‘Before the Gaza war, America’s regional diplomacy was focused on Riyadh-Tel Aviv reconciliation’
| Photo Credit: AFP
Donald Trump, a consummate dealmaker, often relies on the “expanding the canvas” strategy to resolve an intractable stalemate. Nevertheless, he made his most audacious ever deal-bid on February 4, 2025: with typical nonchalance, he wanted the Gaza Strip to be depopulated, with its 2.3 million residents being relocated to Egypt and Jordan while the United States was to take over this “demolition site” to develop it into “a riviera for the world’s people”. While swinging this wrecking ball over Gaza and the region at large, he also hinted that in the next four weeks, he may have another proposal for settling the West Bank issue. Both Mr. Trump and Israeli Prime Minister Benjamin Netanyahu — who was on hand — conspicuously praised Saudi Crown Prince Mohammed bin Salman (MbS) and hinted that Saudi Arabia would soon join the Abraham Accords. This prompted MbS to promptly state that Saudi Arabia would not establish ties with Israel without the creation of a Palestinian state.
To most observers, Mr. Trump’s pitch was chutzpah off his playbook of many recent grandiloquent remarks. To some others, it was a colonial land grab in West Asia, a veritable geopolitical minefield. Its maximalist opening overture seems to be designed to shock the opponent stakeholders into concentrating their minds and coming up with a more realistic counter-offer for eventual settlement on more balanced terms.
A geopolitical reconfiguration
Mr. Trump’s “truthful hyperbole” only underlined two undeniable contextual aspects. First, after a particularly brutish and violent epoch since October 7, 2023, vital but volatile West Asia is now tethering on the verge of a profound geopolitical reconfiguration. Second, with a little nudge from its friends, the Kingdom of Saudi Arabia might be among its prominent architects.
The 16 months of unprecedented hostilities have demolished several long-standing shibboleths — from Israeli invincibility to the end of the Syrian civil war. The feared Axis of Resistance stands neutered for the time being, although a revival cannot be ruled out. Iran’s extensive and carefully assembled strategic outreach from the Red Sea to the Mediterranean has been upended and its deterrence against Israel has been dented. While Israel has managed a pyrrhic victory, its internal and external consequences are still panning out.
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The mayhem has convulsed West Asia and bequeathed the hapless region with colossal challenges which can be broadly divided into two intertwined verticals: political and economic.
Politically, the no-holds-barred conflicts and assassinations galore have left the region repolarised with fewer guardrails, lower mutual trust and unsated revengefulness. The regional turmoil can be further segregated into perennial sub-issues crying for lasting solutions such as the Israel-Palestine question, the Iranian quest for nuclear technology, the Kurdish pursuit of national identity and the Yemeni imbroglio. Additionally, the region now also faces a “known unknown” all over again: In his second term, Mr. Trump appears as impulsive as before and more unpredictable.
Although he professes to prioritise the American economic resuscitation, Washington’s global entanglements keep ceaselessly knocking at his door. Moreover, his abrasive cowboy diplomacy, his penchant for transactional short-term fixes and his propensity for overbidding are often counterproductive. Further, he may discover that the world in general and West Asia in particular are no longer where they were during Trump 1.0. The Gaza war has thrust forth the centrality of Palestinian statehood, complicating, if not derailing, his vision to expand the Abraham Accords with the inclusion of Saudi Arabia and other Arab states. He also has to contend with the growing influence of the ultra-religious Jewish groups in Israel and the HTS-led Syria.
Economic issues
West Asia’s current economic problems are two-fold. The first set is rooted in the conflicts waged over the past few years including in Gaza (rebuilding 1,70,000 houses destroyed is to cost $50 billion), Lebanon ($8.5 billion) and Syria (damage from a 13-year civil war is put at around $500 billion). While humanitarian issues are urgent, a return to socio-economic normalcy would necessarily await the respective political resolutions. In many cases, the western economic sanctions also come in the way. The second regional economic problem is structural: the dependence on hydrocarbons, notoriously fickle natural resources threatened by a global consumption peak by the end of this decade. Recent Trump disruptions including walking away from the Paris climate accord, the launch of the “Drill, baby, drill” campaign and the public call for lower oil prices, make one wonder whether he is part of this specific problem or its solution. The shale revolution has made the U.S. the world’s largest hydrocarbon producer, but the technology, being more expensive, is highly price sensitive. If oil prices are drastically forced down, shale technology may no longer be remunerative. Further, an oil glut would dent the West Asian economies which are widely expected to bear the major burden of the huge post-conflict reconstruction.
Moreover, Mr. Trump’s tariffs and sanctions blitzkrieg against friends and foes alike has not only disrupted global trade and investment flows but has also led to the strengthening of the U.S. dollar. As most West Asian currencies are tied to the dollar, they have also risen, denting their economic competitiveness and derailing their bids to diversify away from oil.
Spotlight on Saudi Arabia
To help cope with the multiple crises in West Asia, the U.S. and the Kingdom need to reorient their over 80-year-old alliance beyond its traditional “security in return for oil” paradigm. The Kingdom, the region’s biggest economy (GDP 1.07 trillion), has come out relatively unscathed by the conflicts waging around it. It is relevant to note that the Saudi Public Investment Fund is estimated to have total assets of $930 billion and Saudi Aramco has a market capitalisation of $1.79 trillion. The country is led by MbS, a pragmatic young leader with an iconoclastic ambition to head the Arab and Islamic world. Apart from hosting two well-attended Arab-Islamic Summits on the Gaza conflict, he has extricated himself from the costly Yemeni civil war and normalised ties with Iran and Qatar. He has deepened links with Russia and China without antagonising Washington. With Saudi Arabia as the world’s largest oil exporter, MbS has been a moderating influence on OPEC and OPEC+. A fortnight ago, Mr. Trump told a Davos videoconference that his first official international phone call after re-entering the White House was with MbS, where the Crown Prince offered to invest $600 billion in the U.S. Mr. Trump then coolly asked him to “round off” the figure to $1 trillion. The incident only goes to show that the Kingdom under MbS has what it takes to be a political and economic bulwark for the region.
Before the Gaza war, America’s regional diplomacy was focused on Riyadh-Tel Aviv reconciliation. While MbS did not rule out joining the Abraham Accords, he played hardball by asking Washington for stiff concessions including a bilateral security treaty, access to nuclear technology and state-of-the-art weaponry. However, 16 months of sordid bloodletting in Gaza has left plenty of toxicity in its wake, making MbS now insist on a pathway towards a two-state solution, which the Israeli Parliament has officially rejected.
Despite these serious obstacles, the rationale for a Saudi-U.S. re-engagement remains intact as MbS can usefully fund the reconstruction of the war-ravaged regions and leverage Saudi Arabia’s profile to persuade doubtful and sullen Arabs to see the merit of a negotiated solution. Mr. Trump’s other challenge lies in coaxing the Israeli leadership to be more flexible and go beyond its survival instinct. Thus, while Trump-MbS bromance may or may not launch a trillion-dollar bilateral investment boom, their synergy would be a priceless contribution to healing the mauled West Asia.
Mahesh Sachdev is a retired Indian Ambassador with an interest in West Asian geopolitics and hydrocarbons
Published – February 11, 2025 12:16 am IST