Saudi Arabia puts big money in Russian economy

The Russian news agency Sputnik has reported on an agreement signed between the Russian Direct Investment Fund (RDIF) and the Public Investment Fund of Saudi Arabia “to create a partnership to invest $10 billion into projects implemented in Russia.” The report said the Saudi funds will be invested within 4-5 years starting from this year and that seven concrete projects are “currently in the final stage”. The majority of Saudi investment will be made on Russia’s agricultural projects, as well as on medicine, logistics and the retail and real estate sectors.

Deputy Crown Prince Mohammed bin Salman with Russian President Vladimir Putin at the Konstantin Palace outside St. Petersburg, Russia, in June

Saudi Deputy Crown Prince Mohammed bin Salman with Russian President Vladimir Putin at the Konstantin Palace outside St. Petersburg, Russia, in June this year

This may be seen as a follow-up to the visit by the Saudi Deputy Crown Prince Mohammed bin Salman to Russia last month, who played an “immense” role of support in sealing the deal, according to a senior Russian official.

An interesting feature of the deal is that the Saudi investment vehicle will combine with other Asian sovereign wealth funds, especially the Russia-China investment Fund (which is backed by the China Investment Corporation.)

Meanwhile, the RDIF disclosed that it also signed an agreement with another Saudi Arabian sovereign-wealth fund, the Saudi Arabian General Investment Authority, to undertake projects in Saudi Arabia and other Middle East countries.

The Saudis are notorious for the glacial pace of their decision-making, but in this case, Mohammed bin Salman’s direct interest speeded up things. The deal committing the Saudi sovereign funds to invest such big amounts in Russia has been signed just as the Iran nuclear deal could be sailing into view in a couple of days.

Again, there are indications that Moscow and Riyadh are working on an early visit by King Salman to Russia.

It is tempting to interpret the trends as constituting a strategic defiance of the US by the Saudis. After all, the Saudis are making up to a large extent for the western banking sanctions against Russia. But a more constructive interpretation is warranted: the Saudis probably hope to make the Russians “stakeholders” in a broader “win-win” relationship that also buttresses their core interests in Syria, Yemen and elsewhere in the region.

To be sure, the Saudi-Russian investment deals cannot but be seen as a powerful signal that the Saudi-Russian rapprochement is rapidly acquiring a momentum that has the potential to reset the power dynamic in the Middle East.

One key area to be watched is Syria where Moscow and Riyadh come under pressure to harmonize their respective approaches.

Enter Iran. Syria was one of the main topics of discussion when Russian Foreign Minister Sergey Lavrov met his Iranian counterpart Mohammad Javad Zarif in Vienna last week on the sidelines of the talks between Iran and the world powers on the nuclear issue.

Lavrov’s meeting with Zarif followed immediately after the Russian minister’s discussions with the US secretary of state John Kerry in Vienna relating to Syria.

The Russian foreign ministry cited Lavrov as stressing to Kerry that “there is no alternative to a political settlement, the path to which lies in consolidated efforts by Syrian patriotic forces and the world community to combat terrorist groups that are tormenting the country and posing a serious threat to regional and international community.”

Lavrov’s usage of the phrase “consolidated efforts by Syrian patriotic forces” gives food for thought. The phrase is sufficiently broad to include the Syrian government forces. But then, Lavrov could as well have mentioned the Syrian government led by President Bashar Al-Assad and “other patriotic forces”.

During a visit to the Pentagon on Monday, President Barack Obama also called for the Syrian people to unite against the Islamic State, and flagged the need to begin the “political transition to a new government without Bashar al-Assad, a government that serves all Syrians.”

For sure, the signs are that an end game could be beginning. The core issue is that neither Russia nor Iran (or Saudi Arabia) has a road map for post-war Syria. But Russia has now come to occupy the middle ground, which enables it to engage with both Iran and Saudi Arabia in a constructive spirit.

It is entirely conceivable that there is a back-to-back Russian-American understanding shaping up in this regard. Clearly, Obama’s focus at the Pentagon yesterday was almost exclusively on fighting the Islamic State (without committing any additional US forces) and he touched on Syria only peripherally.

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Categories: AT Top Writers, M.K. Bhadrakumar, Middle East

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  • Mr. Bernard Wijeyasingha

    Saudi Arabia was one of America’s strongest allies. Seen this way the shift to Moscow during a time when Washington D.C. and Moscow are facing each other over the issue of Ukraine in Europe and Syria in the Middle East, is massive. Partly due to the overtures made by Washington D.C toward Tehran the newly developing alliance between Saudi Arabia and Russia will give Russia access to the Persian Gulf.

  • Maria Adams

    http://www.theguardian.com/world/2014/jun/04/bashar-al-assad-winds-reelection-in-landslide-victory The US government wants to topple al-Assad because he’s an ally of Russia, that’s all. President al-Assad was DEMOCRATICALLY re-elected in 2014, as The Guardian reports, so, the US’s talk that al-Assad doesn’t represent his people & “must go” is the typical outrageous RAPE of the truth by the US.

  • Fernando Martinez

    Bashar is the Michael Corleone of this story, he ain’t going anywhere kids. You can blow him away but he isn’t simply going to walk away from the seat of power, dream on.

  • Lion Heart

    1. Saudi had promised to INVEST billions of dollars in Syria’s economy too………rather than it INJECTED terrorists in Syria a couple of years later.

    2. Russia should not fall into same trap——-Syria is not far from Chchenya.

    3. To use Rumsfeld words—-there are “unknown unknowns”.

  • Mike O Smith

    There is a STORM COMING .

  • roger green

    The Saudis are giving this money to the Russians as protection money (Insurance)

  • jako777

    Lucky for the Saudi’s;
    ex KGB ex FSB Putin, Lavrov and their bunch are very, very naive…I think you should send them an e-mail warning …huh?

  • jako777

    I would rather say that somebody will be looser once all is over in this “end game”.
    Maybe “STORM” will come, maybe not,.. But the world will be completely different from one we know now, that is for sure.
    I just can’t see how Russia backed by China be looser in this game.

  • jako777

    For Russia Bashar Al-Assad is dispensable, but not Syria, not Iran, not security problem called “Islamic State”.
    Russia will stick always with China and if China confirms “Iran is on our side”, that is how it will be no matter what Saudi offer…

    Saudi just try to play “end game” with true big players. Maybe they are too big for them..
    US-Saudi newborn bastard child -“Islamic State” is a bull in a china shop for big powers Russia and China.
    In BIG game small (Saudi?) fish usually ends up the worst…