The Complicated Dynamic of Arab’s Love-Hate Relationship with the Rest of the World

U.S. Secretary of State John Kerry & Arab League Secretary-General Dr. Nabil Elaraby,, Photo by U.S. Department of State

U.S. Secretary of State John Kerry & Arab League Secretary-General Dr. Nabil Elaraby,, Photo by U.S. Department of State

MIDDLE EAST - The relationship the Middle East maintains with other global nations is complicated. Whether political relations or social ties, trying to understand the depth of Arab’s love-hate relationship with other countries sometimes seems like an impenetrable task.

Without taking into consideration foreign nations, the countries that make up the Middle East are themselves strategically aligned despite differences in terms of social issues, beliefs, regulations, and political dominance. The conflicts and alliances within the boundaries of Arab nations impacts the global landscape in innumerable ways and has great significance.

The Middle East maintains a very definite and elaborate relationship with the rest of the world. Some of these relationships are cordial, others born of necessity and political expediency such as Gulf security, while others are mutually beneficial and actively nurtured. It is very interesting to study and understand the relationship between Arab nations and rest of the world.

Here is a snapshot of the relationships shared with different countries:

With The USA

This relationship depicts an underlying distrust of the fundamentalist values that govern most Arab nations, juxtaposed with an insatiable dependence upon Arab’s vast oil reserves. This high energy consumption is a primary reason that the United States walks a delicate balance in maintaining cordial relationships with Middle East countries despite periodic conflicting priorities. For instance, after 9/11 there were numerous allegations by the U.S. government that some of terrorists originated from Saudi Arabia. This caused a potential rift in relations, but unlike Iran, the dependence on the oil and Saudi Arabia as a formidable ally in the region, the U.S. negotiated terms under which it could continue to receive the much needed petroleum.

"The United States imported approximately 9 million barrels per day (MMbbl/d) of petroleum in 2014 from about 80 countries. Petroleum includes crude oil, natural gas plant liquids, liquefied refinery gases, refined petroleum products such as gasoline and diesel fuel, and biofuels, including ethanol and biodiesel. In 2014, about 80% of gross petroleum imports were crude oil, and about 44% of the crude oil that was processed in U.S. refineries was imported.

The top five source countries of U.S. petroleum imports in 2014 were Canada, Saudi Arabia, Mexico, Venezuela, and Iraq.  The country rankings vary based on gross petroleum imports or net petroleum imports (gross imports minus exports)." (Source: U.S. Energy Information Administration)

The intricate relationship between the U.S. and Saudia Arabia started with ‘Abd al-‘Aziz Ibn Saud’, the founding monarch of Saudi Arabia. The event was initiated by most respected American president, Franklin D. Roosevelt in the year 1951. The outcome of these negotiations forever connected Arab’s oil with American national security.

In the current climate in the Middle East as well as the continuing instability in the entire region, the increasingly interdependent relationship between the kingdom and the U.S. is largely driven by the supply of cheap oil in in exchange for American protection. The ‘hate’ factor cannot be denied as well; as xenophia against all Arabs is rampant in the U.S. in some instances with cause, but in many it is the result of a lack of education and exposure.

With China

The relationship between the Peoples' Republic of China and Saudi Arabia goes beyond the love for ‘oil’ or rather the greed for it. The mutually beneficial relationship is predicated by an exchange of goodsfor petrol. This success of this relationship can be seen in the ubiquity of Chinese goods being sold in throughout the Middle East. Like most countries that are voracious consumers of the low price goods manufactured in China, Saudi Arabia procures many of these items through bilateral agreements in which China gets oil in exchange. In addition, there are a number of infrastructure projects being undertaken by the two countries which include:

  • Saudi Arabia has become increasingly important as an investment location for the Chinese (with the Saudi reciprocating the interest by increasing their presence in China as part of King Abdullah’s “Look East” strategy).
  • Chinese firms have begun to invest in infrastructure and industry in Saudi Arabia, including in an aluminum smelter in the southern province of Jizan, at a cost of US$3 billion.
  • Direct flights from China
    • Beijing-Jeddah (4 flights weekly)
    • Guangzhou-Jeddah (1 flight weekly)
    • Guangzhou-Riyadh (3 flights weekly) (Source: China Briefing)

The Middle East clearly understands that China’s global rise is a force to be reckoned with and that a strong relationship between the two will be mutually beneficial. The price for this relationship is built upon economic and infrastructure interests versus the quid pro quo relationship that exists between the Saudi Arabia and the U.S. which trades oil in exchange for Gulf security.

With India & Other Asian Countries

India has become a major business partner with Saudia Arabia. Like other nations the relationship between the two countries is primarily a "buyer-seller" relationship with oil being the primary commodity. The recent visit of Saudi Arabia's Crown Prince Salman bin Abdulaziz Al Saud to New Delhi boosted strategic ties and the two countries agreed to explore ways and means to transform their buyer-seller relationship. According to Saudi Arabia is India's fourth largest trading partner at $43.78 billion in fiscal 2012-13. In the April-November period of the current fiscal, the two-way trade was $32.7 billion. Imports of crude by India form a major part of this trade. Almost one-fifth of India's oil imports come from Saudi Arabia. (Source: Times of India)

Further, India provides companies stationed in Arab nations like the UAE and Qatar with an efficient and cost effective laborer force and the Gulf employment market has benefited immensely from this exchange.

In summary, each of these relationships was initially established on a foundation of oil trade, but have since diversified their partnerships to the mutual benefit of each nation. Call it the greed for oil or the Middle East’s initiative to achieve economic diversification, the ‘love-hate’ relationship that exists between it and other nations will continue to balance on a delicate fulcrum. These relationships, though fraught with dangers, will ultimately result in greater interdependence, increased stability in the region,  and the development of alternate sources of revenue.

Middle East Correspondent: @vinita1204

Gazprom Pipeline Runs Dry

2113212191_9e8cf0ddef_z.jpg

Michael Ransom, Contributing EditorLast Modified: 08:05 p.m. DST, 21 June 2014

KIEV, Ukraine -- The violent conflict between Russian separatists and Ukrainian militias is slowing down, if only momentarily, due to a ceasefire declared by Ukrainian president Petro Poroshenko on Wednesday, 18 June. While bloodshed may be decreasing, Russia has initiated a new economic offensive, shutting off the primary gas pipeline running between the two nations.

According to Russian officials, Ukraine has run up an oil bill totaling more than $4 billion, although Poroshenko's administration denies this figure. The issue at hand is not whether Ukraine owes its northeastern neighbor for unpaid gas, but rather the size of the debt. Ukrainians have been vocal about Russian price-gouging, claiming that exports to Ukraine are sent at a steep premium when compared to other countries. Also, according to Poroshenko the value of Russian oil fluctuates at president Vladimir Putin's convenience.

While Russia closed the tab on 16 June, the move will not immediately impact the Ukrainian markets. Like much of Russian diplomacy, shutting off the pipeline is more a show of power than anything else. For now, the gas reservoirs throughout Ukraine are full and will provide energy for months. Even so, winter months are brutal in Ukraine, and officials will need to act fast to secure reliable gasoline preserves for wintertime.

The feud impacts communities outside of Russia and Ukraine. Gazprom, the corporation responsible for the supply termination, is the largest gas company in Russia and one of the largest international suppliers. European Union nations rely largely on the circulation of Gazprom oil through Ukraine, which is then sold and traded further west into EU countries. The uncertain relationship between Russia and Ukraine, especially in light of the ongoing Ukrainian civil war, leaves EU member nations at the mercy of regional stability.

Sensing the gravity of the situation, EU representatives have tried to middleman a compromise between Ukrainian and Russian executives, to no avail. Gazprom will require Ukraine to pay at least half of the debt before any more oil crosses the border. Ukraine has dismissed the offer, citing the longstanding price inflation and demanding that the costs be set at a rate consistent with the international market.

At the end of the day, both Ukraine and Russia have much to gain by cooperation, and more to lose if the regional friction continues to silence synergy. A good portion of Gazprom revenue comes from Ukrainian consumers and the network of markets throughout the EU. And similarly, Ukrainian winters could prove dangerous without the necessary raw materials.

The stalemate is expected to drag on, as both parties are sure of their facts and figures regarding oil transactions. Russia and Ukraine will both plead their case to international mediators in the coming months, but considering the average length of arbitration and settlement agreement, it will likely come down to the combined efforts of Kiev and Moscow to resolve the dispute and steady the market.

Follow Michael on Twitter Twitter: @nahmias_report Contributing Editor: @MAndrewRansom

Related articles

South Sudan's Treacherous Growing Pains Continue

south-sudan-independence-celebration-photo-by-united-nations-peacekeeping.jpg

Jessamy Nichols, Africa CorrespondentLast Modified: 22:00 p.m. DST, 18 February 2014

South Sudanese Man Celebrates Independence, Photo by United Nations PeacekeepingAs the world’s youngest country, South Sudan is a country to watch in terms of stability, growth and development. The country has been entwined in conflict and hardship, especially with Sudan, for decades, and current events are proving to show little progress.

Unfortunately, there has been a reprisal of violence and political tension since mid-December, and the deep, complicated history of the country is making it increasingly difficult to resolve. In a pattern all too familiar to African countries, South Sudan’s president, Salva Kiir, has been battling insurgencies and destabilizing movements, led by his former deputy, Riek Machar. In the past, the two were comrades bonded in the fight for secession from Sudan. Now, the two have become enemies, each battling to hold ultimate power over South Sudan.

Since the renewal of violence between the leaders, thousands have been killed and nearly a million have been displaced from their homes and are now seeking refuge. This situation is never acceptable, but it is especially disheartening considering South Sudan’s development potential. The young country is extremely resource-rich, with several oil fields and a seemingly-endless supply of minerals. Most of these reserves are still untapped, and are thus harboring immense economic and growth potential.  However, if the conflict continues, South Sudan’s oil minister has said that oil production and its export to international markets may be hindered or even halted. Such a consequence would cause further setbacks for the country.

Currently, Kiir has been working to spread the word at events and meetings that revenge and renewed violence will not be tolerated and that citizens, especially the youth, should put national interests above personal vendettas. Kiir’s party, the SPLM, has even moved to promoting a new theme, “one nation, one people,” in order to emphasize the importance of national goals over ethnic divisions.

If the situation is going to improve and remain stable, there must be immense change in sentiment and action for all of the country’s citizens. Continued political strife and armed conflict will only bring the country further away from growth and success, and unfortunately, South Sudan is running out of time.

Follow Jessamy on Twitter Twitter: @nahmias_report Africa Correspondent: @JessamyNichols