Saudi Arabia: Re-calibration in Progress

In the last two months, there have been two events back-to-back that have changed the perspective on Saudi foreign policy, and expectedly, the credit is directed towards Crown Prince Mohammad bin Salman, the de facto ruler of the Kingdom of Saudi Arabia (KSA).

Late in March, Riyadh and Teheran agreed to re-establish formal diplomatic relations in a deal brokered by Beijing. Commenting on the deal, Iran's mission to the UN had hinted that this breakthrough agreement would be a harbinger of a political settlement to the nearly decade-long war in Yemen. According to the UN, over 150,000 people have been killed in Yemen, as well as estimates of more than 227,000 dead from an ongoing famine and lack of healthcare facilities due to the war.

In early April, Saudi Arabia and rebel groups in Yemen agreed upon a ceasefire followed by a prisoner exchange, promising an end to the war in the near future.

So, what lies behind the series of swift changes introduced to KSA's decades-old policies? The answer lies, perhaps, in its current ruler, the young Crown Prince Mohammad bin Salman (MSB), a much-maligned favourite of the Western media who seems to be growing stronger with every passing day.

Background

Since Mohammad bin Salman became the crown prince, KSA has undergone significant changes. The country has been modernised in many ways. While it is alleged that the authoritarian tendencies of the House of Saud have been strengthened, there is also a clear drive to prepare the Kingdom for the inevitable decoupling of its economy from its current near-total reliance on oil. Approximately 2/3^rd of the government’s revenues come from oil exports which saw oil revenues hit a record $ 326 billion thanks to the war in Ukraine.

However, the greatest changes have occurred in the country's foreign policy realm.

Saudi Arabia is best known as a major U.S. ally in the Gulf region and the wider Middle East. Iran emerged as a strategic threat to the Saudis following the Islamic Revolution in 1979. The Iranian revolutionaries opposed any and all monarchies in the Islamic world, and the House of Saud was their most obvious target. KSA has a significant Shia minority population in its eastern oil-rich provinces, generally kept under strict control but always a potential threat to the Sunni monarchy. Unable to make headway in KSA, the Iranians turned their attention to Iraq, where they found much success as the successive turmoil revealed.

The U.S. invasion of Iraq in 2003 changed all the Saudi calculations towards Iran. Iraq was no longer a buffer state. Rather the Shia Muslims of Iraq started gaining ground in that country after 2003. In this, they were backed by the Islamic Republic of Iran. The Saudis had much less influence among the Shia groups in Iraq but to the Sunni factions out of power, they provided a powerful ally to sustain their battles against the Shia-dominated government, leading to a sectarian war that tore the country apart.

Since the Iranian Revolution in 1979, Saudi Arabia has tried to counter radical Shia Islam by adhering more strictly to its conservative brand of Wahhabi Islam. But the 9/11 attacks on the United States was a moment of reckoning for the Saudi regime. Most of the people involved in this plot were Saudi nationals. So, the royal family came to realise that the Sunni radicalism it had promoted could come back to bite it.

The House of Saud was more of a system of collegiality in the top echelons of the power structure. The Saudi king could not act as a dictator, and he had to consider the opinions of the other princely notables. Saudi Arabia is a highly tribal society, and problems are resolved through tribes, not individuals. So, the Saudi king also had to accept the viewpoints of tribal leaders before taking any decision. This system was a safety mechanism that allowed dissent to be vented out. But this also meant that conservative Islamic forces could not be questioned. Crown Prince Mohammad bin Salman completely overturned this system when he took power in his own hands and decided to implement a system of top-down modernisation.

Iran's nuclear ambitions have been a direct threat to KSA. The Kingdom's traditional security shield, the U.S., has failed to assure them of foolproof security from growing Iranian ambitions. Despite international sanctions, Iran's influence in the region has only spread to the detriment of Saudi interests. Iran has been the major player holding most of the strings from Iraq to Yemen to Syria and beyond to the oil-rich Eastern Mediterranean in Libya. Even the much-hyped 2015 Iran nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), had been suspended since 2018 when President Trump unilaterally withdrew from it under alleged Israeli pressure.

Saudi Arabia has always considered the Gulf Arab region its geo-strategic backyard. It has tried to portray itself as the regional leader of all the Arabs in the Gulf region. These pretensions are not without basis as it is the largest and the most powerful country among its Gulf Arab neighbours. To maintain this hegemony, smaller Gulf states could not take foreign policy decisions without consulting Riyadh first. Qatar broke this cardinal rule when it challenged Saudi hegemony through its support for the Muslim Brotherhood and its broadcast of Al Jazeera. As a result, it had to pay a substantial price.

The biggest shock to Saudi Arabia came with the unravelling of the Arab Spring, which began in 2011. As a status quo power, it was especially alarmed by the collapse of conservative regimes around it. The United States once again proved to be a disappointment to the Saudis as an ally. It did not stand by these regimes as they collapsed. Instead, it watched in silence and even cheered on the opposition. Whatever soft corner the Saudis had in the U.S. was lost in the process. They realised that they could not blindly depend on U.S. security assurances anymore.

As the Arab Spring progressed, the Saudis saw an Iranian hand everywhere, and this was more so in its own backyard in the country of Yemen. Here the Arab Spring destabilised the country, and a civil war ensued. The Iranians backed a Shia Islamic group called the Houthis in this civil war.

In January 2015, the current king, Salman bin Abdulaziz Al Saud ascended the throne and appointed his son MSB as the minister of defence. MSB immediately orchestrated a military campaign in Yemen against Iranian proxies.

Code named Operation Decisive Story, the Yemeni intervention was planned along the lines of Desert Storm, preceded by an intensive bombing campaign, followed by a naval blockade and ground offensive against the Houthi rebels. To the credit of MSB, he could expand the coalition to include Egypt, Morocco, Jordan, Sudan, UAE, Kuwait, Qatar and Bahrain. Many neighbouring countries provided airspace and territorial waters while the U.S, and UK pitched in with electronic intelligence, weapon systems, and logistics, including aerial refuelling and search and rescue of downed Saudi pilots. Pakistan was also asked to participate, but due to internal opposition, it declined, earning Saudi public and private reproach at the highest echelons.

In 2017, Mohammad bin Salman was appointed the Crown Prince. Since then, he has consistently been in the news, especially when the Saudi dissent and U.S. journalist Khashoggi was brutally murdered within the premises of the Saudi embassy in Turkey.

Analysis

MSB has been driving the change in Saudi economic policies since 2016 when he choreographed the ambitious Vision 2030 plan, which, as he then said, would ensure "we can live without oil by 2020." The plan included selling shares of Aramco to generate revenues, creating a sovereign wealth fund worth $ 2 trillion, amending the Kingdom's strict visa rules to allow qualified ex-pats to come and work in the country and, most importantly, diversifying the economy. He also hinted at allowing women to participate in the workforce in greater numbers and removed the notorious ban on women driving cars.

Aware of the vast riches of the profligate royal family, MSB launched a much-publicised anti-corruption campaign in 2017 which detained 11 princes, four sitting ministers and dozens of ex-ministers, including Prince Alwaleed bin Talal, a billionaire with huge investments in Twitter and Apple amongst others. Thus, he consolidated his power and incentivised the powerful elite to be mindful of national economic well-being by declaring their wealth and using it for the national good.

But all this financial awakening would come to nought without international collaboration and investment. For this, Saudi Arabia must not only be peaceful from within but also live in a safe region for peaceful growth and investments. Herein comes MSBs' next priority, which is to usher in a measure of geopolitical stability in this unstable region. Towards this end, a rapprochement with Iran is the first crucial step.

This is nothing new. Mohammad bin Salman has always been flexible in his foreign policy and has never shied from highlighting Saudi national interests. So, when tensions with Iran were high, the crown prince signalled a subtle shift in Saudi policy towards Israel. This eventually led to the signing of the Abraham Peace Accords between Israel and the two Gulf Arab states of Bahrain and UAE. Under these accords, these two states officially recognised Israel. This was a big historic moment. Yet Saudi Arabia itself has still not established diplomatic relations with Israel. Israel has also reportedly carried out covert security cooperation with Saudi Arabia.

In the case of Qatar, the collective regional blockade of Doha proved to be highly counter-productive. This was both in the economic and political sense. While the Qatari economy suffered from isolation, its Arab neighbours were also cut off from its dynamism. As the leader of the regional Gulf Cooperation Council (GCC), it is the duty of Saudi Arabia to see to it that Gulf Arab unity is maintained. So, Qatar could not be excluded for very long politically as well. Doha also offered an opening to Riyadh to engage with Tehran. All these factors led to the eventual re-establishment of Saudi-Qatari relations and the wider Qatar-GCC relations and the end of the inter-Arab dispute in the Gulf region. That it happened well before Qatar hosted the World Football Cup, the biggest sporting event ever held in the Gulf region, was indicative of the reawakening of a measure of Arab solidarity.

The proxy war against Iran has also been taking a heavy toll on the Saudi economy and undermining Vision 2030. Further, the Iranian advantage during the Arab Spring dissipated as Syria was completely destroyed, and the Yemen conflict remained in a stalemate. Iran is also facing increasing economic pressure from sanctions and domestic pressure from its young population demanding political and social reforms. So, the Iranians also had an interest in reconciling with Saudi Arabia. Finally, when the Chinese emerged as a mediator, both sides began to talk. Iran and Saudi Arabia each have long-standing ties with China and trust Beijing.

Saudi Arabia is a very important country for India, and it is India's fourth-largest trading partner. More than 18 per cent of India's crude oil imports are sourced from Saudi Arabia. During FY22 (Apr-Dec), bilateral trade was valued at US$29.28 billion. During this period, India's imports from Saudi Arabia were valued at US$22.65 billion, and exports to Saudi Arabia were worth US$6.63 billion. There are around 745 Indian companies registered as joint ventures/100% owned entities with investments worth approximately US$2 billion in the Kingdom. The approximately 2.2 million-strong Indian community is the largest expatriate community in the Kingdom.