Saudi Crown Prince Mohammed bin Salman at the GCC-Central Asia Summit in Jeddah in July. SPA
Saudi Crown Prince Mohammed bin Salman at the GCC-Central Asia Summit in Jeddah in July. SPA
Saudi Crown Prince Mohammed bin Salman at the GCC-Central Asia Summit in Jeddah in July. SPA
Saudi Crown Prince Mohammed bin Salman at the GCC-Central Asia Summit in Jeddah in July. SPA

Saudi Arabia’s role as mediator centre stage in Ukraine talks


Mina Aldroubi
  • English
  • Arabic

Saudi Arabia is taking on the role of a “non-aligned” influencer on the global stage as it hosts peace talks on Ukraine this weekend, analysts told The National.

The kingdom has a long history of acting as mediator in regional conflicts such as the civil war in Lebanon, the Israeli-Palestinian conflict and, most recently, the crisis in Sudan.

On Saturday, a multinational meeting kicked off in the port city of Jeddah in the presence of Ukrainian President Volodymyr Zelenskyy, who looks for a peace plan to end the war on his country.

The two-day meeting comes as Ukraine-Russia war crosses the 500-day mark and Ukraine launches a counteroffensive in an effort to liberate Russian-occupied areas.

The Jeddah conference is “distinct” from other talks that the kingdom has hosted, Sanam Vakil, director of the Middle East and North Africa programme at the Chatham House think tank, told The National.

“The kingdom is trying to position itself as a middle ground non-aligned influencer that can bring together multiple parties in Ukraine war,” Ms Vakil said.

“These efforts are designed to show Riyadh's international mobilising power, particularly among the G20. This outreach has shown a shift in Riyadh's regional approach away from outsourcing to directly managing its regional security interests.”

Saudi Arabia has invited 30 countries to join the talks this weekend. They include the US, European nations, Chile, Mexico, Indonesia, Egypt and Zambia, according to the Wall Street Journal.

The talks are aimed at persuading countries from the Global South to back Kyiv’s proposals for ending the war.

Ukraine’s proposed plan is made up of a 10-point peace formula, including the restoration of Ukraine’s territorial integrity, the withdrawal of Russian troops, the release of all prisoners, a tribunal for those responsible for the aggression and security guarantees for Ukraine.

Saudi Arabia's Crown Prince Mohammed bin Salman is positioning the kingdom “as an indispensable actor” not only on the regional but also on the international stage, Kristian Ulrichsen, a fellow for the Middle East at Rice University’s Baker Institute for Public Policy in Houston, said.

“The Saudi authorities are seeking to present the kingdom as central to policy responses to key issues in international politics.”

The focus on diplomacy began on the regional stage at the time of the AlUla reconciliation summit of GCC leaders in January 2021, Mr Ulrichsen said.

The kingdom placed itself on the international stage after the Russian invasion of Ukraine in February last year highlighted how central Saudi Arabia is to global energy markets.

Self-reliant

Saudi Arabia is aiming for its foreign policy to become self-reliant by diversifying its political and economic relations, Anna Jacobs, senior Gulf analyst at the Crisis Group, told The National.

She said the kingdom is attempting to move “away from its long-time dependence on the United States. For Riyadh, this is an imperative in an increasingly multipolar world order”.

Saudi Arabia maintains strong ties with both East and West, she said, adding that it has many reasons for maintaining close links with both Russia and Ukraine.

“One of the benefits of this strategy is that Saudi Arabia can try to present itself as a neutral arbiter that can facilitate dialogue between the two sides, which would further raise Riyadh's global profile,” Ms Jacobs said.

The kingdom, along with Turkey, took on the role of arranging prisoner exchanges between Russia and Ukraine.

Russia released 10 prisoners of war captured in Ukraine after diplomatic mediation efforts by Saudi officials last September.

“It's clear that Saudi Arabia is assuming a more important role in various mediation efforts, but it's too early to judge the effectiveness of these efforts,” said Ms Jacobs.

Past mediation efforts

One of Saudi Arabia's most significant peacemaking efforts was the meeting between Lebanese parties that the kingdom hosted in the city of Taif in 1989. The resulting Taif Agreement led to the end of Lebanon's 15-year civil war the following year.

Officials in the kingdom are known to have played significant mediating role in Lebanon, where, as one Lebanese observer commented, “Lebanese factions have become addicted to outside interference.”

In 2002, Saudi Arabia presented the Arab Peace Initiative that offered Israel normalisation of ties with Arab nations in return for statehood for Palestinians and a full Israeli withdrawal from territory captured in the 1967 war.

In 2018, the kingdom hosted the signing of an agreement between longtime foes Ethiopia and Eritrea to normalise relations.

Saudi Arabia's also played a mediating role in Iraq. Over the years, the kingdom hosted rival leaders of different Sunni and Shiite blocs in attempts to ease tension in the country.

Populist cleric Moqtada Al Sadr made a rare visit to the kingdom in 2017 , where he met Prince Mohammed and other top officials. It was seen by experts and officials as a significant development for regional stability and in efforts to counter Iran’s expanding influence in the region.

Ammar Al Hakim, an influential Shiite cleric who supports the pro-Iran parliamentary bloc in Iraq known as the "Coordination Framework" has also made several trips to Riyadh over the years.

Mr Al Hakim and Mr Al Sadr are known to be political rivals.

The kingdom has taken a more proactive role in regional policy. Building stronger ties with Iraqi leaders has become a priority to limit Iran’s influence in the country, which has dominated Iraq's politics since the US-led invasion in 2003.

Most recently Saudi Arabia, along with the US, has sought to end the fighting in Sudan between the army and the paramilitary Rapid Support Forces.

Negotiations between the two sides began in Jeddah in early May, just weeks after the conflict broke out, and are continuing.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: August 05, 2023, 1:10 PM