Saudi Arabia, If Oil Becomes A Curse
The unlikely rapprochement between the U.S., Israel and Saudi Arabia, orchestrated by Donald Trump's son-in-law Jared Kushner, seems to be a response to the rise of the Iran-Russia coalition. In this game of chess, the American decision to choose Jerusalem as the Israeli capital offers an interesting opening.
This face-off between the four oil-giants that are the U.S., Saudi Arabia, Russia and Iran comes as the probable rise in crude oil prices promises to inject yet higher stakes in this power struggle.
When the price of crude oil tops $60, ambitions become inflated on all sides. The Trump administration's oil bigwigs dream of energy dominance thanks to its (ephemeral) shale production. Meanwhile, Vladimir Putin is expected to generate enough cash to finance his strategy, and the massive influx of petrodollars is adding to Iran's weight in the Middle East.
In this game, Saudi Arabia is the only player showing signs of weakness.
Since King Salman promoted his 35-year-old son Mohammad bin Salman al-Saud (MBS) to the helm of the country, the fundamentals of the world's biggest oil exporter have been shaking. The kingdom's wealth depends entirely on a raw material that is bound to eventually run out. And since bad news always come in threes, domestic oil consumption is steadily increasing and the country's net exports are declining.
An oil drilling rig in the 1970s — Photo: Urbain J. Kinet
The members of the royal family are more grasshopper than ant, preferring to export and store their wealth abroad. What's more, much of the national budget is spent on arms purchases for wars abroad, including in Yemen and Iraq. And it's interesting to note that though the Royal family supports Sunni Islam, the populations living near the oil fields are Shia Muslims.
About 70% of the Saudi population is under the age of 30, meaning that the pressure to expand social freedoms and to create jobs in innovative sectors is increasing. With his Saudi Vision 2030 agenda, MBS has shown he is well aware of these issues and the challenges lying ahead. For months now, we've seen him frantically trying to find the $2 trillion necessary to free his country from black gold and attract other kinds of businesses.
As surprising as it may seem, it all looks as if oil, not just peak oil, had become a curse for Saudi Arabia.
Global warming, however, is jamming the machine. Increasingly unsustainable temperatures, as well as drought, are making the region unbearable to live in. In this context, the big question is: How long will it be until oil is no longer enough to activate the air conditioning and desalination systems?
A nasty habit of backfiring
So far, the young Prince's decisions have had a nasty habit of backfiring. As Defense Minister, he chose to intervene in the Yemen civil war. The Saudi air force did not go in for the subtleties. Several thousand civilians have been killed, raising the prospect of "war crimes' prosecution. In November, as it tried to harden its stance, Saudi Arabia decided to block the ports, pushing 7 million Yemenis toward risk of starvation. When the Houthi rebels threatened to attack oil tankers, Riyadh immediately reconsidered its decision. Since then, a Yemeni missile was fired at Riyadh Airport, but it could just as well have been an oil refinery.
From the onset of the war in Syria, Saudi Arabia has supported the various Sunni militias. When MBS arrived in power in 2015, the young Prince decided to increase his support against Syrian President Assad. But the involvement and success of the Russian army, together with the help of Iran and Hezbollah, derailed those plans.
The prince's most incomprehensible maneuver came in the wake of Donald Trump's visit in May 2017. Along with Egypt and the United Arab Emirates, Riyadh made the surprise announcement of a major blockade of Qatar. To this day, no one involved knows how to get out of this quagmire.
There was also the sidelining of Lebanese Prime Minister Saad Hariri forced to announce his resignation in front of the cameras of Saudi TV network Al Arabiya. Once he was out of Saudi Arabia and backed by French President Emmanuel Macron, Hariri quickly returned to the helm of his country.
Furthermore, Mohammad bin Salman has ordered an internal purge, arresting hundreds of princes, members of the government, dignitaries, under the pretext of corruption. More than $800 billion worth of private wealth were confiscated. Could this prompt the affected parties to try to overthrow the Prince? That's a question most don't even want to ask.
It is disturbing when we see the four oil powers playing cat and mouse. Because we rely on their oil to fuel our economies, we cannot contemplate the prospect of one of these giants imploding. Instead, such troubles should encourage us to begin our emancipation from gas and oil. It would be a pleasant irony if the fires lit in the Middle East could eventually free us from their chains.