GCC and Russia beyond Syria


Since 2011, discussions of Gulf Cooperation Council (GCC)-Russia relations have been dominated by their diverging approaches regarding Syria and Iran. There are, however, many other facets of this relationship. In fact, when it comes to Russia, the Gulf states have, at least historically, produced relatively similar foreign policies focused primarily on economic engagement. This article looks at several dimensions of GCC-Russia relations: Investment, defense sales, energy, and Islam.

The division of the GCC due to the crisis pitting Bahrain, Saudi Arabia, and the United Arab Emirates (UAE) against Qatar does not appear to have dramatically altered these states’ alignment vis-a-vis Moscow, although Russia and Qatar at first glance appear to have more common interests. Specifically, when it comes to Iran and gas pricing. In fact, Russia did volunteer to supply Qatar with food after the start of the blockade. Nonetheless, when the crisis broke out, Foreign Minister Sergei Lavrov mentioned that Moscow’s intention is to remain uninvolved: “These are bilateral relations of the states. We do not interfere in these decisions.”[1]

 

Russia as a Hub for Gulf Investment

 

Securing investment in Russia’s economy from the Gulf is a high priority for Moscow. This interest in seeking investment from countries on both sides of the Gulf crisis—namely Qatar, Saudi Arabia, and the UAE—has been one of main factors driving Russia to maintain neutrality in the GCC’s diplomatic row.

On the Qatari side, assets of the Qatar Investment Authority (QIA) in Russia are valued at more than $2.5 billion[2]. QIA has a $500 million stake in leading Russian bank VTB and a 25 percent stake in Pulkovo Airport in St. Petersburg. Additionally, a staggering $11.3 billion in Russia’s Rosneft for upstream projects, and logistics, which accounts to one-fifth of Rosneft’s privatization portfolio. Shaykh Hamad bin Jassim bin Jaber al-Thani, former Prime Minister, Foreign Minister and CEO of QIA, is also a board member of the Russian Direct Investment Fund (RDIF)[3], Russia’s sovereign wealth fund. This suggests that investment decisions may go both ways.

Meanwhile, the largest sovereign wealth fund in the GCC, Abu Dhabi Investment Authority (ADIA), has invested billions in infrastructure and industry through the RDIF. DP World, Dubai’s ports operator, has agreed to launch a joint venture with RDIF and is believed to be considering investing in a large port in Vladivostok[4] as of January 2018, however, no deal has been reached according to DP World chairman[5]. In December 2017, Mubadala Investment Company also committed investments of up to $6 billion[6] in renewables, infrastructure, and transport.

For its part, Saudi Arabia’s Public Investment Fund (PIF) agreed in 2015 to invest $10 billion in a general investment program with the RDIF[7] in the areas of infrastructure, retail, logistics, and agriculture over five years. This was the largest foreign direct investment in Russia at that time. In October 2017, at the Russian-Saudi Investment Forum (also the occasion of King Salman’s first visit to Russia) Saudi and Russian companies signed investment deals worth more than $3 billion[8]. These deals included the creation of a $1 billion fund to invest in energy projects, a deal to invest $150 million into Russia’s Eurasia Drilling Company, and a $1.1 billion agreement for Russian petrochemical company Sibur to open a plant in the Kingdom. According to Russian statistics, in the first quarter of 2017, trade with Saudi Arabia mounted to an $124 million and $296 million with the UAE[9] – impressive numbers but ones that pale in comparison to Russian trade with Iran, which stood at $398 million[10].

 

Defense Deals

 

Aside from investment deals coming from the Gulf, the GCC states and Russia also appear eager to continue cooperating on military sales, especially at a time when the American provision of security in the Gulf has become less reliable. For instance, the UAE and Russia in early 2017 partnered to develop the next generation of Russian military jets[11]. In October 2017, during King Salman’s first state visit to Russia, a deal for a $3 billion supply from Russia to the Saudis of their most advanced air defense missile system, was signed[12]. The same month, Qatar signed a military technical cooperation agreement as well as a memorandum of understanding for air defense and military supplies[13]; in January reports also surfaced that Qatar is in discussion with Moscow about purchasing its air missile defense systems[14].

The case of Bahraini-Russian defense cooperation is telling. After the unrest of 2011 broke out in Bahrain, officials in Manama came under some pressure from Western governments due to human rights violations. Consequently, Bahrain turned to Russia for arms imports, ultimately sending Washington and other Western capitals a message that the island kingdom had ‘other options’ for such purchases. By selling AK-103 assault rifles, grenade launchers and ammunition to Bahrain amid the tumultuous period of 2011, Russia curried favor with officials in Manama and other GCC capitals by communicating Moscow’s keenness to provide weapons without Gulf Arab countries’ domestic politics or styles of governance preventing such transactions.

 

Oil and Gas Markets

 

Another shared economic interest between Russia and the GCC lies in the global oil and gas markets. For the first time since 2001, Russia collaborated with Organization of Petroleum Exporting Countries (OPEC) on the joint oil production cut in December 2016. As of January 2018, Russia and OPEC confirmed that the cuts would last throughout 2018 and that Russia would cooperate with OPEC even after these cuts[15]. The Saudi Energy Minister Khalid al-Falih suggested may continue into 2019.

Qatar, Russia, and Iran enjoy the world’s largest natural gas reserves[16], making them somewhat natural energy partners. Indeed, they are the main backers for the creation of a so-called “GASPEC”[17], which Saudi Arabia, the UAE, and the US oppose. Nonetheless, news surfaced earlier this month that Russia and Saudi Arabia, encouraged by success gained through cooperating through OPEC, may reach a new energy agreement on liquefied natural gas (LNG)[18]. Putin has prioritized expansion of Russia’s LNG production, while the Saudis hope to double their own gas production in the next decade[19], which could potentially put the Russians at odds with Qatar.

 

Grozny, Islamists, and the UAE

 

Perhaps the most interesting and least discussed aspect of the GCC-Russia link is a shared interest in squelching Islamist influence, particularly on the UAE’s part. Although Russia is maintaining neutrality in the Qatar crisis, the accusations made by blockading countries about Doha supporting Islamist movements, were also made by Moscow at earlier stages of the Syrian crisis. Unquestionably, one of the major issues that fueled friction in Qatari-Russian relations prior to the Gulf dispute was Doha’s ties with various Islamist groups in the region.

The Grozny Conference in September 2016, hosted by Chechen leader, Putin friend, and self-acclaimed Sufi Ramzan Kadirov, brought together some of Sunni Islam’s most influential leaders to define what it means to be a Sunni. It was co-organized by Abu Dhabi-based Tabah Foundation[20], the sponsor of the Senior Scholars Council, which aims to recapture Islamic discourse from Saudis as well as to counter Muslim Brotherhood ideologue Shaykh Yusuf al-Qaradawi’s Doha-based International Union of Muslim Scholars. James Dorsey aptly describes this event as demonstrating “successful behind-the-scenes maneuvering by the United Arab Emirates to counter Salafism despite the UAE’s close collaboration with Saudi Arabia [….] It also shines a light on Russian efforts to cultivate Muslim religious leaders.”[21] In attendance were, the imam of Al-Azhar Egyptian grand mufti; President Abdel Fattah al-Sisi’s religious affairs advisor; the mufti of Damascus; and influential Yemeni cleric and head of the Tabah Foundation Habib al-Jifri, who also has close ties with Mohammed bin Zayed. Interestingly, and quite tellingly, the conference excluded Wahhabism, Salafism, and Deobandism from its definition of Sunni Islam. Despite this oversight, just months after the conference, in November 2016, then-Deputy Crown Prince Mohammed bin Salman welcomed Kadirov to the kingdom[22], where he visited the Prophet’s Mosque in Madinah. All of this suggests Russia’s sympathy with the Emirati and Saudi approach towards Sunni Islamists, who are considered fundamentally politically dangerous. Despite this shared ideological approach, however, Russia has not wholeheartedly backed the Emirati and Saudi stance when it comes to isolating Qatar.

 

Re-structuring the Balance of Power Post-Crisis?

 

Russia has signed major defense agreements with both sides of the crisis. Moscow has also held four strategic dialogues with the GCC since 2007, most recently in May 2016, suggesting that it aims to court the entire sub-regional organization. If the GCC crumbles, Russia may be forced to choose sides. For their part, states on both sides of the GCC’s rift appear open to Russian involvement in the region, as a power vacuum still exists due to America’s relative retreat from the Middle East. With Senator Bob Corker having lifted the ban on arms sales to the Gulf[23], Russian-GCC military cooperation may wane, but Gulf engagement with Russia is unlikely to end.

 

By Dr. Courtney Freer

 

 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.
References

 

  1. Prince-meets-with-Chechan-leader.html (February 16, 2018).

 

 

[1]  Issaev, Leonid. 2017. “Russia and the GCC crisis.” Al Jazeera. June 13 http://www.aljazeera.com/indepth/opinion/2017/06/russia-gcc-crisis-170613073826800.html (February 16, 2018).

[2] Karasik, Theodore. 2017. “Why is Qatar Investing so much in Russia?” Middle East Institute. March 8. http://www.mei.edu/content/article/why-qatar-investing-so-much-russia (February 16, 2018).

[3] Karasik.

[4] Kane, Frank. 2017. “Reset for Russian-GCC trade relations, but still a long way to go.” Arab News. June 5. http://www.arabnews.com/node/1110241 (February 16, 2018).

[5] Debusmann, Bernd. 2018. “DP World says no Russian investments yet despite JV deal.” Arabian Business. January 24. http://www.arabianbusiness.com/transport/388268-dp-world-says-no-russian-investments-yet-despite-jv-deal (February 16, 2018).

[6]  Rahman, Fareed. 2017. “RDIF in talks with UAE partners for investments.” Gulf News. February 16. http://gulfnews.com/business/sectors/investment/rdif-in-talks-with-uae-partners-for-investments-1.2134596 (February 16, 2018).

[7] Hille , Katherin . “Saudi sovereign fund to invest 10bn in Russia .” Financial Times . July 6, 2015. https://www.ft.com/content/0205a0d6-2412-11e5-bd83-71cb60e8f08c

[8] Foy , Henry . “Saudi and Russia line up $3bn in investment deals .” Financial Times . October 4, 2017. https://www.ft.com/content/3dbba10c-7a49-38ba-a7c5-59dc336fd196

[9] Kane.

[10] Kane.

[11] Kane.

[12] Carroll, Oliver. 2017. “Russia and Saudi Arabia ‘sign $3bn arms deal’ as King Salman visit shows how much relations have changed.” The Independent. October 5. http://www.independent.co.uk/news/world/europe/russia-king-salman-visit-saudi-arabia-moscow-vladimir-putin-a7985161.html (February 16, 2018).

[13]  El Yaakoubi, Aziz. 2017. “Qatar, Russia sign agreements on air defense, supplies” ed. Robin Pomeroy. Reuters. October 26. https://www.reuters.com/article/us-russia-qatar-military/qatar-russia-sign-agreements-on-air-defense-supplies-idUSKBN1CV11E (February 16, 2018).

[14] El Yaakoubi, Aziz. 2018. “Qatar in talks to buy Russia’s S-400 systems: Tass” ed. Gareth Jones. Reuters. January 25. https://www.reuters.com/article/us-russia-qatar-military-hardware/qatar-in-talks-to-buy-russias-s-400-systems-tass-idUSKBN1FE0HP (February 16, 2018).

[15] Mazneva, Elena, Wael Mahdi, Grant Smith, and Annmarie Hordern. 2018. “OPEC, Russia Signal Global Oil Alliance May Endure Past 2018.” Bloomberg. January 21. https://www.bloomberg.com/news/articles/2018-01-21/saudi-oil-minister-says-opec-allies-should-cooperate-past-2018 (February 16, 2018).

[16] Issaev.

[17] Issaev.

[18] Mahdi, Wael, and Elena Mazneva. 2018. “Russians, Saudis May Go Beyond Oil Alliance With LNG Project.” Bloomberg. February 14. https://www.bloomberg.com/news/articles/2018-02-14/russia-saudis-may-go-beyond-their-oil-alliance-with-lng-deal (February 16, 2018).

[19] Mahdi.

[20] Dorsey, James. 2016. “Fighting for the Soul of Islam: A Battle of the Paymasters.” Huffington Post. September 30. https://www.huffingtonpost.com/james-dorsey/fighting-for-the-soul-of_b_12259312.html (February 16, 2018).

[21] Dorsey.

[22]  “Saudi Deputy Crown Prince meets with Chechen leader.” 2016. Al Arabiya English. November 27. https://english.alarabiya.net/en/News/gulf/2016/11/27/Saudi-Deputy-Crown-Prince-meets-with-Chechan-leader.html (February 16, 2018).

[23]  Gould, Joe. 2018. “Corker lifts hold on arms sales to Gulf nations in Qatar row.” Defense News. February 14. https://www.defensenews.com/breaking-news/2018/02/14/corker-lifts-hold-on-arms-sales-to-gulf-nations-over-qatar-row/ (February 16, 2018).


Comments

Add Comment