What are Putin Arab Tour’s Gains?

Russian-Saudi agreements in the energy sector

During the Russian president’s visit, 9 agreements were signed between the Saudi oil giant Aramco and the Russian companies and the Arab kingdom issued license for 4 Russian companies for activities in Saudi Arabia. Last month, the US said its oil production will hit 20 million barrels a day by 2024, namely double the total daily production of Saudi Arabia and Russia. The issue has set off the alarm bells to the two major oil producers making them rush for efforts to improve the oil prices.

One key challenge to them is oil prices. Over the past four years, Russia has been moving in line with the OPEC without being its member. Riyadh called for extending the OPEC-Plus agreement, which means the cooperation between OPEC members and non-OPEC members for 20 to 30 years. Moscow opposes the demand.

The Russian policy is to create a kind of economic entanglement to strengthen its relations with the Saudis. The Saudis, on the other side, said they will pave the way for the Russian companies to work in its oil sector. The Saudis seek to acquire 30 percent of Novatek, Russia’s biggest oil and gas contractor. They also engaged in talks with Russia to invest in Eurasian gas and oil projects.

Business agreements

In their strategic economic partnership document they signed in 2015, Moscow and Riyadh agreed on increasing their business exchange. Their trade last year was about $1.5 billion, showing a 15 percent growth compared to 2017.

Before flying to Riyadh, Putin said there is yet a lot of work to do to shore up trade with Saudi Arabia. “So far, we have had a good pace. Last year, the bilateral business grew 15 percent and this figure jumped to 35 percent in the first half of the current year.” 

Before Putin, Alexander Novak, Russia’s energy minister, visited Saudi Arabia. His talks with Saudi authorities resulted in several agreements in the economy, agriculture, industry, and most importantly the energy sector, all to be officialized by signing during the Putin trip. Izvestia newspaper of Russia reported that Putin joined Monday a Saudi-Russian business forum, during which some 30 agreements were signed. 

A major part of the signed agreements has to do with high-tech, energy, and infrastructure. But the two remain divided over the nature of projects to be covered by a $6 billion joint investment fund. On 30 May 2017 by the Russian Direct Investment Fund (RDIF) and the Public Investment Fund of Saudi Arabia (PIF). Russia seeks to direct the fund's potentials to the energy sector while Saudi Arabia wants it to work on infrastructural projects like airports. 

Political dialogue 

After the US last year sanctioned Iran and Venezuela oil, Russia rose to play a key role in energy markets. This role automatically expanded Russia’s security and political influence in the West Asia region. Putin wants to use this power source to manage regional crises. Upon meeting the Saudi King Salman bin Abdulaziz, Putin said Russia pursues peace and security for the region and stable energy markets for the world. He continued: “Russia cares much about expansion of the friendly relationship with Saudi Arabia and thinks that it benefits both sides.” Saudi king, for his part, said: “We warmly welcome cooperation in all areas including boosting security, peace, and economic growth, and fighting extremism.” 

As Trump pulled his forces out of northern Syria just before the Turkish military action last week, the Syrian Kurdish factions have headed to the Syrian government and Russia, further giving the Russian influence a chance of boosting. Moscow uses this clout for political dealings with the Saudis. An advisor to Putin said the president is willing to see Arab participation in efforts seeking an end to the Syrian conflict. Putin told the Saudis it is unlikely to find a sustainable solution to any of the regional issues without Riyadh. 

Some experts talked about possible mediation of Putin between Saudi Arabia and Iran, two regional rivals which are locked in a fierce competition for regional influence. 

Military cooperation is another case for talks with the Saudis. Putin gifted King Salman an Arctic falcon. The bird, named Alpha in Russia, has special capability and skill in hunting other birds. Many observers speculated Putin had a message to pass to Saudis behind this gift: Buy our S-400 air defense systems because they outact their American likes. Two years ago, the two sides signed an agreement for Saudi procurement of the state-of-the-art interceptors but it never came to materialization. 

Putin leaves UAE with hands filled 

The Russian leader visited the UAE after Saudi Arabia. He had last time visited the Arab emirate in 2007. The visit to the UAE was also of economic profits to Russia, indicating that the president is determined to get an economic toehold in the Persian Gulf Arab states. Last year, bilateral trade hit $3.4 billion, showing a 21 percent rise compared to 2017. Yuri Ushakov, an aide to Putin, said talks with the Emiratis focused on bilateral cooperation in trade and investment and also consultations on regional cases like the conflict in Syria, Yemen, and Libya. 

Putin told Mohammed bin Zayed Al Nahyan, Abu Dhabi’s crown prince, Russian-Emirati ties are increasing in a friendly atmosphere and Moscow is ready to engage in partnership with the UAE in the space sector and help Abu Dhabi develop its satellite navigation system. Putin’s visit led to 6 agreements in energy and investment. 

Dmitry Peskov, the spokesman to Putin, said the two countries also discussed military cooperation. Also, an MoU on the peaceful use of nuclear energy by the UAE was signed by Russia’s Rosatom and Emirates Nuclear Energy Corporation. The Abu Dhabi National Oil Company said has reached an understanding with Russian Lukoil for partnership in the Ghasha gas field of the UAE. 

Tourism was another area of agreement. About 40,000 Russians are living in the UAE and 3,000 Russian companies are active in the UAE. Annually, some 1 million Russian tourists visit the Arab emirate and, as Putin noted, they spend $1.3 billion in the UAE.