How the GCC is Benefitting from the Russia-Ukraine Conflict
by Salman Rafi Sheikh on 08 Jul 2022 0 Comment

Military conflicts are a deadly – and costly – business, especially for those who fight them directly. But these conflicts also benefit others directly and indirectly. Those involved in the military-industrial complex benefit from both actual and potential conflicts. This has been the most famous story in the US and continues to be in the present era, as I explained in an earlier piece written for NEO. But the ongoing military conflict between Russia and Ukraine – especially, the way it has shifted global oil supplies and prices – has put the world’s leading oil-producing players at the centre of global geo-economics.


On the one hand, Russia seeks to maintain the OPEC+ pact to maintain stable levels of oil production, supply and prices. On the other hand, the US and EU want countries like Saudi Arabia and the UAE to break the OPEC+ pact with Russia and produce more oil. The US and EU have also tried (unsuccessfully) to convince these states to impose sanctions on Russia and join the US/EU bandwagon of “economically punishing” Moscow.


But the leading OPEC countries based in the Gulf continue to refuse to take sides in the conflict. Saudia Arabia, while voicing its support for a political resolution to the conflict, has refused to condemn Russia and/or impose sanctions. The same remains true of the UAE. However, while these states have not imposed sanctions on Russia – and they are unlikely to do this – the EU sanctions on Russian oil have certainly opened up a possibility for these states to capture the European market for oil/gas supplies.


Eyeing “new horizons for cooperation”, the Emir of Qatar, Sheikh Tamim, recently visited Europe – the UK, Spain, and Germany specifically – to project Qatar’s ability to supply gas to these countries and, thus, ensure these countries’ “energy security” that has been “threatened” by the ongoing conflict in Ukraine. In other words, Qatar offered these countries to supply gas and, thus, help control rising energy – and electricity – prices in all of Europe. On his trip to Germany, Qatar’s Emir confirmed that his country will start supplying Liquified Natural Gas (LNG) to Germany by 2024. This deal is being seen as part of Germany’s efforts to reduce its dependence on Russian gas, which currently makes up the largest portion (55 per cent in 2021) of total German gas imports.


Qatar is already responsible for supplying almost 45 per cent of the UK’s gas supplies and the Gulf state is seeking to increase its sales in the wake of soaring gas prices in the UK. While increasing gas prices benefit the producing countries, what also benefits Qatar the most is the ability to exert greater influence in the UK, thus adding to its global profile in much the same way that holding the football World Cup is expected to do.


Other Gulf states such as Saudi Arabia and the UAE, too, have found in the ongoing Russia-Ukraine conflict an opportunity to stamp their importance as states capable of shaping global politics. Apart from the fact that the US has been courting, both directly and indirectly, Saudi Arabia to break out of the OPEC+ deal, the fact Russia, too, has increased its engagement with them has added to their global importance, allowing them to play ‘safe’ on both sides of the conflict and maintaining what even Russia’s Lavrov called a “balanced position.”


The “balanced position” of the Gulf – especially because they have been able to maintain this position in the face of US/EU pressure – has allowed Russia to push for deepening its ties with them. As Lavrov put it during his recent tour to the Gulf, Russia’s ties with the Gulf states are a sharp contrast today to Moscow’s ties with the West. To quote him, “We reaffirmed our focus on the comprehensive development of our partnership, including in the new conditions that are emerging in the world economy in the context of the policies of our Western colleagues.”


These emerging conditions are an outcome of how the US is trying to gain total control of the global oil and gas market to completely isolate Russia. The Russian response has been to deepen its ties even further with the most important – and the largest – bloc of these producers. This game of geopolitics has allowed Gulf states like Saudi Arabia to force the US to mend its ties with Riyadh – especially, in terms of forcing Biden to make amends with Mohammad bin Salman (MBS).


The UAE, on the other hand, is also making similar gains vis-à-vis the US, which had very recently refused to sell the promised F-35s to Abu Dhabi, forcing the latter to buy French Rafael jets. Now that the US needs both of these states against Russia means that both states have a hitherto unavailable opportunity to extract crucial concessions from Washington.


Does it mean the Gulf states will bow down to the US? It remains unlikely. Their greatest benefits are served by playing both superpowers and seeking concessions from both sides. Maintaining OPEC+ plus also serves these states insofar as these states’ economies, despite significant efforts to diversify – remain deeply tied to Petro-wealth. Plus, Western sanctions on Russian oil will automatically allow these states to produce more oil. While it depends on their actual capacity to produce additional oil, these states can still benefit from higher production without violating OPEC+ and/or annoying the US/EU.


Maintaining ties with the US/EU serves elsewhere as well. When Antony Blinken called his Saudi counterpart on the eve of Lavrov’s visit, he was keen to discuss Yemen and other regional issues, such as Iran and the “food crisis.” Saudi response showed that the call had no meaningful impact on Saudi position on the war, as the Saudi foreign minister confirmed after his meeting with Lavrov that “the kingdom’s position regarding the crisis in Ukraine is based on the principles of international law and support for efforts aimed at achieving a political solution to the crisis”, adding that the Gulf remains united in its response and position on the war, a position that includes an offer of mediation between Moscow and Kyiv.


But Saudi support for a political solution falls much short of Washington’s efforts to wean these states away from Russia. It has prompted Biden to contemplate a visit to Riyadh and woo the Saudis – especially, MBS – himself. For MBS, this opportunity would not have arrived without the Ukraine war, making the Saudis contemplate the best possible ways to make the best possible use of the war. For now, the Saudis – who are leading the “united Gulf stance” on the war – have emerged as a crucial balancer between the West and the East. This is, in itself, an unprecedented strategic opportunity to project the Gulf as a global player.


Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook”. Courtesy  

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