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    CFR Academic Webinar: Should We Stay or Should We Go? America's Role in the Middle East
    Play
    F. Gregory Gause III, department head and professor of international affairs and John H. Lindsey ’44 Chair at Texas A&M University’s Bush School of Government and Public Service, leads a conversation on America’s role in the Middle East. FASKIANOS: Welcome to the CFR Winter/Spring 2021 Academic Webinar Series. I'm Irina Faskianos, vice president of the National Program and Outreach at CFR. Today's meeting is on the record and the video and transcript will be available on our website, CFR.org/academic, if you would like to share it with your colleagues or classmates. As always, CFR takes no institutional positions on matters of policy. We're delighted to have F. Gregory Gause, III, with us today to discuss America's role in the Middle East. We have shared his bio with you, but I will give you a few highlights. Dr. Gause is the John H. Lindsey '44 chair, professor of international affairs, and head of the International Affairs Department at Texas A&M University's Bush School of Government and Public Service. Previously he served as professor of political science, chair of the department, and director of the Middle East Studies Program at the University of Vermont. Dr. Gause has published three books, the most recent of which is The International Relations of the Persian Gulf published by Cambridge University Press. He's testified on Persian Gulf issues before the House of Representatives Committee on International Relations and the U.S. Senate Foreign Relations Committee. In addition to being a CFR member, Dr. Gause was also a fellow for Arab and Islamic Studies in a past life. So, Dr. Gause, it's really wonderful to have you with us and especially coming from Texas in the wake of last week's very devastating storm that we saw. So glad you're safe and well. So I thought if you could begin by talking about what you think our involvement should be in the Middle East, the United States' involvement, if and how we should withdraw, and what you think President Biden's priority should be in the region? GAUSE: Sure. Howdy, everybody. That's the way we start talks at Texas A&M. I can report that we have turned the corner from the winter apocalypse of last week. Almost all Texans now have power, and water, and heat, and electricity. And I can tell you if we were meeting last Wednesday, the answer to those questions would have been "No, no, no, and no" from me. So I'm very happy that we have turned the corner from the bad storms of last week. So if I were more technologically adept, I would have played us in with the song by The Clash, the proto-punk band of the early '80s, that kind of inspired the title for today's session. The Clash had a song called "Should I Stay Or Should I Go." And those of us of a certain age recall it as, you know, one of those songs that you grew up with. And it keeps reoccurring to my mind as I think about the debate over America's role in the Middle East because it really is, it's become a question of should we stay or should we go? Now, we suggested four readings for the session, and I think they represent kind of different strains of this debate. One of the readings from colleagues at the Quincy Institute, which kind of represents the school of restraint in terms of American foreign policy that urges a less militarized and less, in many ways, a less active American foreign policy, a more withdrawn American foreign policy, not isolationist, but one that has very limited aims for American foreign policy. They talked about a complete American military withdrawal from the region. And reading between the lines you might read into them a strategy that in international relations theory is called offshore balancing. They're not saying the Middle East isn't important, but what they're saying is if there were a real challenge to American interest there, the United States could intervene militarily, much as it did in 1990 when Saddam Hussein invaded Kuwait. The United States didn't have this network of bases that it's developed in the Persian Gulf region and throughout the greater Middle East since that time. Probably on the other side of the debate is the article by Steven Cook, who's a senior fellow at the Council dealing with Middle East issues and in his article in Foreign Affairs last year, he put forward kind of a more traditional American approach. One that emphasized containment of Iran, that advocated for the maintenance of some amount of American military power in the region, and the maintenance of some troops in Iraq for counterterrorism purposes to support the Iraqi government, and also to try to, as part of the containment of Iran. I think Steve's article very much is, if you will, the more traditional American approach. I thought that the article by Karlin and Wittes, Tammy Wittes, who previously served in the Obama administration in the State Department on Middle East issues, and Mara Karlin, was a good example of what international relations theory people call liberal internationalism. They want us to be involved but more on a multilateral diplomatic level. They want us to be tougher on our allies, like Saudi Arabia on human rights grounds, while reaching out to Iran, for example, a country, which, you know, the United States during the Trump administration, had a policy of maximum pressure against. I think that the Karlin and Wittes approach is very much in this tradition of a liberal approach that emphasizes diplomacy and multilateral institutions as a way to achieve American interests. And finally, an article by Steve Simon, Josh Landis, and Aiman Mansour that, I think, was a very good addition here, because I think more than any of the other articles it recognized what I think is the core issue in the crisis in the greater Middle East, which is the collapse of state authority in so many places in the Arab world—Lebanon, Syria, Iraq, Yemen, we can extend out to Libya, we could even talk about the Palestinian Authority. And these political vacuums, I think, draw in intervention from regional and international powers to the extent that the civil conflicts in these places become the battlefield, both literally and figuratively, of the contest for influence in the Middle East. They advocated an American effort to encourage Arab states, particularly the Arab states of the Gulf, to use what they call their soft power, and I think that that's both their money, money is not really soft power. I mean, money is pretty hard power. If you've got money, you've got power, right, but to use kind of a sense of Arab fellowship and Gulf money to try to give regimes in Syria and Lebanon kind of alternatives to Iranian or Turkish or Russian patronage. And while I think that that's a worthwhile goal, I'm not sure given the collapse of oil prices and in our current COVID crisis that the states in the Gulf are going to have the kind of money to be able to rebuild Yemen, rebuild Syria, and so while I think that that's a noble calling, it's probably not a practical way to achieve the goals that they set out. Let me just say one more thing about this and I'll give you a short, kind of, where I come down on all this. What's interesting about all of these articles, I think, is that even though they come from very different perspectives, they share a couple of common assumptions. And one of those assumptions is that the United States has been too involved in the Middle East. And I think that that's absolutely right. I think that there's a consensus, not just among American foreign policy experts who look at the region, but also in the American public more generally, that the United States has been over involved in the Middle East. But for me it's always the question of what's your baseline? You know, what year do you pick to say that was the peak and that's over-involvement? And I think that when the United States was actively involved in a war in Iraq, having invaded Iraq in 2003, having, you know, over 100,000 troops in Iraq in the late 2000s while it was also conducting a counterinsurgency war and support for the Afghan government, well, we're in Afghanistan—that was over-involvement. And I think that there's an enormous consensus that the United States should ratchet down from that level. What these various authors expressed, though, is differences in what the right sizing should. The other thing that I thought was very interesting about these articles, you know, despite the different approaches they took, is that they all have had a sense that the U.S. still had important interest in the Middle East—counterterrorism and regional stability more generally. The argument was how does one try to ensure regional stability, which is the prerequisite for the free flow of oil, which is what the United States has always said it's been involved in the Middle East for. Some of the authors say a modest military presence would help contribute to regional stability. Others say no. The military presence contributes, in fact, to instability. And I think that that's a really important debate. So where do I come down with this? And we'll conclude there and then open up to your questions, and I'm looking forward to a vigorous back and forth where folks can tell me that they think Karlin and Wittes are wrong or Cook is wrong or the Quincy Institute is wrong, or even, heaven help us, that I'm wrong. So I come down more on the traditional side. I think that the American military presence in the Persian Gulf region, which really was established through a series of bases in the 1990s in the smaller Gulf states—Kuwait, Bahrain, Qatar, and facilities arrangements with the United Arab Emirates and Oman—can play a stabilizing role in the region. I think that, I agree with much of what was in the Quincy Institute report in that the United States has to talk to Iran. I was a big supporter of the Joint Comprehensive Plan of Action, the Iran nuclear deal negotiated by the Obama administration. I thought it was a mistake for the Trump administration to withdraw from it. I think the Biden administration is on the right path to try to get back in it. I don't know if that will be possible given politics in Iran right now but it's worth trying. And so I do think that we have to be in touch, we should be talking to everybody in the Middle East. But I also think that right now a limited presence of American military forces in the region can act as a stabilizing element. I say this because I think that the Iranians have actually done extremely well in the contest for influence in the Middle East. I would say that they're the dominant regional influence in Iraq, in Syria, in Lebanon, and their ally in Yemen is doing very well. And thus, I do think that there's a fear among many other regional states, particularly in the Arabian Peninsula, Saudi Arabia, and some of the smaller Gulf states, that an American withdrawal, a complete militarily withdrawal from the region, would embolden Iran. And I think that the United States has to be able to both talk to the Iranians and try to, to the extent possible, contain and, if possible, rollback Iranian influence in some of these parts of the Arab world simultaneously, right? I think if you can't negotiate with somebody and also work against their spreading regional influence at the same time, you're not up to the job of conducting American diplomacy in the region. So to me, I see that regional stability element, the protection of oil transit, and let's be honest, there have been two major attacks on oil facilities in the past thirty years in the Persian Gulf region. One, of course, was the invasion of Kuwait by Saddam Hussein in 1990. But the other occurred in September of 2019 when the Iranians fired missiles at the Saudi oil facilities in Abqaiq and Khurais in the eastern province of Saudi Arabia. The gathering plant at Abqaiq, which was taken out for about a month, is the single most important oil facility in the world. It processes about 5 million barrels of oil a day, which is a little over 5 percent of world production—not Saudi production—world production. And the fact that the Iranians launched a missile attack on this essential element of the world oil infrastructure certainly gave me pause about the possibilities of future disruptions. And so with that I'm looking forward to your comments and questions. This is a really active issue, the whole issue of whether American military forces are a cost-effective way to stabilize oil shipments, whether they stabilize oil production and transit at all is a really interesting intellectual and policy question. And so with that, I'm looking forward to hearing from you. FASKIANOS: Thank you very much. That was terrific. Let's go now to all of you for your questions. You can either raise your hand at the bottom of the screen or if you're on a tablet on the "more" button. Or if you would like you can write your question in the Q&A box. So let me just take a look at who we've got, and when I call on you, please unmute yourself and tell us who you are so we have context for what institution you're with and if you're a student or a professor, tell us a little bit about yourself. So I'm going to take the first question, a written question, from Wendy Hahn, who is from Georgia Tech, and she wants to know "how can the United States hold the Saudi Arabian government to account, particularly the misuse and mismanagement of U.S. military hardware by the Saudi Arabian military as well as its human rights violations?" GAUSE: Well, not very well, truthfully. We have more leverage on the Saudis vis-a-vis the military campaign in Yemen than we have on their domestic politics. And I think that that's true throughout the region. I think the Biden administration is doing the right thing in reviewing arms sales to Saudi and beginning a new diplomatic effort on Yemen. I think, actually, that the Saudis would be open to that. The way I read it, if you're going to get some kind of political solution in Yemen, you're going to need the Iranians involved, too, because I think they're the only outside force that the Houthis are going to listen to. But the Saudi military campaign in Yemen has been a failure. On the other hand, I perfectly acknowledge, and it's very reasonable, the Saudis see Yemen as a national security issue. The Houthis have launched numerous drones and missiles into Saudi Arabia from Yemen. And so what might come out of a political solution in Yemen is not going to be perfect. The Yemeni state is going to be severely decentralized, and it's going to continue to represent a security issue. But the continuation of the war is not getting anything done. It's just creating a humanitarian disaster and killing people. Now, on the human rights front, I think we have to be realistic. I think that we can talk to the Saudis, and particularly the crown prince, Mohammed bin Salman, about the rules of the road. I think that one of the problems of the Trump administration is they were so close to the crown prince and to the Saudi leadership, that there was a belief that the Saudis could do the kinds of things, frankly, that the Iranians and the Chinese and the Russians do in dealing with their dissidents abroad, referring, of course, to the killing of Jamal Khashoggi, the Saudi dissident journalist, in 2018. That's not something that the United States can stand for as has been made clear. But in terms of the domestic politics of Saudi Arabia, I just don't think that we have much leverage. Regimes are going to do what they think that they need to do to sustain themselves in power. And I think it would be a mistake for us—I think it's inconsistent for me, for example, to say, I think that we need to have a dialogue with Iran about regional issues, strategic stability, and proliferation of weapons of mass destruction in the Middle East, we have to have a direct dialogue with the Iranian government, even though we don't like a lot of the things the Iranian government does domestically. And we don't like the fact that the Iranian government also tries to kill its dissidents abroad. And at the same time, say, we shouldn't be dealing with Saudi Arabia because we don't like their human rights record. I think if you're going to have a practical policy in the Middle East, you're going to be dealing with a lot of people whose human rights record doesn't measure up to what we would like it to be. And for me that means we've got to focus like a laser on what we think our national interests are there. We had two presidencies, the George W. Bush presidency and the Barack Obama presidency, where the administrations thought that they could use American power to change the domestic politics of the Middle East in a direction that would be more liberal, more open, more democratic. Both of those failed. And I think that's one area where I agree with all of the people who wrote the pieces that we sent out for this session is that we have to limit our ambitions of what we can do in the Middle East. FASKIANOS: Thank you. I going to go next to Mojubaolu Olufunke Okome. She's raised her hand. If you could ask your question and tell us where you come from. Q: My name is Mojubaolu Olufunke Okome, and I'm a professor of political science at Brooklyn College. You know, my question is about Yemen and maybe even Syria. You know, there are humanitarian crises underway in those countries, so I think the concern is not just about military presence of the U.S., but the fact that there's a lot of human suffering, and I think also a reluctance of the U.S. to take cognizance of how some of its foreign policy agenda may affect people who have nowhere else to go, you know. So what are the responsibilities of the U.S. when, you know, where these people are concerned and should there not be more thinking about having a holistic strategy that also foregrounds, you know, people's humanitarian needs, not just the security concerns and stabilizing access to oil and whatever else, kind of, geopolitics the U.S. is interested in? GAUSE: Thanks very much. There's a lot to chew on there. I think that the responsibilities of the U.S. are very, very different in Yemen and Syria. In Syria, the U.S. is involved but was mostly involved against ISIS. The efforts to encourage a liberal democratic Syrian opposition were a complete failure and the parties involved, really, in the Syrian civil war, the external parties, that have more responsibility for what happens there are Russia and Iran through their support for the Assad regime, which has killed hundreds of thousands of its own people and used chemical weapons against them, and the parties that have funded the rebels—Qatar, Turkey, less so Saudi Arabia these days. In the early days of the conflict there was a lot of Gulf money, private Gulf money, going into Syria. Not so much now. Yemen is a different story because the United States does have leverage on Saudi Arabia and the United States has participated indirectly in the Saudi campaign in Yemen through the provision of arms and intelligence. And I've thought for some time that the failure of the campaign in Yemen to achieve its political goals meant the U.S. should be pushing Saudi Arabia to end the military campaign. I think it's very, very difficult for any external power to operate a policy that privileges humanitarian needs over geopolitical strategies. If that were the case, privileging humanitarian needs, we should be much more involved in Yemen and much more involved in Syria. And that might actually require the use of force, the use of military force to protect aid shipments to establish safe havens for endangered populations, reconstructing the domestic politics of these countries so that they will become, at a minimum, not areas of mass killing where there'll be some amount of normal life where people can engage in normal economic activities so they can feed themselves is a daunting task. My soundbite on this is that the U.S. is really good at state destroying, but we're not very good at state building. You know, it was easy to destroy the state in Iraq, but we found it was really difficult to rebuild it. We've had a twenty-year effort to build state capacity in Afghanistan that has not worked. And so while I think that where at the margins the United States can act to promote humanitarian goals, we should. For example, I think the Biden administration was absolutely right to revoke the designation of the Houthis, the group in Yemen that controls the capital and much of the northern part of the country that's allied with Iran that the Saudis are fighting. The Biden administration reversed the designation of the Houthis as a terrorist organization, because once a group is designated a terrorist organization under U.S. law you can't deal with him at all. And we should be dealing with the Houthis and we should allow international aid organizations, encourage them, to deal with the Houthis. Now, the Houthis aren't choirboys either, right? They have, shall we say, misappropriated international aid meant for humanitarian purposes as well. But I think that given the severity of the situation in Yemen, we should be working with all the parties there to try to lessen the humanitarian crisis. But I think it's unlikely, if not impossible, but also, I think, extremely difficult for a great power like the United States to, in essence, place humanitarian needs first. If the United States did that it would be the only great power in history that did that. And I don't think we're that special. FASKIANOS: Thank you. So we have a question from Maggie Chambers, she's a senior international business major at Howard University: "Many foreign policy experts have said that both sides are interested in Iran nuclear deal negotiations but because of the politics it's turned into a contest of who will blink first. So the administration might not actually have time in the early part of the year, especially because of COVID-19, to review the deal. What do you think are the effects of pushing it back too far?" And, you know, just building on the Iran question, we have a number of students from the King Fahd University of Petroleum and Minerals and they're very much interested in this question of Iran and is Biden going to return to Obama's policy with Iran at the expense of the Gulf states and how do you see this vis-a-vis Saudi relations with Israel? So there are a lot of questions on Iran. So if you can dig into that—I won't go through each one. GAUSE: Great. So yes, welcome to the students from Saudi. Marhabaan. [Continues speaking in foreign language]. It's nice to have folks from the kingdom joining us. I've actually visited the King Fahd University of Petroleum and Minerals and look forward to the plague ending so I can get back to Saudi Arabia and maybe come out and visit you. Right, so let's start with the nuclear deal. I think the Biden administration already has blinked first. I think that the administration is very, very interested in getting back into, if you will, a freeze-for-freeze, kind of the U.S. takes off sanctions, the Iranians return to the limitations of the deal. I think that the Biden administration has clearly signaled that they're willing to support the EU initiative to restart talks on the nuclear issue. And I think that it's pretty clear that the Biden administration is very happy to go back into, in essence, what JCPOA was, as a starting point, and then negotiate potential changes in terms of the lengthening of the time frame of the agreement or bringing in the Iranian missile capability, those kinds of things. I doubt very strongly that the Iranians are going to be willing to negotiate that. So I think that the real issue here is on the Iranian side. And a couple of things come up there. First, in June, there's a presidential election in Iran. And just like in the lead up to elections in the United States, things get extremely political and leaders might not want to tackle what they consider to be dangerous or divisive or controversial issues. I think you might find that in Iran. So the Rouhani administration, President Hassan Rouhani, under his presidency the JCPOA was negotiated back in 2015, will be leaving office. He's term limited. People who watch Iranian politics much closer than I suspect that the next president of Iran will probably be someone who has a harder line than Rouhani, both domestically and toward the United States. We certainly know that the Supreme Leader whose approval is absolutely necessary for anything major to happen in Iran, Ayatollah Ali Khamenei, has publicly expressed the sentiment that he doesn't trust the United States, it was a mistake to go into JCPOA originally, Iran shouldn't trust America for all the historical reasons. And he's pretty negative about returning to some kind of renewal of the JCPOA. I kind of doubt we're going to get much of anywhere before June. We'll see what happens with the Iranian elections. And then, I think, the diplomacy, if there is a diplomatic possibility, will begin in earnest. But I certainly think that the Biden administration has demonstrated quite a bit of openness to getting back to a simple Iran returns, the U.S. returns in terms of sanctions to where we were when JCPOA was signed and then let that be the basis for future negotiations. So more generally, the approach toward Iran, I think, and the Biden administration, is going to be one of a combination of trying to engage with Iran on the nuclear question, WMD questions, as a basis to try to build some amount of trust to then engage on regional issues. And this is exactly, I think, the sentiment of the Obama administration. And let's face it, almost all the people who are dealing with the Iran issue and Middle East issues in the Biden administration dealt with those issues in the Obama administration. So I think that we can look toward the Obama administration's position as, at least informing, how a Biden administration is going to go forward. Now, I know that for many people in Saudi Arabia and the other Gulf states, that's not a positive message because they worried that the Obama administration was more willing to do a grand bargain with Iran and basically ignore Gulf state strategic interest. But I think that's an exaggeration, that really didn't happen. American military forces didn't leave the Gulf region, and I think that it's perfectly consistent to engage with Iran while still worrying about the spread of Iranian regional influence. Okay. I think that for many people in the Gulf and in the Middle East more generally, there's a very strong belief that America is leaving the Middle East. And one can understand why. Both President Obama and President Trump campaigned on a platform that the U.S. was too involved in the Middle East, right? They both opposed the Iraq War, although there's, I'm not sure President Trump actually opposed it in 2003, but subsequently he says he was against it. We know that President Obama was against it. It was probably the reason that he was able to defeat Hillary Clinton in the Democratic primaries of 2008, was his public opposition to the war from the get-go. One can understand the nervousness in the Gulf states when the Iranians attack Saudi oil facilities in September of 2019 and the American response is extremely muted. So I can understand the fears, but I think they're exaggerated. Despite the fact that both President Obama and President Trump said that they wanted to pivot away from the Middle East and not be as involved in the Middle East, they both left office with tens of thousands of American troops stationed in the Middle East. And I think that that's a reflection of the fact that American administrations, in general, continue to see the Middle East as an important part of the world. All right, let me say one thing about the Abraham Accords and then we can continue on. You know, I would say two cheers for the Abrahamic Accords—not three cheers. This is not Camp David and the Egyptian-Israeli peace treaty. The Abraham Accords do nothing to change the geopolitical realities of the Middle East. There were no wars between the United Arab Emirates and Israel, Morocco and Israel. These are not peace agreements the way some people in the United States portrayed them. They're recognition agreements. And I think that it's healthy in the long run, the part of the integration of Israel as a normal member of the Middle East state system. But they don't change the geopolitics one iota. When you think of the strategic change that happened in the Middle East when Egypt and Israel signed a peace treaty, that was enormous. This doesn't do that at all. We know that the Israelis have been cooperating with numerous Gulf states because of a shared worry about Iran and Iranian influence in the region. So the Abraham Accords just bring that for some of the Gulf states like Bahrain and the UAE more into a public realm. But let's face it, the two issues with Iran that are the most significant threats to the region, right, the Israelis and the Gulf states have different views of them. For the Israelis the big issue is the possibility of an Iranian nuclear capability. And the Israelis see that as an existential threat. For the Gulf states, of course, an Iranian nuclear capability would not be welcome. But I think for the Gulf states the most serious threat emerging from Iran is Iran's ability to affect the domestic politics of so many Arab states—Iraq, Syria, Yemen, Lebanon—the efforts Iran has made to infiltrate into the politics of numerous Gulf states, failed efforts but efforts, nonetheless. For the Gulf states, right, Israeli military power is not a deterrent to Iranian involvement in the domestic politics of the Arab world because Iran already has far superior military power, but the Iranians have been successfully involved in Iraq and Syria and Lebanon, now Yemen. So there's room for cooperation, but I just don't see the Abraham Accords as being a major geopolitical change. FASKIANOS: Thank you. I'm going to go next to Jim Hollifield, who has his hand raised. Q: Greg, glad you're doing better down there in College Station. It's really nice and warm today in Dallas, Texas, and thanks to Irina, the CFR, and you guys for putting this on. I have a fairly straightforward, simple, but somewhat loaded question for you. If you could pick the top three or four allies of the United States in the Middle East as things currently stand, who are they and what should we expect from them to advance American interests in the region? FASKIANOS: And, of course, Jim is with Southern Methodist University in Dallas. GAUSE: Yes. So whenever anybody says they have a simple and straightforward question for me, I put my hand on my wallet because I'm afraid I'm going to get pickpocketed. So, Jim, it's not so simple and straightforward, as you know. Look, the United States has only one treaty ally in the whole Middle East. And that's Turkey because Turkey is a member of NATO. We do not have a mutual security treaty with Israel, even though I think it would be a mistake not to call Israel America's ally. We don't have formal treaty commitments to any state in the Arab world, even though we fought a war to restore Kuwaiti sovereignty in 1991. Even though we have named a number of Arab states as major non-NATO allies. We don't have these treaties. So I'm going to just say, who are the most important American partners in the Middle East and every one of them is problematic. Every one of them is problematic. We have a number of unproblematic partners like the Kuwaitis, but they're relatively small, right? And their ability to project power and influence is limited. The three countries that we deal with that I think are the most important, but also in many ways the most difficult, are Turkey, Israel, and Saudi Arabia. Turkey, a NATO ally, but has been pursuing policies both in the Eastern Mediterranean in the Aegean and in Syria that are problematic. The Israelis, with whom the United States has the closest relationship in the Middle East, and that's based on a very, very strong domestic political basis, right, a bipartisan commitment in the United States to the support of Israel. And that's something that one can argue about what it should be and how much it should be and what, you know, how much should it extend. But I think that anyone who deals with American policy in the Middle East has to acknowledge that there is a bipartisan American consensus that the United States is going to have a close relationship with Israel and close security relationship and close political relationship. And finally, Saudi Arabia, which in some ways might be the most influential Arab state these days but still is not that influential, right? It's losing in Iraq. It's losing in Syria. It's losing in Yemen. It's losing in Lebanon. The Saudis are a difficult partner and that they do things we don't want them to do. The Israelis do things we don't want them to do. Certainly the Turks do things we don't want them to do. But I think the reason that these three are important is because they're real states, right? They have real governments. They pretty much control their borders. They have governments that can actually function and conduct foreign policy beyond their borders. This is not something that's true in Iraq, it's not something that's true in Syria, right? Even Egypt, right, an important American partner in many ways, has seen its regional influence decline and Egyptian energies are so concentrated on domestic politics that, aside from some very specific issues like Nile water issues with Ethiopia and Sudan and some involvement in Libya, Egypt's reach in the Arab world is very, very limited these days. And so we have to find some way to deal with Turkey and Israel and Saudi Arabia, realizing that we don't, you know, our interests sometimes diverge from them and that each of those relationships is going to be difficult. So there's my simple and straightforward answer. FASKIANOS: Fantastic. So I'm going to take the next question from—oh, it just popped away. Here it is. From Mohammed Sulaiman, also from KFUPM: "Today there is a deal between Saudi and Russia in military cooperation. Can you talk about this deal? And what does it mean for Saudi-U.S. relations?" And obviously President Biden has now talked about sanctions on Russia so there is a lot around all of this. GAUSE: So thank you very much, Professor Sulaiman. I think that, you know, with the Cold War over, everybody in the Middle East is playing a multipolar game. And for Saudi Arabia, Russia is an extremely important interlocutor, mostly because of energy issues, right? In many ways the Saudi ability to influence the world energy markets, world oil market, depends upon their ability to make deals with Russia. And the three largest oil producers in the world are Russia, the United States, and Saudi Arabia. Saudi Arabia far and away the largest oil exporter in the world. The United States, we don't have a centralized locus of control for our energy markets, right? People produce, companies produce, my neighbors in Texas produce, but the government really can't control that that much. But Russia and Saudi Arabia are centralized political systems where political deals can lead to increases and decreases in oil production that can affect the market. And I think that we've seen that, we saw that in negotiations between Saudi Arabia and OPEC and the OPEC-plus members, Russia, back in 2014, '15, and '16. And we saw it in March 2020 where the inability of Russia and Saudi Arabia to come to an agreement led to a collapse of oil prices that to some extent engineered by Saudi production decisions in order, I would say, to bring the Russians back to the table, among other reasons. And so it's not surprising to me that Saudi Arabia would be reaching out to Russia. As I said earlier, there are suspicions in Saudi Arabia about American reliability. I think they're exaggerated, but they're real. They're there, I know. But let's face it, what the Russians can't do is project power, right? They can help in air campaigns as they did in Syria. But they really don't have a blue-water navy anymore. They can't project power into the Gulf in any realistic way. And I think that, in terms of security, it makes a lot of sense for countries in the Middle East to talk to Russia, talk to China, but if you need to get something done today, you need to talk to the United States. FASKIANOS: Thank you. I'm going to go next to Babak Salimitari, who has raised hand. Q: Hello, can you hear me? GAUSE: Yes. Q: My name is Babak. I'm a second-year econ major at UCI. And I have a question mostly pertaining how the United States can use their leverage that they gained in the past four years with the Trump administration against Iran. So I've been to Iran under every single administration of the twenty-first century, except for Joe Biden, not yet. And you can really say that you had thirty-eight years of conventional international relations with Iran and then there's the four years of Trump. So the country felt really, really different. And what I would have to say with international pressure and considering that Iran was isolated, along with the fact that Israelis were bombarding their settlements in Syria, there was the Abraham Accords, there was the fact that the Russians had also turned on them in Syria, the Iraqis weren't giving them their money, the country had a really isolated stance and they could have easily come to the table without going to another JCPOA. So I'm wondering what ways could the United States use that leverage and not ruin everything that has been gained? GAUSE: Sure. Thanks very much. UCI, University of California, Irvine? Okay, I'll assume you're from UC Irvine. So how do you bring the Iranians to the table? This has been the question, I think, for American administrations since Jimmy Carter. To me, the most successful effort to do that was the Obama administration, right, the negotiation of the JCPOA, which led to the Iranians cutting back on their nuclear infrastructure, shipping enriched uranium out of the country. And the lesson I took from that is that the approach to Iran that works is if you can get multilateral pressure and multilateral sanctions and that Iran is more comfortable as it were negotiating with and accepting agreements with multilateral groups under a UN auspices, rather than having to seem like they're knuckling under to the United States. And I think that this was the core problem of the Trump administration. I think your point that the Trump administration put a lot of pressure on Iran is absolutely right. And I was surprised by that, you know, because in international relations we usually say multilateral sanctions work, unilateral sanctions don't. But the Trump administration was able to leverage access to the American financial system, which everybody in the world wants, into a very effective set of sanctions that reduced Iranian oil production and reduced economic activity for Iran. The problem, I think, for the Trump administration is that they didn't know what they wanted to do with that leverage. There were some indications that President Trump wanted to negotiate directly with the Iranians. There were some indications that what the Trump administration really wanted was regime change. Well, no regime is going to negotiate its own downfall from power, right? And even if President Trump was sincere in the sense that he wanted to, you know, renew some kind of diplomatic interchange with Iran, you can understand why plenty of people in Iran were suspicious of that given the regime change rhetoric, given the tough sanctions, and given the fact that in Iranian domestic politics there are always elements that will oppose any kind of negotiations with the United States, both perhaps for their own domestic reasons but also for ideological reasons. So I take the point that the Trump administration had some leverage. But I think what the Biden administration is, kind of, demonstrating coming in, is that they would like to return to a multilateral framework, both because that's what they sense led to success in the Obama administration and because they think it might be easier for the Iranians to come back to the table in a multilateral framework. The problem with that, I think, going forward, is I don't think the Chinese and the Russians will be involved in the same way that they were in those UN sanctions and the P5-plus-one negotiations that led to the JCPOA. I don't think the Russians and the Chinese will be up for that. But if the United States and the Biden administration can bring the Russians and the Chinese back into that, that would be a real diplomatic coup and might put more pressure on the Iranians to enter into multilateral talks. FASKIANOS: Fantastic. I'm just scrolling through. We've got over forty questions in the chat, so I'm trying to cover areas that we haven't touched upon. I going to ask Shirin Tahir-Kheli's question, she's at Johns Hopkins University: "How likely is any kind of U.S. military disengagement in the Middle East and Gulf given the growing emphasis on China and the fear of any region to China?" And somebody else asked about, "Does our military presence in the Middle East help or hurt us, the perception of America?" GAUSE: Right, boy, those are two very different questions. Professor Kheli, whose work I've read, I think that I don't think we're leaving the Persian Gulf region. It seems to me that, does give us some leverage vis-a-vis China? Well, probably not that much in normal terms. I don't think that we're going to, you know, we say we're there for the free flow of oil. I don't think we're going to say everything but oil to China. I mean, that's not in the cards. But it would only be in the most extreme of circumstances, it seems to me, if China and the United States we're actually in a shooting war where the American presence in the Gulf might be substantial leverage against China. You know, the Chinese position toward the Middle East, I think, is fascinating. I don't know much about it. I'm a student, not a teacher on that subject. But it seems to me that the Chinese so far have been acting like economists would recommend, right? They don't have a major military commitment to the region. They want to do business with everybody. To some extent they freeride on whatever guarantees the United States has on the free flow of energy out of the Persian Gulf. If they start thinking like political scientists, i.e., the Persian Gulf is really important to us as an energy source and in an extreme situation that the Americans are they could try to cut us off so we really have to beef up our presence in the Persian Gulf, that could definitely lead to tensions going forward. In general, I think that—the second question about the American military presence—the American military presence in Saudi Arabia, which stemmed from the Gulf War of 1990-91, we maintained forces in Saudi Arabia to run the air surveillance over Iraq, Operation Southern Watch, was definitely in the long run a bad thing for the United States because that was the rallying cry for Osama bin Laden and al-Qaeda when they said that the United States was quote, unquote "taking over Saudi Arabia," and that was one of the spurs to the formation of al-Qaeda and eventually to the attacks of 9/11 on the United States. However, the American military presence in the smaller Gulf states—Kuwait, Bahrain, Qatar, the United Arab Emirates, and Oman—is not nearly as controversial. In Kuwait it's popular because Kuwaitis remember the Iraqi invasion and they see the American military presence as a guarantee that that won't happen. The rest of these states, within the living memory of people who are citizens of those areas, they were protectorates of Great Britain and the British had forces in these places. Not as many as the United States but it's within the living memory of people in these states to have been under the military protection of an outside great power. And it just doesn't seem to me that the military presence, even in a country like Bahrain, which has its own political divisions, just to a great extent on the sectarian basis in Bahrain, I don't see the American military presence as being one of the focal points of political mobilization in Bahrain. And thus, I think that these states are just much more accustomed to foreign military presences and foreign presences and they're much more comfortable with it. FASKIANOS: Great, the next question is from Lena Kumar, who is at the University of Houston: "What role can organizations like USAID play in the Middle East in an effort to help reduce the capacity gap?" GAUSE: I get back to my question of how do you rebuild states. I think what USAID does on the ground in many places is great. But, you know, our enormous efforts in Iraq and Afghanistan have not led to an appreciable increase in state capacity. And thus USAID, I think, can be very helpful. It can play a humanitarian role, that's for sure. It can have a real impact on local projects. But what I think we lack is a theory of how to use aid to build states. And until we get that theory our efforts are going to be piecemeal. I think that they're going to be frequently going to be counterproductive, and there'll be some amount of waste. So I think that we can help on the ground and USAID does great work in all sorts of places, but that larger question of how we can use international development aid to try to reconstruct states that can actually govern and govern in a civil and decent way in these countries where the state is broken, I don't see the guideposts. I don't see the theory and until we get one efforts are going to be scattershot and the results are going to be mixed. FASKIANOS: Great. We have two minutes left, so I think we will sneak in one more question. And I'm going to go to, I'm trying to find it, Sophie Berman from Skidmore College: "What do you think are the strategic implications of non-state actors for U.S. foreign policy in the Middle East?" That's a big one to sum up in a minute. GAUSE: I can sum that in two minutes, right? Greetings to Skidmore, I hope everything in Saratoga is going well. So I think non-state actors are extremely important in these places where the state has collapsed or has weakened. And the problem for American diplomacy is I think we're really good at dealing with people who have addresses. You know, we're really good at dealing with states. We're even good at dealing with states who don't like us and we distrust. You know, I'll point to JCPOA. The Iranians are a real government, they have a real address, and the United States can bring both sets of sanctions and sets of incentives to the table to deal with states. What we're not really very good at is dealing with non-state actors because the kinds of tools that we have, they don't care about, right? Our big military stick doesn't really affect them that much unless we want to use it, you know, like we used it against ISIS. And it's tough to do that against non-state actors. They don't have the responsibilities of states and don't need the kinds of things that the United States can bring to the table in a negotiation. And non-state actors tend to be, they tend to be driven as much by narrow domestic concerns about their own power and ideological concerns. So who's good at dealing with non-state actors? The Iranians have been great at dealing with non-state actors because they've built networks based on shared notions of what politics looks like, right? Iran's proxies and allies and clients want to be allied to Iran. The United States doesn't have those kinds of connections to any players in the Middle East and United States allies like Saudi Arabia, right, the "natural allies," quote, unquote, the natural non-state actor allies of Saudi Arabia kind of based on ideology, hate the Saudis and want to kill them and hate the United States, the Salafi jihadist movements. So, you know, the United States has been able to play Kurdish politics in Syria. That's about the only place where I would say the United States has successfully had a relationship with a non-state actor that was positive and supportive and helped to achieve American interests. But we're really not good at that. I think American diplomacy works better when there are stable, decently governed states. And that doesn't necessarily mean they're democracies, but that there is a real governance in those states. We could deal with the Assad regime, under Hafez al-Assad, but we can't really deal with a Syria that's broken apart. And so to the extent that non-state actors are important, America's leverage is reduced. FASKIANOS: Thank you. And with that, we need to end. Dr. Gause, thank you very much for this conversation. We really appreciate you doing it and for everybody's questions. We're leaving with over fifty questions still, between raised hand and written questions, so I apologize for not having gotten to all of you but we hope we covered a lot of the areas that were raised. You can follow Dr. Gause's work on gregorygause.com. He doesn't tweet, but he does have a very rich website. You need to add that to your to-do list. GAUSE: I'm too old to tweet. I'm too old. Look at all the trouble it got President Trump in. FASKIANOS: I know, it's overrated, right? So thank you very much for doing this. Our next webinar will be on Wednesday, March 10, at 1 p.m. Eastern time. H.R. McMaster, the Fouad and Michelle Ajami senior fellow at the Hoover Institution, will be with us to lead a conversation on the role of the National Security Council. So do please follow us @CFR_Academic on Twitter and visit CFR.org and ForeignAffairs.com for new research and analysis on these global issues. You can find articles published by Dr. Gause in Foreign Affairs. He's a regular contributor there, too. So thank you again for joining us and be safe and be well, everybody. (END)
  • Middle East and North Africa
    How Saudi Arabia Gets Away With Murder
    Investors flocking to Riyadh’s “Davos in the Desert” prove that nobody knows what accountability for Mohammed bin Salman would even mean.
  • Saudi Arabia
    Saudi Arabia’s Downsized Hajj, Turkey’s Hagia Sophia Transformation, and More
    Podcast
    Saudi Arabia hosts a scaled-down hajj, Turkey’s historic Hagia Sophia begins its reconversion into a mosque, and tensions mount over the Grand Ethiopian Renaissance Dam.
  • Saudi Arabia
    Just How Important Is the Rift Between Qatar and the Saudi Arabia-led Quartet?
    Amir Asmar is a Department of Defense analyst and CFR’s national intelligence fellow. Throughout his intelligence career, his primary area of focus has been the Middle East. He held a wide range of analytic, senior analytic, and leadership positions for the Department of the Army, the Defense Intelligence Agency, and the National Intelligence Council. The statements of fact, opinion, or analysis expressed in this blog post are strictly those of the author and do not reflect the official policy or position of the Department of Defense (DoD) or the U.S. government. Review of the material does not imply DoD or U.S. government endorsement of factual accuracy or opinion. Gabriela Hasaj is a research associate for CFR's military fellowship program. It is unlikely that the 2017 rift between Qatar and the Gang of Four—Arab states led by Saudi Arabia and including Bahrain, Egypt, and the United Arab Emirates (UAE)—will heal anytime soon. A few months after the rift began, then Secretary of State Rex Tillerson had to intervene to stop a Saudi Arabia and UAE-led plan to invade Qatar. An effort at a negotiated solution in February faltered, and an April call between U.S. President Donald J. Trump and Qatari Sheikh Tamim bin Hamad failed to facilitate a resolution. Although the Saudi-led group criticizes Qatar’s relationship with Iran and its outreach to Islamist groups, the dispute centers on Doha’s unwillingness to follow Riyadh’s lead on regional issues. The United States has maintained security relationships with the two sides, but a variety of U.S. regional objectives—collective security structures, particularly to contain Iran; more effective countering terrorism efforts; stability in Libya; and energy production and distribution—have been or are likely to be affected by the rift. Although the quartet broke diplomatic relations with Qatar after its April 2017 ransom payment to Shia militants to gain the release of twenty-six Qataris abducted in southern Iraq, elements of the conflict between Doha and Riyadh predate the payoff. With the 1995 ascent of Sheikh Hamad bin Khalifa al-Thani as emir of Qatar, Doha pursued an independent foreign policy that sought ties to important regional and international players. Al-Jazeera, founded in 1996, is a voice of the Doha government and angers Riyadh with its critical coverage. In 2011, Doha argued that the wave of Arab revolts “could not be ignored or contained and can only be moderated if they were engaged.” It deviated from the Saudi approach, supporting Islamist parties that came to power in Tunisia and Egypt, and anti-Qaddafi forces in Libya. Rather than criticize Iran for stoking Bahrain’s Shia revolt, Doha held high-level meetings with Iranians during the protests to discuss security and economic issues. As one of many conditions for ending the rift, the quartet has demanded that Doha sever all ties with Iran. Washington would probably also prefer that as many of its partners as possible take steps to further isolate and pressure Tehran. Qatar insists, however, that maintaining cordial relations with Iran is a commercial necessity. Since the 2017 break with the quartet, Qatar’s relations with Iran have grown closer. Doha restored full diplomatic relations with Tehran, and Iran provided Qatar with sea shipments of fresh food and allowed Qatari airplanes to use its airspace. Qatar is on the record in support of Iran’s right to peaceful uses of nuclear power. Also, senior Qatari defense officials have called for the restoration of the 2015 Iran nuclear agreement—which was opposed by Riyadh and Abu Dhabi—and indicated Qatar would not join any conflict against Iran. Although they ended up on opposite sides of the Syrian civil war, Iran sought Qatar’s influence among opponents of the Damascus regime to avoid conflict with its own militias. Although there is no indication that any party to the rift is reconsidering its security ties to the United States, including U.S. basing on their soil, divisions among Washington’s Gulf partners also make them reluctant to embrace ideas regarding collective security. The U.S. Central Command’s (CENTCOM) naval forces remain in Manama, while the United States’ largest air presence in the region and CENTCOM’s forward headquarters are at Al-Udeid Air Base near Doha. U.S. troops are also based in Saudi Arabia and the UAE. Qatar and three members of the quartet were in the top fifteen purchasers of U.S. arms in the world between 2008 and 2018. However, as a result of the rift, the 2017 U.S. proposal of a Middle East Strategic Alliance, a regional NATO encompassing Egypt, Jordan, and the six Gulf Cooperation Council (GCC) states—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE—with an initial focus on containing Iran, never got off the ground. The GCC and its Peninsula Shield Force, typically a non-player in the region’s major conflicts, is unlikely to become more effective or contribute to U.S. regional security priorities. Furthermore, Doha clearly engages with militant groups and may be frustrating Washington’s objectives of stifling funding for some violent extremists. In addition to the 2017 payment of hundreds of millions of dollars in ransom to groups currently designated by the U.S. as foreign terrorist organizations (FTO)—Iran’s Islamic Revolutionary Guard Corps, Lebanon’s Hezballah, and Iraq’s Kata’ib Hezballah—Doha has explicitly supported jihadists fighting the Syrian regime, including Ahrar al-Sham and al-Qaeda affiliate Jabhat al-Nusra. With Israeli acquiescence, it sends funds to the Palestinian resistance group Hamas, a U.S.-designated FTO descended from the Muslim Brotherhood that has worked for years to undermine U.S. regional peace proposals. Doha also permits the Afghan Taliban to maintain an office in Qatar. Senior U.S. Department of the Treasury officials have criticized Qatar for allowing fundraisers to solicit donations for extremist groups such as al-Qaeda and the self-proclaimed Islamic State in the country. Moreover, al-Jazeera’s news coverage provides a platform to operatives from many terrorist groups. For its part, Doha has denied enabling terrorist attacks, and it is worth noting that some of its quartet accusers likely have their own links to militants through government and private funding of Islamist proselytization, schooling, and charities and are cynically using this issue in an effort to paint Doha in the worst possible light. In Libya, where the United States has sought stability since Qaddafi’s 2011 downfall, the Gulf rift has created openings for external powers to intervene in violation of a nine-year-old UN arms embargo. Turkey has joined Qatar in providing arms to the UN-recognized Government of National Accord (GNA) in Tripoli against UAE- and Egypt-supported strongman Khalifa Haftar. The Muslim Brotherhood-backed Justice and Construction Party retains a strong position within the GNA, which explains Doha’s support and the quartet’s hostility. The nine-year-old civil war has created a security vacuum and made the country a base for terrorist attacks in Europe, North Africa, and the Sahel. Had the GCC maintained the ability to come to coordinated policies, picking a partner in Libya may have reduced the scope of the Libyan conflict to the benefit of Libyans, their neighbors, and the United States’ European partners. The rift between Qatar and the Saudi Arabia-led quartet has also impacted the energy sector. In 2018, the year after the quartet broke relations with Qatar, it left the Organization of the Petroleum Exporting Countries (OPEC) to signal its disapproval of Saudi influence in OPEC and to focus on becoming a leader in the liquefied natural gas (LNG) market. Historically, LNG was priced based on the price of oil. Quitting OPEC gave Qatar more freedom to price its LNG with less deference to Riyadh’s oil pricing. Although the UAE has a longstanding LNG agreement with Qatar that remains unaffected by the rift, it expires in 2032, and Abu Dhabi has decided to expand its own natural gas production capacity. A recent discovery of a massive gas field on the border of Dubai and Abu Dhabi could lead to the UAE becoming a net exporter of LNG at Doha’s expense. Riyadh is also seeking to become a player in the LNG field, through a network of GCC countries and relationships with U.S. and Russian LNG producers. Qatar—already the leading LNG exporter to the United States’ largest trading partners in Europe—reached a partnership deal with the Italian company Eni to develop oil fields in Oman, Mexico, and Mozambique, and invested in the Golden Pass LNG project in Texas. In conclusion, the rift has made it more difficult to move closer to a number of U.S. regional objectives, including constructing a regional security architecture, placing greater limits on Tehran, averting more effectively the funding of extremist groups responsible for regional terrorism, and containing the damage from Libya’s civil war. The energy sector may well become the next battlefield of competition between Qatar and its adversaries. To avoid a dynamic similar to the recent destructive Russia-Saudi oil price war, Qatar and Saudi Arabia or the UAE would need to communicate and separate their longstanding differences from the LNG market. Their split will continue to invite involvement in Arab affairs from Iran, Turkey, and other actors. Despite the rift’s obvious negative consequences, Washington has benefitted from Doha’s relationships. It negotiated an agreement with the Taliban in Qatari-hosted talks. Also, Qatar’s ties to Syrian insurgents enabled the 2014 release of Peter Curtis, an American held by Jabhat al-Nusra. Qatar’s increasingly close ties to Tehran could serve a similar role if U.S.-Iranian talks resume. However, until it is resolved, the rift will continue to render achieving many U.S. regional objectives more difficult. The appearance of external hyperlinks do not constitute endorsement by the United States Department of Defense (DoD) for the linked websites, the information, the products, or the services contained therein. The DoD does not exercise any editorial, security, or other control over the information you may find in these locations.
  • Afghanistan
    Women This Week: Attack on Maternity Ward in Kabul
    Welcome to “Women Around the World: This Week,” a series that highlights noteworthy news related to women and U.S. foreign policy. This week’s post, covering May 7 to May 15, was compiled by Maleeha Coleburn and Rebecca Turkington.
  • Financial Markets
    OPEC Plus’ Zero-Sum Oil Game
    Prior to the U.S. invasion of Iraq in 2003, international sanctions had severely curtailed Iraq’s oil industry. Oil production sat at 1.4 million barrels a day (b/d). Iraq’s beleaguered refining industry was forced to inject surplus heavy fuel oil into oil reservoirs because there was nowhere else to put it. Iraq’s oil industry was debilitated from years of war and sanctions. It took the country billions of dollars of foreign direct investment and over twelve years to restore production to its pre-revolution 1979 capacity of above 4 million b/d. The breakup of the former Soviet Union tells a similar story. Russian oil production declined slowly from 11.3 million b/d in 1989 to a low of 6 million b/d in 1996. It only reached its pre-collapse level of 11.3 million b/d again in 2018. These lessons from history are important because they demonstrate the severe and long-reaching consequences that can result from mismanagement of oil sectors amidst turmoil created by endogenous or exogenous forces. The COVID-19 pandemic has already shown it could produce unprecedented shocks both from the health crises within petrostates and from external forces such as the sudden loss of demand for oil and the accompanying logistical and operational problems arising from oil pricing volatility.     The news that the Organization of Petroleum Exporting Countries (OPEC) plus other key oil producers like Russia had reached a historic agreement on April 12, 2020, to jointly cut production by 9.7 million b/d and that other output reductions would follow from other countries such as Brazil, Norway, and Canada was hailed as a good first step to stemming the tide of a massive surplus of oil that is accumulating across the world. The intervention was welcomed by the G-20 and in particular, the United States, which put its diplomatic weight into the effort to broker the arrangement, hoping to stave off a sovereign credit crisis in fragile petrostates and ease the pressure of mounting global oil inventory surpluses. But just a week later, the difficulties of the arrangement, which does not officially start until May 1, 2020, are starting to emerge. OPEC’s own internal calculations anticipate 300 million barrels accumulated in global inventory in March, with even more to come in April. Energy Intelligence Group reported that surplus floating crude oil storage, which is surplus too, and does not include crude oil in transit at sea to meet anticipated demand, had already increased to 117 million barrels by the end of February, up from 99 million barrels at the end of 2019.   The Wall Street Journal reported late last week that twenty large oil tankers holding a combined 40 million barrels of Saudi crude oil is heading towards oil ports in Texas and Louisiana and are due to arrive in May. Some of the oil was diverted from China, whose shutdown in February left it unable to absorb Saudi oil. But Saudi Arabia also emptied oil from its oil storage facilities in Egypt, Europe, and elsewhere as it was ramping up its declared price war in early March 2020. Now, Saudi Arabia will have to consider if it should slow steam its tankers, that is, have them sail at a slower than normal rate, or even reverse course, to ease the pressure of the arrival of so much oil amidst a continued collapse in U.S. oil demand in the wake of longer than expected economic slowdowns from COVID-19 related directives to shelter in place.   Saudi Arabia owns a 600,000 b/d refinery in Port Arthur, Texas but overall U.S. refining utilization has fallen below 70 percent of capacity nationwide this month in the wake of collapsing demand for gasoline and jet fuel. It is technically difficult for refineries to operate below 60 percent of capacity without turning off some processing units.   The time lag between when oil demand began to crater in February and the point at which the May OPEC Plus oil deal will kick in has created a rush to find storage where it might be available. Over 19 million barrels of crude oil was added to U.S. inventories last week alone. American pipeline companies are requiring companies seeking space on their lines to provide proof of destination certificates verifying there is a refiner at the other end of the pipeline willing to take the oil. U.S. crude oil exports are still moving into ships at the same rates as earlier this year with expectations that firm buyers are still there at the other end. Already, as storage tanks and distribution systems fill, logistical problems and related oil price volatility is worsening. Today, for example, May futures prices for West Texas Intermediate (WTI) crude oil on the New York mercantile exchange (NYMEX) have fallen precipitously to $1.75 as the contract comes towards its expiration date. If the economic demand rebound in May and June in Asia and beyond does not materialize fast enough and at the large scale needed to absorb the world’s oil, continued oil price volatility could be harsh. Recent Chinese traffic data, for example, shows a strong resumption in driving of personal automobiles on the road during work related commuting hours but a still subdued amount of traffic at other times of the day when cars could have been expected to return to the road for shopping and recreational activities.   If global oil demand does not pick up sufficiently in the coming weeks, then lack of access to physical oil storage facilities is bound to cause some oil production to shut-in. Analysts believe that oil production in Africa, Latin America, and Russia could be the most at risk to storage shortage-related curtailments, with potential damaging results for the long run performance of some older oil fields. The prospects that some oil exporters could be forced to close oil fields sooner than others means that all producers have some incentive to take a wait-and-see approach to their promised cuts. In recent years, the collapse of Venezuela’s industry has made room for better prices for the rest of OPEC. Loss of exports from war-torn Libya has also helped.   Despite all the uncertainty or maybe because of it, Russia and Saudi Arabia released a joint statement last week saying that they will “continue to monitor the oil market and are prepared to take further measures jointly with OPEC Plus and other producers if these are deemed necessary.” At the same time, analysts are struggling to anticipate which will come first, a gradual recovery of oil demand as various countries or regions reopen their economies, or damage to oil fields whose operations can no longer continue normally due to financial bankruptcies, severe economic losses, lack of access to storage, or worse still, a severe outbreak of coronavirus among critical offshore workers in a particular location or platform. The uncertainty is bound to create a volatile mix for oil prices in the next few weeks and complicate any future international diplomacy to bring longer range stability to oil markets.  
  • Middle East and North Africa
    Russia is Losing the Oil War—and the Middle East
    Moscow spent years building influence in the region—and lost it all playing hardball with Riyadh.
  • Energy and Environment
    The Russian-Saudi Oil Price War, With Amy Myers Jaffe
    Podcast
    Amy Myers Jaffe, CFR’s David M. Rubenstein senior fellow for energy and the environment and director of the Energy Security and Climate Change program, sits down with James M. Lindsay to discuss the standoff between Russia and Saudi Arabia over oil prices.
  • Oil and Petroleum Products
    Oil Price War: Is U.S. Shale The First To Blink?
    As the oil price war continues, markets are hanging on every word coming from Washington, Moscow and Riyadh, amid signs that diplomacy could be afoot. A statement by the Kremlin’s presidential spokesperson, that Russia would like to see higher prices, signaled that Russia might be willing to blink in the Russia-Saudi oil price standoff. It appears that the fall in the ruble is larger than Moscow expected, prompting them to use up foreign currency reserves at a faster clip than anticipated. Russia could also be finding it more difficult to sell its oil in China and Europe.
  • Oil and Petroleum Products
    The Oil Price Shock: Who’s Most Vulnerable in the Coronavirus Slump?
    A long dip in oil prices could put several oil-producing states under great strain, but some are better positioned than others to weather the downturn from the coronavirus.