1 00:00:05,949 --> 00:00:08,729 Speaker 1: Welcome to Kobe Time, a podcast series on markets and 2 00:00:08,739 --> 00:00:11,939 Speaker 1: economies from D BS Group Research. I'm Tara Chief economist. 3 00:00:11,949 --> 00:00:14,439 Speaker 1: Welcoming you to our 99th episode 4 00:00:15,130 --> 00:00:19,250 Speaker 1: today. We will welcome back, Professor Bernard Heckel. He is 5 00:00:19,260 --> 00:00:21,889 Speaker 1: the director of the Institute for Trans Regional Study of 6 00:00:21,899 --> 00:00:26,909 Speaker 1: the contemporary Middle East at Princeton University and historian by training. 7 00:00:26,920 --> 00:00:32,240 Speaker 1: Professor Hackle's work draws from anthropology, politics, history, and philology. 8 00:00:32,630 --> 00:00:35,500 Speaker 1: He was the very first guest on this series to 9 00:00:35,509 --> 00:00:36,598 Speaker 1: appear remotely 10 00:00:36,909 --> 00:00:41,360 Speaker 1: uh way back in the COVID intense times of April 2020. Today, 11 00:00:41,369 --> 00:00:42,729 Speaker 1: I'm sitting with him face to face in New York 12 00:00:42,740 --> 00:00:45,869 Speaker 1: City which will explain the occasional siren and car horns 13 00:00:45,880 --> 00:00:48,880 Speaker 1: in the background. Professor Vernon Hagel. Welcome to Kobe Time. 14 00:00:48,930 --> 00:00:51,638 Speaker 1: It's a pleasure to be back. It's fantastic to have 15 00:00:51,650 --> 00:00:54,490 Speaker 1: you if I may go back to that last episode 16 00:00:54,500 --> 00:00:57,639 Speaker 1: that we did way back in early 2020 you were 17 00:00:57,650 --> 00:00:59,799 Speaker 1: working on a book at that time on the changes 18 00:00:59,810 --> 00:01:02,349 Speaker 1: occurring in Saudi Arabia. When will we get a chance 19 00:01:02,360 --> 00:01:02,930 Speaker 1: to read that book? 20 00:01:02,939 --> 00:01:05,980 Speaker 2: So I'm hoping to have it published next year. 21 00:01:06,199 --> 00:01:11,929 Speaker 2: Um Basically that book when I last had had a sabbatical, 22 00:01:11,940 --> 00:01:15,500 Speaker 2: I ended it with the death of King Abdullah who died, 23 00:01:15,510 --> 00:01:19,279 Speaker 2: who died in January 2015 and a new king uh 24 00:01:19,290 --> 00:01:22,750 Speaker 2: came to the throne exceeded to the throne of Saudi Arabia. 25 00:01:22,760 --> 00:01:26,410 Speaker 2: This is King Salman and then King Salman effectively delegated 26 00:01:26,419 --> 00:01:28,268 Speaker 2: most of his powers to his son. 27 00:01:28,550 --> 00:01:32,529 Speaker 2: Uh crown prince, Mohammed bin Salman, crown prince since 2017. 28 00:01:32,629 --> 00:01:38,679 Speaker 2: And Mohammed bin Salman's uh period in power has dramatically 29 00:01:38,690 --> 00:01:40,970 Speaker 2: changed the kingdom. And I felt that a book that 30 00:01:40,980 --> 00:01:45,080 Speaker 2: doesn't include the last eight years of 31 00:01:45,194 --> 00:01:50,845 Speaker 2: Saudi political, cultural social history would be lacking, right? So 32 00:01:50,855 --> 00:01:55,565 Speaker 2: I'm now trying to finish that last bit. I'm particularly 33 00:01:55,574 --> 00:01:59,404 Speaker 2: privileged in that I have access both to the crown prince. 34 00:01:59,415 --> 00:02:01,764 Speaker 2: I've interviewed him four times. I will be interviewing him 35 00:02:01,989 --> 00:02:05,139 Speaker 2: a number of times still. And I also have access 36 00:02:05,150 --> 00:02:07,839 Speaker 2: to a lot of the people who dislike him intensely, 37 00:02:07,849 --> 00:02:11,679 Speaker 2: including dissidents and enemies from within the royal family as 38 00:02:11,690 --> 00:02:15,800 Speaker 2: well as the dissidents overseas. So it'll be the last 39 00:02:15,809 --> 00:02:19,038 Speaker 2: bit of the book will have a very interesting and 40 00:02:19,050 --> 00:02:20,978 Speaker 2: hopefully extremely original material 41 00:02:21,520 --> 00:02:24,970 Speaker 2: that uh brings his perspective and the perspective of those 42 00:02:24,979 --> 00:02:26,929 Speaker 2: who are loyal to him, but as well as those 43 00:02:26,940 --> 00:02:29,220 Speaker 2: who are, who dislike him intensely, right? 44 00:02:29,229 --> 00:02:32,509 Speaker 1: So we will wait for the book eagerly, but little 45 00:02:32,520 --> 00:02:35,928 Speaker 1: preview perhaps. I mean, your sense of these dramatic changes 46 00:02:35,940 --> 00:02:37,690 Speaker 1: that have been happening in Saudi Arabia over the last 47 00:02:37,699 --> 00:02:42,279 Speaker 1: 56 years, for better, for good. Is it all cohesive 48 00:02:42,288 --> 00:02:44,669 Speaker 1: or there's some degree of noise that it's very hard 49 00:02:44,679 --> 00:02:46,419 Speaker 1: to predict where it's all gonna end up. 50 00:02:46,788 --> 00:02:48,880 Speaker 2: So I think it is very difficult to know whether 51 00:02:48,889 --> 00:02:53,160 Speaker 2: the the transformation that's underway will succeed. But let me 52 00:02:53,169 --> 00:02:56,359 Speaker 2: explain what the transformation is about the way I view 53 00:02:56,369 --> 00:02:58,418 Speaker 2: it the way I view King Salman's reign and he 54 00:02:58,429 --> 00:03:02,050 Speaker 2: and the crown prince's uh period of rule is one 55 00:03:02,059 --> 00:03:03,860 Speaker 2: of uh 56 00:03:04,479 --> 00:03:08,649 Speaker 2: sort of dramatic desire to transform the country to diversify 57 00:03:08,660 --> 00:03:13,740 Speaker 2: the economy, to consolidate power. And in fact adopt a 58 00:03:13,750 --> 00:03:16,990 Speaker 2: different ideology of rule. One that's not based on Islam, 59 00:03:17,000 --> 00:03:19,860 Speaker 2: but based on nationalism. And I think it's because there 60 00:03:19,869 --> 00:03:23,770 Speaker 2: is a desperation, there's a fear among the king and 61 00:03:23,779 --> 00:03:24,470 Speaker 2: his son 62 00:03:24,729 --> 00:03:30,460 Speaker 2: that the dynasty will not survive the transformation that's taking 63 00:03:30,470 --> 00:03:36,339 Speaker 2: place in the world, the transformation to alternative sources of energy. 64 00:03:36,399 --> 00:03:40,979 Speaker 2: So the energy transition is one that I think creates 65 00:03:40,990 --> 00:03:42,960 Speaker 2: dread that in fact, most 66 00:03:43,029 --> 00:03:46,570 Speaker 2: Saudi oil will end up as a stranded asset. And 67 00:03:46,580 --> 00:03:51,080 Speaker 2: so the way I see all the changes uh under 68 00:03:51,089 --> 00:03:56,279 Speaker 2: under way, I see them as a desperate attempt by 69 00:03:56,289 --> 00:04:00,009 Speaker 2: the Saudi leadership to make sure that the dynasty in 70 00:04:00,020 --> 00:04:05,210 Speaker 2: the country and the regime will remain in place and 71 00:04:05,220 --> 00:04:08,460 Speaker 2: not disappear. Given the challenges that they face. 72 00:04:09,360 --> 00:04:12,059 Speaker 1: Fascinating. Yeah, to be continue and Bernie, we will look 73 00:04:12,070 --> 00:04:14,949 Speaker 1: forward to the book. Uh There are so many things 74 00:04:14,960 --> 00:04:17,179 Speaker 1: I want to touch upon. Uh the first thing I'd 75 00:04:17,190 --> 00:04:20,459 Speaker 1: like to do is begin with the war in Ukraine. 76 00:04:20,790 --> 00:04:24,450 Speaker 1: And we've seen a wide range of actors involved in 77 00:04:24,459 --> 00:04:26,850 Speaker 1: this war. It's almost like a proxy war between China 78 00:04:26,859 --> 00:04:30,010 Speaker 1: and the US through Ukraine and Russia. Uh we've seen 79 00:04:30,019 --> 00:04:34,868 Speaker 1: many countries trying to mediate peace. Uh What's your sense? 80 00:04:35,589 --> 00:04:38,480 Speaker 2: So my sense, I mean, seeing it from, say the 81 00:04:38,488 --> 00:04:42,549 Speaker 2: Arab world or from a Saudi and Gulf perspective is 82 00:04:42,559 --> 00:04:45,440 Speaker 2: that this is not our war, this is the war 83 00:04:45,450 --> 00:04:50,320 Speaker 2: of Russia and the United States. We want to um 84 00:04:51,220 --> 00:04:55,779 Speaker 2: cushion or buffer ourselves as much as possible from its effects. 85 00:04:56,049 --> 00:04:59,149 Speaker 2: Um So the Saudi perspective as well as that of 86 00:04:59,160 --> 00:05:00,790 Speaker 2: the UAE is that, you know, we have a very 87 00:05:00,799 --> 00:05:03,299 Speaker 2: good working relationship with Russia when it comes to oil 88 00:05:03,309 --> 00:05:03,980 Speaker 2: production 89 00:05:04,269 --> 00:05:08,170 Speaker 2: uh through the OPEC plus um framework. Um We don't 90 00:05:08,178 --> 00:05:11,540 Speaker 2: want to make an enemy of Russia. It worked extremely well. 91 00:05:11,549 --> 00:05:15,350 Speaker 2: Uh The relationship when the US share, revolution was eating 92 00:05:15,609 --> 00:05:20,399 Speaker 2: uh into um our um you know, market share 93 00:05:21,019 --> 00:05:24,549 Speaker 2: both Russian and Arab. Um But we also don't want 94 00:05:24,559 --> 00:05:26,149 Speaker 2: to make an enemy of the United States or of 95 00:05:26,160 --> 00:05:29,190 Speaker 2: the Ukrainians. So what you see with the Saudis, but 96 00:05:29,200 --> 00:05:33,019 Speaker 2: also with the Emirates is that Saudis have given $400 97 00:05:33,029 --> 00:05:38,640 Speaker 2: million to the Ukrainians in aid for humanitarian purposes. At 98 00:05:38,649 --> 00:05:42,178 Speaker 2: the same time, they've kept the lines open with, with 99 00:05:42,190 --> 00:05:46,290 Speaker 2: the Russians and they still are still coordinating on oil production, 100 00:05:46,363 --> 00:05:50,015 Speaker 2: the OPEC plus framework. They've also tried to mediate between 101 00:05:50,024 --> 00:05:53,565 Speaker 2: the Russians and the Americans. There have been some prisoners 102 00:05:53,575 --> 00:05:56,394 Speaker 2: released through the mediation of both the UAE and Saudi. 103 00:05:56,535 --> 00:05:59,714 Speaker 2: So they don't see it as their war and they 104 00:05:59,725 --> 00:06:01,993 Speaker 2: see that their top priority. And this is true. I 105 00:06:02,005 --> 00:06:04,924 Speaker 2: think for most countries in the Gulf, we want to 106 00:06:04,934 --> 00:06:07,144 Speaker 2: build our country, we want to build our economy, we 107 00:06:07,154 --> 00:06:09,815 Speaker 2: want to develop, we want to diversify and 108 00:06:10,130 --> 00:06:14,100 Speaker 2: you know, for us to take sides would mean increasing 109 00:06:14,109 --> 00:06:16,200 Speaker 2: oil production to bring down the price of oil so 110 00:06:16,209 --> 00:06:19,399 Speaker 2: that the Russians make less money that would harm our 111 00:06:19,410 --> 00:06:21,969 Speaker 2: own national interest. We're not going to do that. That's 112 00:06:21,980 --> 00:06:25,119 Speaker 2: essentially the position, right that they've adopted. 113 00:06:25,130 --> 00:06:27,988 Speaker 1: So you mentioned the Saudis and the Emirates. What about 114 00:06:28,000 --> 00:06:28,480 Speaker 1: the Qataris? 115 00:06:29,279 --> 00:06:33,659 Speaker 2: So the Qataris are the huge beneficiaries of this war 116 00:06:33,709 --> 00:06:35,079 Speaker 2: because essentially 117 00:06:35,329 --> 00:06:40,979 Speaker 2: um the end of Russian gas to Europe uh has been, 118 00:06:40,988 --> 00:06:43,700 Speaker 2: has been a boom for the Qataris because they one 119 00:06:43,709 --> 00:06:45,899 Speaker 2: end to the Americans, by the way, because the Americans 120 00:06:45,910 --> 00:06:49,500 Speaker 2: are also exporting tremendous amount of gas to, to Europe. 121 00:06:49,678 --> 00:06:54,049 Speaker 2: So effectively, you know, Europe has become a major client, 122 00:06:54,059 --> 00:06:56,980 Speaker 2: both to the Qataris and to the Americans. They're beneficiaries 123 00:06:56,988 --> 00:06:57,118 Speaker 2: of the, 124 00:06:57,209 --> 00:07:00,649 Speaker 2: of this war. And as long as they're selling gas, 125 00:07:00,660 --> 00:07:02,850 Speaker 2: I don't think they want to complain. They've kept a 126 00:07:02,859 --> 00:07:05,809 Speaker 2: very low profile of the Qataris and they've done extremely 127 00:07:05,820 --> 00:07:09,390 Speaker 2: well from uh from the increase in price in gas 128 00:07:09,399 --> 00:07:10,000 Speaker 2: and gas. 129 00:07:10,200 --> 00:07:13,660 Speaker 1: I, I remember there were parts in the previous decade 130 00:07:13,670 --> 00:07:15,890 Speaker 1: when Qatar was showing a great deal of aspiration to 131 00:07:15,899 --> 00:07:20,470 Speaker 1: become a player in the geopolitical scene. Are they going 132 00:07:20,480 --> 00:07:23,119 Speaker 1: to try to play a role in the Russia Ukraine thing? 133 00:07:23,769 --> 00:07:28,100 Speaker 2: I don't think so. I mean, the Qataris essentially for 134 00:07:28,109 --> 00:07:33,700 Speaker 2: a very long time, were using different actors as a 135 00:07:33,709 --> 00:07:38,290 Speaker 2: way to leverage their power to increase their power. So 136 00:07:38,299 --> 00:07:42,380 Speaker 2: the Muslim brotherhood was one aspect of their policy in 137 00:07:42,390 --> 00:07:46,929 Speaker 2: projecting power overseas Arab nationalism was another a special relationship 138 00:07:46,940 --> 00:07:50,480 Speaker 2: with the Taliban, a special relationship with some African countries, 139 00:07:50,489 --> 00:07:51,760 Speaker 2: with Turkey and so on. 140 00:07:51,950 --> 00:07:55,760 Speaker 2: The Qataris, I think have since they've made up with the, 141 00:07:55,769 --> 00:07:58,600 Speaker 2: with the Saudis, I mean, more or less made up, 142 00:07:58,609 --> 00:08:02,489 Speaker 2: not entirely have kept a much lower profile and you 143 00:08:02,500 --> 00:08:05,470 Speaker 2: can see this in the news coverage of Al Jazeera 144 00:08:05,480 --> 00:08:09,829 Speaker 2: and Arabic in particular, which is what matters, but they 145 00:08:09,839 --> 00:08:13,420 Speaker 2: also they will want to remain mediators, but they're not 146 00:08:13,429 --> 00:08:17,790 Speaker 2: going to try to take a bigger role, especially not 147 00:08:17,799 --> 00:08:18,899 Speaker 2: one I think that 148 00:08:19,239 --> 00:08:23,450 Speaker 2: it entails, you know, big actors like China and Russia 149 00:08:23,459 --> 00:08:27,570 Speaker 2: and America. That's just way too high and too, too 150 00:08:27,579 --> 00:08:29,239 Speaker 2: much exposure, I think for that. 151 00:08:29,339 --> 00:08:32,770 Speaker 1: Interesting. All right, you mentioned China. So let's bring China in. 152 00:08:32,780 --> 00:08:36,098 Speaker 1: We've seen headlines in the last few weeks, the mediation 153 00:08:36,109 --> 00:08:38,630 Speaker 1: and looks like a successful one between Iran and 154 00:08:38,890 --> 00:08:42,400 Speaker 1: Saudi Arabia. Um I get the feeling that we haven't 155 00:08:42,409 --> 00:08:45,510 Speaker 1: gotten the full context that the media may have missed 156 00:08:45,520 --> 00:08:47,609 Speaker 1: the actual story that there is more to it than 157 00:08:47,619 --> 00:08:50,400 Speaker 1: just the Chinese mediating between the Saudis and the Qataris 158 00:08:50,409 --> 00:08:51,340 Speaker 1: who will help us understand 159 00:08:51,830 --> 00:08:54,080 Speaker 2: there is definitely much more to it. And by the way, 160 00:08:54,090 --> 00:08:57,900 Speaker 2: that special agreement that was mediated by China between Iran 161 00:08:57,909 --> 00:09:00,599 Speaker 2: and Russia, as between Iran and Saudi Arabia, 162 00:09:00,950 --> 00:09:04,469 Speaker 2: um has two aspects to it. There's a public kind 163 00:09:04,479 --> 00:09:07,520 Speaker 2: of agreement and there's a private as it were quota. 164 00:09:07,570 --> 00:09:10,569 Speaker 2: So to the agreement that has not come out to 165 00:09:10,580 --> 00:09:13,679 Speaker 2: the public. So let me go back to the point 166 00:09:13,690 --> 00:09:17,119 Speaker 2: that I made earlier, which is that Gulf countries like 167 00:09:17,130 --> 00:09:21,239 Speaker 2: Saudi Arabia in particular are primarily interested in building up 168 00:09:21,250 --> 00:09:24,460 Speaker 2: their economy, right, in developing. So there are these mega 169 00:09:24,469 --> 00:09:28,140 Speaker 2: projects in Saudi Arabia that involve building a futuristic city 170 00:09:28,150 --> 00:09:29,020 Speaker 2: called Neon 171 00:09:29,289 --> 00:09:34,739 Speaker 2: um building a major Red Sea Resort building. Uh you know, 172 00:09:34,750 --> 00:09:38,659 Speaker 2: a new city within Riyadh, a new, a whole new 173 00:09:38,669 --> 00:09:43,789 Speaker 2: district called Reya and many other projects. So you can't 174 00:09:43,799 --> 00:09:46,940 Speaker 2: do that. If you're Saudi Arabia, you can't do that 175 00:09:46,950 --> 00:09:50,570 Speaker 2: if you're the UAE if there are missiles and drones 176 00:09:50,580 --> 00:09:51,039 Speaker 2: and 177 00:09:51,229 --> 00:09:55,080 Speaker 2: um coming at you and hitting your oil installations, hitting 178 00:09:55,090 --> 00:09:59,710 Speaker 2: your desalination plants um or hitting oil depots, like what 179 00:09:59,719 --> 00:10:02,609 Speaker 2: happened at the formula one uh a year ago in 180 00:10:02,619 --> 00:10:04,859 Speaker 2: March of 2022. 181 00:10:05,510 --> 00:10:10,849 Speaker 2: So essentially, I think the Saudis have decided um that, 182 00:10:10,859 --> 00:10:13,250 Speaker 2: you know, we don't want to uh 183 00:10:13,750 --> 00:10:20,130 Speaker 2: be aggressive regionally and internationally, we want to turn completely 184 00:10:20,309 --> 00:10:24,679 Speaker 2: and transform our policy from one of, from one of 185 00:10:24,690 --> 00:10:28,890 Speaker 2: sort of active forward leaning engagement to one of zero problems. 186 00:10:28,900 --> 00:10:31,919 Speaker 2: So they want zero problems with all their neighbors so 187 00:10:31,929 --> 00:10:33,479 Speaker 2: that they can get on with the business of building 188 00:10:33,489 --> 00:10:36,659 Speaker 2: their country. That means essentially ending the war in Yemen, 189 00:10:36,840 --> 00:10:41,090 Speaker 2: ending the tensions with the Iranians trying to come to 190 00:10:41,099 --> 00:10:42,679 Speaker 2: some resolution on Syria. 191 00:10:42,979 --> 00:10:46,699 Speaker 2: And so what we see is this attempt by the 192 00:10:46,710 --> 00:10:48,718 Speaker 2: Saudis to say, ok, if we need to come to 193 00:10:48,729 --> 00:10:52,309 Speaker 2: terms with the Iranians, what country has leverage over Iran, 194 00:10:52,320 --> 00:10:56,070 Speaker 2: not the United States, China however does because China is 195 00:10:56,080 --> 00:10:59,580 Speaker 2: the main trading partner of the Iranians and it imports 196 00:10:59,590 --> 00:11:01,010 Speaker 2: a lot of Iranian oil. 197 00:11:01,369 --> 00:11:04,570 Speaker 2: Um So the Saudis are saying, ok, let's think out 198 00:11:04,580 --> 00:11:07,429 Speaker 2: of the box, let's see if China can put this 199 00:11:07,440 --> 00:11:10,590 Speaker 2: kind of pressure and on the Iranians so that the 200 00:11:10,599 --> 00:11:14,108 Speaker 2: Iranians back off from a number of the kind of 201 00:11:14,119 --> 00:11:17,900 Speaker 2: activities they were engaged namely through proxies and non state 202 00:11:17,909 --> 00:11:22,098 Speaker 2: actors and providing weapons and missiles and drones and that 203 00:11:22,109 --> 00:11:24,630 Speaker 2: sort of thing. So the Saudis are 204 00:11:25,250 --> 00:11:28,750 Speaker 2: engaging the Chinese. I think this idea of, of, of 205 00:11:28,760 --> 00:11:31,330 Speaker 2: coming to terms with the Iranians through China was a 206 00:11:31,340 --> 00:11:33,468 Speaker 2: Saudi idea. It was not a Chinese idea because you 207 00:11:33,479 --> 00:11:36,030 Speaker 2: have to remember the Saudis and the Iranians had met 208 00:11:36,039 --> 00:11:39,979 Speaker 2: already six times initially through the Iraqis as mediators and 209 00:11:39,989 --> 00:11:42,700 Speaker 2: then through the Omanis as mediators and nothing ever came 210 00:11:42,710 --> 00:11:43,640 Speaker 2: of any of those media. 211 00:11:44,205 --> 00:11:46,875 Speaker 2: It was only when the Chinese got involved, that we 212 00:11:46,885 --> 00:11:49,905 Speaker 2: came to some sort of resolution where they would reopen 213 00:11:49,914 --> 00:11:53,814 Speaker 2: embassies and give Hajj visas and so on. So officially, 214 00:11:53,825 --> 00:11:56,875 Speaker 2: it's about embassy reopening and it's about Hajj visas and 215 00:11:56,885 --> 00:12:00,944 Speaker 2: that sort of thing. Unofficially, it's also about things that 216 00:12:00,955 --> 00:12:05,104 Speaker 2: both sides will do for each other. So the Iranians 217 00:12:05,114 --> 00:12:08,184 Speaker 2: will try to help with ending the war in Yemen, 218 00:12:08,195 --> 00:12:11,034 Speaker 2: putting pressure on the Houthis who are this rebel group 219 00:12:11,044 --> 00:12:12,825 Speaker 2: that is very close to the Iranians. 220 00:12:13,130 --> 00:12:17,799 Speaker 2: In return, the Saudis will tone down the criticism from 221 00:12:17,809 --> 00:12:21,090 Speaker 2: a TV station that they've funded in London called Iran 222 00:12:21,099 --> 00:12:27,500 Speaker 2: International uh that has been causing the Iranians a tremendous headache. 223 00:12:27,510 --> 00:12:29,969 Speaker 2: And the Iranian leadership is very upset with this uh 224 00:12:29,979 --> 00:12:33,880 Speaker 2: TV station because it's had a huge impact and influence 225 00:12:33,890 --> 00:12:36,119 Speaker 2: on Iranian uh viewers. 226 00:12:36,469 --> 00:12:41,728 Speaker 2: The Saudis will also try to bring the Syrian regime 227 00:12:41,739 --> 00:12:45,090 Speaker 2: of President Assad back, back from the Cold, back into 228 00:12:45,099 --> 00:12:48,179 Speaker 2: the Arab League. So, you know, there are moves on 229 00:12:48,190 --> 00:12:53,890 Speaker 2: multiple fronts to try to lower tensions. I don't think 230 00:12:53,900 --> 00:12:56,880 Speaker 2: Iran and Saudi Arabia will become good friends anytime soon. 231 00:12:57,099 --> 00:12:59,330 Speaker 2: But under the aegis of China, 232 00:12:59,789 --> 00:13:03,039 Speaker 2: uh it's possible that tensions can be lowered. And what's 233 00:13:03,049 --> 00:13:07,539 Speaker 2: particularly interesting about this deal and China's involvement is that 234 00:13:07,549 --> 00:13:09,640 Speaker 2: this is the first time that I'm aware of 235 00:13:10,289 --> 00:13:13,848 Speaker 2: that the Chinese have gotten into the Persian Gulf and said, 236 00:13:13,859 --> 00:13:16,520 Speaker 2: you know, we have core interests here and we would 237 00:13:16,530 --> 00:13:20,510 Speaker 2: like to secure them. And what's good about Chinese core 238 00:13:20,520 --> 00:13:21,960 Speaker 2: interests as far as I'm concerned. 239 00:13:22,289 --> 00:13:26,789 Speaker 2: Uh is that the Chinese are identical in what they 240 00:13:26,799 --> 00:13:30,069 Speaker 2: want from the Persian Gulf as the Americans, namely, they 241 00:13:30,080 --> 00:13:35,380 Speaker 2: want stability, security, reliability of oil and gas supplies. They 242 00:13:35,390 --> 00:13:38,559 Speaker 2: don't want turmoil, they don't want war, they don't want instability. 243 00:13:38,659 --> 00:13:41,059 Speaker 2: So I think the United States should actually welcome 244 00:13:41,429 --> 00:13:45,340 Speaker 2: China's involvement and not see it as a threat or 245 00:13:45,349 --> 00:13:49,559 Speaker 2: as a challenge. It's just another kind of added bonus 246 00:13:49,679 --> 00:13:53,419 Speaker 2: since it meets American interests as well. Right? But 247 00:13:53,429 --> 00:13:55,709 Speaker 1: so far, it seems like the response has been one 248 00:13:55,719 --> 00:13:58,099 Speaker 1: of alarm in the US State Department. 249 00:13:58,210 --> 00:14:01,400 Speaker 2: Well, I mean, there's tremendous alarm in what we call 250 00:14:01,409 --> 00:14:02,449 Speaker 2: the uh 251 00:14:02,919 --> 00:14:06,309 Speaker 2: you know, the the swamp in Washington DC. There are 252 00:14:06,320 --> 00:14:07,609 Speaker 2: a lot, you know, there are lots of people who 253 00:14:07,619 --> 00:14:11,799 Speaker 2: basically want to dramatize this and turn it into a 254 00:14:11,809 --> 00:14:17,890 Speaker 2: major uh you know, another kind of indicator of American 255 00:14:17,900 --> 00:14:21,359 Speaker 2: decline in Chinese China's rise and so on. There's a 256 00:14:21,369 --> 00:14:24,309 Speaker 2: whole industry that wants to manufacture a war 257 00:14:24,409 --> 00:14:26,650 Speaker 2: or a cold war and maybe even a hot war 258 00:14:26,659 --> 00:14:29,750 Speaker 2: between China and the United States, right? And they are, 259 00:14:29,760 --> 00:14:32,909 Speaker 2: you know, pointing to this to this episode as yet 260 00:14:32,919 --> 00:14:36,510 Speaker 2: another example of why China is a, is a, is 261 00:14:36,520 --> 00:14:39,559 Speaker 2: a zero sum sort of competitor with the United States. 262 00:14:39,570 --> 00:14:42,059 Speaker 2: I don't see it that way. I think that the 263 00:14:42,070 --> 00:14:44,869 Speaker 2: initial response of the Biden administration was to welcome this, 264 00:14:44,880 --> 00:14:47,059 Speaker 2: which was the right one. Of course, there's been another 265 00:14:47,070 --> 00:14:49,679 Speaker 2: response from the CIA director who said, 266 00:14:49,969 --> 00:14:52,770 Speaker 2: I, I, I, I heard he said that, you know, 267 00:14:52,780 --> 00:14:55,809 Speaker 2: he was blindsided and hadn't realized that there was this 268 00:14:55,820 --> 00:14:57,669 Speaker 2: deal in the offing, the Saudis should have been more 269 00:14:57,679 --> 00:15:01,940 Speaker 2: forthcoming and so on. Um I, I, I worry about the, 270 00:15:01,950 --> 00:15:05,400 Speaker 2: uh I worry about that those who want to manufacture 271 00:15:05,409 --> 00:15:08,619 Speaker 2: a war and a cold war with the Chinese. Um 272 00:15:09,359 --> 00:15:13,030 Speaker 1: um but in terms of China's interest in the Middle 273 00:15:13,039 --> 00:15:16,239 Speaker 1: Eastern region, other than energy security and the sort of 274 00:15:16,250 --> 00:15:18,609 Speaker 1: the uninterrupted supply of oil issue, which of course is 275 00:15:18,619 --> 00:15:23,929 Speaker 1: very paramount. Um what about trade and investment and like 276 00:15:23,940 --> 00:15:26,169 Speaker 1: the Belt and Road initiative and the Silk Road and 277 00:15:26,179 --> 00:15:26,349 Speaker 1: so 278 00:15:26,359 --> 00:15:28,880 Speaker 2: on. I I think that all go fits fits in, 279 00:15:28,890 --> 00:15:30,609 Speaker 2: I mean, it's all of a piece these are not 280 00:15:30,619 --> 00:15:31,109 Speaker 2: mutually 281 00:15:31,190 --> 00:15:35,440 Speaker 2: inclusive with energy security and, and, and, and political stability. 282 00:15:35,450 --> 00:15:38,760 Speaker 2: I mean, if there, if there's political and, and, and economic, 283 00:15:38,770 --> 00:15:42,669 Speaker 2: political stability, economic prosperity in the Middle East, people will 284 00:15:42,679 --> 00:15:47,000 Speaker 2: trade more with China. If there's chaos, uh the Chinese will, will, 285 00:15:47,010 --> 00:15:50,150 Speaker 2: will suffer for it as well. So I think it's 286 00:15:50,159 --> 00:15:54,090 Speaker 2: actually what we see is that the Chinese have some, 287 00:15:54,099 --> 00:15:58,440 Speaker 2: what one would call soft power, which is both economic, 288 00:15:58,450 --> 00:16:00,659 Speaker 2: as well as political and they're deploying it 289 00:16:00,979 --> 00:16:06,030 Speaker 2: um to try to bring two um antagonists to the table. 290 00:16:06,830 --> 00:16:09,369 Speaker 1: But at the same time China is facing a lot 291 00:16:09,380 --> 00:16:12,359 Speaker 1: of pushback from the US on a wide spectrum of France. 292 00:16:12,369 --> 00:16:14,299 Speaker 1: And one thing that we have noticed in the last 293 00:16:14,309 --> 00:16:15,919 Speaker 1: couple of years is that trying to 294 00:16:16,270 --> 00:16:19,150 Speaker 1: deepen the use of their own currency. And we hear 295 00:16:19,159 --> 00:16:22,140 Speaker 1: this term Petro C N Y that the Chinese yuan 296 00:16:22,150 --> 00:16:24,390 Speaker 1: for all the oil related trade, they would want to 297 00:16:24,400 --> 00:16:28,190 Speaker 1: invoice it and reuse reliant on the US dollar. Would 298 00:16:28,200 --> 00:16:31,440 Speaker 1: they find among the Middle Eastern countries sort of willing partners? 299 00:16:31,450 --> 00:16:35,080 Speaker 1: Because they would, they presumably want to prefer dealing with 300 00:16:35,090 --> 00:16:36,190 Speaker 1: the US dollar for all 301 00:16:36,200 --> 00:16:38,729 Speaker 2: their I think, look, I think most people still prefer 302 00:16:38,739 --> 00:16:40,659 Speaker 2: to use the US dollar simply because, 303 00:16:40,989 --> 00:16:44,010 Speaker 2: you know, you can buy anything and everything with it and, 304 00:16:44,239 --> 00:16:46,760 Speaker 2: and you can't with the yuan, right? You have, you know, 305 00:16:46,770 --> 00:16:49,770 Speaker 2: so there are countries that talk about this a lot, 306 00:16:49,780 --> 00:16:55,010 Speaker 2: especially Iran. Uh but I think the Saudis are, 307 00:16:55,580 --> 00:16:58,080 Speaker 2: you know, for two reasons are still committed to the 308 00:16:58,090 --> 00:17:01,190 Speaker 2: dollar one is because, you know, it, it provides the 309 00:17:01,200 --> 00:17:05,219 Speaker 2: kind of purchasing power and liquidity that they want and 20% 310 00:17:05,229 --> 00:17:07,510 Speaker 2: of all their, at least 20% of all their foreign 311 00:17:07,520 --> 00:17:10,319 Speaker 2: investments are in the United States. They don't want to 312 00:17:10,329 --> 00:17:11,959 Speaker 2: jeopardize that the Saudis. 313 00:17:13,098 --> 00:17:15,707 Speaker 2: They also don't want to send a political message to 314 00:17:15,718 --> 00:17:19,779 Speaker 2: the United States that, you know, they're threatening the reserve currency. 315 00:17:19,788 --> 00:17:22,629 Speaker 2: And the, you know, the power of senior that the 316 00:17:22,638 --> 00:17:25,728 Speaker 2: United States has I mean, they're not going to do that, 317 00:17:25,928 --> 00:17:29,548 Speaker 2: you know, they may have smaller kind of gestures toward 318 00:17:29,558 --> 00:17:31,029 Speaker 2: the Chinese, perhaps to do 319 00:17:31,119 --> 00:17:35,979 Speaker 2: do with specific relations and imports and exports that are, 320 00:17:35,989 --> 00:17:38,550 Speaker 2: that are just from China. But I think by and large, 321 00:17:38,560 --> 00:17:42,250 Speaker 2: it kept away from, from saying that we're going to 322 00:17:42,260 --> 00:17:44,250 Speaker 2: trade in other currencies. 323 00:17:44,459 --> 00:17:46,550 Speaker 1: I neglect you to ask a follow up question when 324 00:17:46,560 --> 00:17:49,109 Speaker 1: we were discussing the Iran, Saudi Arabia matter, which was 325 00:17:49,449 --> 00:17:53,800 Speaker 1: the whole nuclear issue of Iran and the sanction regime 326 00:17:53,810 --> 00:17:58,400 Speaker 1: and the desire of Israel and the US to make 327 00:17:58,410 --> 00:18:00,989 Speaker 1: sure that Iran never develops a nuclear weapon. 328 00:18:01,270 --> 00:18:01,739 Speaker 1: Um 329 00:18:02,609 --> 00:18:05,020 Speaker 1: Could you see a situation where Saudi Arabia says we 330 00:18:05,030 --> 00:18:07,099 Speaker 1: want to develop our nuclear weapon? If 331 00:18:07,709 --> 00:18:10,170 Speaker 2: so, I mean, what the Saudis have officially said is 332 00:18:10,180 --> 00:18:12,589 Speaker 2: that if the Iranians ever develop a nuclear weapon, they 333 00:18:12,599 --> 00:18:16,000 Speaker 2: will develop a nuclear weapon. So the one thing I 334 00:18:16,010 --> 00:18:20,109 Speaker 2: should have added earlier on the Saudi Iranian deal is 335 00:18:20,119 --> 00:18:21,280 Speaker 2: that the Saudis 336 00:18:21,630 --> 00:18:26,030 Speaker 2: I believe are afraid of an Israeli attack. Israeli slash 337 00:18:26,040 --> 00:18:29,609 Speaker 2: us attack on Iran. And in the past, the Iranians 338 00:18:29,619 --> 00:18:32,680 Speaker 2: have said unofficially to the Saudis and also to the 339 00:18:32,689 --> 00:18:36,660 Speaker 2: emirati that if we're attacked by Israel, we will attack you, 340 00:18:36,670 --> 00:18:40,050 Speaker 2: we will hit your oil installations, your desalination plants and 341 00:18:40,060 --> 00:18:40,459 Speaker 2: so on 342 00:18:40,760 --> 00:18:43,629 Speaker 2: by having this deal with the Iranians right now under 343 00:18:43,640 --> 00:18:48,709 Speaker 2: Chinese auspices, they've decoupled themselves from a potential Israeli attack 344 00:18:48,719 --> 00:18:51,869 Speaker 2: on Iran. In other words, if the Israelis attack, Iran 345 00:18:52,000 --> 00:18:54,129 Speaker 2: the Saudis have every right to say, look, we have 346 00:18:54,140 --> 00:18:56,920 Speaker 2: nothing to do with this. You shouldn't attack us. Um, 347 00:18:56,930 --> 00:18:59,650 Speaker 2: so they, they, it's, it's a very clever move as 348 00:18:59,660 --> 00:19:01,849 Speaker 2: far as, as far as I can tell, it's a 349 00:19:01,859 --> 00:19:04,459 Speaker 2: very clever move to move away from the kind of 350 00:19:04,469 --> 00:19:07,689 Speaker 2: hostility that the Israelis and the Americans who, by the way, 351 00:19:07,699 --> 00:19:08,630 Speaker 2: been practicing, 352 00:19:08,939 --> 00:19:14,930 Speaker 2: uh, you know, an attack on Iran together and, and exercises. Um, So, so, so, 353 00:19:14,939 --> 00:19:17,750 Speaker 2: so my, my sense is that, you know, should the 354 00:19:17,760 --> 00:19:21,188 Speaker 2: Iranians ever develop a nuclear weapon? The Saudis would get one, 355 00:19:21,640 --> 00:19:24,948 Speaker 2: they would probably get one in here. I'm speculating through 356 00:19:24,959 --> 00:19:29,188 Speaker 2: the Pakistanis, I suspect largely because they, I think they 357 00:19:29,199 --> 00:19:34,329 Speaker 2: funded most of the Pakistani nuclear, you know, program 358 00:19:34,619 --> 00:19:37,239 Speaker 2: and I mean, this would not mean just the Pakistanis 359 00:19:37,250 --> 00:19:40,310 Speaker 2: giving them a weapon. It would mean probably relocating a 360 00:19:40,319 --> 00:19:44,109 Speaker 2: whole team of Pakistani uh you know, systems and engineers 361 00:19:44,119 --> 00:19:46,630 Speaker 2: and all the rest of it that would manage it, 362 00:19:46,640 --> 00:19:48,069 Speaker 2: but out of Saudi soil. 363 00:19:48,410 --> 00:19:53,680 Speaker 1: Wow. Oh, gosh. Uh scary thoughts. Um, let's talk a 364 00:19:53,689 --> 00:19:55,560 Speaker 1: little bit about Israel. Uh since you brought up the 365 00:19:55,569 --> 00:19:57,449 Speaker 1: Israel issue with respect to Iran, 366 00:19:57,770 --> 00:20:00,228 Speaker 1: there's a lot of internal strife going on in that country, 367 00:20:00,239 --> 00:20:03,459 Speaker 1: domestic politics. We are now seeing in this month of Ramadan, 368 00:20:03,469 --> 00:20:07,290 Speaker 1: a lot of tension in Jerusalem and of course, we've 369 00:20:07,300 --> 00:20:10,339 Speaker 1: seen this issue spilling over internationally. There have been missile 370 00:20:10,349 --> 00:20:14,069 Speaker 1: strikes in Lebanon, Syria. Of course, it is a regular occurrence. Um, 371 00:20:14,079 --> 00:20:16,000 Speaker 1: where are we going with Israel? 372 00:20:17,560 --> 00:20:21,890 Speaker 2: So, uh, you know, the, the, the situation in Israel 373 00:20:21,900 --> 00:20:25,859 Speaker 2: is such that, uh, you know, without getting too much 374 00:20:25,869 --> 00:20:31,520 Speaker 2: into baseball, you have a prime minister who's likely to face, um, 375 00:20:31,530 --> 00:20:34,640 Speaker 2: a court trial very much like Trump in, in, in 376 00:20:34,650 --> 00:20:38,550 Speaker 2: the United States. Um And he has made an alliance 377 00:20:38,560 --> 00:20:42,670 Speaker 2: with a group of extreme hard line people, including Racists 378 00:20:43,010 --> 00:20:46,170 Speaker 2: and extermination is when it comes to the Palestinians. 379 00:20:46,589 --> 00:20:50,030 Speaker 2: And they want to change the Supreme, the laws that 380 00:20:50,040 --> 00:20:52,489 Speaker 2: have to do with the Supreme Court and the judicial 381 00:20:52,500 --> 00:20:56,219 Speaker 2: system because the judicial system in Israel is dominated by liberal, 382 00:20:56,229 --> 00:20:59,040 Speaker 2: but they consider it to be liberals or left wing 383 00:20:59,050 --> 00:21:03,229 Speaker 2: people who don't push their agenda or block the kinds 384 00:21:03,239 --> 00:21:06,290 Speaker 2: of things that they want to do, that the extremists 385 00:21:06,300 --> 00:21:09,719 Speaker 2: want to do. So I think that that tension within 386 00:21:09,729 --> 00:21:13,339 Speaker 2: Israel is from the Arab point of view, deeply problematic 387 00:21:13,349 --> 00:21:15,140 Speaker 2: because it's producing 388 00:21:15,510 --> 00:21:20,958 Speaker 2: a tremendous amount of uh uh negative uh publicity and 389 00:21:20,969 --> 00:21:24,540 Speaker 2: discrimination against Palestinians as we saw in the Aqsa Mosque. 390 00:21:24,790 --> 00:21:27,739 Speaker 2: Uh But also we saw in riots in the West 391 00:21:27,750 --> 00:21:30,719 Speaker 2: Bank and the Palestinian town. Um And you know, this 392 00:21:30,729 --> 00:21:33,920 Speaker 2: is deeply embarrassing for countries like Bahrain or the United 393 00:21:33,930 --> 00:21:38,180 Speaker 2: Arab Emirates who have normalized relations with Israel, right? So 394 00:21:38,439 --> 00:21:43,510 Speaker 2: uh an extreme hard line government in Israel is, you know, 395 00:21:43,520 --> 00:21:47,810 Speaker 2: bad news for any Arab country that has normalized relations with, 396 00:21:47,819 --> 00:21:52,449 Speaker 2: with it. Um And I think that so far, Saudi 397 00:21:52,459 --> 00:21:56,400 Speaker 2: Arabia has not normalized with Israel and is unlikely to 398 00:21:56,410 --> 00:21:59,139 Speaker 2: normalize anytime soon. The Saudis have been very clear and 399 00:21:59,150 --> 00:22:04,750 Speaker 2: insistent that the Israelis have to give the Palestinians a state. 400 00:22:05,170 --> 00:22:08,199 Speaker 2: They don't stipulate what the nature of that state is 401 00:22:08,209 --> 00:22:10,369 Speaker 2: or what it would look like. But as long as 402 00:22:10,380 --> 00:22:13,680 Speaker 2: Palestinians don't have a state, they will not normalize with Israel, 403 00:22:13,920 --> 00:22:17,119 Speaker 2: there's also another aspect to normalization that I think your 404 00:22:17,130 --> 00:22:19,819 Speaker 2: audience ought to know about. Which is that whenever an 405 00:22:19,829 --> 00:22:21,879 Speaker 2: Arab state has normalized with Israel, 406 00:22:22,170 --> 00:22:25,379 Speaker 2: the price for that normalization or let's say the cost 407 00:22:25,390 --> 00:22:28,260 Speaker 2: of that normalization has been borne by the United States. 408 00:22:28,500 --> 00:22:31,949 Speaker 2: So the United States has given Egypt aid nonstop since 409 00:22:31,959 --> 00:22:37,239 Speaker 2: 1979 and the agreement with Israel. Yes, the Moroccans got 410 00:22:37,250 --> 00:22:40,179 Speaker 2: recognition of the Western Sahara by the United States. But 411 00:22:40,189 --> 00:22:43,339 Speaker 2: for normalizing with Israel, the Sudanese got, you know, the 412 00:22:43,349 --> 00:22:45,319 Speaker 2: sanctions lifted and lots of money 413 00:22:45,560 --> 00:22:47,879 Speaker 2: as a result of normalization with Israel, the U E 414 00:22:47,890 --> 00:22:51,369 Speaker 2: got a special deal to be able to buy certain 415 00:22:51,380 --> 00:22:54,739 Speaker 2: types of weapons systems and so on. So every country 416 00:22:54,750 --> 00:22:58,489 Speaker 2: gets something when normalizing with Israel, but not from Israel, 417 00:22:58,500 --> 00:23:02,310 Speaker 2: from the United States. So the price for the Saudis 418 00:23:02,319 --> 00:23:06,020 Speaker 2: of normalization aside from, you know, the condition of having 419 00:23:06,030 --> 00:23:08,688 Speaker 2: a Palestinian State is that the United States has to 420 00:23:08,699 --> 00:23:11,750 Speaker 2: do at least two things for the Saudis. One is 421 00:23:11,760 --> 00:23:13,949 Speaker 2: to help build a nuclear 422 00:23:14,680 --> 00:23:19,149 Speaker 2: energy program for for, for Saudi Arabia, they want nuclear 423 00:23:19,160 --> 00:23:22,270 Speaker 2: energy partly because they want to also 424 00:23:22,949 --> 00:23:26,099 Speaker 2: export more oil. If they produce nuclear energy, they can 425 00:23:26,349 --> 00:23:31,050 Speaker 2: generate a lot more electricity and, and release more oil 426 00:23:31,060 --> 00:23:34,640 Speaker 2: from having to be burnt in country for the production 427 00:23:34,650 --> 00:23:37,810 Speaker 2: of electricity. And they're also going by the way, the 428 00:23:37,819 --> 00:23:40,270 Speaker 2: Saudis are building solar and wind farms and all that 429 00:23:40,280 --> 00:23:41,839 Speaker 2: sort of thing. But um 430 00:23:42,430 --> 00:23:44,989 Speaker 2: so the one thing they want from the Americans officially, 431 00:23:45,000 --> 00:23:48,540 Speaker 2: they've said is nuclear energy and nuclear technology. The other 432 00:23:48,550 --> 00:23:52,920 Speaker 2: is they want sort of ironclad security guarantees that are 433 00:23:52,930 --> 00:23:57,959 Speaker 2: NATO like as so that the regime, the, the the 434 00:23:57,969 --> 00:24:02,979 Speaker 2: country is secure from the possibility of a foreign attack 435 00:24:02,989 --> 00:24:03,859 Speaker 2: on the country. 436 00:24:04,209 --> 00:24:07,430 Speaker 2: And that's very difficult for the United States to pull off. 437 00:24:07,439 --> 00:24:10,699 Speaker 2: Not least because, you know, every time there's an election 438 00:24:10,709 --> 00:24:13,300 Speaker 2: in the United States, you get different political parties with 439 00:24:13,310 --> 00:24:17,560 Speaker 2: different attitudes, often wanting to block arms sales to the 440 00:24:17,569 --> 00:24:22,069 Speaker 2: Saudis because of human rights violations or for some other reason. 441 00:24:22,239 --> 00:24:26,099 Speaker 2: So the Saudis want to somehow find a way to 442 00:24:27,219 --> 00:24:30,209 Speaker 2: get the United States to always be supportive, always come 443 00:24:30,219 --> 00:24:32,958 Speaker 2: to the defense of the kingdom, regardless of the electoral cycles, 444 00:24:32,969 --> 00:24:35,770 Speaker 2: regardless of the political party. And that I think is 445 00:24:35,780 --> 00:24:38,380 Speaker 2: structurally impossible to pull off. Right. 446 00:24:38,770 --> 00:24:43,660 Speaker 1: Right. Um The issue of OPEC you touched on this earlier, 447 00:24:43,670 --> 00:24:45,859 Speaker 1: maybe we can go a little deeper into it. Um 448 00:24:45,880 --> 00:24:49,439 Speaker 1: So Biden administration's relationship with Saudi Arabia has been a 449 00:24:49,449 --> 00:24:53,270 Speaker 1: bit fraught. Um Initially when Biden became president, he refused 450 00:24:53,280 --> 00:24:54,369 Speaker 1: to meet with N BS. 451 00:24:54,670 --> 00:24:57,949 Speaker 1: He did then meet the infamous fist bump picture. Uh 452 00:24:57,969 --> 00:25:00,670 Speaker 1: But the US hasn't really gotten Saudi Arabia to play 453 00:25:00,680 --> 00:25:03,399 Speaker 1: ball with us interests as far as oil supply is 454 00:25:03,410 --> 00:25:05,989 Speaker 1: concerned because we still have a big inflation problem, not 455 00:25:06,000 --> 00:25:07,959 Speaker 1: just in the US, but many places in the world. 456 00:25:08,359 --> 00:25:12,389 Speaker 1: So when OPEC under Saudi sort of, you know, goes 457 00:25:12,400 --> 00:25:15,599 Speaker 1: and announces that there's gonna be another production cut. I'm 458 00:25:15,609 --> 00:25:18,629 Speaker 1: assuming Washington sees that as a very unfavorable development. 459 00:25:19,630 --> 00:25:22,400 Speaker 2: It it doesn't, it does indeed. And the the relationship 460 00:25:22,410 --> 00:25:25,890 Speaker 2: with the Biden administration has been very bad. I mean, 461 00:25:25,900 --> 00:25:29,420 Speaker 2: during the election campaign, President Biden called Saudi Arabia a 462 00:25:29,430 --> 00:25:33,040 Speaker 2: pariah state. Uh you know, said that there's nothing redeeming 463 00:25:33,050 --> 00:25:37,119 Speaker 2: about them, insulted the crown prince. Um 464 00:25:37,729 --> 00:25:40,879 Speaker 2: So the Saudis take this all very personally and they 465 00:25:40,890 --> 00:25:44,319 Speaker 2: also take it as an insult to their sovereignty, you know, 466 00:25:44,640 --> 00:25:45,300 Speaker 2: um 467 00:25:46,229 --> 00:25:52,199 Speaker 2: also uh Biden came to the presidency wanting to push 468 00:25:52,209 --> 00:25:57,560 Speaker 2: very far ahead in the alternative energy uh space and 469 00:25:57,569 --> 00:26:00,609 Speaker 2: the energy transition. If you remember in the United States, 470 00:26:00,619 --> 00:26:04,880 Speaker 2: he was um he, he stopped at the A pipeline, 471 00:26:04,890 --> 00:26:08,609 Speaker 2: he wasn't giving out permits for uh you know, new 472 00:26:08,619 --> 00:26:12,040 Speaker 2: developments and exploration and so on. Um 473 00:26:12,459 --> 00:26:14,958 Speaker 2: And then he also started when prices started going up, 474 00:26:14,969 --> 00:26:19,750 Speaker 2: he started releasing oil from the strategic petroleum reserve deliberately 475 00:26:19,760 --> 00:26:22,089 Speaker 2: to lower price. So it wasn't just in response to 476 00:26:22,099 --> 00:26:25,459 Speaker 2: a crisis. But rather in order to bring the price 477 00:26:25,469 --> 00:26:27,839 Speaker 2: of oil down, which is unprecedented as far as I know. 478 00:26:27,849 --> 00:26:30,079 Speaker 2: And that was not the purpose of the strategic petroleum 479 00:26:30,089 --> 00:26:32,669 Speaker 2: reserve to begin with. So the Saudis felt that the 480 00:26:32,680 --> 00:26:33,609 Speaker 2: Americans 481 00:26:34,479 --> 00:26:37,969 Speaker 2: um we're not playing by the rules of the game 482 00:26:37,979 --> 00:26:40,750 Speaker 2: as far as oil is concerned. And then Biden when, 483 00:26:40,760 --> 00:26:45,790 Speaker 2: when the, uh, before the, before the, the Ukraine War 484 00:26:46,030 --> 00:26:48,170 Speaker 2: back in the fall of 2021 485 00:26:49,479 --> 00:26:50,050 Speaker 2: um 486 00:26:50,660 --> 00:26:54,180 Speaker 2: He sent Jake Sullivan national security adviser to, to Saudi 487 00:26:54,189 --> 00:26:57,520 Speaker 2: Arabia asking for more oil because the price of oil 488 00:26:57,530 --> 00:27:02,489 Speaker 2: was very high and, and the Saudis didn't uh you know, 489 00:27:02,500 --> 00:27:06,489 Speaker 2: basically didn't accommodate him at all. And then he went 490 00:27:06,500 --> 00:27:10,160 Speaker 2: again in July of 2022 asking for more oil again 491 00:27:10,170 --> 00:27:13,869 Speaker 2: this time because in the midterm elections. So the Saudis 492 00:27:13,880 --> 00:27:15,448 Speaker 2: were of the view that, 493 00:27:15,780 --> 00:27:19,109 Speaker 2: you know, you insult us. You uh you, you know, 494 00:27:19,119 --> 00:27:21,188 Speaker 2: you say bad things about us, you threaten us and 495 00:27:21,199 --> 00:27:23,989 Speaker 2: so on and then you beg us for oil and 496 00:27:24,000 --> 00:27:27,089 Speaker 2: you want us to not uh you know, push on 497 00:27:27,099 --> 00:27:29,239 Speaker 2: with our development plans because we need a certain human. 498 00:27:29,250 --> 00:27:33,030 Speaker 2: Saudis need a minimum of $80 a barrel to, to, to, 499 00:27:33,040 --> 00:27:37,589 Speaker 2: to get on with their uh with their projects, um their, 500 00:27:37,599 --> 00:27:40,939 Speaker 2: their development projects. So they were not willing to accommodate 501 00:27:40,949 --> 00:27:43,719 Speaker 2: uh Biden and I still think that they're not willing 502 00:27:43,729 --> 00:27:44,890 Speaker 2: to at all because 503 00:27:45,209 --> 00:27:48,238 Speaker 2: they still regard the United States, which is the largest 504 00:27:48,250 --> 00:27:49,899 Speaker 2: producer of oil in the world. By the way, you know, 505 00:27:49,910 --> 00:27:53,650 Speaker 2: the United States, if you, if you count everything, you know, 506 00:27:53,660 --> 00:27:56,688 Speaker 2: all in with N G L s and, and so on, 507 00:27:56,699 --> 00:28:00,290 Speaker 2: I mean, the United States is the equivalent of Russia 508 00:28:00,300 --> 00:28:03,290 Speaker 2: and Saudi Arabia put together in terms of production. So 509 00:28:03,300 --> 00:28:05,800 Speaker 2: nearly 20 million barrels. So, 510 00:28:06,920 --> 00:28:09,599 Speaker 2: you know, the Saudis see the United States as a, 511 00:28:09,609 --> 00:28:12,829 Speaker 2: as a competitor in this, in this, in this space. 512 00:28:13,260 --> 00:28:16,729 Speaker 2: Um and they, they don't forget the shale oil revolution, 513 00:28:16,739 --> 00:28:18,859 Speaker 2: they don't forget what that did to them. And which 514 00:28:18,869 --> 00:28:21,430 Speaker 2: is what pushed the Russians and the Saudis into each 515 00:28:21,439 --> 00:28:25,109 Speaker 2: other's arms in 2016 to try to, to, to bring 516 00:28:25,119 --> 00:28:29,069 Speaker 2: them to win back market share. Um The other thing is, 517 00:28:29,079 --> 00:28:31,790 Speaker 2: I don't think the Saudis are entirely convinced that, 518 00:28:32,089 --> 00:28:34,550 Speaker 2: you know, a price of a barrel at 85 or 519 00:28:34,560 --> 00:28:39,290 Speaker 2: 90 is what's causing or what's making inflation worse, right? 520 00:28:39,300 --> 00:28:43,180 Speaker 2: For them, there was a very long period of time 521 00:28:43,189 --> 00:28:48,140 Speaker 2: from 2004 to 2014 when the price of oil was 522 00:28:48,150 --> 00:28:51,189 Speaker 2: very high at one point in 2008. I believe it 523 00:28:51,199 --> 00:28:55,719 Speaker 2: hit 147. Yes. And you know, and inflation wasn't 524 00:28:56,040 --> 00:28:59,609 Speaker 2: that high, you know, during that entire period. So I 525 00:28:59,619 --> 00:29:04,660 Speaker 2: don't know if they entirely connect uh you know, inflation 526 00:29:04,670 --> 00:29:07,170 Speaker 2: with the price of oil. They somehow think that at 527 00:29:07,180 --> 00:29:10,449 Speaker 2: least in the OECD countries, the the economies have developed 528 00:29:10,459 --> 00:29:14,930 Speaker 2: sufficiently so that, and they become efficient in their usage 529 00:29:14,939 --> 00:29:18,930 Speaker 2: and utilization of energy that oil prices are not the 530 00:29:18,939 --> 00:29:21,050 Speaker 2: principal driver of inflation, 531 00:29:21,739 --> 00:29:24,300 Speaker 2: whether that's true or not. I I'm not sure. So, 532 00:29:24,310 --> 00:29:26,500 Speaker 2: so in other words, the relationship with the United States 533 00:29:26,510 --> 00:29:29,869 Speaker 2: when it comes to oil and, and Biden in particular 534 00:29:29,880 --> 00:29:32,479 Speaker 2: is a complicated one and it's fraught by the fact that, 535 00:29:32,790 --> 00:29:35,579 Speaker 2: you know, Biden has used the S pr has tried 536 00:29:35,589 --> 00:29:37,319 Speaker 2: to get the Saudis to produce more because of the 537 00:29:37,329 --> 00:29:40,630 Speaker 2: war in Ukraine because of elections. And so it's not 538 00:29:40,640 --> 00:29:44,989 Speaker 2: for them just about economics and about and about the, 539 00:29:45,000 --> 00:29:47,839 Speaker 2: you know, the, the the the health of the global economy. 540 00:29:48,439 --> 00:29:53,569 Speaker 1: Interesting. And then what about the uh Saudi role in 541 00:29:54,500 --> 00:29:57,739 Speaker 1: sort of trying to get oil at this 80 level 542 00:29:57,750 --> 00:30:00,849 Speaker 1: that you're talking about? Is it? I mean, I'm pretty 543 00:30:00,859 --> 00:30:02,439 Speaker 1: sure and I think we discussed this in the last 544 00:30:02,449 --> 00:30:03,089 Speaker 1: podcast that 545 00:30:03,420 --> 00:30:06,510 Speaker 1: the production cost of oil is one of the cheapest 546 00:30:06,520 --> 00:30:10,349 Speaker 1: in Saudi Arabia. So 80 is M BS is dream 547 00:30:10,359 --> 00:30:13,430 Speaker 1: in terms in terms of infrastructure investment, in terms of investment. 548 00:30:13,439 --> 00:30:15,189 Speaker 1: That's why they need $80. I think, I 549 00:30:15,199 --> 00:30:17,989 Speaker 2: mean, at least 80 I said, you know, I think 550 00:30:18,000 --> 00:30:19,819 Speaker 2: they would, they would like it to be closer to 551 00:30:19,849 --> 00:30:22,959 Speaker 2: 100 90 and 100. Yeah, because the last time it 552 00:30:22,969 --> 00:30:25,439 Speaker 2: hit that level, you know, he was, he saw the 553 00:30:25,449 --> 00:30:28,109 Speaker 2: windfall and he saw that he was able to 554 00:30:28,359 --> 00:30:32,050 Speaker 2: um develop all these very expensive mega projects that he's 555 00:30:32,060 --> 00:30:35,130 Speaker 2: engaged in. Yes. So, absolutely. He wants a higher price 556 00:30:35,140 --> 00:30:38,939 Speaker 2: because he thinks that that's what will help him. Um 557 00:30:38,949 --> 00:30:42,910 Speaker 2: you know, cover the costs of uh uh uh of these, 558 00:30:42,920 --> 00:30:46,530 Speaker 2: of these projects. Plus you have to remember that, you know, 559 00:30:47,010 --> 00:30:51,650 Speaker 2: something like 50% of the budget goes to public sectors, 560 00:30:51,660 --> 00:30:54,160 Speaker 2: uh wages and salaries in Saudi Arabia. So a very 561 00:30:54,170 --> 00:30:55,270 Speaker 2: big chunk of uh 562 00:30:55,520 --> 00:30:57,969 Speaker 2: of the budget is still one of the highest in 563 00:30:57,979 --> 00:30:59,939 Speaker 2: the world is still going to public. You know, most 564 00:30:59,949 --> 00:31:01,989 Speaker 2: of the people in Saudi Arabia work for the government. 565 00:31:02,339 --> 00:31:06,040 Speaker 2: Um The uh so, so, you know, for all these reasons, 566 00:31:06,050 --> 00:31:08,339 Speaker 2: I think he wants a higher price, I would also 567 00:31:08,349 --> 00:31:12,010 Speaker 2: add one thing which is that not only is the 568 00:31:12,020 --> 00:31:15,079 Speaker 2: production of oil, the cheapest in the world in the 569 00:31:15,089 --> 00:31:18,930 Speaker 2: Persian Gulf, by which I mean, Kuwait, you know, Saudi Arabia, 570 00:31:18,939 --> 00:31:22,199 Speaker 2: the UAE, but it's also the cleanest place for the 571 00:31:22,209 --> 00:31:23,310 Speaker 2: production of oil. 572 00:31:23,670 --> 00:31:27,979 Speaker 2: Uh in that it has the lowest me methane emissions. 573 00:31:27,989 --> 00:31:31,359 Speaker 2: They're very, very good at deploying, you know, a lot, 574 00:31:31,369 --> 00:31:35,219 Speaker 2: they've spent a lot of money trying to capture methane. 575 00:31:35,390 --> 00:31:38,229 Speaker 2: Uh They don't flare as much as, as the United 576 00:31:38,239 --> 00:31:41,619 Speaker 2: States does. Um So it's not only the cheapest but 577 00:31:41,630 --> 00:31:44,859 Speaker 2: it's also quote unquote, the cleanest oil, which is why 578 00:31:44,869 --> 00:31:47,699 Speaker 2: they're probably, they're very likely to be the last man 579 00:31:47,709 --> 00:31:48,520 Speaker 2: standing 580 00:31:48,829 --> 00:31:51,880 Speaker 2: when it comes to the energy transition, the last barrel 581 00:31:51,890 --> 00:31:54,359 Speaker 2: of oil that will ever be produced will come from 582 00:31:54,369 --> 00:31:54,800 Speaker 2: the Persian 583 00:31:54,810 --> 00:31:55,170 Speaker 1: Gulf. 584 00:31:56,089 --> 00:31:59,819 Speaker 1: You mentioned earlier, like this very large projects like um 585 00:31:59,829 --> 00:32:02,589 Speaker 1: some of the numbers and the scale that are being 586 00:32:02,599 --> 00:32:07,339 Speaker 1: projected is, is absolutely extraordinary mind boggling. Is there popular 587 00:32:07,349 --> 00:32:09,739 Speaker 1: support for projects like this in Saudi Arabia or are 588 00:32:09,750 --> 00:32:12,060 Speaker 1: these being seen as just one man's dream? 589 00:32:12,650 --> 00:32:16,859 Speaker 2: So I think one has to disaggregate the Saudi population 590 00:32:16,869 --> 00:32:19,380 Speaker 2: and we don't have, you know, um 591 00:32:20,150 --> 00:32:23,729 Speaker 2: real kind of figures and surveys. No, we don't. I 592 00:32:23,739 --> 00:32:26,479 Speaker 2: think the government does. The government has, you know, um 593 00:32:26,489 --> 00:32:32,359 Speaker 2: monitors the population mainly through sentiment analysis, technologies on Twitter 594 00:32:32,369 --> 00:32:35,589 Speaker 2: and social media and so on. But anecdotally, this is 595 00:32:35,599 --> 00:32:38,199 Speaker 2: what I'll say. Um And, you know, I've been to 596 00:32:38,209 --> 00:32:39,900 Speaker 2: Saudi Arabia a lot of times and I've met, you know, 597 00:32:39,910 --> 00:32:43,430 Speaker 2: many hundreds, if not thousands of people. So whenever you 598 00:32:43,439 --> 00:32:46,760 Speaker 2: meet someone above 40 in Saudi Arabia, they generally hate 599 00:32:46,770 --> 00:32:48,660 Speaker 2: M BS that they don't like what's happening 600 00:32:48,890 --> 00:32:53,020 Speaker 2: because they feel that he is changing the old order. 601 00:32:53,030 --> 00:32:56,339 Speaker 2: He's changing the system of entitlements. They're not having to 602 00:32:56,349 --> 00:33:01,010 Speaker 2: pay 15% tax va T tax on all purchases. There's 603 00:33:01,020 --> 00:33:04,699 Speaker 2: a sin tax on, you know, soft drinks and, and cigarettes. 604 00:33:04,989 --> 00:33:09,329 Speaker 2: Uh There's also um much less uh you know, the 605 00:33:09,339 --> 00:33:13,449 Speaker 2: subsidies on gasoline on water and electricity are, are, are, 606 00:33:13,459 --> 00:33:15,160 Speaker 2: have been significantly reduced. 607 00:33:15,569 --> 00:33:19,380 Speaker 2: Um So, you know, life is expensive and, and they 608 00:33:19,390 --> 00:33:22,579 Speaker 2: don't feel that they have as good a deal as they, 609 00:33:22,589 --> 00:33:25,599 Speaker 2: as they once had under previous kings. If you speak 610 00:33:25,609 --> 00:33:27,660 Speaker 2: to the younger people who are like, say, you know, 611 00:33:27,670 --> 00:33:28,819 Speaker 2: under 35 612 00:33:29,199 --> 00:33:32,270 Speaker 2: they worship him. They think of him as like some 613 00:33:32,280 --> 00:33:37,250 Speaker 2: rock star who is transforming the country who is, you know, 614 00:33:37,260 --> 00:33:42,099 Speaker 2: radically changing the social habits and norms and mores of 615 00:33:42,109 --> 00:33:44,900 Speaker 2: the place. There are women everywhere. People, women can veil, 616 00:33:44,910 --> 00:33:47,119 Speaker 2: they don't have to veil, they can dress any which 617 00:33:47,130 --> 00:33:47,989 Speaker 2: way they want. 618 00:33:48,270 --> 00:33:51,319 Speaker 2: Um There are many more women in the workforce, there 619 00:33:51,329 --> 00:33:55,109 Speaker 2: are many more potential jobs or promised jobs in the, 620 00:33:55,180 --> 00:33:58,239 Speaker 2: in the private sector. I mean, it's just a hip 621 00:33:58,250 --> 00:34:01,400 Speaker 2: and happening place, right? So you go to any of 622 00:34:01,410 --> 00:34:05,020 Speaker 2: the countries, whether from Egypt or Lebanon or the UAE, 623 00:34:05,030 --> 00:34:07,739 Speaker 2: all the talk is about what's happening in Saudi Arabia. 624 00:34:07,750 --> 00:34:09,719 Speaker 2: You know, this is where the action is. So I 625 00:34:09,729 --> 00:34:11,959 Speaker 2: think a lot of young people are excited about this, 626 00:34:11,969 --> 00:34:14,340 Speaker 2: which also means that they have very high expectations of 627 00:34:14,350 --> 00:34:17,020 Speaker 2: a man and what he can, what, what he can deliver. 628 00:34:17,379 --> 00:34:21,290 Speaker 2: Um have they thought deeply about the cost of neon 629 00:34:21,300 --> 00:34:24,500 Speaker 2: and whether it can succeed or not or I don't 630 00:34:24,510 --> 00:34:26,889 Speaker 2: think so. Right. I, I, I don't think so. I 631 00:34:26,899 --> 00:34:31,290 Speaker 2: think some of the projects that he's um uh that he's, 632 00:34:31,300 --> 00:34:33,770 Speaker 2: you know, working on, say the Red Sea 633 00:34:34,070 --> 00:34:37,919 Speaker 2: uh uh tourism project that's very likely to do extremely well. 634 00:34:37,929 --> 00:34:41,080 Speaker 2: You know, because there's a kind of comparative advantage there. 635 00:34:41,090 --> 00:34:43,919 Speaker 2: It's a service industry, it will produce a lot of jobs. 636 00:34:43,929 --> 00:34:47,729 Speaker 2: There's a remarkable kind of site. Um You know, the 637 00:34:47,739 --> 00:34:50,260 Speaker 2: Red Sea, uh the, the development of religion 638 00:34:50,350 --> 00:34:54,239 Speaker 2: tourism is also kind of a natural comparative advantage of 639 00:34:54,250 --> 00:34:59,080 Speaker 2: the country. They're likely to do well there, the entertainment 640 00:34:59,090 --> 00:35:02,429 Speaker 2: industry is also likely to do very well because Saudis 641 00:35:02,439 --> 00:35:06,540 Speaker 2: are spending their money in country rather than going overseas. 642 00:35:06,810 --> 00:35:11,340 Speaker 2: So there are some tangible benefits. Um But the big 643 00:35:11,350 --> 00:35:14,439 Speaker 2: mega projects like neon, I think are still, the jury 644 00:35:14,449 --> 00:35:16,178 Speaker 2: is still out on that. And I think there's very 645 00:35:16,189 --> 00:35:18,339 Speaker 2: little knowledge about what it all means, 646 00:35:18,760 --> 00:35:22,989 Speaker 1: right. So these are big, what we call service sector projects. Yeah. 647 00:35:23,280 --> 00:35:27,020 Speaker 1: Beyond oil and gas does a country like Saudi Arabia 648 00:35:27,030 --> 00:35:29,639 Speaker 1: or even like the U E E have a future 649 00:35:29,649 --> 00:35:31,590 Speaker 1: in manufacturing or it's just too expensive for them to 650 00:35:31,739 --> 00:35:33,580 Speaker 2: Yeah, I, I suspect they don't have a future in 651 00:35:33,590 --> 00:35:34,679 Speaker 2: manufacturing because they're 652 00:35:34,909 --> 00:35:37,770 Speaker 2: um you know, their labor costs are very high unless 653 00:35:37,780 --> 00:35:41,090 Speaker 2: they choose to import labor. Like they, they still do. Right. 654 00:35:41,100 --> 00:35:44,399 Speaker 2: So they have a very large guest worker population uh 655 00:35:44,409 --> 00:35:48,320 Speaker 2: you know, from, from overseas. Um No, I, I think 656 00:35:48,330 --> 00:35:52,080 Speaker 2: their natural, I mean, whatever advantage they'll end up having 657 00:35:52,090 --> 00:35:53,899 Speaker 2: and this is where they'll compete with each other and 658 00:35:53,909 --> 00:35:58,310 Speaker 2: where there's real structural competition. And this is why relations 659 00:35:58,320 --> 00:36:00,698 Speaker 2: are sometimes tense between Saudi Arabia and the UAE. 660 00:36:01,070 --> 00:36:08,669 Speaker 2: So, you know, logistics, airlines, transportation, um uh you know, tourism, 661 00:36:08,889 --> 00:36:13,759 Speaker 2: um banking, those sorts of areas they could, they could 662 00:36:13,770 --> 00:36:18,589 Speaker 2: do relatively well in manufacturing. I doubt they'll ever be 663 00:36:18,600 --> 00:36:22,239 Speaker 2: able to compete with Vietnam or India or China. Um 664 00:36:22,250 --> 00:36:25,429 Speaker 2: Unless it's something super specialized. The other thing that they're 665 00:36:25,439 --> 00:36:27,639 Speaker 2: all doing, by the way is they're giving out, they 666 00:36:27,649 --> 00:36:29,939 Speaker 2: have a program now for of Golden Visas. 667 00:36:30,439 --> 00:36:37,489 Speaker 2: So they're trying to attract the kind of smartest Lebanese Syrians, Iraqis, Egyptians. So, 668 00:36:37,500 --> 00:36:40,639 Speaker 2: you know, you bring in 100,000 or 200,000 of the 669 00:36:40,649 --> 00:36:43,479 Speaker 2: smartest people in the region who are really willing to 670 00:36:43,489 --> 00:36:47,419 Speaker 2: work very hard. Uh You could create, you know, a remarkable, 671 00:36:47,429 --> 00:36:50,500 Speaker 2: let's say you could create a tech industry, you could create, 672 00:36:50,510 --> 00:36:54,770 Speaker 2: you know, a number of um sectors that you otherwise 673 00:36:54,780 --> 00:36:56,590 Speaker 2: wouldn't be able to because you don't have the human 674 00:36:56,600 --> 00:36:57,570 Speaker 2: capital yourself, 675 00:36:57,610 --> 00:36:57,760 Speaker 1: right? 676 00:36:59,020 --> 00:37:01,830 Speaker 1: Um I just spent a few days in Washington DC 677 00:37:01,840 --> 00:37:04,199 Speaker 1: and one of the big discussions along the sidelines of 678 00:37:04,209 --> 00:37:06,909 Speaker 1: the IMF spring meetings for which I was there was 679 00:37:06,919 --> 00:37:10,639 Speaker 1: the whole debt debt restructuring agenda uh for all the 680 00:37:10,649 --> 00:37:12,439 Speaker 1: poor countries around the world who have suffered during the 681 00:37:12,449 --> 00:37:16,280 Speaker 1: last 23 years of pandemic and then subsequent interest rate increases. 682 00:37:16,469 --> 00:37:18,750 Speaker 1: And there was a lot of question about China's role 683 00:37:18,760 --> 00:37:21,770 Speaker 1: in restructuring the debt of Sri Lanka, Pakistan and so on. 684 00:37:22,260 --> 00:37:24,510 Speaker 1: What about the Middle Eastern countries? I mean, are they 685 00:37:24,520 --> 00:37:27,469 Speaker 1: helping out Egypt, which seems to be in a deep crisis. 686 00:37:27,479 --> 00:37:30,259 Speaker 1: And of course Pakistan, which has had historically, a lot 687 00:37:30,270 --> 00:37:31,270 Speaker 1: of dependence on 688 00:37:31,600 --> 00:37:35,169 Speaker 1: support from Saudi Arabia and so on is Saudi Arabia 689 00:37:35,179 --> 00:37:37,069 Speaker 1: and perhaps even the UAE from the UN common are, 690 00:37:37,080 --> 00:37:39,419 Speaker 1: they are examining the way they have been helping out 691 00:37:39,429 --> 00:37:40,399 Speaker 1: these developing 692 00:37:40,409 --> 00:37:43,610 Speaker 2: countries. I, I think they are, I mean, look as 693 00:37:43,620 --> 00:37:46,620 Speaker 2: far as the Saudis are concerned and, and to some extent, 694 00:37:46,629 --> 00:37:48,979 Speaker 2: the UAE there are certain countries that are sort of 695 00:37:48,989 --> 00:37:52,428 Speaker 2: strategically extremely important for their security, for their national security. 696 00:37:52,439 --> 00:37:56,820 Speaker 2: Yemen is one of them, Jordan is another to some extent, Egypt, 697 00:37:56,830 --> 00:37:59,449 Speaker 2: although there's a question mark there. So 698 00:38:00,010 --> 00:38:03,219 Speaker 2: what, what they've, in the past, they've been willing to help. They've, 699 00:38:03,229 --> 00:38:05,669 Speaker 2: they've even helped the Saudis even put, I think four 700 00:38:05,679 --> 00:38:10,889 Speaker 2: or $5 billion in, in Pakistan and in Turkey in this, 701 00:38:10,899 --> 00:38:12,340 Speaker 2: in the Turkish Central Bank. So, 702 00:38:12,610 --> 00:38:15,290 Speaker 2: you know, they're willing to help because they're willing to 703 00:38:15,300 --> 00:38:19,300 Speaker 2: help but not under any circumstances. They're particularly wary of corruption. 704 00:38:19,310 --> 00:38:23,110 Speaker 2: They're particularly wary of sort of crazy projects that are 705 00:38:23,310 --> 00:38:27,260 Speaker 2: sort of, um, you know, a road to nowhere type project. 706 00:38:27,270 --> 00:38:30,060 Speaker 2: So on Egypt, for instance, they've told the Egyptians we're 707 00:38:30,070 --> 00:38:32,739 Speaker 2: willing to help you, but only if you adhere to 708 00:38:32,750 --> 00:38:37,040 Speaker 2: the conditions set by the IMF and World Bank, right. 709 00:38:37,050 --> 00:38:38,600 Speaker 2: So not under any condition 710 00:38:39,070 --> 00:38:42,510 Speaker 2: now, it seems to me, I mean, here, I'm not 711 00:38:42,520 --> 00:38:45,620 Speaker 2: an expert but one of the reasons why the President 712 00:38:45,629 --> 00:38:48,520 Speaker 2: of Brazil had such a great time. And I think 713 00:38:48,530 --> 00:38:51,139 Speaker 2: still is in China is having a great time in China. 714 00:38:51,219 --> 00:38:53,959 Speaker 2: Is that apparently he thinks that, you know, he can 715 00:38:53,969 --> 00:38:57,899 Speaker 2: get from the Chinese um uh things that you know, 716 00:38:57,909 --> 00:39:01,439 Speaker 2: he couldn't get from Western donors. Um whether that's true 717 00:39:01,449 --> 00:39:03,339 Speaker 2: or not, I I'm not sure. So 718 00:39:03,860 --> 00:39:06,629 Speaker 2: will the will the Egyptians I think are due to 719 00:39:06,639 --> 00:39:10,350 Speaker 2: come up with $25 billion worth of repayments this year? 720 00:39:10,360 --> 00:39:13,330 Speaker 2: Are they going to turn to China? Will the Saudis 721 00:39:13,340 --> 00:39:16,638 Speaker 2: help them out? The Saudis will? But under conditions under 722 00:39:16,649 --> 00:39:19,590 Speaker 2: certain conditions, some of those conditions also involve 723 00:39:20,149 --> 00:39:25,729 Speaker 2: sort of buying major assets in Egypt itself. And as 724 00:39:25,739 --> 00:39:28,489 Speaker 2: you know, a country like Egypt, the army controls something 725 00:39:28,500 --> 00:39:31,429 Speaker 2: that 40% of the economy, whether they're willing to give 726 00:39:31,439 --> 00:39:35,350 Speaker 2: away or sell, you know, their, their crown jewels to 727 00:39:35,479 --> 00:39:37,060 Speaker 2: the Saudis. I'm not sure. 728 00:39:37,469 --> 00:39:37,959 Speaker 1: Right. 729 00:39:38,229 --> 00:39:40,049 Speaker 1: I, I kind of wonder whether I mean, there is 730 00:39:40,060 --> 00:39:42,810 Speaker 1: this thing called Islamic Development Bank and we've seen some 731 00:39:42,820 --> 00:39:45,600 Speaker 1: initiative in the past to pool the resources of the 732 00:39:45,610 --> 00:39:49,000 Speaker 1: Arab countries to again first help the Arab region abroad 733 00:39:49,070 --> 00:39:51,379 Speaker 1: also help the rest of the world. But the Chinese 734 00:39:51,389 --> 00:39:53,468 Speaker 1: have taken it to a different level, the Asian Infrastructure 735 00:39:53,479 --> 00:39:56,159 Speaker 1: Investment Bank and breaks back and so on. Um 736 00:39:56,939 --> 00:39:59,529 Speaker 1: So I really want to end our conversation on that 737 00:39:59,540 --> 00:40:03,029 Speaker 1: point of China and the Middle East. Uh we've already 738 00:40:03,040 --> 00:40:05,629 Speaker 1: touched upon sort of the desire for stability where China 739 00:40:05,639 --> 00:40:08,709 Speaker 1: then becomes a useful mediator. And we've also talked about 740 00:40:09,510 --> 00:40:12,479 Speaker 1: incentives aligning because China wants oil and the region wants 741 00:40:12,489 --> 00:40:15,719 Speaker 1: to sell oil in a stable and predictable manner. Um 742 00:40:15,729 --> 00:40:18,239 Speaker 1: But we are living in this world where there's significant 743 00:40:18,250 --> 00:40:20,129 Speaker 1: friction between the Chinese and the US. 744 00:40:21,629 --> 00:40:23,159 Speaker 1: I suppose you would tell me that none of these 745 00:40:23,169 --> 00:40:26,129 Speaker 1: Middle East countries want to pick a side. But if 746 00:40:26,139 --> 00:40:29,090 Speaker 1: things were to go much, much more, you know, on 747 00:40:29,100 --> 00:40:32,959 Speaker 1: the out of the escalation, how would these countries behave? 748 00:40:34,080 --> 00:40:37,399 Speaker 2: So, you know, a country like Saudi Arabia, unlike Egypt, 749 00:40:37,409 --> 00:40:40,009 Speaker 2: let's compare them for a second. So a country like 750 00:40:40,020 --> 00:40:44,589 Speaker 2: Saudi Arabia, the vast majority of their military equipment is 751 00:40:44,600 --> 00:40:49,459 Speaker 2: American or British or French, but mainly American. Um so, 752 00:40:49,469 --> 00:40:51,510 Speaker 2: you know, they wouldn't be able to fly their planes 753 00:40:51,520 --> 00:40:54,370 Speaker 2: without the help of the United States or the services 754 00:40:54,379 --> 00:40:58,250 Speaker 2: in servicing of these planes by American companies and by 755 00:40:58,260 --> 00:40:59,989 Speaker 2: British companies for their tornadoes. 756 00:41:00,280 --> 00:41:04,850 Speaker 2: So, and you know, transforming your move, shifting your military, 757 00:41:05,030 --> 00:41:09,070 Speaker 2: uh it's training, it's uh it's equipment, its whole way 758 00:41:09,080 --> 00:41:12,159 Speaker 2: of being from, say the United States to China is 759 00:41:12,169 --> 00:41:15,219 Speaker 2: not something you could do, you know, overnight, it would 760 00:41:15,239 --> 00:41:15,570 Speaker 1: take, 761 00:41:16,620 --> 00:41:19,570 Speaker 2: it would take 2030 years, you know, to do that. 762 00:41:19,850 --> 00:41:22,629 Speaker 2: So in, in a way when it comes to security, 763 00:41:23,040 --> 00:41:28,169 Speaker 2: the the relationship with the United States is deeply structural 764 00:41:28,330 --> 00:41:34,649 Speaker 2: and cannot be undone, right? But its commercial and trade 765 00:41:34,659 --> 00:41:39,250 Speaker 2: relationship at Saudi Arabia as that is, is almost entirely 766 00:41:39,260 --> 00:41:42,070 Speaker 2: in facing the far east. It's not 767 00:41:42,350 --> 00:41:45,859 Speaker 2: uh involving the United States except when it comes to 768 00:41:45,870 --> 00:41:47,388 Speaker 2: investing in the United States. 769 00:41:47,530 --> 00:41:49,239 Speaker 1: America hardly needs Saudi oil 770 00:41:49,449 --> 00:41:52,080 Speaker 2: and America doesn't need Saudi oil, although, you know, oil 771 00:41:52,090 --> 00:41:54,270 Speaker 2: is a global and fungible commodity. So if there's less 772 00:41:54,280 --> 00:41:56,290 Speaker 2: of it in Saudi Arabia or there's a destruction in 773 00:41:56,300 --> 00:41:59,239 Speaker 2: Saudi Arabia, everyone will feel it even in Texas, right? 774 00:41:59,250 --> 00:42:02,179 Speaker 2: It's not like the pricing is, is, is separate. 775 00:42:02,649 --> 00:42:06,300 Speaker 2: So America still needs stability and, and you know, even 776 00:42:06,310 --> 00:42:09,159 Speaker 2: if every drop of oil gets sold to China, it 777 00:42:09,169 --> 00:42:12,260 Speaker 2: still needs that oil market to be stable in Saudi 778 00:42:12,270 --> 00:42:15,520 Speaker 2: Arabia and its production to be stable. So, so, so 779 00:42:15,530 --> 00:42:19,179 Speaker 2: the Saudis are in a particularly difficult situation because, you know, 780 00:42:19,189 --> 00:42:22,469 Speaker 2: they are as it were split uh when it comes 781 00:42:22,479 --> 00:42:25,800 Speaker 2: to security, it's one, you know, superpower, when it comes 782 00:42:25,810 --> 00:42:29,279 Speaker 2: to trade and trade and commerce, it's another 783 00:42:29,610 --> 00:42:31,080 Speaker 2: and I don't know how they're going to resolve it. 784 00:42:31,090 --> 00:42:34,279 Speaker 2: They're gonna try to hedge, they're going to try to diversify, 785 00:42:34,489 --> 00:42:36,899 Speaker 2: they're gonna try to play all sides, they're gonna try 786 00:42:36,909 --> 00:42:40,469 Speaker 2: to avoid picking sides um as much as possible. And 787 00:42:40,479 --> 00:42:42,899 Speaker 2: this is what you see, by the way with Ukraine, 788 00:42:42,909 --> 00:42:46,370 Speaker 2: you know, with Ukraine, they've voted against Russia, but they've 789 00:42:46,379 --> 00:42:50,199 Speaker 2: continued to uh coordinate with Russia on oil policy. They've 790 00:42:50,209 --> 00:42:52,939 Speaker 2: given money to the Ukrainians for humanitarian aid. You know, 791 00:42:52,949 --> 00:42:55,929 Speaker 2: they've kind of tried to keep a number of balls 792 00:42:55,939 --> 00:42:57,399 Speaker 2: up in the air simultaneously. 793 00:42:57,729 --> 00:43:00,500 Speaker 2: Um The Egyptians are interesting in that, you know, I, 794 00:43:00,510 --> 00:43:02,739 Speaker 2: I mentioned them a little earlier, which is that, you know, 795 00:43:02,750 --> 00:43:06,149 Speaker 2: they're buying more equipped military equipment from the Russians. Now, 796 00:43:06,159 --> 00:43:09,610 Speaker 2: there's a history of having done that before 1974. And 797 00:43:09,620 --> 00:43:13,159 Speaker 2: so they seem to be willing to be more kind 798 00:43:13,169 --> 00:43:16,780 Speaker 2: of uh adventurous in saying, you know, we can do 799 00:43:16,790 --> 00:43:19,350 Speaker 2: without you, we can switch to the other side. And that's, 800 00:43:19,360 --> 00:43:22,820 Speaker 2: I think because the Egyptians are much less. Um 801 00:43:23,419 --> 00:43:27,340 Speaker 2: uh I mean, I have to be more nimble. They, they, they, they, they, 802 00:43:27,350 --> 00:43:29,860 Speaker 2: they're not like the Saudis, they're not sort of their 803 00:43:29,870 --> 00:43:32,549 Speaker 2: relationship with the United States is not as deeply structural 804 00:43:33,290 --> 00:43:35,590 Speaker 1: uh one country in that region that we did not 805 00:43:35,600 --> 00:43:38,760 Speaker 1: talk about is Turkey, which has a great deal of 806 00:43:38,770 --> 00:43:41,070 Speaker 1: internal strife. But at the same time, has proven to 807 00:43:41,080 --> 00:43:44,370 Speaker 1: be pretty successful in leveraging the Ukraine conflict. 808 00:43:44,689 --> 00:43:47,780 Speaker 1: Uh Their hardware is making its way to use by 809 00:43:47,790 --> 00:43:50,638 Speaker 1: Ukrainian militaries, but at the same time, they remain friends 810 00:43:50,649 --> 00:43:54,729 Speaker 1: with the Russians is that a model of Middle Eastern 811 00:43:54,739 --> 00:43:57,620 Speaker 1: countries uh relationship between Russia and the US, 812 00:43:58,189 --> 00:44:01,100 Speaker 2: it, it potential potentially it is, I mean, like, look, 813 00:44:01,110 --> 00:44:04,198 Speaker 2: but the, the thing with Turkey is that its geography 814 00:44:04,649 --> 00:44:08,419 Speaker 2: um and it's, you know, industry allows it to, to, 815 00:44:08,429 --> 00:44:10,469 Speaker 2: to be, to be what to do to play the 816 00:44:10,479 --> 00:44:12,949 Speaker 2: role that it is. I mean, in other words, Turkey, 817 00:44:12,959 --> 00:44:15,669 Speaker 2: because of its position and its geography on the, on 818 00:44:15,679 --> 00:44:18,300 Speaker 2: the Black Sea and on the, and the straits and 819 00:44:18,310 --> 00:44:21,580 Speaker 2: then the Mediterranean, you know, every, the Russians can't do 820 00:44:21,590 --> 00:44:24,330 Speaker 2: without Turkey, nor can the Americans do without Turkey. Right. So, 821 00:44:24,340 --> 00:44:27,139 Speaker 2: I don't think the Saudis or the Egyptians are in 822 00:44:27,149 --> 00:44:31,089 Speaker 2: the same uh privileged position. I mean, because of their 823 00:44:31,100 --> 00:44:31,860 Speaker 2: geography 824 00:44:32,949 --> 00:44:36,110 Speaker 1: very interesting. Um That was a quick rundown of all 825 00:44:36,120 --> 00:44:37,510 Speaker 1: the things that are going on in the Middle East. 826 00:44:37,520 --> 00:44:40,009 Speaker 1: Uh Bernie, we look forward to the book next time. 827 00:44:40,020 --> 00:44:42,209 Speaker 1: Perhaps we will uh do a little book review and, 828 00:44:42,219 --> 00:44:44,359 Speaker 1: and chat with you about that. Thank you so much 829 00:44:44,370 --> 00:44:46,409 Speaker 1: and it was so much better doing this in person 830 00:44:46,419 --> 00:44:49,000 Speaker 1: than the Battle days of COVID. 831 00:44:50,070 --> 00:44:52,199 Speaker 2: Yeah. No, it's a real pleasure. Thank you so much. 832 00:44:52,209 --> 00:44:54,459 Speaker 1: Thank you for your insights, Bernie. Uh Thanks to our 833 00:44:54,469 --> 00:44:57,580 Speaker 1: listeners too, Kobe Time was produced by Ken Delbridge of 834 00:44:57,590 --> 00:45:00,760 Speaker 1: Fly Studios. Additional assistance was provided by Violet Lee and 835 00:45:00,770 --> 00:45:04,259 Speaker 1: Daisy Sharma. It is for information only and does not 836 00:45:04,270 --> 00:45:05,620 Speaker 1: constitute any investment in 837 00:45:05,719 --> 00:45:09,009 Speaker 1: advice. All Nanyang episodes of Coby Time are available on 838 00:45:09,020 --> 00:45:12,989 Speaker 1: youtube as well as on major podcast platforms including Apple 839 00:45:13,000 --> 00:45:16,760 Speaker 1: Google and Spotify. As for our research publications and webinars, 840 00:45:16,770 --> 00:45:18,550 Speaker 1: you can find them all by Google and D BS 841 00:45:18,560 --> 00:45:21,290 Speaker 1: two research library. Have a great day.