SAUDI AND RUSSIA LOOK BEYOND ENERGY TO JOBS AND SYRIA PEACE
Historic visit to Moscow by King Salman shows how both countries are increasingly finding common ground
Saudi Arabia and Russia yesterday agreed to expand their co-operation beyond energy and work to end the conflict in Syria and galvanise defence manufacturing in the kingdom to create jobs and boost diversification efforts, after a historic meeting at the Kremlin between King Salman and president Vladimir Putin.
While the two countries have been at odds on Syria, where Moscow supports president Bashar Al Assad and Riyadh backs the opposition, the visit and several economic agreements announced yesterday, including for Saudi to acquire defence systems from Russia, emphasise how they have increasingly found common ground in recent months after they led a global oil production restraint deal to shore up crude prices at the end of last year.
Saudi energy minister Khalid Al Falih said in Moscow yesterday that co-operation between Russia and Saudi Arabia “breathed life back into Opec” and made his country more optimistic about the outlook for oil than it has been for several years. The “success of this collaboration is clear”, he said.
It is hoped the collaboration on defence manufacturing “will act as a catalyst for localising 50 per cent of the kingdom’s military spending as targeted by Vision 2030”, said Saudi Arabian Military Industries. Saudi Arabia is the world’s fifth biggest spender on defence, with a budget of US$48.7 billion (Dh178.8bn) last year, according to IHS Markit.
Kalashnikov rifles, anti-aircraft and anti-tank missile systems, and rocket and grenade launchers will be manufactured in Saudi Arabia, creating hundreds of jobs for its nationals and supporting the diversification of its economy away from its dependence on oil.
Saudi’s economy is expected to return to growth next year thanks to expansion in its oil GDP, the IMF said yesterday.
The kingdom is undertaking huge economic transformation plans aimed at creating new revenue streams to cope with the low oil price era, a strategy led by Crown Prince Mohammed bin Salman. This year non-oil GDP is forecast to grow 1.7 per cent, the IMF said.
Yesterday, Mark Mobius, one of the world’s leading investors in emerging markets, said that his Templeton Emerging Markets Group could potentially more than double its investment allocation in Saudi Arabia’s stock market to up to $1.16bn given the potential of its non-oil economy.
Saudi Arabia’s King Salman met Russian President Vladimir Putin at the Kremlin yesterday for historic talks that focused on Syria and further co-operation in oil production.
Mr Putin described the talks in Moscow as “substantive and meaningful”. He also said he had accepted the king’s invitation to visit Saudi Arabia.
“This is a landmark event,” Mr Putin said in televised comments before the meeting at the Kremlin’s opulent St Andrew’s Hall.
King Salman called Russia a “friendly nation” and said his four-day visit would boost growing ties between the world’s two largest oil exporters. “We strive to continue the positive co-operation between our countries to achieve stability on world oil markets, which promotes the growth of the world’s economy,” King Salman said.
In a sign of the improving relationship, Saudi Arabia signed preliminary agreements with Russia to buy S-400 air defence systems, as well as anti-tank weapons and multiple-rocket launchers, the Saudi Arabian Military Industries (Sami) said.
Russia agreed to help the kingdom develop its own military industries, including a plan to “localise the manufacturing and sustainment of parts of the S-400” system and of the Kalashnikov automatic rifle and its ammunition in Saudi Arabia, Sami said.
King Salman’s four-day trip to Russia is the first time a Saudi monarch has paid an official visit to Moscow after decades of frosty relations. Although the Soviet Union was the first country to recognise the nascent Saudi state in 1926, relations plummeted sharply, and the two countries had no official diplomatic relations throughout the Cold War.
The dramatic improvement in relations between Russia and Saudi Arabia comes even though both countries support different sides in the six-year war in Syria. Mr Putin sent in Russia’s military to prop up Bashar Al Assad, the Syrian leader, in 2015, while the Saudis are financing rebel groups. But Russian military success in Syria has resulted in Saudi Arabia pressuring opposition groups to hold peace talks with Damascus.
Russia’s foreign minister, Sergey Lavrov, said after the talks that Mr Putin and King Salman had discussed conflicts in the Middle East, as well as reconfirmed the need to fight terrorism.
He also said the Saudi monarch had again expressed his support for a Russian-backed plan to create de-escalation zones in Syria. Mr Putin has said the zones are vital for ending the conflict. Saudi Arabia had previously been opposed to the plan because it involves Iran.
Mr Lavrov said Russia supported Saudi efforts to unite splintered rebel groups in Syria in an attempt to pave the way for peace talks to bring an end to the war.
Syrian opposition groups are due to meet in Riyadh this month in an attempt to iron out their differences.
Russian state media hailed King Salman’s visit as evidence that Russia’s backing for Mr Al Assad had made Mr Putin “master of the Middle East”.
“The Russian president has proven that he doesn’t abandon his friends when they are in trouble,” according to an article published by the state-run Ria Novosti news agency.
Russian analysts said that King Salman was seeking to diversify Saudi alliances because of uncertainty over Donald Trump’s Middle East polices.
Russia and Saudi Arabia rely heavily on oil revenues and were hit by the slump in world energy prices. Co-operation between the world’s two largest exporters, as well as other Opec members, has helped stabilise global oil prices in recent months at about $50 a barrel.
Mr Putin said yesterday the Kremlin was open to extending a deal to cap production to the end of next year. The agreement was due to expire in March 2018. Oil rose after Mr Putin’s statement.
Co-operation between Russia and Saudi Arabia “breathed life back into Opec” and made his country more optimistic about the outlook for oil than it has been for several years, Saudi energy minister Khalid Al Falih said yesterday.
The countries also moved to deepen ties in the energy sector, with Russian firm Sibur agreeing to joint oil-refining projects with Saudi Aramco.
As many as 100 Saudi businessmen are accompanying King Salman on his trip to Moscow.
The king’s 1,000-strong delegation took up all the rooms in the five-star hotels around the Kremlin, state media reported.
The Kremlin talks were attended by Ramzan Kadyrov, the strongman leader of Chechnya, a mainly Muslim republic in Russia’s south.
Although Chechnya has a population of just over one million, Mr Kadyrov is one of Russia’s most influential officials. He recently hosted Ahmed Maiteeq, the deputy Libyan prime minister in Grozny, the Chechen capital.
We strive to continue the positive co-operation between our countries to achieve stability on world oil markets KING SALMAN Saudi Arabia