Oil, Iran and Palestine - What’s at Stake for Saudi Arabia (3/3) (Really Good Watch/Transcript)

Oil, Iran and Palestine - What’s at Stake for Saudi Arabia (3/3)
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http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=13589Paul JAY, SENIOR EDITOR, TRNN: Welcome to the Real News Network. I'm Paul Jay.We're continuing our discussion about Saudi Arabia, what's at stake for it in the current conflict in the Middle East. Now joining us again from London is Madawi al-Rasheed. She's a visiting professor at the London School of Economics and Political Science.Thanks for joining us again,

Madawi.MADAWI AL-RASHEED, PROF. MIDDLE EAST CENTER, LONDON SCHOOL OF ECONOMICS: Thank you.

JAY: So we were talking about Yemen, we're talking about the sort of bigger picture of Saudi Arabia trying to become the leader of the Sunni world, and that's important for them particularly domestically, to be able to present themselves as having that strength.In the context of all of that, what does the current price of oil mean for Saudi Arabia? I mean, a lot of people thought the Saudis helped facilitate such a low price of oil. I don't think they created the whole situation, but they saw oil prices coming down, partly through supply and demand equations. But they, what's the word. Exacerbated it by not reducing their own production and not allowing OPEC to pull back on production, and thus helped oil go down maybe further than it would have otherwise.Given all of that, how's the low price of oil affecting Saudi Arabia? It's certainly screwing Russia and Nigeria and Venezuela, and some other places.

AL-RASHEED: Yes, Saudi Arabia's policy on oil, especially recently in the context of the OPEC meetings, it became very clear that they wanted to maintain their market share regardless of the price of oil, and they kept pouring oil into markets, without any kind of anticipation of how this is going to affect the price.Saudi Arabia, in a way, is luckier than other oil-producing countries in the region. For example, Iran and Venezuela.

Because they have a lot of reserves of cash, and they have accumulated over the past years, and therefore they could maintain their sort of income, at least in the short term. But in the long term, there is a problem. And in a way, we talk about the Sunni-Shiite rivalry, Saudi Arabia and Iran, as if this is only a conflict that could be explained only in terms of ideological factors. But there is, the bottom line, is also a conflict about oil. Saudi Arabia wants to make sure that it remains the main producer in the Arab world, and it is at the moment.

But it does not want to see neither Iraqi oil nor Iranian oil coming to the market.And in that context of reaching an agreement over Iran's nuclear program, in the discussion between the United States and the P5+1, Saudi Arabia is worried about lifting the sanctions on Iran, which means that there is more oil from Iran coming to the market. It will depress probably the prices even more, but Saudi Arabia's determined to make that difficult, and it keeps pouring oil. At the same time, it didn't anticipate the low demand.There is another factor to this. Saudi Arabia was very, very worried about Shell oil, and especially in the United States. And therefore, cheap oil coming from Saudi Arabia that is also cheap to extract helps the Saudis to maintain their market share. They do not want to see any other oil in the region coming to the market, because simply they will lose that market share. So the -

JAY: There's also a lot of analysts who said, well, this is a market forces issue. A competitive issue. Also a geopolitical issue. That the Saudis were quite happy, and perhaps in connivance with the United States government to number one, as I said, screw up the Russian economy, and screw up the Iranian economy. The Saudis certainly have no love for Russia, given the support for Assad, and how much Russia played in keeping and thwarting, keeping Assad in power and thwarting the Saudi objective there.And of course, screwing the Iranian economy is good geopolitically for the Saudis. How much do you think that was a factor?

AL-RASHEED: Yes, it is a factor, because Saudi Arabia felt the threat of Iran not only in terms of penetrating Arab society and getting closer to the borders with Saudi Arabia, especially in Iraq, and on the northern borders of the country. But cheap oil, and low oil prices also served Saudis foreign policy in terms of its relation with both Russia and Iran.

JAY: Now, you would think if you looked at this objectively, just in terms of pure economic interest, even geopolitical interest, you would think a Saudi-Iranian alliance would actually make a heck of a lot of sense for both of them. First of all, they're both theocracies. They're both theocracies that are, you know, contain a lot of billionaires and multi-multi-billionaires. Between them they would be a powerhouse. They would virtually control the price of global oil.And they would balance American power in the region. Right now, I would think one of the objectives of the American rapprochement with Iran, assuming that it happens, is that it helps to balance Saudi and GCC power, and they get to play Iran and GC off against each other, which is good for the Americans.But the objective interest here seems to be the Saudis simply want to be the lone, leading monarchy, and nothing else seems to matter to them.

AL-RASHEED: Well, I think the Saudis perceive their foreign policy and their status in the Arab and Muslim world as a zero-sum game. So if Iran is rehabilitated into the international community, this is interpreted as a loss for Saudi Arabia. Saudi Arabia does not trust Iran and Iran does not trust Saudi Arabia after 1979. There's a long history of animosity.

Much More Transcript and even Better Towards the End.....

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