Who Is Telling the Truth?

Hussein Ibish is a senior resident scholar at the Arab Gulf States Institute in Washington, D.C. On October 26, the New York Times published a major story on the deterioration in U.S.-Saudi relations, following Saudi Arabia’s controversial push to cut oil production at an OPEC + meeting in October, this at a time of rising inflation globally. Diwan interviewed Ibish on the story, as he is someone intimately familiar with the thinking in Riyadh and Washington and could offer a perspective on the attitudes of both sides in what has become a deeply divisive issue in U.S.-Saudi relations.

Michael Young: On Wednesday, the New York Times published a story in which it reported that the United States had expected that the July meeting between President Joe Biden and Saudi Crown Prince Mohammed bin Salman would lead to a boost in oil production, bringing down global oil prices. Instead, in October the OPEC + group slashed production, a move that could send prices upward at a time of high inflation globally. What do you think happened for such a misunderstanding to take place?

Hussein Ibish: It’s very hard to explain what went wrong in a series of at times indirect meetings over a long period in which one was not personally involved. But my sense is that, in general, Americans believed they had a strong commitment from Saudi Arabia to maintain production and pricing at certain levels over a prolonged period of time, whereas the Saudis believed they had committed to not allowing the price to go too high, as opposed to agreeing not to take defensive actions if prices began to fall precipitously in their view. And they may well have believed that they had already fulfilled their commitments regarding production quotas by the time the October 5 OPEC + meeting took place.

The biggest source of the misunderstanding, though, has to do with diverging contexts. The whole Western world—Russia included—is now divided into pro- and anti-Vladimir Putin camps, and there is a shared sense in the West that the Ukraine war is a macro historical inflection point of tremendous significance, redefining strategic and international relations for the foreseeable future. Therefore, everyone is expected to take a side.

However, this is not how the conflict is viewed in the developing world, particularly in Asia and Africa, including by the Saudis. Very few countries in Asia and Africa accept the need to reevaluate their strategic calculations and restructure much of their foreign policy because of the Ukraine war, which to them is a limited border war in far-off Eastern Europe. Most are happy to side with Ukraine at the United Nations and provide humanitarian aid when possible, as Saudi Arabia recently did to the tune of $400 million. But the idea that Ukraine is now the primary lens through which all aspects of international relations must be judged and measured is simply not shared by the developed and developing worlds. And this really lies at the heart of the U.S.-Saudi misunderstanding over the oil pricing and production quota issue.

The United States expected Saudi cooperation and loyalty on this issue, and a willingness to take a huge hit for the international community because of the crucial importance of the Ukraine war. Saudi Arabia has at stake its socioeconomic viability, because it has a few precious decades remaining in which to build a viable post-hydrocarbon economic future. This is as urgent a project as any could be. Strategic planning to accomplish this radical and extremely ambitious transformation has been built around the de facto OPEC+ cartel created with Russia in 2016 and the hard-fought and dearly-won dominance that Saudi Arabia established in its pricing and production war with Russia in 2020.

If Americans have been left with the suspicion that Saudi Arabia is siding with Moscow, Riyadh has been left with the suspicion that Washington expects it to abandon its existential development project and casually cast aside the crucial relationship with Russia around which the project is built in order to side with Ukraine. Neither impression is correct in my view, but it seems to me that this divergence in perspectives lies at the heart of the misunderstanding over what Saudi Arabia had, or had not, agreed with Washington earlier this year on oil pricing and production.

MY: Some articles in media outlets have suggested that the Saudi decision to cut output was actually aimed at the domestic U.S. political scene, the goal being to favor Republicans in the upcoming congressional elections, who would gain from the Democratic administration’s inability to control inflation. What do you think?

HI: I find this extremely unconvincing. I just don’t think that this is the nature of Saudi decisionmaking on such a crucial issue as oil pricing, given their apparently sincere conviction that prices were headed toward $60 or even $50 a barrel, which could prove catastrophic for their development strategies. So, I’m pretty sure the decision was taken for economic and strategic reasons. The Saudi project of building a post-hydrocarbon economy is an existential challenge, as I said, that cannot be postponed or delayed without posing a significant threat to the country’s future. It’s rather narcissistic of the Democrats to believe that the government in Riyadh shares their obsession with the American political calendar. On the other hand, given the importance of the long-standing partnership with Washington, it was equally narcissistic of the Saudis to be oblivious to the American political calendar, which apparently left them unprepared for the inevitable angry backlash, especially among Democrats. That said, the negative American response has been bipartisan, as demonstrated, for example, by the evident anger of Senator Chuck Grassley of Iowa.

MY: There have been calls in Congress for Washington to take retaliatory measures against Saudi Arabia for the oil production cut. Do you think that the United States will carry through on such threats? If so, in what ways?

HI: It looks like the administration is wisely deciding to let temperatures cool and resume a dialogue with the Saudis before taking any steps that are irreversible or disproportionate. So, there have been small gestures of anger, such as postponing a U.S.-Gulf Cooperation Council working group on Iran and air and missile defense integration or the failure of any Biden administration officials to attend a recent investment conference in Riyadh, which Saudi officials somewhat unconvincingly attributed to the absence of specific invitations. But I think the administration wants to keep the door open to improving relations, or at least avoiding any future complications.

There are at least three key benchmarks to watch for in the coming months. First, if the Democrats lose the Senate in November there will be a search for culprits, and Saudi Arabia has put itself on the list of potential targets. Second, there is the December 4 OPEC+ meeting, which is another opportunity for things to either get better or become even worse, because another repetition of the previous lack of coordination and mistaken expectations would be absolutely terrible for the relationship. And, finally, sometime in the next few months Chinese president Xi Jinping is expected to visit Riyadh, and that could rankle Americans in two different ways: The optics of an exuberantly warm welcome might be contrasted with the low-key reception Biden received in Jeddah earlier this year (even though he wanted the least pomp and circumstance possible), with the concomitant negative conclusions drawn. And there are inevitably going to be deliverables involved in such a meeting and they too could raise American concerns. Last week Saudi Arabia and China signed another agreement for cooperation on nuclear energy, which is precisely the kind of thing that could further exacerbate the relationship with the United States. Any deliverables arising from a state visit to Saudi Arabia by the Chinese leader that seem to strengthen China’s strategic or military posture in the Gulf region would be deeply unwelcome in Washington.

MY: How do you foresee that Saudi Arabia will act when OPEC + meets in December? Will it take U.S. anger into consideration, or will it double-down on cutting production to avoid weakening the kingdom’s ability to finance diversification projects at home?

HI: There are too many imponderables to make a confident prediction in any direction. Saudi Arabia is clearly on notice that Washington is very angry about the perceived betrayal of an existing understanding on oil pricing and production which was apparently misunderstood by both parties. There is also a strong dispute over whether OPEC+ needed to act urgently to reverse the drop in prices per barrel or, as Washington insisted, whether a month or two delay would have been relatively risk-free. The delay that the United States sought, but did not get, also just so happens to correspond to the American political calendar.

However, two factors will have kicked in on December 4 that did not exist on October 5. First, Russian liquified natural gas will largely be off-line for Europe, leading to a major potential spike in energy costs. Second, the winter plunge in temperatures across Europe will also be well underway by then. So, if Saudi Arabia wishes to begin to repair relations with Washington by coordinating effectively before the December meeting, and portray itself as rescuing, or at least aiding, Europe while also eliminating suspicions that it is supporting Russia in the Ukraine war, the December OPEC+ meeting provides an excellent opportunity to do so.

If Riyadh does not coordinate effectively with Washington and simply refuses to moderate prices, especially in the context of this current contretemps, it will be widely seen as deliberately provoking the United States. In that case it will be very hard for anyone in the West to push back against the idea that Saudi Arabia at the very least doesn’t care about what happens in Ukraine or, at worst, is indeed siding with Russia.

So, the most important thing to understand about the December 4 meeting is that, unlike the October 5 meeting, the stakes are clearly understood by all parties. The context is now also widely understood by the general public on all sides. Therefore, this time there will be no excuse for the impression left by anyone’s conduct. All parties are on notice as to what the others are thinking and the prospects for a misunderstanding are, therefore, very low. But that means that any additional offense will be regarded as deliberate and not the consequence of a miscalculation or misunderstanding.