CHANCES FOR RUSSIA´S OUTREACH TO THE MIDDLE EAST / GEOPOLITICAL FUTURES

Chances for Russia’s Outreach to the Middle East

The focus of Moscow’s diplomacy is energy production and food supplies.

By: Ekaterina Zolotova

Last week, Russian Foreign Minister Sergey Lavrov visited Bahrain and Saudi Arabia, where he took part in the Gulf Cooperation Council forum. 

It was Lavrov’s second trip to Arab countries in a month; he had earlier visited Oman and Algeria. 

The trip came against the backdrop of Russia’s ongoing war in Ukraine and tough sanctions from Europe, the United States and their allies. 

Notably, the Arab states have chosen neutrality. 

This has attracted special attention from Moscow, which is looking for alternatives given its deteriorating trade relationship with its most important partner, the European Union. 

However, the Kremlin overestimates its ability to sway the Arab countries to abandon neutrality and side with Russia.

Breaking Out of Isolation

Western sanctions against Russia were immediate following its Feb. 24 invasion of Ukraine. 

The sanctions targeted Russian elites, banks, the central bank, major commodities exports and supply chains. 

They have already caused a drop in the rate of Russian economic growth. 

According to the Ministry of Economic Development, gross domestic product growth slowed to 1.6 percent in March, from 4.3 percent in February and 5.8 percent in January. 

Somewhat hidden from view, foreign firms’ unwillingness or inability to do business in Russia has disrupted production. 

More damage will be revealed as import-dependent industries exhaust their inventories. 

To mitigate the impact, Russia needs new partners to buy its products and, if necessary, help it acquire foreign goods.

The Arab countries of the Persian Gulf are a plausible alternative for Moscow. 

They have potential demand for Russian products, sufficient currency reserves to pay for them on time, and are in constant dialogue with Moscow and some Muslim-majority republics such as Chechnya. 

They also have not imposed any sanctions against Russia. 

And, in general, major economies such as Saudi Arabia are at odds with the U.S. on various issues.

Russia has been intensifying contacts with the Gulf Cooperation Council (GCC) countries based on mutual economic interests since the early 2000s. 

A change in Moscow’s approach to partnership facilitated this process. 

During the Cold War, the Soviet leadership considered Gulf countries to be allies of the U.S. and unfriendly to Moscow. 

The Soviet invasion of Afghanistan and Saudi support for Chechen separatism caused significant rifts. 

But since the turn of the millennium, Moscow has emphasized pragmatism and the benefits of trade over its “with-us-or-against-us” approach, which suits GCC countries’ desire for nonalignment. 

This is also in line with Russia’s strategy to normalize relations with all countries in the region.

However, despite years of better relations, Russia has not been able to secure close trade and economic ties with the Gulf countries yet. 

Russia’s share of those countries’ trade remains small, and bilateral trade is slanted in favor of Russia, which supplies more goods than it buys from Arab countries. 

Trade is also sporadic and often relies on one-time deliveries.

Energy and Food ‘Diplomacy’

Moscow remains optimistic. 

It is involved in many unrealized projects in the region that could find new momentum due to the war, global logistics problems and supply shortages. 

It believes Arab countries are more eager to collaborate with Russia than with the West because Russia isn’t concerned with spreading or protecting liberal values. 

And it recognizes that U.S. relations with the region have generally deteriorated since Washington declared its intention to revive the Iran nuclear deal.

Russia is counting on at least two main areas of economic cooperation. 

First is coordination of oil production, including within the OPEC+ framework, where Russia is part of the plus. 

The GCC countries and Russia are among the largest exporters of energy resources, and both have an interest in using the cartel to increase income from energy exports. 

Arab states have largely ignored strong Western pressure to increase oil and natural gas production in order to cut into Russia’s export revenues, because doing so would hurt their revenues as well. 

This coordination is very likely to continue.

In addition, the war and resulting disruption could give new impetus to frozen projects, such as Russian-Saudi plans to build a $1.1 billion petrochemical plant in Saudi Arabia.

 

Russia’s second focus of economic cooperation concerns food. 

The war in Ukraine hampered food production and export, driving up already high prices. 

The Gulf countries are heavily dependent on food imports. 

So far, Russian grain supplies to the Gulf countries are rather low, but there is potential to increase them. 

Russian companies have frequently discussed the creation of grain hubs and increased grain deliveries with the governments of the UAE, Saudi Arabia and Bahrain. 

In 2014, the UAE considered a proposal to store Russian grain for the region, with the hope of eventually maintaining a constant stockpile of at least 3 million tons. 

Russia’s proximity to the region makes its grain cheaper than its competitors’, and the war has hampered Ukraine’s ability to get grain to market. 

Given the food situation, Russia will probably again try to establish itself as the breadbasket of the Middle East and North Africa.

On top of this, Russia could grow its trade with the Gulf in minerals, chemical products and jewelry. 

An additional advantage may be that countries will switch to their national currency in trade, enabling them to circumvent sanctions. 

The Russian Ministry of Agriculture expects to offer ruble schemes to grain-importing countries in the Middle East and North Africa.

Suspicion Reigns

However, the Russian side appears much more optimistic about potential cooperation with the Arab countries than vice versa. 

The Arab countries believe that, though they have achieved better results with Russia today compared with the Cold War period, many contradictions remain between them. 

In addition to logistical and financial difficulties that may arise in trade between the Arab countries and Russia, there are at least two major obstacles.

First, Arab countries are wary of Russia’s relationship with Iran and its actions in Syria. 

Iran has a strong military and can count on the loyalty of Shiite communities in GCC member states. 

Although the Arab countries recognize the limits of the partnership between Russia and Iran, they do not expect Moscow to abandon long-term cooperation with Tehran – which is a member of the Shanghai Cooperation Organization and has temporary free trade status with Russia – in favor of rapprochement with Arab states.

Moreover, Russia is a long-term supporter of the Assad regime in Syria, where Qatar and Saudi Arabia invested huge sums supporting the armed opposition. 

Syria could become a bigger issue soon, with Turkey intent on launching an operation in the country’s north around Manbij and Tel Rifaat. 

This prompted a reaction from interested parties, and the Russian armed forces have already sent an additional military contingent to their base on the outskirts of Manbij and increased the number of military personnel in Ain Issa, Ayn al-Arab and Tal Tamr. 

Moscow also deployed Pantsir-S1 air defense systems in Qamishli, according to Turkish reports.

Second, the Saudis have no illusions that a partnership with Russia can replace their traditional ties with the United States. 

In recent weeks, Washington has moved sharply toward rapprochement with Riyadh, alarmed by the frequency of contacts between Arab governments and Moscow and desperate to get more Saudi oil onto international markets. 

In May, U.S. Secretary of State Antony Blinken visited the region to enlist Arab support for ending the war in Ukraine, and preparations are underway for the first visit by President Joe Biden to the Middle East. 

Biden may stop in Saudi Arabia on his visit, although earlier he refused to maintain contacts with Crown Prince Mohammed bin Salman, whom the U.S. accuses of plotting the murder of journalist Jamal Khashoggi. 

Riyadh would likely prioritize relations with Washington over ties with Moscow, especially if Washington offered Riyadh something like greater freedom of action in Yemen.

Moscow still believes its diplomacy can work in the Middle East and North Africa. 

Its focus on the Persian Gulf is becoming clearer, with early signs of increased cooperation in the oil and agricultural sectors. 

Russia also obtained reaffirmation from the GCC of its commitment to closer partnership with Moscow, despite Western pressure and global economic disruptions. 

And Russia and the GCC agreed to hold their next strategic dialogue in Moscow in 2023. 

But ultimately, while Russia clearly wants to speed up and expand cooperation, Arab countries jealously guard their neutrality and choose only those projects that will be really beneficial.