Saudi officials aware of the disastrous appeal told Middle East Eye that the dispute threatened to cancel months of detente between the two countries, in which a major arms trade had also been agreed.
The call came just before an Opec + meeting on March 6, during which the major oil producers failed to agree on a reduction in production despite the drop in global demand following the coronavirus pandemic.
“Just before this meeting, there was a call between Putin and MBS. MBS was very aggressive and issued an ultimatum. He threatened that if there was no agreement, Saudi Arabia would start a price war.
“The conversation was very personal. They yelled at each other. Putin refused the ultimatum and the call ended badly, “the Saudi official said on condition of anonymity.
Before becoming aggressive with Putin, bin Salman spoke with Jared Kushner, son-in-law and chief adviser to President Donald Trump, who has been described as “the prince’s most important defender in the White House,” according to a second source, who also spoke on condition of anonymity.
” The call [to Putin] had Trump’s blessing by Kushner. Kushner didn’t ask MBS to do it, but Kushner knew it and didn’t veto it. Bin Salman drew his own conclusions, “said the source.
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Oil prices plummeted after the meeting in which Opec, Russia and other countries failed to agree on proposed cuts of 1.5 million barrels per day. Reports of the meeting suggested that Saudi Arabia had attempted to “strengthen Russia”, with an industry analyst commenting, “We have just seen the dangers of supporting Putin in the corner.”
The collapse in the price of oil was initially hailed by Trump, who initially presented it as an opportunity to fill the United States’ own reserves with cheap oil.
“We will fill it to the top, save American taxpayers billions and billions of dollars, help our oil industry [and furthering] this wonderful goal – that we have achieved, that no one thought possible – of energy independence, “he said.
But the White House later turned around after protests from US oil producers, many of whom have invested in more expensive shale oil extraction and are demanding significantly higher prices to break even.
The Saudi dispute with Putin over oil production had months of silent diplomacy between Moscow and Riyadh. It started when Putin captured Trump’s non-response to two Saudi Aramco gas separation plants struck by Iranian drones and cruise missiles last September.
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Speaking in Ankara in September of last year after meeting with Turkish and Iranian leaders, Putin has offered to sell his own air defense systems to Saudi Arabia.
“We are ready to provide respective assistance to Saudi Arabia, and it would be enough for the political leaders of Saudi Arabia to make a wise government decision – as did the Iranian leaders in their time by buying S-300 and as President Erdogan did by purchasing the latest S-400 “Triumph” air defense systems from Russia, “said Putin.
In mid-January, Saudi Arabia agreed in principle to purchase the Russian pantsir S1M SPAAGM air defense system, MEE sources said.
“They did not sign any contracts. They decided to buy the system, but they set certain conditions. The Saudis wanted part of the Russian system to be made at home. They were serious about the system. It was three months after the Aramco attack, “said the official.
The Russian missile system is relatively new. It was unveiled at a Russian Defense Ministry exhibit early last year. The Russian Defense Ministry describes it as being designed to protect small military and military-industrial infrastructures, by engaging low-flying air targets.
Putin’s liaison man
The liaison in these negotiations was a Putin insider named Kirill Dmitriev, head of RDIF, Russia’s $ 10 billion public investment vehicle. Dmitriev told CNBC in October of last year that Russia is not trying to fill the void left by the United States in the Middle East.
“Really, we’re not talking, you know, about the strategic partnerships that Saudi Arabia has with the United States, and what we are doing is not against the United States. It’s actually about building something very positive, “said Dmitriev.
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“And build something that helps the Saudi economy, the Russian economy – and that builds friendship between our nations. “
He added: “We had a lot of differences during the Soviet era. We have had many differences in many policies in the Middle East. But now I can tell you that we have really made a breakthrough and it is a breakthrough because President Putin and King Salman and now Crown Prince Mohammed bin Salman really believed that it was possible to bring Russia and the United ‘Saudi Arabia. “
RDIF has investment partnerships with two Saudi sovereign wealth funds, the Public Investment Fund (PIF), which is chaired by Mohammed bin Salman, and the Saudi Arabian General Investment Authority (SAGIA). Saudi Aramco has also invested in the Russian oil company Novomet. Other mutual investment announcements were planned before the atmosphere deteriorated in the oil line.
In October of last year, Saudi Arabia invested $ 2.5 billion out of a $ 10 billion investment in Russian energy, infrastructure and technology.
Meeting in Seychelles
Dmitriev was introduced to bin Salman by the crown prince of Abu Dhabi, Mohammed bin Zayed, at a meeting in Seychelles that caught the eye of Robert Mueller, the special advocate investigating allegations of Russian interference in the 2016 U.S. elections.
Dmitriev was named after the Russian Erik Prince met “for a drink” at the Four Seasons Hotel on the Indian Ocean islands. Prince, who founded the American private military contractor firm Blackwater (now called Academi), is now based in the United Arab Emirates and has close ties and commercial contracts with the UAE government.
Prince admitted to having met Dmitriev in testimony at the United States Congress, but denied that it was official. Prince said he met Dmitriev on the recommendation of UAE officials, but mostly discussed private investment.
“They said, ‘Oh, there’s this Russian who’s also here to see us. You might find it useful to meet him, “said Prince to Congress.
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However, Prince’s account of the meeting was undermined by the Mueller report.
Mueller revealed that George Nader, a repairer of MBZ and a convicted pedophile who is currently in detention in the United States facing new charges of child pornography, had arranged for them to meet after Dmitriev requested an introduction to a member of the Trump transition team to start improving in the United States. – Russian links.
The report described Dmitriev as reporting directly to Putin who, he said, often referred to his “boss”.
By the time Saudi Arabia was looking for a new partner in Russia, Dmitriev had the key credentials to personally conduct negotiations with Saudi Arabia and bin Salman.
These were cemented in a bizarre ceremony during which Dmitriev received the Order of King Abdulaziz, the highest civil honor in the kingdom.
Dmitriev then played a key role in securing a Russian-Saudi oil deal, announced on April 12, when OPEC + finally agreed to cut global production by about 10%. By that time, the price of oil had already dropped to about half of what it was at the time of the rupture.
The deal was reached in a series of phone calls between leaders from Moscow, Riyadh and Washington.
On April 10, the Kremlin announced that Putin had spoken to bin Salman and that “the two had agreed to new Russian-Saudi contacts” in the context of the reduction in oil production.
On April 12, Putin had a telephone conversation with Trump and Saudi King Salman to confirm the OPEC + agreement. Trump then congratulated Putin and King Salman for accepting the deal in a tweet.
But the deal was not enough to keep oil markets from falling to historic lows on Monday, with futures prices for US crude oil plunging into negative territory and ending the day at – $ 37.63, petroleum storage facilities are unable to cope with excess supply.
When asked if he would consider stopping US imports of Saudi oil to support the domestic industry, Trump said, “We will look into it. “
From yacht to no
Dmitriev met bin Salman on February 22, when the Saudi crown prince began to worry about falling oil prices, sources said.
“At that point, the virus became evident and the price of oil began to drop. He came as a envoy from Putin and discussed these issues. The meeting was not a bad one, but MBS has expressed concern that our budget cannot tolerate falling prices, “an official told MEE.
Dmitriev asked bin Salman if he could moor his yacht off the coast of Saudi Arabia. “Relations at that time were good,” said the source.
MEE contacted the Saudi and Russian governments and RDIF, but none responded to requests for comment at the time of publication.