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  • Manoj Kumar Meena asked: As the US is increasingly becoming self reliant in oil and gas, why does it still ally with a theocratic regime in Saudi Arabia?

    Rumel Dahiya replies: It is true that the US is approaching a stage of energy self sufficiency. In fact, it would be in a position to export LNG to its favoured trade partners once the infrastructure is in place. Availability of cheap gas domestically is creating a competitive edge for America's manufacturing sector and an influential section of the American society would like to retain that edge by restricting exports. It is axiomatic, therefore, that in the changed situation the importance of West Asia (or the Middle East) in America's energy security matrix will reduce greatly. Some analysts opine that America's involvement in the geopolitics of the West Asian region as a whole would decline. However, a superpower would always like to retain influence and maintain leverages all across the world. Being a region with the largest exportable surplus of oil and gas, the region as a whole is bound to remain strategically important to the world, even if not to the US.

    With its ability to increase oil production at short notice and financial capacity to reduce production without serious damage to its economy, Saudi Arabia remains a significant and perhaps the most important energy player in the world. Also, being the richest and most influential country in the region, ready to financially help out regimes from Egypt to Pakistan and beyond, it can not be ignored easily. This is so even when it does not shy away from promoting fundamentalist Wahabism across the world. America's liberal democracy and pluralism and Saudi Arabia's hardline sectarian theocracy do not make for easy partnership. However, their relationship has always been interest driven. US has looked at close engagement with Saudi Arabia in terms of maintaining its influence in the region, controlling and securing energy resources for itself and its allies and to serving its geopolitical interests besides furthering its economic interests in terms of trade and commerce. Saudi Arabia, on the other hand, looked at the US as a guarantor of its security, particularly from Iran after the Iranian Revolution, and supporter of its ambitions for regional hegemony.

    The situation is now changing primarily because of two reasons. America's energy independence is perhaps the most important reason. US is also realising that Saudi obsession with Iran is constricting American choices in the region. This issue has gained salience with much reduced American appetite for military interventions abroad for economic and political reasons. Increased focus on East and South East Asia will necessitate a degree of disengagement from elsewhere. West Asia is one such region wherein various players like Saudi Arabia, Egypt, Israel and Turkey continue to place heavy demands on American political capital and security apparatus. By not getting directly involved in Syria and initiating talks with Iran on the nuclear issue, America has signalled change in its approach. This, however, does not mean that America will disengage with the region or affect a break with Saudi Arabia. America may not need West Asian oil and gas but some of its allies do. It would also not like to see its peer competitor(s) to fill the vacuum once it vacates the geopolitical space. It would also be necessary for the US to maintain a degree of influence with all important states in the region so that it remains an indispensable balancer for the region. The US-Saudi relationship is likely to cool down considerably in next decade or so but it is unlikely to turn into hostility. US is likely to follow a more nuanced and balanced policy for the region to create a new regional balance of power wherein it would be able to exercise influence but not be a guarantor.

    The Great Gas Game over Syria

    New energy find in West Asia will set forth new political equations. Syria alone has discovered huge proven gas, oil and shale reserves. Whether the Assad regime survives or a change of regime happens there would determine the global gas system in a large way.

    September 09, 2013

    Iraq: Ten Years after the US-Led Invasion

    The US has spent over a trillion and a half dollars and this huge expenditure has nearly unhinged its domestic economic equilibrium. At the strategic level the results for the US have been even more disconcerting in terms of Iraq's Shiite-led government refusing to let US troops stay on as well as extending support for fellow Shiites in Syria.

    March 20, 2013

    The Iran-Pakistan Pipeline: Pressler 2.0?

    The Pakistanis are playing a high-stakes gamble, one in which they think the odds are stacked in their favour in a way that while they stand to gain a lot even if things don’t quite work in the way they imagine they won’t end up losing too much.

    March 12, 2013

    Peak Oil and Implications for India

    The basic point is that crude oil is a finite resource. Hence, the issue is not ‘if’ crude oil peaks and availability declines, but ‘when’ it peaks and starts its decline. Peak oil is the theoretical point in time at which oil production peaks and begins to fall. Here we refer only to peaking of conventional oil.

    January 2013

    India struggling to cope with sanctions on Iran

    The Indian government is now weighing several options to manoeuvre around the ever-tightening sanctions, including the provision of sovereign guarantees to oil tanker operators.

    June 26, 2012

    China’s Strategic Petroleum Reserves: A Reality Check

    While maintaining a reserve of 100 days worth of imported petroleum consumption at present consumption rates may be the stated policy of the Chinese government, an analysis of the existing capacities seems to suggest that China may be in a position to store much larger strategic oil reserves should it so desire.

    May 21, 2012

    Going Beyond the Public Statement on Iranian Oil

    Having rejected the western demand for oil sanctions, the real test for the Indian government lies in whether it can implement its public pronouncement.

    February 09, 2012

    EU Oil embargo on Iran—China is now the pivot

    All China has to do is to purchase Iranian oil and off-set this against a supply of essential consumer goods from China to Iran and settle the accounts in Chinese Yuan.

    January 30, 2012

    The Persian Gulf Cul-de-Sac

    With growing tensions between the US and Iran leading to a drawing of maritime red lines, the Iranian threat to close the straits of Hormuz and the US response could affect future maritime issues, oil supplies and the world economy.

    January 12, 2012

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