Dr Jorge's blog: Territorial disputes: The Persian Gulf (Part 19) [Post 179]

Thursday, 29 November 2018

Territorial disputes: The Persian Gulf (Part 19) [Post 179]

The Persian Gulf and Russia

Two factors account for a more assertive Russian policy in the Persian Gulf. One has to do with the reestablishment of Russia as a great power. The other involves a sense that the "near abroad" (republics of the former Soviet Union other than Russia) directly affects Russian stability and security; the Middle East, in other words, can affect the Caucasus and Central Asia, and through them Russia itself.

Prior to the collapse of the Soviet Union, authorities had created a solid foundation for the development of fruitful cooperation with the Arab world and Iran. After 1991, however, Russia largely neglected the potential to develop these ties. Political and economic contacts were mostly curtailed, if not cut.

This situation was determined by a mixture of material and ideological reasons. The domestic economic and political turmoil of the 1990s limited Russia’s export capacities and diverted the attention of the authorities from foreign to domestic policy issues. The loss of Ukrainian ports (the main trade gateways of the Soviet Union to the Mediterranean) also hurt business contacts.

Furthermore, the active development of relations with Middle Eastern countries was against the ideology of the new Russian elite, which saw the country as a part of the Western world and was reluctant to develop those vectors of diplomacy that were either non-Western or actively developed under the Soviet regime.

As a result, Russia did not pay much attention to the Middle East unless its ties there helped to develop relations with the West. The only exception was Israel, with which relations improved considerably during the 1990s, mainly due to the fact that the country was considered a Western island in the Middle East.

Russia’s relations with the US became the predominant factor determining the dynamics of Russia’s dealings with Middle Eastern powers.

Officially, the increased frequency of Russian contacts with the Middle East since 2012 is connected to the overall changes in diplomacy caused by disputes with the US and the EU, particularly regarding activity in Syria and Ukraine. As a result of these tensions and in an effort to maintain its international significance, Russia tried to shift its focus from the West to non-European countries, including those in the Middle East.

In reality, the reasoning is more complicated. Russia’s policy towards the Middle East and Asia, although ostensibly aimed at improving relations with these countries, aims to create leverage that can affect the behaviour of the US and EU, and mitigate the negative effects of ongoing confrontation between Moscow and the West on Russia’s economy, security and international relations.

Russia, Syria and the Gulf

Gulf rapprochement to Moscow does not necessarily mean Russia will replace the US as its main Arab ally. UAE and other Gulf countries have far greater degrees of security and economic cooperation with the United States and the West than with Russia. However, Russia, the emerging power in the Middle East is simply seen as an alternative guarantor of their security.

Russia’s geopolitical influence and soft power in the Persian Gulf has increased since the start of President Vladimir Putin’s third term in 2012. Through stronger investment linkages and diplomatic overtures, Russia has attempted to carve out a more prominent geopolitical role in the Persian Gulf. Russia is unlikely to threaten Saudi Arabia’s hegemony over the Gulf Cooperation Council (GCC) bloc. But stronger relations between Moscow and Saudi Arabia’s closest allies have caused some GCC countries to be more receptive to Russia’s calls for a political solution in Syria. Saudi Arabia’s fear of being isolated from the Arab world’s consensus could cause Riyadh to eventually soften its belligerent anti-Assad approach and diplomatically reengage with Russia. This scenario differs dramatically from the Russian-Saudi collision course predicted by many regional analysts.

Putin has saved Syrian President Bashar al-Assad from sure defeat while supporting Iran’s intervention and ambitions in Syria, and at the same time, has managed to sell billions of dollars of weapons to their Gulf enemies. In the process, he has immensely enhanced Russia's presence in the region.

Investment and Energy

Russia’s combined trade with the GCC member states accounted for less than 1 percent ($2.51 billion) of the country’s total trade with the world ($467.1 billion) in 2016. Yet it accounts for about 26 percent of Russia’s total trade with the Middle East ($9.73 billion), according to the latest data from the International Monetary Fund (IMF).

But despite the volume of trade between the Gulf and Russia being modest, Gulf investments have begun to flow significantly into Russia. According to BMI Research, foreign direct investment (FDI) inflows into Russia climbed to $33 billion in 2016, driven by capital repatriation and the acquisition of a 19.5 percent stake in Russian oil giant Rosneft by the Qatar Investment Authority (QIA) and the Swiss mining company Glencore.

The improvement in Russian-Gulf relations has begun to impact global oil markets. Russia and Saudi Arabia, the world’s top oil producers, joined forces twice in the past year to cut production to lift prices.

Meanwhile, the Gulf crisis has reminded energy-consuming countries, such as China, India, Japan and South Korea, that the stability of the region could deteriorate at any moment. This may push these countries to widen their diversification strategy, giving Russia a golden opportunity to penetrate these important markets even further.

Russian Policy Across the Middle East