Letter from Washington: America’s Saudi dilemma
19 May 2016|

Washington has a serious long-term relationship dilemma with the Kingdom of Saudi Arabia. And President Obama’s April visit to Saudi Arabia—the fourth one as president—was all about trying to shore up that relationship. Notwithstanding the usual official statements, I seriously doubt it did the job.

As President Obama recently told Prime Minister Turnbull referring to the relationship, ‘it’s complicated’. Indeed, it is. And it’s a difficult one at two levels: strategic and domestic.

At the strategic level, the relationship is—at its most basic—an unwritten agreement whereby the Saudis would provide a ready supply of oil in return for American guarantee of its security.

The relationship first came under severe strain in the wake of the Arab Spring when Washington decided—against Saudi wishes—to support the popular Egyptian uprising and dump long-standing US ally and friend of the Saudi royal family, President Hosni Mubarak. Another crack in the relationship has been the Saudi feeling that the US hasn’t done enough to oust Russian and Iran-backed Bashar al-Assad from power in Syria, focusing too much on defeating the Islamic State in Syria and Iraq. Cracks have also appeared over the Saudis’ year-long intervention in Yemen’s civil war which has killed thousands and isn’t any nearer to a resolution.

But what has really riled the Saudis is last year’s nuclear deal with Iran, Riyadh’s regional arch-rival. With the lifting of the sanctions and the gradual return of Iran into the international fold, Riyadh feels that it’s only a matter of time before Washington begins to distance itself from the Saudi kingdom in favour of Iran. This isn’t paranoia thinking on the part of the Saudis—President Obama quite bluntly revealed his thinking on this issue recently when, in a long interview for The Atlantic last month (probably his most important on foreign policy), Obama not only indicated the Saudis aren’t doing enough for their own security, but to add insult to injury suggested that they should ‘share’ the Middle East with the Iranians. That confirmed what they always thought: Obama never liked them.

Adding fuel to this increasingly fractured relationship is a current move in the US Congress to pass a bipartisan bill which would expose Saudi Arabia to legal liability for any role in the 9/11 attacks. Interestingly, Hillary Clinton supports such a bill. Although Obama has made clear he would veto such a move, the Saudis are worried it could still go through. Accordingly, they have threatened to sell some $750 billion worth of US treasury securities and other assets before these could be in danger of being frozen by US courts. Ironically, that would hurt them more than the US. Those in  Congress, however, may shelve such a bill if Obama agrees to release highly-classified 28 pages from a Congressional report which many in Congress believe would point to Saudi government ties with the terrorists. Most experts agree that the president should veto such a bill otherwise the US itself could become a target of law suits from other nations.
So it’s no wonder that upon Obama’s arrival in Riyadh on his recent trip he wasn’t welcomed by King Salman himself but instead by the governor of Riyadh. And to make the point, the King personally welcomed all the other Gulf Cooperation Council heads’ of state who arrived on the same day. Let’s not beat around the bush: this was a serious snub.

Turning to the domestic front, the Obama administration is fully aware that it’s dealing with a state which is not only feeling increasingly insecure externally, but is utterly anachronistic in its mode of governance. And while this style of rule—effectively a family-run business—may have been acceptable (at a pinch) in a previous century, its increasingly becoming less so in this globalised, social media-rich environment. It’s unlikely that such a political system can continue in the long-term, particularly in the wake of the Arab Spring. And the Saudi royals know it—sort of.

Deputy Crown Prince Mohammed bin Salman, the King’s 31-year-old son and the effective ruler of the kingdom, launched a grand plan, Vision 2030, on 25 April which aims to modernise and diversify the country’s economy and end its ‘addiction to oil’. This highly ambitious—and probably unachievable—plan aims to end the country’s dependence on oil by 2030 by selling 5% of Aramco, the country’s giant oil company, and creating the world’s largest sovereign wealth fund, designed to eventually hold $2 trillion in assets. This is a commendable economic plan, given the high level of youth unemployment, the halving of the price of oil in less than two years, the increasing budget deficits (15% of GDP) and the very inefficient and wasteful government spending in Saudi Arabia over the years.

However, it’s a missed opportunity to open up the political system to greater participation. And although Prince Mohammed supports socio-cultural changes, such as ending the ban on women driving and doing away with polygamy, he also knows he can only go so far in pushing for reform before offending the deeply conservative and powerful religious establishment. And although the Obama administration would like to see greater domestic reforms, particularly on women’s rights, it’s unlikely to push very hard on that front for the moment. It has seen in other parts of the Middle East how difficult it is to control events once suppressed domestic forces are mobilised. And given the already fragile nature of the Saudi polity, the last thing this administration would want to see is a faltering Saudi kingdom in a region beset with instability and conflict.

And although Saudi Arabia isn’t about to break with the US and embrace China, for example, this difficult but critical bilateral relationship will be one that the next American president will have to manage very deftly and diplomatically in the hope of guiding it in the right direction. That would be particularly challenging under a possible Clinton Administration—not only does Hillary Clinton have a keen interest in promoting women’s rights around the world but the Clinton Foundation has been the recipient of many millions of dollars from Saudi donors.