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Saudi Pragmatism

Just weeks after Saudi Arabia and Iran agreed to resolve their differences and restore diplomatic relations under China’s mediation, Riyadh decided to join the Shanghai Cooperation Organisation (SCO) as a dialogue partner, an organization built around two anchors, China and Russia. Under its forward-looking leadership, Saudi Arabia’s worldview has undergone a gradual transformation. Riyadh views the emerging geopolitical order as ‘malleable’ and is steadily moving away from the unidirectional approach and status-quo-oriented policies of yesteryears, towards more independence and non-aligned pragmatism.

Today, China has become Saudi Arabia’s largest trading partner, replacing the United States. Around twenty-five percent of Saudi Arabia’s total oil exports are to China which has become the biggest buyer of Saudi crude oil. According to Reuter’s news agency, bilateral trade between the two countries reached $87.3 billion in 2021, with Chinese exports to the Kingdom amounting to $30.3 billion and China’s imports from Saudi Arabia totalling $57 billion.

On the other hand, despite some irritants with Saudi Arabia, the US remains the largest source of Saudi Arabia’s defence equipment purchases. According to a Washington Post report, US defence sales to Saudi Arabia totalled over 90 billion dollars from 1950. Till recently, the US was Saudi Arabia’s largest trading partner, and Saudi Arabia, was the largest US export market in the Middle East. The US-Saudi Arabia alliance was built on decades of security cooperation and strong business ties dominated by US interests in Saudi oil.

Under the direction of its Crown Prince, Saudi Arabia has embarked on a major economic and social transformation outlined in its Vision 2030.

This has changed and by 2021, the United States itself became the world’s biggest producer of oil, ahead of Saudi Arabia and Russia. Currently, only five per cent of Saudi Arabia’s oil exports are destined for the United States. Against the backdrop of broader policy shifts, a remarkable balancing deal was announced by Saudi Arabia in March 2023 when two Saudi Airlines, state-owned Saudi Arabian Airlines (Saudia) and new national airline Riyadh Air announced plans to order a combined 78 Boeing 787 Dream Liners from Boeing that marks the fifth largest commercial order by value in its history.

Earlier in 2016, Riyadh took the lead in forming OPEC Plus, to include ten additional oil-producing states, notably Russia. OPEC Plus is an alliance, though not treaty-bound, of oil-producing countries to promote their shared interests. This gives them greater freedom of action on the crucial issue of oil production and pricing.

The dynamics of the Middle East are shifting. For some time now, for the United States, given its preoccupation with countering China and Russia, the Middle East no longer seems to be a top priority. The US withdrawal from the broader region is evident in the departure of its troops from Afghanistan in 2021 and reductions in US military commitments to Iraq, Jordan, Kuwait, and Saudi Arabia. China has deftly stepped in. In the context of growing China-Saudi Arabia ties, the most significant recent event was Chinese President Xi Jinping’s visit to Saudi Arabia in December 2022. The three-day visit included meetings with the Saudi king and the Crown Prince as well as two summits with leaders of the Gulf and the Arab countries. China and Saudi Arabia signed 34 agreements and deals worth 30 billion dollars.

China’s quiet diplomacy and Saudi Arabia’s realistic approach have led to a historic Saudi Arabia-Iran détente that has the potential for far-reaching and transformative implications for a troubled region. This breakthrough bodes well for the restoration of eventual peace and normalcy in Yemen, Syria, and Lebanon.

Saudi Arabia is also strengthening economic and commercial ties with the emerging markets which accounted for approximately 67 percent of global GDP growth in the last decade. The Saudi leadership is astutely and vigorously protecting its economy as the world’s energy and oil demands fluctuate.

Under the direction of its Crown Prince, Saudi Arabia has embarked on a major economic and social transformation outlined in its Vision 2030, built on the futuristic model of diversification away from oil. The concept of a “thriving economy” foreseen in Vision 2030, is expected to be achieved through a major change in the economic model, with a shift towards a new paradigm based on increased productivity through private sector-led growth. The Saudi Crown Prince’s Project NEOM, a US$500 billion-worth high-tech city is considered the centerpiece of Saudi Arabia’s post-oil diversification strategy.

Saudi Arabia, as a G20 member and a fast emerging economy, is leading the socio-economic transformation of the Middle East. UAE and other GCC states are supplementing this effort. The thaw in Saudi Arabia-Iran relations will help accelerate this process.

Saudi Arabia is Pakistan’s sincerest and most steadfast friend and has always stood by Pakistan in all difficult times. It is also host to the largest expatriate population of Pakistan in any single country. Given Saudi Arabia’s growing strength as an emerging economy, its robust role in the evolving dynamics of the Middle East and its unique status for the entire Islamic world, Pakistan needs to further upgrade its existing exemplary bilateral ties with Saudi Arabia to a multidimensional strategic partnership, making wide-ranging economic cooperation as its centrepiece.

The writer is Director (Foreign Affairs) at the Centre for Aerospace and Security (CASS). He may be reached at [email protected]

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