Saudi Arabia looks to China and
India By Harsh V Pant
Some have labeled Saudi King Abdullah bin
Abdul Aziz al-Saud's tour in January of China and
India a strategic shift in the foreign policy of
the country, arguing that it heralds a new era.
The trip, which also included Malaysia and
Pakistan, was strategically significant and may
have some important long-term implications.
Saudi Arabia and China improve
relations The fact China was the first
destination on the king's list speaks volumes not
only about the rising profile of China in global
politics,
but
also about a growing intimacy between the two
states. China has been working hard to improve its
relations with Saudi Arabia, the world's biggest
oil exporter. The two countries decided in 2004 to
hold regular political consultations at the same
time as China's state oil company, Sinopec, signed
a deal to explore gas in Saudi Arabia's vast Empty
Quarter. Abdullah's visit followed Beijing's first
formal talks with the Organization of Petroleum
Exporting Countries (OPEC) in December.
It
is instructive to note that Saudi Arabia's ties
with China have been on an upswing at a time when
its relationship with the US has come under severe
strain. While China has emerged as the Saudi
kingdom's largest customer, the United States'
share in Saudi oil exports has been going down
after peaking in 2002 at 1.7 million barrels per
day. Saudi Arabia's traditional share of the US
oil market has been a function of the country's
"strategic relationship" with the US, a tie that
many think has been weakening for some time now,
especially in the aftermath of the attacks of
September 11, 2001, and the Iraq war.
Saudi Arabia reacted angrily to a
multitrillion-dollar lawsuit against Saudi Islamic
organizations and three top Saudi royals filed by
the relatives of the September 11 attack victims.
Riyadh called the lawsuit political and financial
blackmail aimed at undermining the country's
economic strength. It also refused to grant the US
access to bases in the kingdom for an attack on
Iraq. The unpopularity of the United States in the
Arab world may be forcing the Saudis to weaken the
US hold over their economy and polity.
Additionally, Saudi Arabia itself has come
under direct pressure from the US to curtail
extremist Islamic groups flourishing in its
territory as well as to initiate political
reforms, especially when democracy promotion is at
the heart of the US foreign-policy agenda. Some
have called the recent weakening of the US-Saudi
"special relationship" one of the most profound
changes occurring in the oil market.
China, a rising political and economic
power with little interest in the domestic affairs
of other states, must seem a much more attractive
option to Saudi Arabia. Moreover, being a net
exporter of oil until 1995, China has emerged as
the world's second-largest oil market after the
US. It has been estimated that by 2010, 95% of
China's imported oil will come from the Middle
East. China's rapidly growing economy is dependent
on imports of oil and oil products, more than 51%
of which originate in the Persian Gulf states.
China's burgeoning appetite for oil is only going
to grow in the coming years and its dependence on
Middle Eastern sources of energy will only
increase further.
In the past few years,
China's exports to the Gulf countries have also
been increasing. Saudi Arabia in particular has
emerged as a major investor in China. Saudi
Arabia's Aramco Overseas Co has provided US$750
million of the total $3 billion in investment to
construct a petrochemical complex in Fujian
province in southeastern China that will process 8
million tons of Saudi crude oil. Several members
of OPEC, including Saudi Arabia and Kuwait, intend
to build a new refinery in Guangzhou, the capital
of China's Guangdong province, involving a total
investment of $8 billion.
Therefore, it
was no surprise that Abdullah decided to visit
China first in his trip to Asia. It was his first
trip outside the Middle East since taking the
throne in August, and it was also the first trip
by a Saudi ruler to China since the two countries
established diplomatic relations in 1990. Saudi
Arabia accounts for about 17% of China's imported
oil, and total trade between the two countries
grew by a substantial 59% in 2005 to $14 billion.
Saudi Arabia is China's largest trading partner in
the region between West Asia and North Africa.
Today, China is Saudi Arabia's fourth-largest
importer and fifth-largest exporter, while Saudi
Arabia is China's 10th-largest importer and
biggest oil supplier.
Apart from the
burgeoning economic relationship, Saudi Arabia and
China have also developed close military ties
since the mid-1980s, an aspect of their bilateral
relationship that has not received much attention.
It has been reported that Saudi Arabia has
imported from China CSS-2 nuclear-capable
intermediate-range ballistic missiles with a
3,000-kilometer range. Now, with the CSS-2 largely
obsolete, Beijing is interested in newer, more
advanced CSS-5 and CSS-6 weapons.
During
Abdullah's trip, the two states signed a pact on
energy cooperation that calls for increased
cooperation and joint investment in oil, natural
gas and mineral deposits. Several other agreements
were also signed on economic, trade and technical
cooperation, on avoiding dual taxation, on
vocational training cooperation, and granting of
an urban development loan to the far western
Chinese city of Aksu by the Saudi Arabian
Development Bank. The Saudi king also invited
Chinese investors to invest in his country since
it is now engaged in a series of economic reforms,
especially the privatization of its state-owned
firms. Saudi Arabia is working toward diversifying
its economy as relying on just one source of
income has proved counterproductive.
Saudi Arabia and India recognize mutual
interests From China, Abdullah went to
India, the other emerging Asian power, where he
was invited as the chief guest at the country's
Republic Day celebration on January 26. It was the
second visit of a Saudi monarch to India, the last
one having been in 1955. The Cold War precluded
the development of close ties between the two
states. However, once the structural constraint of
the Cold War era was gone, the two states have
tried to build bilateral relations on a number of
complementary factors.
For instance, India
is home to the second-largest Muslim population in
the world; India's Muslim population have their
holiest shrines at Mecca and Medina in Saudi
Arabia. Numbering about 1.5 million, Indians also
constitute the largest expatriate community in
Saudi Arabia. This by itself makes it imperative
for the two states to have a deeper engagement
with each other. But several other factors come
into play in shaping this relationship.
For India, the issue of cultivating an
Islamic state that can act as a counterweight to
Pakistan in the Islamic world is very significant.
India has tried to build close ties with Iran, but
these have come under stress in recent years;
Saudi Arabia has filled that gap. Riyadh agreed to
support India's claim for observer status in the
Organization of Islamic Conferences. It has also
been supportive of recent Indian moves to
de-escalate tensions in Kashmir. More important,
neither India nor Saudi Arabia is at all
enthusiastic about the emergence of an Iran armed
with nuclear weapons.
The issue of
terrorism also binds the two states as both face
the risk of domestic turmoil if Islamic extremists
are not controlled and sidelined. India and Saudi
Arabia signed a memorandum of understanding
dealing with terrorism, transnational crime and
subversive underworld operations during Abdullah's
recent visit.
However, as with Saudi
Arabia's relations with China, it is energy that
has become the driving force in its relations with
India; India has emerged as Saudi Arabia's
fourth-largest destination for oil exports and
Riyadh is the largest supplier of oil to India.
India, like China, is reshaping its diplomacy to
serve energy needs as its booming economy also
needs new supplies of oil to ensure its continued
growth.
Reliance, a private Indian energy
firm, has decided to invest in a refinery and
petrochemicals project in Saudi Arabia. In
addition, India's state-owned energy firm, Oil and
Natural Gas Corp, is planning to engage Saudi
Arabia as its equity partner for a refinery
project in the Indian state of Andhra Pradesh. The
recent upheavals in India's relationship with
Iran, and Tehran's decision to renege on some of
its oil-supply commitments in the aftermath of
India's vote against Iran at the International
Atomic Energy Agency, have also alerted India to
the importance of having a diversified set of
suppliers.
The recent visit of the Saudi
monarch to India saw the signing of the Indo-Saudi
"Delhi Declaration" that calls for a wide-ranging
strategic partnership in the critical energy
sector, putting economic cooperation on overdrive
coupled with major investments in the petroleum
sector as well as joining hands in dealing with
the problem of terrorism. Saudi Arabia's emphasis
was also on learning from an established
industrialized state such as India, and it invited
India either to participate alone or form joint
ventures with Saudi companies to bid for
gas-exploration and refinery projects.
Conclusion Notwithstanding these
attempts by Saudi Arabia and India to upgrade
their bilateral ties, various factors are bound to
play a constraining role in the future. The most
important of these is the Sino-Indian energy
competition that is bound to emerge sooner rather
than later. As long as Saudi Arabia is able to
deal with China and India without impinging on
either's interests, the present relationships can
flourish. But if China and India continue
competing over energy resources, as they have done
in various parts of the world, Saudi Arabia will
be forced to make some complicated choices.
If the United States is thrown into the
matrix, the picture becomes all the more
complicated. With the US viewing China as the most
likely potential threat to its global supremacy,
while at the same time helping India to emerge as
a global player, the pressures under which Saudi
Arabia will have to operate will only become
stronger.
What this recent visit
highlights unambiguously is the growing economic
and strategic importance of China and India in the
new global order, and the substantial effect their
growth is having on global energy demand and
diplomacy.
Published with permission of
thePower and Interest News
Report, an analysis-based
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