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Saudi-US Relations Voyage Beyond Oil Sales

US President Donald Trump and Saudi Crown Prince Mohammad bin Salman, Reuters
US President Donald Trump and Saudi Crown Prince Mohammad bin Salman, Reuters
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Saudi-US Relations Voyage Beyond Oil Sales

US President Donald Trump and Saudi Crown Prince Mohammad bin Salman, Reuters
US President Donald Trump and Saudi Crown Prince Mohammad bin Salman, Reuters

Oil has been at the heart of the Saudi-American economic relationship for eight decades, but that fact is changing as black gold no longer occupies the center on which the economic partnership between the two countries evolves.

It is worth noting that the United States itself is importing less shale oil after worldwide production has significantly increased, possibly putting it on the track to surpass Saudi Arabia and Russia in terms of production for 2018.

Last year, US imports of Saudi crude oil fell more than usual due to Saudi Arabia's policy of rolling back production along with Russia and the rest of the Organization of the Petroleum Exporting Countries (OPEC).

The oil-cut agreement between OPEC and non-OPEC producers forced the Kingdom to reduce its exports to the US in the second half of 2017.

US imports from Saudi Arabia show that since July 2017, the kingdom has not exported over 1 million barrels per day to the United States. It fell to 795,000 bpd, from a previous 1.015 million bpd in June, according to the US Energy Information Administration.

More so, US imports of Saudi oil fell to their lowest level since 1988 in October, reaching 563,000 bpd, almost half of what the US imported in the same month in 2016.

But the Kingdom can go back to boosting production to one million bpd—nevertheless, it is not likely for production to exceed a million bpd by far. It is difficult to assume that the Kingdom will return to exporting above 1.5 million bpd.

Saudi Arabia continues to share multiple energy partnerships and other oil sector interests with the US, as both countries are interested in stabilizing the oil market.

Saudi Aramco has the largest refinery in the US, the Motiva refinery in Port Arthur, which has a refining capacity of over 600,000 bpd.

Many Aramco officials, on different occasions, expressed the company’s desire to own new assets in the US. It is also looking for a new Liquefied natural gas (LNG) deal and has already spoken with some US companies, including Tellurian Inc, The Wall Street Journal reported months ago.

The US administration, led by President Donald Trump, combines the same approach with the Saudi government.

US Energy Secretary Rick Perry said in a Huston speech that the US will not take a hostile attitude toward fossil fuels, especially since many developing countries in the world need cheap and clean energy.

An important aspect of Saudi-US energy cooperation has recently emerged in terms of nuclear energy. The kingdom seeks to build its very own nuclear reactors for peaceful means of producing clean energy.

Competition seems to be building up on Saudi nuclear reactors, with the US showing strong interest following Russia's announcement on making a move towards building reactors to produce electricity in the kingdom.

Bloomberg reported that the US administration was considering allowing Saudi Arabia to enrich uranium in the kingdom for peaceful purposes, which would give preference to US companies wanting to build reactors in the kingdom, such as Westinghouse Electric Co., Exelon Corp. and others.

In Riyadh, Russian Energy Minister Alexander Novak said in a joint press conference with his Saudi counterpart Energy Minister Khalid al-Falih last month that Russia's Rosatom had asked the Saudi government to build nuclear reactors in the kingdom.

The kingdom plans to build 16 reactors for peaceful uses over the next 20 to 25 years, with investments amounting to $80 billion, according to the World Nuclear Association.

Saudi Arabia, which seeks to reduce domestic oil consumption, is considering building a nuclear power generation capacity of 17.6 gigawatts by 2032 and has sent a request for information from global suppliers to build two reactors.

Saudi Arabia has also attracted considerable attention from China and France, along with the US and Russia, to build nuclear reactors.

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Ghassan Salame to Asharq Al-Awsat: World in Store for Broader Wars, More Nuclear Countries

Former Minister Ghassan Salame speaks to Asharq Al-Awsat. (Asharq Al-Awsat)
Former Minister Ghassan Salame speaks to Asharq Al-Awsat. (Asharq Al-Awsat)
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Ghassan Salame to Asharq Al-Awsat: World in Store for Broader Wars, More Nuclear Countries

Former Minister Ghassan Salame speaks to Asharq Al-Awsat. (Asharq Al-Awsat)
Former Minister Ghassan Salame speaks to Asharq Al-Awsat. (Asharq Al-Awsat)

The world is facing growing uncertainty as the first quarter of the 21st century draws to a close. The changes are rapid and old convictions are dropping one after another. To come to terms with this uncertainty, Asharq Al-Awsat sat down with Lebanon’s former Minister of Culture, and former United Nations envoy Ghassan Salame, whose latest publication, “The Temptation of Mars: War and Peace in the 21st Century”, sheds light on which path the world is headed on for decades to come.

Nuclear ambitions

*What has changed in the world system in the first quarter of the 21st century?

Since the end of the Cold War, the world witnessed massive positive change, such as a drop in military spending, nuclear warheads and military bases in foreign countries. The Soviet Union withdrew from Eastern Europe and the United States closed several of its military bases in the Philippines and Central America. Work at the United Nations and several international agencies was also revived.

However, the situation was flipped on its head when the US invaded Iraq in 2003 because the invasion had no legal basis – certainly not from the UN Security Council – and world powers opposed it.

Moreover, the US played the biggest role in establishing the international order since 1945, starting with the UN, international funds and other organizations. So, if this country allowed itself to violate the rules it helped put in place, what’s stopping other countries from doing the same? And this is indeed what happened: Russia entered Georgia and Moldova and then Ukraine for the first time, and again for a second time. Other countries followed suit where they resorted to force to achieve their goals.

As a result, we witnessed a gradual growth in military budgets and nuclear countries, such as Russia, the US and France, began to gradually expand their nuclear arsenal. China is aiming to double its nuclear warheads from 1,500 to 3,000 by 2030.

Non-nuclear countries are meanwhile seeking to obtain them. Some 20 countries are capable of becoming nuclear in one year and I believe some will do so.

If the lack of trust between major powers, including the US, China and others, continues then the tensions will persist and escalate. Just look at how Russia changed its nuclear doctrine and Israeli officials called for bombing Gaza with a nuclear bomb. Such statements could not have been uttered in the 20 years before that.

Comprehensive South

*Will the “comprehensive South” play a role in restoring balance in the global order?

Certainly, but it will take time. Let us take a look at the scene. We have the NATO alliance which has no other equal in the world. When Russia started to move against Georgia and later Ukraine, NATO became more important and neutral European countries, such as Sweden and Finland, previously opposed to joining the alliance, have asked to become a part of it. So, this alliance mainly brings together western countries.

There is no other alliance that is similar to it across the globe. So, there is an imbalance between the West and the rest of the world because the West is reliant on an integrated alliance. There is a feeling among other countries, such as China, Russia, Brazil, South Africa and India, that they are not getting their share in international organizations and that their opinions, demands and interests do not get the same attention because they are not part of an integrated alliance or unified bloc.

This is why organizations, such as the BRICS and Shanghai Cooperation Organization, were formed. These groups are still in their early stages of development and they are also victims of contrasting interests: China wants more countries to join the BRICS, while Russia doesn’t. China is speaking of an integrated global south, while Russia doesn’t want to lump itself in that group.

Furthermore, members of these groups have differences between them, such as India and China’s border disputes. The BRICS has not, and will not, in the near future transform into anything like NATO unless it sets a doctrine for itself. NATO is formed of countries that enjoy similar political systems. It is based on a free economic market and liberal constitutional system. These features don’t exist in the BRICS countries.

China and the US

*Where is the rivalry between China and the US headed? Will the years to come lead us to a bipolarity?

It is wrong to believe that China and the US are already in bipolarity. Bipolarity is a project that started 15 years ago. The US does not like multiple poles. It knows that it won’t be able to retain a large number of its allies if it were the sole pole in the world. Washington is most at ease in a bipolar world where it holds the upper hand and where fierce competition makes its allies take its side.

Between 2006 and 2007, when US President Geore W. Bush was in power, the deep state and political elite in the US sought a new rival and believed that China could be it. So, efforts got underway to form the bipolar world and for China to become the main strategic competitor. Of course, China was very comfortable with this.

When Barack Obama was elected president in 2008, the first foreign dignitary he met was the president of China, not of Russia or France. This elevates China’s status. So, China has become embroiled in this American project to establish a bipolar world. The project is still facing some major resistance from several countries. The question is: Will Russia, India, Brazil and others accept this bipolarity? I believe that several major countries are wary of this bipolarity because it will curb their political and diplomatic freedoms.

Tectonic shifts in the Arab world

*The Arab world is witnessing tectonic shifts, most notably with the ouster of the Syrian regime. Will the Arab world remain this fragmented?

What you are asking has to do with the conditions for political stability. Why are some countries and regions politically stable and others are constantly witnessing revolutions and lack of security?

There are several explanations for this. The common answer is the absence of the state of law, and representation of the people and their involvement in political decisions. These elements provide stability. This is the liberal explanation. Some would say that the liberal reading applies to advanced countries with low populations, not backward ones with large populations where stability can only be imposed through the forceful application of the law.

I believe the Arab world is experiencing a phase that does not allow stability. First, we have the vast inequality in incomes between neighboring countries. This will lead the poorest countries to demand that the wealthier ones share their wealth.

Other factors are the population explosion, people moving from rural to urban areas and the lack of new job opportunities. Syria, for example, has several factors that do not lead to stability: desertification, water scarcity, drop in agricultural production and a population explosion. I think Syria is the third country in the world in terms of population growth, people moving to urban areas and lack of job opportunities. Syria needs 300,000 job opportunities each year and they are mostly unavailable. I’m not even talking about politics, sectarianism, oppression and other issues.