Saudi Arabia’s King Salman bin Abdulaziz is conducting a six-country tour of Asia that will take him to Malaysia, Indonesia, Brunei, Japan, China, and the Maldives. Aside from its monthlong duration, the trip is significant for the commercial and strategic messages it conveys in the context of Saudi Arabia’s ambitious program of economic reform and efforts to balance global power and geopolitical influence. The visit is consistent with the Saudi “pivot to Asia” in recent years, based around a set of common interests in trade, energy, and counterterrorism. Moreover, at a moment of such international uncertainty, the Saudi leadership will be keen to portray a kingdom that remains attractive to, and open to business with, a wide array of partners in regional and world affairs.
Relations between Saudi Arabia and Asian states have come a long way in a comparatively short period as formal diplomatic ties with China, for example, were only established in 1990. Successive Saudi leaders have recognized that the structure and pattern of world trade is changing and have readjusted pragmatically to take advantage of those shifts. Saudi Arabia’s late King Abdullah bin Abdulaziz notably made China the destination for his first major international visit as monarch in January 2006, visited India later the same year, and in 2010 upgraded the Saudi-Indian relationship into a Strategic Partnership. In 2014, as crown prince, Salman made two lengthy trips to Asia during which he visited Pakistan, China, India, Japan, and the Maldives, and came away with a raft of agreements across the defense, security, energy, and infrastructure sectors.
This decade of growing ties has added considerable depth and breadth to the core aspects of a relationship that, for decades, revolved around the export of oil from Saudi Arabia and the influx of migrant workers from the Indian subcontinent and Southeast Asian states. To be sure, energy continues to form a linchpin of the relationship as Asian buyers account for about 70 percent of Saudi oil exports, and individual Asian states remain heavily reliant on imported oil, much of which is sourced from Saudi Arabia and other Gulf Cooperation Council states, as well as Iran. Saudi Arabia overtook Iraq in 2015 to briefly become India’s largest supplier of crude oil as Saudi shipments rose to compensate for the sharp fall in imports of oil from Iran as international sanctions tightened after 2012. In Japan, the relative and absolute levels of Saudi supplies rose for the third consecutive year in 2016 to 36 percent of total oil imports and contrasted with the kingdom’s struggle to maintain market share elsewhere.
An important focus for Saudi officials on this trip (and in policymaking more generally) is to identify and expand markets for non-oil exports. China already is the largest destination for Saudi non-oil products and such exports to Japan also have increased considerably, due in part to a series of large joint ventures between the Saudi Basic Industries Corporation and Japanese partners such as the Mitsubishi Group. With the National Transformation Program kicking into gear in 2017 and expected to accelerate from 2018 through 2020, there is scope for significant investment into the Saudi economy from China and particularly Japan. Such collaboration is integral to supporting the transformative aspirations of Vision 2030 through knowledge and technology transfer and by creating the skilled jobs for Saudi citizens needed to strengthen a private sector intended to spearhead economic diversification and development. It thus was little surprise that the king’s stop in Malaysia encompassed agreements that covered sectors from construction to aerospace and from halal products to hajj services.
Oil-related products such as chemicals and plastics nevertheless continue to dominate Saudi non-oil exports, and the opening days of the Asia trip saw the announcement of $13 billion in ventures in refining and petrochemicals between Saudi Aramco and its state-owned counterparts in Malaysia (Petroliam Nasional) and Indonesia (PT Pertamina). As energy analyst Diane Munro has observed, the expansion of refining and petrochemicals represents the cornerstone of Deputy Crown Prince Mohammed bin Salman’s ambition to transform Saudi Aramco into a global industrial conglomerate. While it has taken Saudi officials longer than anticipated to work out the details of the planned Initial Public Offering of 5 percent of Saudi Aramco, the conclusion of these agreements gives a boost to the company’s outlook.
The geopolitical angle to the Asia visit is twofold. On a strategic level, the Saudi leadership seeks simultaneously to bolster the Islamic Military Alliance to fight terrorism that was launched at the Arab League meeting in Cairo in December 2015 but which has since struggled to gain traction. Like Saudi Vision 2030, the Islamic Military Alliance is seen by many as closely associated with Mohammed bin Salman and a part of the Saudi-led GCC effort to isolate Iran in the Arab and Islamic world. For these reasons, the powerful deputy crown prince and his father are conscious that any failure of the initiative would reflect negatively on both their individual prestige and on Saudi leadership in global Islam. Military and counterterrorism cooperation therefore featured heavily on the agendas in Malaysia and Indonesia and is expected to do the same on the upcoming stops in Brunei and the Maldives as well.
Finally, the trip provides an opportunity for Saudi leaders to visibly demonstrate that the kingdom remains a partner of choice among key emerging and developed economies across Asia. Riyadh’s direct involvement in the Yemen war, which begins its third year later in March, has intensified criticism of Saudi Arabia in European states and at the United Nations. In the United States, the Trump administration has been mired in legal and political turmoil since the inauguration and raised doubts over the future of U.S. leadership in the international arena. King Salman’s Asia visit can, perhaps, offset some of the (largely) Western negativity over Yemen and offer a timely reminder to U.S. and European leaders of Saudi engagement in international politics and policymaking at a time when isolationism appears to be on the rise.