As the Gulf states enter a new era of lower oil prices, Bahrain faces the most difficult test. It has the highest fiscal break-even price in the Gulf and unlike its wealthier neighbors, lacks the reserves to cover budget deficits for very long. Borrowing in the credit market likewise has become more difficult and expensive: In February, Bahrain suffered the ignominious distinction of becoming the first Gulf country to have its credit rating fall below investment grade. Substantial fiscal cutbacks are inevitable. Read more
This article was written on April 19 as a preview to the U.S.-GCC summit.
When President Barack Obama visits Saudi Arabia on April 20-21 and meets with Gulf Cooperation Council leaders, he will be tackling one of the most important, but deeply strained, U.S. international relationships. Although some Americans, including Obama, have questioned how strategically important the Middle East remains to the United States, both U.S. policy and interests continue to reflect a strong engagement in and commitment to the region in general, and the Gulf area in particular. Read more
The April 17 Doha meeting of major oil producers ended in disarray after Saudi Arabia’s ambitious economic czar, Deputy Crown Prince Mohammed bin Salman, abruptly blocked the deal to “freeze” oil production because Iran was not party to the formal agreement. After months of uncertain negotiations by officials from Russia, Qatar, and Saudi Arabia, a draft agreement to freeze production at January levels until October, with a high-level committee created to monitor compliance, was widely circulated the day before the scheduled meeting. Read more
April 20 marked the end of the first oil workers’ strike in Kuwait since 1996. Some 7,000 workers (out of a workforce of around 13,000) walked off their jobs in Ahmadi, home of Kuwait Oil Company (KOC) – a subsidiary of the Kuwait Petroleum Corporation – to contest proposed amendments to public sector wages and partial privatization of the oil sector. The new payroll scheme for Kuwait’s public employees would affect the oil sector’s 20,000 workers and would reduce incentives, benefits, and wages. The union is also opposed to plans for privatizing portions of the oil sector. Read more
It’s a good time to be a banker with government clients in the Gulf. There is significant interest by Gulf governments in sovereign debt, in the form of bonds and loans. Banks stand to earn generous fees from extending loans, issuing bonds, and serving as arrangers on a host of privatization plans and corporate restructurings. There is also a bit of time pressure to secure funding. Pressures emanate from domestic and international sources. Domestically, the fiscal budgets of the GCC states are in deficit and governments are seeking new ways to generate revenue. Read more
Saudi Arabia is dismayed by President Obama’s Middle East policy. Its leaders feel that he does not play by the rules that have governed the Saudi-American alliance for decades: The United States provides security guarantees in return for the Persian Gulf states’ reliable stewardship of their oil reserves and support for American regional dominance. Read more
Marshall McLuhan’s famous observation that sometimes “the medium is the message" perfectly describes the substance of last week’s US-GCC summit. The meeting itself, especially its now-confirmed annual status, is the biggest takeaway for both sides. Read more
That US policy towards the Middle East has dramatically fluctuated over the past decade is an understatement, especially considering the sharp differences between President George W. Bush’s 2003 Iraq war and President Barack Obama’s decision not to enforce his own redlines on Syria. Read more
US President Barack Obama’s visit to Saudi Arabia this week, to attend the summit of the Gulf Cooperation Council, comes at a time when relations between the two countries have rarely been worse. And yet, however negatively most Americans view Saudi Arabia, the country remains an important regional ally. Obama would be wise to mend the bilateral relationship. Read more
In anticipation of UN-sponsored peace talks in Kuwait, UN spokesman Stephane Dujarric confirmed that Yemen’s Houthi movement would participate after receiving assurances that pro-government forces would respect a ceasefire. The warring parties have already engaged in substantive confidence-building measures, which include to stop fighting along the border with Saudi Arabia, where the Houthi rebels’ stronghold is located. Read more
In the Media
AGSIW President Ambassador Marcelle M. Wahba discussed U.S.-Saudi relations in an interview with RT. Wahba noted the effect of Congress' inquiry into Saudi Arabian involvement in the attacks on 9/11 on relations between the the United States and Saudi Arabia. Speaking to TRT World, Wahba further explained the strained relations between the two countries, citing regional turmoil as a driving force behind the tension.
AGSIW Executive Vice President Ambassador Stephen A. Seche spoke with BBC Newshour about the Saudi-led intervention in Yemen and its effect on U.S.-Saudi relations. Seche was also quoted by Al Arabiya, discussing how U.S. President Barack Obama's comments in The Atlantic referring to Gulf allies as "free riders" may affect the relationship between the two countries.
In Al Arabiya, AGSIW Senior Resident Scholar Hussein Ibish commented on the differences between the United States and Saudi Arabia on Syria, as Obama prepared to visit Riyadh for a summit with Gulf Cooperation Council leaders: “Unfortunately a coordinated, common strategy on Syria is unlikely because the United States and the Gulf states don't agree on how to deal with the crisis.” In the same article, Wahba noted the concern of GCC states over the growing crisis in Syria and their support for peace talks in Geneva. Ibish additionally addressed the Saudi view of regional crises and fear of Iranian influence in an article for Voice of America. CNN also referenced Ibish on U.S.-Saudi relations noting, "[Saudi Arabia] can talk about Europe and China and Russia all they like, but in the end, its military is structured around the United States and only the United States can provide the leadership they're looking for."
AGSIW Non-Resident Fellow Fahad Nazer also addressed Obama's visit to Riyadh. In articles for The Wall Street Journal and The New York Times, Nazer explained the differing views of the United States and Saudi Arabia on regional turmoil. Additionally, in Politico, he discussed the Saudis' view of the "negative narrative" about Saudi Arabia in Western media. However, Nazer reaffirmed key aspects of the U.S.-Saudi relationship, including counterterrorism, in an article for The National.
Better the Saudis We Know
In Truth, the U.S. Hasn’t Given Up on the Gulf
How Will U.S.-Saudi Relations Continue in the Post-Obama Era?
Obama in Arabia
Yemen’s Warring Sides Finally Met at Talks, But What’s Next?
