Quoted from WSJ:
Saudi Arabia to Invest up to $10 Billion in Russiahttp://www.wsj.com/articles/saudi-arabia-to-invest-up-to-10-billion-in-russia-1436198674
Faced with sanctions from the West, Russia is turning eastward for investment
MOSCOW—Saudi Arabia has signed a commitment to invest up to $10 billion in Russia, the Russian Direct Investment Fund said Monday.
Russia’s latest pact with its closest oil-producing rival marks Moscow’s efforts to replace Western funding, which has been hit by sanctions, just a few days before a summit of five major emerging economies, known by the acronym of Brics, to be held in Russia’s town of Ufa.
The majority of the $10 billion from Saudi Arabia’s sovereign-wealth fund, Public Investment Fund, will be spent on Russia’s agricultural projects, as well as on medicine, logistics, and the country’s retail and real estate sectors, RDIF chief Kirill Dmitriev told The Wall Street Journal.
The agreement was reached after a “great” contribution from Mohammad bin Salman Al Saud, Deputy Crown Prince of Saudi Arabia, who met Russia’s President Vladimir Putinduring an annual economic forum in Saint Petersburg in June, the RDIF said.
“The key investments will take place on Russian territory, but we will also invest in Saudi Arabia, which we consider a very promising market,” Mr. Dmitriev said.
The RDIF also said it signed an agreement with another Saudi Arabian sovereign-wealth fund, the Saudi Arabian General Investment Authority, under which the two sides would seek mutual investment opportunities in Saudi Arabia and other Middle East countries.
Facing a political standoff with the West, Moscow has been turning eastward, saying it would seek Asian investors to reduce reliance on Europe and the U.S. In early May, Russia signed economic deals with China via the RDIF worth up to $25 billion, with Chinese banks investing in Russian companies. However, so far, there has been little evidence that China’s money has started flowing into Russia under this pact.
Write to Andrey Ostroukh at email@example.com
Which sounds odd since the relation in short was summarized by this WaPo article:
Saudi Arabia’s hostile relationship with Russia is leaving Egypt stuck in the middle
At a gathering of Arab leaders in Sharm el-Sheikh this weekend, Egyptian President Abdel Fatah al-Sissi read a letter from Vladimir Putin. "We support Arab nations in their effort to ensure a safe future and urge them to resolve all emerging challenges peacefully without any foreign involvement," the Russian president's message read, according to Sputnik News.
These comments did not go down well with those in attendance. In particular, Saudi Arabia, which accused the Russian leader of hypocrisy. "He speaks about the problems in the Middle East as though Russia is not influencing these problems," Prince Saud al-Faisal, the Saudi foreign minister, said immediately after the letter was read.
In the increasingly complicated web of alliances in the Middle East and farther afield, Faisal's comments highlight a noteworthy split. Egypt and Saudi Arabia are important allies; right now, they are partners in a joint Arab military intervention in Yemen, where Iran-backed Shiite rebels have toppled the government. And under the leadership of Sissi, Egypt has become increasingly close to Moscow and moved away from Washington.
But for Saudi Arabia – a stalwart U.S. ally and a powerful Sunni-led Arab state – relations with Russia have faced a distinct chill in the past few years. It's an important fault line in a coalition formed by Sunni states to counter the influence of Iran, the region's Shiite superpower – and it's probably not the only one.
Saudi Arabia and Russia's strained relationshipHistorically, Saudi Arabia has always sided with Washington over Moscow. That relationship was cemented when President Franklin D. Roosevelt met the first Saudi king, Abdul Aziz ibn Saud, in 1945 as World War II ended. Meanwhile, Russia and Saudi Arabia had no diplomatic relationship after Joseph Stalin closed the Soviet Union's embassy in Saudi Arabia in 1938.
Diplomatic relations were restored after the Soviet Union collapsed, and in2007 Putin became the first Russian leader to make an official visit to the Saudi kingdom. But in the past few years, Russia's iron-clad political support for Bashar al-Assad's regime through the Syrian conflict has led to a serious disagreement between the two nations.
The most obvious evidence of the conflict between the two nations may be oil prices. Many outside observers have suggested that Saudi Arabia could be using its power to flood the market with oil as a means of hurting the economy of Russia, another oil-producing giant, with the aim of loosening Moscow's support for Assad. “If oil can serve to bring peace in Syria, I don’t see how Saudi Arabia would back away from trying to reach a deal,” one Saudi diplomat told the New York Times last month.
Putin himself sees a political factor behind the low oil prices, which experts say have hit Russia harder than economic sanctions imposed by the United States and its allies. "A political component is always present in oil prices,” Putin said in November. “Furthermore, at some moments of crisis, it starts to feel like it is the politics that prevails in the pricing of energy resources.”
There might be an interesting historical precedent here. During the nadir of relations between Saudi Arabia and the Soviet Union in the late 1980s, some say the Saudis flooded the markets with cheap oil at the request of U.S. President Ronald Reagan. The veracity of that account has been questioned, but, if true, it would suggest that Saudi Arabia is willing to use its economic leverage for political ends – especially if the United States is on board.Meanwhile, Egypt's relationship with Russia is blossomingEgypt has had a much longer relationship with Russia, with Russian czars supporting Orthodox Christians in Egypt as far back as the 16th century. The Soviet Union was a key backer of Gamal Abdel Nasser's neutralist, anti-imperialist government, providing military and political support. As WorldViews wrote at the weekend, Nasser-led Egypt actually had its own intervention in Yemen in the 1960s – a Soviet-supported intervention so disastrous that it has been dubbed "Egypt's Vietnam."After Nasser's death, relations grew more strained, with Anwar Sadat and Hosni Mubarak leading the country toward a more pro-Western stance. When Mubarak was overthrown in 2011, things got more complicated. In 2012, Mohamed Morsi was elected president of Egypt with the backing of the Islamist Muslim Brotherhood. Then, a year later, Sissi ousted Morsi in what was widely called a coup and violently cracked down on the Muslim Brotherhood.Relations with the United States became tense, with the Obama administration halting a third of its military aid to Egypt and withholding delivery of military equipment. Egypt instead looked to alternative allies, and Russia – whose relationship with the West was just souring – was an obvious choice. Since then the kinship between Putin and Sissi has been made obvious in a couple of official visits.Russia wasn't just an economic lifeline for Egypt. As The Post's Erin Cunningham noted, the way that the Kremlin had crushed its own Islamist uprising in Chechnya may have appealed to a newly nationalistic sentiment in Egypt. Conversely, Moscow's handling of Islamic minorities is one of the many issues between Russia and Saudi Arabia.When partners disagreeAfter this weekend, Saudi Arabia and Egypt have become two of the most important members of an Arab military force designed to intervene in neighboring states. The coalition is widely seen as a Sunni response to Shiite intervention across the Middle East, with Saudi Arabia leading the charge against Tehran's international efforts.However, the Sunni-Shiite split is just one of a number of factors this Arab force will have to consider. The alliances and rivalries in the Middle East currently have grown increasingly complicated – and increasingly dangerous. The threat posed to Arab governments by Sunni extremism is another big factor, and so are relationships with Russia and other outside powers.
Saudi Arabia has become a major financial backer for Egypt in recent years, and some have suggested that Sissi's unbridled support for military action in Yemen stems from a sense of indebtedness. But Saudi Arabia isn't Egypt's only ally, and Sissi may not be willing to give up his relationship with Putin just yet.