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.

Deputy Crown Prince Mohammed bin Salman with Russian President Vladimir Putin at the Konstantin Palace outside St. Petersburg, Russia, in June
Saudi Deputy Crown Prince Mohammed bin Salman with Russian President Vladimir Putin at the Konstantin Palace outside St. Petersburg, Russia, in June this year

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.

One key area to be watched is Syria where Moscow and Riyadh come under pressure to harmonize their respective approaches.

Enter Iran. Syria was one of the main topics of discussion when Russian Foreign Minister Sergey Lavrov met his Iranian counterpart Mohammad Javad Zarif in Vienna last week on the sidelines of the talks between Iran and the world powers on the nuclear issue.

Lavrov’s meeting with Zarif followed immediately after the Russian minister’s discussions with the US secretary of state John Kerry in Vienna relating to Syria.

The Russian foreign ministry cited Lavrov as stressing to Kerry that “there is no alternative to a political settlement, the path to which lies in consolidated efforts by Syrian patriotic forces and the world community to combat terrorist groups that are tormenting the country and posing a serious threat to regional and international community.”

Lavrov’s usage of the phrase “consolidated efforts by Syrian patriotic forces” gives food for thought. The phrase is sufficiently broad to include the Syrian government forces. But then, Lavrov could as well have mentioned the Syrian government led by President Bashar Al-Assad and “other patriotic forces”.

During a visit to the Pentagon on Monday, President Barack Obama also called for the Syrian people to unite against the Islamic State, and flagged the need to begin the “political transition to a new government without Bashar al-Assad, a government that serves all Syrians.”

For sure, the signs are that an end game could be beginning. The core issue is that neither Russia nor Iran (or Saudi Arabia) has a road map for post-war Syria. But Russia has now come to occupy the middle ground, which enables it to engage with both Iran and Saudi Arabia in a constructive spirit.

It is entirely conceivable that there is a back-to-back Russian-American understanding shaping up in this regard. Clearly, Obama’s focus at the Pentagon yesterday was almost exclusively on fighting the Islamic State (without committing any additional US forces) and he touched on Syria only peripherally.

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M.K. Bhadrakumar is a former diplomat who served for more than 29 years as an Indian Foreign Service officer with postings including India’s ambassador to Turkey and Uzbekistan.

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