Commentary | 10 August 2018

Saudi blowup with Canada bodes ill for it when wind changes

Originally published in The Australian.

Originally published in The Australian.

The recent expulsion of the Canadian ambassador to Saudi Arabia and the recall of the Saudi ambassador to Canada, along with the cessation of flights to Canada and a ban on any new trade and investment deals with Ottawa, is another example of Riyadh’s poor grasp of foreign policy.

The over-reaction to a tweet comes on top of an ill-advised intervention in Yemen, the detention and forced resignation of Lebanese prime minister Sa’ad Hariri and the ongoing Saudi-led embargo of Qatar that has all but destroyed the Gulf Co-operation Council as a multilateral institution.

In the rarefied world of diplomacy, the expulsion of an ambassador is serious business, usually reserved for very serious offences. This dispute over a tweet could and should have been handled at a much lower level and with little fanfare. But the Saudi decision-making process is an opaque one and can be open to fits of pique if it believes it has not been treated in the manner to which it believes it is entitled.

Saudi Arabia’s rejection of the UN Security Council seat it won in 2013 after two years of intense lobbying to do so shows how decisions can be made on a whim.

But in calling a tweet from the Canadian Foreign Ministry “an attack on the Kingdom of Saudi Arabia” and an attempt “to undermine the sovereignty of the Kingdom of Saudi Arabia”, Riyadh’s reaction is about much more than having a thin skin when it comes to external criticism. Saudi Arabia is sending a signal to two audiences. It is telling its own population that there are limits to the pace and nature of social reforms, and that what reforms are implemented will be granted from the top down and should not be demanded from below. It is also signalling to the West that there will be economic costs for those who seek to shine a light on the kingdom’s human rights.

Washington and London’s limp responses in support of its historically close Canadian ally is testimony to the economic power that Riyadh wields as a consumer of British and American goods.

Riyadh, however, needs to be careful about the potential second-order effects of its belligerent approach to the issue. Saudi Arabia’s position as the regional leader and moves to reform the kingdom require it to be seen as a reliable partner. Indeed, the success of Crown Prince Mohammed bin Salman’s ambitious Vision 2030 relies to a significant degree on attracting foreign direct investment and partnerships to Saudi Arabia, as well as foreigners to the kingdom as tourists in the longer term. His moves towards driving domestic social reforms such as allowing women to drive and the construction of entertainment complexes to include cinemas have been welcomed as evidence of social reforms being instituted in parallel to the much-heralded economic reforms.

But this latest imbroglio with Canada will do little to engender investor confidence about the certainty of dealing with Saudi authorities if diplomatic fits of pique make life difficult for business. Companies will think twice about investing in a country whose rulers are willing to cancel future bilateral trade and investment with a country based on a simple tweet. Riyadh’s hyper-sensitivity to criticism over its human rights record from either within or without is also likely to impact on the willingness of academics to participate in their grand plans for a knowledge-based, post-oil economy, and of some tourists to come to its planned Red Sea resorts.

Riyadh undoubtedly feels emboldened because of the close relationship it feels it has with the Trump administration, which has given Saudi Arabia the type of political backing they were denied under president Barack Obama, who tended to view Washington’s relationship with Riyadh in transactional terms. Obama’s perceptions of the gulf between Saudi and American societal values, as well as his focus on regional proliferation issues and the Iran nuclear agreement, largely prevented any closer relationship developing.

Riyadh should be careful in the way in which they handle this dispute and not mistake tactical success for strategic victory. Crown Prince Mohammed may well be in power for half a century when he accedes to the throne and will likely have to rule during potentially momentous regional changes. Fossil fuel reserves will dwindle, and it is likely that Iran’s theocratic government will have reformed or fallen and the country begin to develop economically. In short, Saudi Arabia’s economic and security relevance in the future is by no means guaranteed.

It is during the hard times that Saudi Arabia will face in the future that it will need all the friends that it can muster. And picking a fight over a tweet, after a series of other foreign policy mis-steps doesn’t do much to engender confidence in Riyadh’s ability to navigate an uncertain future. The regional security outlook currently favours Saudi Arabia, and it has a friend in the form of the Trump administration, but it shouldn’t make the mistake that either of these situations will be the case in a little over two years.