And there arose in Riyadh a prince who knew Israel pretty well, all things considered. Mohammed bin Salman, acronymised as “MBS” and demonised for the killing of the Washington Post journalist Jamal Khashoggi, wants Saudi Arabia to become a world power by 2030. The implications for the United States and Israel are emerging, and they are divergent.
The Chinese-sponsored reconciliation between Iran and Saudi Arabia in early March seems to have taken America’s diplomats by surprise.
They remain doubly distracted from the Middle East by Russia’s war in Ukraine and tensions with China over Taiwan.
The Biden administration had abandoned its effort to license an Iranian nuclear weapon, at least for the time being, and was more focused on a second embarrassment, the effort to persuade the Saudis to increase their oil output.
The oil talks failed to increase Saudi production. MBS’s refusal says a lot about how low Biden, who promised to make Saudi Arabia a “pariah” state for the Khashoggi killing, stands in his opinion. What did emerge from those talks was MBS’s terms for normalising relations with Israel: the US should assist Saudi Arabia in building nuclear reactors and not oppose its development of nuclear weapons.
The Saudis want those nukes because they fear Iran’s nuclear programme. The US, the historic Saudi patron, has failed to contain Iran, so the Saudis are now looking to China to do it. China, like India, needs steady flows of oil and gas from the Middle East, and Russia too. The Chinese know a Sunni-Shia war that closes the Persian Gulf would be bad for business.
It remains to be seen whether the Iranian regime will deliver on its promise to reconcile with Saudi Arabia and rein in its regional campaign of terrorism.
Regardless, the vacuum left by the slow American withdrawal from the Arab Middle East is being filled by rival external powers. First it was Russia, Turkey and Iran, and now it is China.
A multipolar world order is rapidly emerging.MBS is positioning Saudi Arabia as one of the “pivot” states, between the US and China. Saudi Arabia wants to have the best of both worlds, as Germany has now.
While America guarantees Germany’s security and, more recently, presses it to buy American-made weapons, the German export economy sees its future in China, not the US. Ten per cent of Germany’s exports are sold in America, versus 6.9 per cent and rising in China.
It’s accurate but misleading to call the US the biggest export market for Saudi oil. In 2022, the US bought 14 per cent of Saudi Arabia’s exports.
Combine the value of Saudi Arabia’s next-biggest export markets, all of them in Asia, and the picture changes: Japan (13 per cent), China (12 per cent), South Korea (10 per cent ) and India (8 per cent). Those numbers add up to 43 per cent of Saudi exports, triple the value of exports to America. Demand from Asia will only grow.
Saudi Arabia’s economic pivot has already occurred. Last week, the Saudis joined the Chinese-sponsored Shanghai Cooperation Organisation as observers.
Next, they will be active members. Talks with China on selling oil for Chinese yuan rather than US dollars are ongoing. The days of the petrodollar are numbered.
Mohammed bin Salman with President Xi (Getty Images)
Israel is moving in a similar direction. The Americans cater to Israel’s most advanced defence needs, and the US remains Israel’s biggest export market (28 per cent of Israeli exports in 2022, with a value of $18.7 billion).
But Israel’s second- and third-biggest export markets in 2022 were China (7.1 per cent) and India (6 per cent). Add Hong Kong (2.5 per cent), South Korea (2 per cent), Singapore (1.8 per cent) and Japan (1.7 per cent), and Israel’s Asian exports are well over 20 per cent. In 2021, Israel’s Asian exports totalled $14.5 billion.
As with Saudi exports to Asia, these numbers will only rise in future. By the end of the decade, Asia, not the US, is likely to be Israel’s key market.
The strategic implications for the US-Israel alliance are obvious. Israel has done its best to sit out the war in Ukraine, to preserve its strategic ties to Russia. Israel will face a similar dilemma if the US and China continue on their collision course.