX, this month, the UAE awarded $1.9 billion in military contracts to Russia, including one to Russia’s Rosoboronexport. That consisted of anti-armor missiles, and training and support to the UAE armed forces.

Sergey Chemezov, the chief executive of Russia’s largest military complex Rostec, also said an agreement had been signed with the UAE to develop a fifth generation, joint light fighter aircraft. It coincides with a deal struck between RDIF and a consortium of Middle East investors for the sale of a 12 percent stake in Russian Helicopters, a Rostec unit.

In a statement, RDIF said the investment would enable it to expand to new markets and “broaden Russian helicopters’ activities in this region.”

It’s not just military cooperation. In October, following a visit to Saudi Arabia, Russian Minister of Energy Alexander Novak said Moscow and Riyadh would work together in energy sector.

"We have agreed on technological cooperation in the area of oil and gas production and refinery, and on the implementation of a number of joint projects," he said. That extended into "cooperation in the nuclear sphere, in the construction of tanker fleet and the electricity sector," he added.

But despite Russia’s economic needs and the Gulf’s willingness to satiate them, Borshchevskaya says the stronger military ties and economic bonds won’t necessarily equate to greater influence for the Arab states in the Kremlin.

“I doubt the Gulf would be able to leverage improved economic relations into changing Putin’s policies,” she says. “He’s quite skillful at maneuvering and playing a weak hand. It doesn’t matter how much money you give Russia, Putin is not going to change his policies.”

Borshchevskaya says that although Putin is aware of the economic pressures at home, “he believes the U.S. orchestrates regime change and that he may be next.” So his main aim, she says, is “reducing American influence.”

The Gulf states may not have the same goal. But for now, in the current geopolitical climate, their relationship with Russia may be one of necessity—and convenience. 

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