Arab Countries Maintain Balanced Relations With Russia Despite Pressure From US
Tuesday, October 4, 2022
Ahmed Adel, Cairo-based geopolitics and political economy researcher
On September 30, Russian President Vladimir Putin gave a speech in the Kremlin on the results of the referendums in the Donetsk People’s Republic, the Luhansk People’s Republic, and the regions of Kherson and Zaporozhye, after which he signed a treaty with the heads of the four regions for their admission into the Russian Federation. Although there was outrage from the West about this, it is likely that Arab countries will show a balanced stance when assessing the integration of the four new regions into Russia.
Moscow’s strong ties with the Arab countries is reflected in their stance towards the conflict in Ukraine. Saudi Arabia, perhaps the most important country in the Arab World (alongside Egypt and the United Arab Emirates), has refused to succumb to US pressure to cut relations with Russia and impose sanctions. The Arab countries do not lean to one side or the other in the current conflict, but try to maintain a balance and call for dialogue. Relations with the US are still taken into account, but they are not following the orders given by Washington, and in fact they are instead deepening their ties with Moscow.
The US has shown a divergent stance on the Iran issue, which has drawn criticism from Persian Gulf countries. Due to this, Washington no longer has the trust of those Arab countries to the same extent as it did in decades past.
Arab countries are likely to exercise restraint and try to maintain a balance in their relations with both Washington and Moscow, meaning that they will not criticize or reject the four regions joining Russia. None-the-less, they are also unlikely to endorse or praise Moscow’s move so as to avoid provoking Washington.
But even attempting to not provoke Washington has its own limitations. Famously, it is remembered that Crown Prince Mohamed bin Salman even once rejected meeting US President Joe Biden. It is also recalled that a Saudi fund, which is controlled by billionaire Prince Alwaleed Bin Tala, put more than $500 million in Russia’s top energy companies between February and March of this year. That included $365 million in global depository receipts of Gazprom, $52 million in global depository receipts of Rosneft, and $109 million in Lukoil’s US depository receipts.
This comes as Saudi Arabia and the United Arab Emirates are seriously looking at de-Dollarizing their trade by encouraging and promoting the Chinese yuan, the Indian rupee and the Russian ruble. If China paid for its almost 13.0 million barrels of oil (mbd) imports in the petro-yuan, and Russia sold its 8.0 mbd of exports in rubles, along with Venezuela and Iran accepting the petro-yuan for its exports and India paying in rupees for its crude imports, the petrodollar would lose an estimated 48% of global oil trade.
As the petrodollar is the core of the US financial system, which is effectively upheld by Saudi Arabia trading in US dollars, by undermining the petrodollar, the US financial system and therefore the US economy will also be undermined. This could lead to a devaluation of the dollar by one quarter to one third of its current value.
At the same time, the head of the Planning and Budget Committee in the Egyptian House of Representatives, Fakhry al-Feki, said that Cairo plans to link its Meeza network with the Russian Mir system for payment in rubles by the end of 2022. The Meeza system is an Egyptian payment card, and by linking Mir and Meeza, it would allow easier dealing in Russian rubles. Such a move would support the payment of Russian wheat bills, as well as support the revitalization of Russian tourism in Egypt as travelers would be able to deal in rubles.
Ehab Wahdan, director of Tez Tour Egypt, a tourism company that mainly targets visitors from Russia and Ukraine, told Al-Monitor, “I expect a surge in the number of Russian tourists coming to Egypt during the upcoming winter season, especially considering that they do not have many options when it comes to travel destinations, and facilitating payment in rubles will contribute to this surge.”
A source at the Egyptian Central Bank explained to Al-Monitor that using the ruble is aimed at achieving economic recovery as part of Egypt’s attempts to diversify its foreign currency sources. The source said that linking Egypt to the Russian payment system will help buy Russian products in rubles, especially wheat and fertilizers.
The leading Arab countries understand that the world system is rapidly changing, especially because of the war in Ukraine, and that they can either conform to this new reality or drown in trying to defend a US-centric unipolar system. As Arab countries are now more boldly pursuing their own interests rather than serving US interests in the Middle East, they are unapologetically deepening their ties with Russia and are not being intimidated by Western threats to cut relations with the Eurasian country and impose sanctions.
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