The Russian news agency Sputnik has reported on an agreement signed between the Russian Direct Investment Fund (RDIF) and the Public Investment Fund of Saudi Arabia “to create a partnership to invest $10 billion into projects implemented in Russia.” The report said the Saudi funds will be invested within 4-5 years starting from this year and that seven concrete projects are “currently in the final stage”. The majority of Saudi investment will be made on Russia’s agricultural projects, as well as on medicine, logistics and the retail and real estate sectors.
This may be seen as a follow-up to the visit by the Saudi Deputy Crown Prince Mohammed bin Salman to Russia last month, who played an “immense” role of support in sealing the deal, according to a senior Russian official.
An interesting feature of the deal is that the Saudi investment vehicle will combine with other Asian sovereign wealth funds, especially the Russia-China investment Fund (which is backed by the China Investment Corporation.)
Meanwhile, the RDIF disclosed that it also signed an agreement with another Saudi Arabian sovereign-wealth fund, the Saudi Arabian General Investment Authority, to undertake projects in Saudi Arabia and other Middle East countries.
The Saudis are notorious for the glacial pace of their decision-making, but in this case, Mohammed bin Salman’s direct interest speeded up things. The deal committing the Saudi sovereign funds to invest such big amounts in Russia has been signed just as the Iran nuclear deal could be sailing into view in a couple of days.
Again, there are indications that Moscow and Riyadh are working on an early visit by King Salman to Russia.
It is tempting to interpret the trends as constituting a strategic defiance of the US by the Saudis. After all, the Saudis are making up to a large extent for the western banking sanctions against Russia. But a more constructive interpretation is warranted: the Saudis probably hope to make the Russians “stakeholders” in a broader “win-win” relationship that also buttresses their core interests in Syria, Yemen and elsewhere in the region.
To be sure, the Saudi-Russian investment deals cannot but be seen as a powerful signal that the Saudi-Russian rapprochement is rapidly acquiring a momentum that has the potential to reset the power dynamic in the Middle East.