The lifting of sanctions against Iran is, according to many political scientists, a significant compromise that postpones the risk of a global armed conflict in the region. It also means that in the nearest future the Iranian market, desperate for foreign investment and advanced technologies, will see fierce competition. At the same time, it would suggest an accelerated development of Iran’s economy and the stronger position of Tehran in international affairs, primarily in the Persian Gulf region. Whilst the recent situation has shown that Saudi Arabia, due to its dilettante leadership, has lost and will continue to lose its ground on all fronts from the economy to the OPEC leadership to its influence on Syria, Yemen and other Arabic states.
For instance, the news about the sanctions against Iran being lifted pulled the Saudi Arabia stock exchange down to rock bottom. The main country index Tadawul All Share Index fell by 300 points straight while the shares of 167 companies trading on the Saudi stock exchange suddenly went down in value. The decline in the index Tadawul is estimated at almost 7%: an unprecedented figure. Saudi securities have started selling off on both the Saudi and the international stock markets, and if this is only the beginning, the stock players predict that in the future, prices will take a nose dive off the Saudi cliff.
It escalated to the point, as Bloomberg wrote, that the Saudi Arabia regulatory authority (Saudi Arabian Monetary Agency, SAMA) had to take measures in order to prevent speculators from crashing the national currency. The reason behind it was a 35 point growth in forward contracts on riyal after which the regulatory authority imposed a ban on the state’s banks on closing deals with these contracts. “There is fear everywhere. Any chance for recovery is destroyed by the continuing slump in oil prices and bulk sales,” commented NBAD Securities Executive Director Ahmed Shehada.
Undoubtedly, Saudi Arabia that has long been dictating the world’s oil prices is having hard times in its economy as well as politics. Such opinion was expressed by the experts of a highly regarded sector magazine, OilPrice. According to the edition, the greatest concern in Riyadh has been caused by the situation in OPEC. Not so long ago, this Middle-Eastern kingdom was an unrivalled leader in the cartel, but the shale boom in the USA, the lifting of the sanctions against Iran and the firm position taken by Russia resulted in Saudis losing their influence in the organisation. In addition, low prices of the black gold have already caused problems for the state budget. In the most optimistic scenario, according to the article, Riyadh can only endure low oil prices for the four upcoming years. “Saudis are in a state of panic on all fronts – from their status in OPEC and dwindling reserves to their indirect wars and ever decreasing number of allies. By and large, Saudi Arabia overexerted itself, overestimated its capacity”, concluded OilPrice experts.
The most unpleasant surprise for Saudis was not only the lifting of the sanctions against Iran but also Iran’s stronger role on the international stage. “From Saudi Arabia’s point of view, Iran is advancing on all fronts,” noted a Lebanese newspaper Al-Mustaqbalon January 15. The newspaper recalled that Riyadh and Tehran began a fierce struggle over the influence in Syria and Yemen. Iran also shows support for a militarised shia organisation Hezbollah in Lebanon and the shia majority in Syria. What’s more, Tehran even managed to gain support from some sunni states. The newspaper added “the execution of sheikh Al-Nimr by the Saudis was an indirect acknowledgment that the weight of Iran is growing even among the Saudi Arabia’s shias that constitute around 15% of the population”. That is a telling sign of the fact that the authorities of the kingdom feel threatened within their own borders and in the neighbouring small emirate Bahrein where Saudi troops managed to put out a fire of the ‘Arab spring’.
But at this very moment, when the price of oil has plummeted resulting in Riyadh experiencing difficulties with their budget and sustaining of Saudis’ high standard of living, the voices of those that are unhappy with the despotic governance of the House of Saud have become ever more prominent. It appears that Saudi Arabia, as noted by many international media, has been engulfed with all kinds of protest moods, even those questioning the very existence of the absolute monarchy. Understandably, the country could not avoid a political crisis. But the Saudi authorities chose the easiest methods to resolve all these social, economic and religious problems: the policing solution. The ruling family does not want to share power with anyone. Instead it chose execution as a means of dealing with the opposition, beheading 47 people in one night. A court verdict would not be acceptable from the formal point of view as Saudi Arabia has no independent judicial power whatsoever: the royal family prosecutes the opposition with its dark medieval absolutism, it judges, pronounces the verdict and carries out the sentence.
By the way, as a response to the execution of his supporters, the head of Al-Qaeda Ayman Al-Zawahiri posted a video message where he called for terror attacks against Riyadh. He called the ruling dynasty of Saud a ‘rotten regime’ that sold out Islam. The execution by the Saudi authorities of 47 people did not appall Tehran alone: the majority of the executed were members of the terrorist gang Al-Qaeda, whose underground cells operate throughout the kingdom.
On January 4, Russia took the initiative to propose mediation in the rapidly stifling relationships that brought the two regionally competing states, Iran and Saudi Arabia, to the brink of war. The Russian proposal was turned down. But this initiative could not have been accepted since it is obvious that Tehran is closer to Russia than Riyadh in all respects. Nonetheless, sooner or later there will be a need for such a mediator between the two rival states. Sultan Qaboos bin Said, a man, whose country over centuries kept equal distance in all regional disputes, could become such a referee. For instance, it may be recalled that it was the Omani Sultan who acted as a mediator in the negotiations between the US and Iran, which were held in secret on the Omani territory and led, ultimately, to the lifting of sanctions against the Iranians. Even now despite being a member of the Gulf Cooperation Council, headed by Saudi Arabia,Oman refrained from joining the pro-Saudi coalition which bombed Yemen in 2015. Oman did not break off diplomatic relations with Iran in the latest outbreak of tension in the region, as did many Saudi allies. And now it seems Omani Sultan is the best candidate for mediation between Saudi Arabia and Iran, whose relations have stalled and could explode at the first spark of tension. It is quite clear that the two rival states, contesting the leadership in the region, will sooner or later want to settle the score on the battle field.
Incidentally, while Russia offered its good services, Washington did not act in such a manner but instead continued to pump Riyadh with modern weapons. The thing is, there are practically no Saudis who are even able to professionally use these sophisticated weapons. And besides, the American finance minister knows very well that the Saudis invested up to $1 trillion of public money in the US. And it is well known that the Americans are perfectly capable of freezing foreign assets and then transferring them to their own coffers.
And, it seems, in this situation the leaders of the two countries should temper their belligerent appetites and get down to the other most pressing tasks: for Iran, restoring the country in the aftermath of the crippling Western sanctions, and for Saudi Arabia, making at least minor ‘home improvements’ in its domestic policy and granting more rights and freedoms to its citizens.
Victor Mikhin, Associate member of Russian Academy of Natural Sciences, exclusively for the online magazine “New Eastern Outlook.”