Commentary
For decades, Saudi Arabia has allied with the United States based on the exchange of oil for security. The Saudis pump when oil prices get too high, and America promises to come to Saudi Arabia’s defense when, for example, Iraq or Iran start lobbing missiles. Thus, America never sinks too far into oil-starved recession and remains strong enough to stabilize the Middle East.
Now however, the Saudis are leaning away from America and toward their biggest new customer: China. Riyadh is no longer pumping at Washington’s request, resulting in sky-high inflation, increased interest rates, and an impending recession. The deal is off, and the Biden administration is displeased.
The roots of the breakup are macroeconomic. Saudi
exports to the United States dropped to less than 460,000 barrels of oil per day in 2020 from 2.2 million per day in 2003. Saudi Arabia became China’s largest oil source in 2020, exporting almost
1.7 million barrels per day to the totalitarian country.
Unfettered free trade is
enabling an emerging Sino–Saudi alliance.
On Oct. 21, the Chinese and Saudi energy ministers held a
video conference during which they talked about greater oil and nuclear cooperation, as well as investment in China’s Belt and Road Initiative (BRI). Such dialogue undercuts the Biden administration’s requests, including that Saudi Arabia counterbalance the BRI.
Considering regional tensions with Iran, Riyadh’s discussions with Beijing could lead to talk of weapons production. Iran is proceeding with its plan to acquire a nuclear weapon, which might incentivize Saudi Arabia to do the same, especially if its alliance with the United States is in question.
The Biden administration’s response to increased Saudi independence was stark, and possibly self-defeating, as it
implied the United States could downgrade its Saudi alliance. The Riyadh riposte was the reverse.
China, Russia, Iran, North Korea, and now Saudi Arabia are saying that America’s global leadership is ending and a hypocritical Beijing-led “
new type of international relations” is emerging, one in which the United States would be a follower rather than a leader.
Beijing is well on its way to replacing Washington as the world’s leading capital, both in terms of control over a larger gross domestic product (when considering purchasing power parity) and a larger navy. A world led by Beijing would be far more dangerous than what we have now, because Beijing seeks global hegemony, which the United States and its allies will not cede easily.
The Saudis must see the United States as an existential competitor, in that the Biden administration targeted all authoritarian regimes publicly while hypocritically attempting to bring Iran’s
4 million barrels per day of oil capacity back onto global markets. That would decrease oil prices and threaten Saudi national security, a double whammy for Riyadh.
Nor do the Saudis like Washington’s pressure on Beijing and Moscow. Riyadh would prefer to keep making money, while
leaving politics at the door.
President Joe Biden has taken the moral high road with the Saudis, perhaps at the expense of short-term tactical considerations, by publicly and repeatedly raising the issue of the 2018 assassination of
Jamal Khashoggi, which some allege included the involvement of Crown Prince Mohammed bin Salman.
The Trump administration, and Biden’s administration thereafter, worked to unite the
Saudis and Israelis against Iran. Those are strategic moves that have a global effect, as Iran is allied with China.
Yet, the Saudis are simultaneously moving toward China. Saudi Arabia leads the Organization of the Petroleum Exporting Countries Plus (OPEC+), oil producing nations that limit oil supplies and fix prices at higher levels. In October, the cartel decided to cut production by
2 million barrels in the context of already skyrocketing prices and a looming recession. They did this despite Biden’s appeals to increase production and combat inflation.
The United States has attempted to use positive incentives to loosen this Gordian knot of authoritarian countries, but it must also be bolder in the use of disincentives.
Anti-OPEC+
legislation known as NOPEC, for example, would remove sovereign immunity from OPEC+ countries so the U.S. attorney general could launch antitrust suits against them in U.S. courts. That could destroy the cartel and bring down the price of oil, which would help the U.S. economy.
NOPEC could also increase emissions at a time of global warming. And it could help our biggest adversary, China, which is the world’s biggest importer of oil after the European Union.
But the knot of China and its dictatorial allies is getting harder to undo. NOPEC and other tough measures are consistent with democracy and market principles and should be part of America’s grand strategy.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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