Heavy economic damage, Russia “requested” the Gulf region

The Ukraine crisis has been adding pressure to Russia to strengthen its relations with the countries of the Gulf Cooperation Council (GCC) through strengthening economic and trade ties, in the context of Moscow. increasingly isolated from the West.

Russia is counting on the support of its allies and other neutral countries in the Ukraine crisis.

Saudi Crown Prince Muhammad bin Salman meets with Russian President Putin in Riyadh, Saudi Arabia on October 14, 2019. (Source: AFP)

Not large in scale but necessary

The GCC plays an important role in Russia’s plans as Moscow wants to offset the economic damage caused by sanctions.

Although the value of Russia’s trade with the GCC may not be large in scale, it is essential for Russia, especially in the current volatile context.

In an interview with the newspaper Arab NewsMs. Anna Borshchevskaya, senior fellow at the Washington Institute, said that Russia’s trade with GCC reached 3 billion USD in 2016 and 5 billion USD in 2021.

According to Ms. Borshchevskaya, the United Arab Emirates (UAE) has the closest relationship with Russia in the GCC. The UAE and Russia signed a strategic partnership in June 2018.

Maxim Suchkov, director of the Institute of International Studies at MGIMO-University in Moscow, cited the data that said trade turnover between Russia and the UAE in January-September 2021 reached $3.769 billion, up 86% compared to same period in 2020.

Meanwhile, trade turnover between Russia and Saudi Arabia in 2019 reached 1.667 billion USD, up 58% compared to 2018.

Geopolitical experts say that Russia’s economic relationship with the GCC should be viewed from the prism of its ongoing competition with the West, specifically the US.

From the Kremlin’s point of view, an important aspect of commercial relations is trade, but that aspect also has a political element, Ms. Borshchevskaya explained.

“Syria’s reconstruction activities are in dire need of funding, and the Kremlin has long understood that the West will not spend money on this. So Russia has looked to the Gulf as the main donor.” Ms. Borshchevskaya added.

According to Suchkov, Russia considers the GCC a group of fast-developing countries. Russia understands that there is a lot to learn from the GCC countries, such as business experience, technology development and reducing dependence on energy.

Important investors of Moscow

GCC countries also have a key political role to the stability and prosperity of the Middle East, so Russia highly values ​​the partnership with countries in this region.

Suchkov assessed that the relationship between Russia and most of the GCC countries also witnessed many “up and down” around the conflict in Syria as well as regulations on oil production and trade.

In March 2020, relations between Saudi Arabia and Russia soured due to disagreements over crude oil production levels. The dispute between the two sides was then resolved in April 2020.

Mr. Suchkov added: “However, we have seen some positive dynamics in the Russia-GCC relationship. The bloc has developed into an important region for Russia’s economic interests. The key areas of cooperation between the two sides are economy, technology, innovation and finance.

Russia’s relationship with the GCC is often seen as part of Moscow’s foreign policy, as the GCC is part of Russia’s larger strategy in the Middle East, according to a research report published last year by research firm SETA.

The oil output agreement between the Organization of the Petroleum Exporting Countries (OPEC) and its allied producers, also known as OPEC+, is a key element in the relationship between the GCC and Russia.

SETA’s research report describes GCC as an important source of investment for the Russian economy, especially in the infrastructure projects that the country is implementing.

The majority of investments from the GCC are made through the Russian Direct Investment Fund (RDIF). This is a national investment fund. The RDIF is currently under US sanctions, so it cannot access the US financial system.

The RDIF not only acts as a bridge between Russia and the GCC, but also creates joint funds with Gulf state-owned enterprises and other financial entities to attract investment in infrastructure projects in Russia. . Qatar is one of Russia’s largest foreign investors, with a total investment of more than $13 billion.

As reported by SETA, the main partners of RDIF in the GCC, including investment company Mubadala Investment Co. of the UAE, the Qatar Investment Authority, the UAE’s multinational logistics group DP World, the Public Investment Fund of Saudi Arabia, the Investment Authority of Kuwait, the Saudi energy conglomerate Saudi Aramco and the company. Mumtalakat Holding Co. of Bahrain.

GCC will be the key market for Russian agricultural products, next to China. (Source: AP)

Large market for Russian agricultural products

According to Suchkov, the imposition of sanctions by the US and the West against Russia will open up new business opportunities with the rest of the world, in which agricultural exports are a promising area for them. Russia. The Gulf region, along with China, are key markets in terms of potential for increased agricultural exports.

According to an official from the Russian Ministry of Agriculture, the country’s main agricultural exports include barley (accounting for 32% of agricultural exports in 2021), wheat (25%), sunflower oil (accounting for 25%), and sunflower oil. 12%), poultry (11%) and beef (3%).

The largest buyers of Russian agricultural products are Saudi Arabia (accounting for 77% of total agricultural exports to the Gulf market in 2021) and the UAE (12%). Saudi Arabia and the UAE are also potential buyers of Russian weapons, despite their relationship with the United States.

Ms. Borshchevskaya pointed out that, despite the disagreement that happened with OPEC in 2020, Russian President Vladimir Putin’s approach to the Middle East is also geared towards building good relations with all countries. in this area.