ANALYSIS: Saudi Arabia Still Requires U.S. Alliance as Ties with China Deepen – Reuters

United States Remains the World’s Sole Superpower Amid Rising Challenges

China emerges as a potential guarantee for oil demand
Both the U.S. and Saudi Arabia aim to mitigate Shi’ite unrest

By Ulf Laessing and Barbara Lewis

RIYADH/DUBAI, Feb 22 – The recent wave of violent uprisings throughout the Middle East, coupled with China’s emergence as the fastest-growing oil market globally, has shaken the long-standing oil-for-security alliance between the United States and Saudi Arabia.

With Western oil consumption plateauing, China is on track to surpass the United States as the world’s top oil consumer. Currently, China holds the title of Saudi Arabia’s largest customer, and the kingdom is eager to diversify its political and economic relationships.

Despite the U.S. military’s substantial capability to safeguard Saudi Arabia’s extensive energy resources, the connections between the leading oil exporter and China remain primarily commercial. In light of the revolutionary movements that have destabilized entrenched regimes in the region, Saudi Arabia may increasingly find itself in need of formidable support.

"The Chinese prioritize economic interests and seek regional stability but are hesitant to take significant action to maintain it," noted Barak Barfi, a research fellow currently in Bahrain with the New America Foundation. "There’s little chance of Saudi Arabia abandoning the U.S."

Others echo this sentiment. "China operates as a mercantilist, as it has always done. However, its interest in the Middle East differs significantly, and its lack of intervention in regional matters is noteworthy," commented John Kuzmik, a partner and China expert at Baker Botts international law firm.

In conversations held recently in Riyadh, which brought together oil producers and consumers, U.S. Deputy Energy Secretary Daniel Poneman participated, while China sent high-ranking officials who maintained a low profile during the event.

The expanding commercial ties between China and Saudi Arabia are further evident in the growing presence of Chinese restaurants in the Saudi capital. As the kingdom secures future oil demand through refinery joint ventures in China, Chinese companies have also won significant contracts, such as the construction of a light rail system for transporting pilgrims in Mecca.

Tensions on the Rise

While Sino-Saudi business relations appear cordial, there is increasing tension between Saudi Arabia and the United States. Recently, Saudi Arabia openly expressed regret regarding U.S. support for Israel, particularly over its veto of a draft U.N. Security Council resolution.

Analysts suggest that Saudi Arabia feels abandoned by the U.S., especially following its decision to distance itself from long-time ally Hosni Mubarak in Egypt, which was pivotal for both nations in countering Iran’s regional influence.

"One must critically assess Saudi Arabia’s role in light of recent developments in Egypt," stated John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.

Even prior to these recent events, there were indications that U.S.-Saudi relations were fraying. Trust diminished significantly after the September 11 attacks, which involved a majority of Saudi hijackers. Concurrently, growing U.S. intentions to reduce reliance on foreign oil have resonated poorly with Saudi citizens, as the kingdom invests billions in maintaining its excess oil capacity.

Saudi Arabia’s approximately 4 million barrels per day of spare capacity could readily compensate for lost production from other countries, such as Libya, where unrest is challenging the longstanding regime of Muammar Gaddafi.

The more pressing concern for oil markets is the possibility of revolutionary movements spreading to Saudi Arabia, particularly in the Eastern Province, home to a minority Shi’ite population that has been staging protests. This area is near Bahrain, where demonstrators are calling for the overthrow of the ruling Sunni government.

Currently, Bahrain and its ruling al-Khalifa family represent a strategic advantage for both Saudi Arabia and the United States, particularly as the U.S. maintains its Fifth Fleet in Manama, acting as a buffer against Shi’ite Iran.