Tuesday October 16, 2018
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Saudi’s frenzied calculations amid Middle East ferment

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The scenario in the Middle East is changing fast and at the centre of it is neither the United States or the coalition of countries it leads nor Russia but Saudi Arabia, the Wahabi country which had so long acted as the source and ultimate prop of many Islamist activities in the Arab world. A Continuous crash of oil prices and the rise of the Islamic States (IS) have forced Riyadh to move away from the US sphere of influence and start charting out its own course.

Notwithstanding the recent execution of Sheikh Nimr-al-Nimr, the opposition Shiite cleric, it can be said with a fair amount of certainty that Riyadh is now trying to come out of its self-created cocoon.

Two recent developments point out that Saudi Arabia is prepared to give Russia space in Middle Eastern affairs. First, preparations are on for Saudi King Salman’s visit to Russia later this year. Secondly, the Saudi deputy crown prince and defence minister, Mohammed Bin Salman, visited Russia last June. Following closely on this, Turki-al-Faisal, the former intelligence chief, stated that Russian actions in Syria were more effective than those of the US and that Russia’s views merit attention and respect.

But it would be wrong to presume that Saudi Arabia is aligning with Russia on the Syrian question. Riyadh is worried about Iranian expansion in the Middle East and the US taking a soft line on the country after the nuclear agreement with Tehran. Saudi Arabia will now try to dominate the Middle East scenario on its own and in keeping with this line, Turkish President Recep Erdogan visited Saudi Arabia on December 30, 2015. Riyadh has also built up a strong coalition comprising the oil-rich Arab countries.

But, will Saudi Arabia be really able to dominate the Middle Eastern scenario? Objective conditions preclude such a possibility. There are unmistakable signs that willy-nilly it is tilting towards Russia although that may not be the wish of the Saudi Royal household. Two principal reasons for it are the military fatigue in Yemen and a resource crunch due to Syria. There will be a $100 billion deficit in Saudi Arabia’s budget for 2016. Last year, the budget deficit was 21.6 percent of the GDP and the country barely managed to survive by earlier petrodollar savings.

What will, however, affect the Middle East scenario the most is the decision by the Saudi Arabian Monetary Agency to withdraw $70 billion from foreign investment fund assets last summer. This will certainly cut down on siphoning off money to terror-related organizations through official channels. Moreover, the financial health of Saudi Arabia’s friends in the region is also not good. Reliable estimates put the budget deficits of Middle Eastern oil exporting countries in the next five years around $1 trillion.

It is difficult to predict how long Saudi Arabia can keep up the pressure in Yemen or Syria with such a shaky financial condition. It may not go bankrupt in the near future but the Saudi royal family must look for avenues to push up prices of oil, which came down to less than $50 a barrel last September, a sharp nose-dive from $103 in September 2014.

Here lies the raison d’ etre for Saudi overtures to Russia for cooperation. Riyadh is now looking for an “alliance for oil” partnership with Russia which will also give it a foothold in the Eurasian Economic Union. With this end in view, Prince Salman had talks with Russian President Vladimir Putin on the sidelines of the Sochi Olympics in 2014. This was followed by the Russian energy minister’s talks with his counterparts in Saudi Arabia and Iran.

Three consecutive IS attacks on Saudi mosques have reportedly convinced King Salman about the need for fashioning a new security strategy that puts a premium on choosing an independent course of action, away from US tutelage. Even on Yemen, Saudi Arabia is now open to negotiations. Although Riyadh still demands the removal of Bashr-al-Assad as a precondition for ushering in of peace in Syria, yet Brigadier General Ali Mamlouk, head of the Syrian National Security Bureau, was hosted in Riyadh by no less than the deputy crown prince last July.

Russian military intervention in the Middle East has induced a new type of assessment among all the stakeholders. The US-led coalition’s attack on the IS has undergone a qualitative change. The US attacks are now hitting the IS really hard. Meanwhile, to establish its credibility with international powers, King Salman has fired Prince Bandar, a former intelligence chief, who had his fingers in many CIA-orchestrated operations. Now, a secret Saudi Arabian document has surfaced which shows that the King Salman-led administration has instructed its Middle Eastern embassies not to fund Syrian rebels anymore.

Does this really portend a fundamental shift in terror-related Middle Eastern politics? (IANS, Amitava Mukherjee), (image courtesy: dawatmedia.com)

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Saudi Arabia’s Sovereign Fund Invested $1 Billion In An American Electric Car Manufacturer

Saudi Arabia's 33-year-old Crown Prince Mohammed bin Salman has talked about using the PIF to help diversify the economy of the kingdom.

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lucid motors
Derek Jenkins, VP of Design at Lucid Motors, introduces the alpha prototype of the Lucid Air at the 2017 New York International Auto Show in New York City. VOA

Saudi Arabia’s sovereign wealth fund invested $1 billion Monday in an American electric car manufacturer just weeks after Tesla CEO Elon Musk earlier claimed the kingdom would help his own firm go private.

Tesla stock dropped Monday on reaction to the news, the same day that the Saudi fund announced it had taken its first loan, an $11 billion borrowing from global banks as it tries to expand its investments.

The Saudi Public Investment Fund said it would invest the $1 billion in Newark, California-based Lucid Motors.

Lucid Motors
Lucid Motors. Flickr

The investment “will provide the necessary funding to commercially launch Lucid’s first electric vehicle, the Lucid Air, in 2020,” the sovereign wealth fund said in a statement. “The company plans to use the funding to complete engineering development and testing of the Lucid Air, construct its factory in Arizona, enter production for the Lucid Air to begin the global rollout of the company’s retail strategy starting in North America.”

Lucid issued a statement quoting Peter Rawlinson, its chief technology officer, welcoming the investment.

“At Lucid, we will demonstrate the full potential of the electric-connected vehicle in order to push the industry forward,” he said.

The decision comes after Musk on Aug. 7 tweeted that he had “funding secured” to take Tesla private. Investors pushed Tesla’s shares up 11 percent in a day, boosting its valuation by $6 billion.

Lucid Motors
Electric Car

There are multiple reports that the U.S. Securities and Exchange Commission is investigating the disclosure, including asking board members what they knew about Musk’s plans. Experts say regulators likely are investigating if Musk was truthful in the tweet about having the financing set for the deal. Musk later said the Saudi Public Investment Fund would be investing in the firm, something Saudi officials never comment on.

Meanwhile Monday, the sovereign wealth fund known by the acronym PIF said it had taken its first loan, an $11 billion borrowing. It did not say how it would use the money, only describing it as going toward “general corporate purposes.”

Also Read: Electric Cars: The Newest Trend in India

The Las Vegas-based Sovereign Wealth Fund Institute estimates the Saudi fund has holdings of $250 billion. Those include a $3.5 billion stake in the ride-sharing app Uber.

Saudi Arabia’s 33-year-old Crown Prince Mohammed bin Salman has talked about using the PIF to help diversify the economy of the kingdom, which relies almost entirely on money made from its oil sales. (VOA)