The maize of politics is always unfolding in appalling ways, especially when it comes to the polarity of the world. The transition in polarisation is mostly marked by confrontations. The alliances are not permanent in the self-help system of realist world politics. Small powers always have the option of bandwagoning (Waltz 1979) in the changing global polarity. Saudi Arabia currently is adjusting herself in the changing global order. Using her natural resources as a bargaining chip, the kingdom is approaching the eastern bloc against its historical ally, i.e. the United States. Though both the United States and the Kingdom agreed to lower the prices of oil to hit their adversaries, Russia and Iran respectively, but the inability of the United States to act independently against Syria on the behalf of her allies in the region, her rapprochement with Iran and the policy shift towards Pacific prompted concern in Riyadh. When a particular state is endowed with natural resources like oil, it enhances her bargaining position in international affairs. It is the job of the statesmen to understand the trends of global politics and to align its state with the pole where it can receive maximum benefits.
The transition is always troubling in nature. The revisionist states in terms of the Kenneth Waltz are rising. The United States is trying hard to preserve its hegemony. As in the famous words of Mearsheimer, America must do what it takes to preserve its power. The concept of relative power for Waltz is based on the material capabilities and capacity building. The revisionist states like Russia and China are re-emerging as a powerful bloc. The bloc once conspired against and fallen apart by Kissinger’s back door diplomacy is again seen on the rise. The gestures of China towards Russia, for instance, the veto power for the Syrian intervention not only depict the interest of China in the Syria, but also the endorsement of its support to Russia. This support was never as explicit as it is observed now; Russia and China had an inherent clash of forms of the socialism as well as the fundamental policies. China, having a closed society and a covert foreign policy is now more opening up and showing itself as a decisive actor of the world politics. On the other hand, Russia is stimulating its strength and bullying America once again. Keeping in mind, all these transitions there is a change in the policies of the regional states, for instance, the Kingdom of Saudi Arabia.
The biggest oil producer in the world is now in shackles due to the ongoing changes in the world. The uni-polarity is moving towards multi-polarity with regional connectivity on the rise. The dawn of Asian century and its rising importance is embedded in the harsh realities of the confrontational world politics. The Saudi Arabia is unable to chart a comprehensive foreign policy, to precisely reform its outlook and cope up with its deficits not only in the economic sphere but also in the sphere of political strength and international recognition.
Saudi Arabia is the largest economy of the Arabian Peninsula, based on its GDP. The 90% of the fiscal revenues of the kingdom are based on the Oil export. The 45% nominal GDP is based on the oil industry, while private sector dependence is only 40%. The 85% dependence of the fiscal GDP on oil is a great hindrance in the stability of Saudi Arabia. The simple and primitive monetary system changed in 1952 with the emergence of Saudi currency. The SAMA (Saudi Arabian monetary agency) was established in the same year. The boom of oil prices in 1970’s saw the need for the financial system and a modern stock market. The stock market was regulated in the 1980’s. The pegging with the dollar has consequences for Saudi Arabia. This minimized the trade shocks but did not work to decrease the rate of oil and a shortfall in the revenue.
The shale oil discovery in the US and its cut of around 60% oil imports has adversely affected the kingdom. It has used $100 billion of its foreign reserves to meet the deficit of the fiscal budget during 2015, which according to IMF is the sixth of its overall reserves ($570 billion approx.). This has serious implications for Saudi Arab and the way out would depend on the foreign policy decision making of the Kingdom, which essentially is weak.
The Saudi economy has two challenges to face in the contemporary setting, first is the insulation of oil oriented economy and reducing reliance on the oil revenue. The second is the adaptation of the sound policy option in the wake of changing realities of the world polarity and the rise of Asia pacific nations. The increasing oil dependence of the Asia Pacific region and the shortfall of the oil exports revenue are the convergence points which can be exploited by both the Kingdom and the Asian Pacific nations skilfully. Despite solely focussing on the economy by giving the Vision 2030, Saudi Arabia should also give priority to the foreign policy making and accumulate the use of other options than the alliance of the United States of America.
It is a very difficult task for Saudi Arabia, to implement the reforms, globally demanded from the kingdom. It has a heterogeneous—regionally and economically diverse—society which will take years to reform. The Shale revolution in U.S and the loosened grip of Saudi Arabia over control of oil prices has fractured the economy of Kingdom of Saudi Arabia. However, the Kingdom possesses a bargaining chip, which is dependent upon its foreign office skills to utilise.
Pakistan is on no different course than most of the states living in a region of confrontation. Its bargaining chip is its geo-strategic location. It connects West Asia, Central Asia, Southeast Asia and South Asia. How are Pakistan’s statesmen approaching the changing trends will be demonstrated by her bandwagoning in the near future.