Russian President Vladimir Putin has just wrapped up an important visit to Saudi Arabia.

From the immediate Russian and Saudi point of view, the visit was fruitful, yielding 21 important agreements and undertakings, and getting support for significant Saudi investments in Russia, including investments by the Saudi Arabian Public Fund of US$10 billion for joint foreign direct investment projects in Russia. 

Nothing was said about weapons sales, but there can be little doubt that Putin raised the issue privately with the Saudi leadership.

Given that the US is in the midst of deploying additional Patriot missile defense batteries to the Kingdom along with 3,000 more troops, it would not have been opportune to openly speak about arms sales from Russia, being counter-productive to both sides.

Russia’s economic woes

Putin needs foreign investment badly because the Russian economy continues to be wobbly. Particularly hard hit is the manufacturing sector. 

According to the Moscow Times: “The manufacturing PMI (Purchasing Manufacturing Index) fell to its lowest level since the global recession of 2009 – 46.3 on a score where anything below 50 indicates contraction.”

Moreover, “exports remain a dark spot for the second quarter in a row,” said Tatiana Evdokimova, chief Russia economist at Nordea, a prominent Nordic financial group. 

Net exports fell by 4.9% in the year to June 2019, knocking almost two percentage points from Russia’s overall growth, added Dolgin. Even in the service industry, “exports were a drag compared to domestic performance.”

While domestic consumption is rising, this bit of optimism is overshadowed by lagging export trade and the downturn China is experiencing because of US tariffs, part of the US-China trade dispute. With less ready cash, China is curtailing its purchasing, including from Russia, at least for now.

As a practical matter, improved economic ties between Saudi and Russia, and cooperation on oil pricing issues, probably would constitute a good victory for Putin. Saudi Arabia would see it as an effective step in moderating Russia’s support for Iran.

Iran is a problem

From the Russian perspective, Iran is a problematic friend. While Iran has been quite useful in destroying Syria’s Assad’s opponents, aggressive military operations by the Iranian Revolutionary Guard and its proxy Hezbollah could trigger a war with Israel, which is much against Russia’s short- and long-term interests. 

Russia wants to be the power broker par excellence in Syria, and Russia also wants a good relationship with Israel. Putin understands that Israel is a technology and military powerhouse, and good relations means cooperation.

There is another motive too – Putin knows Israel is the bridge between itself and the United States, and down the road the Russians badly need to repair the relationship with the United States. Whether that may or may not mean sacrificing Iran in the bargain is still an open and unanswered question.

Looked at from a totally practical point of view, Iran’s economy is a basket case, and surely Russian intelligence knows the country is a tinder box that could explode at any moment. 

In Iran, bartering and secret deals are replacing cash, because Iran’s currency is in trouble. Iran is not in a position to work multi-billion dollar arms deals with Russia, unless it is on credit. 

Unpaid debts?

But the Russians can’t really extend much credit to Iran, assuming they would want to do so. And if Iran’s economy collapses, the prospect of unpaid debts is not good news for Russia’s balance of trade or its domestic budget.

No doubt Russia’s leaders understand this, and they are probably wondering why Iran keeps using whatever cash it has on a military buildup, stressing an already weak economy and undermining domestic order. Any war between Iran and its major enemies – Saudi Arabia, Israel and the United States – would mean the end of the Mullahs.

Saudi Arabia, of course, hopes that Russia can calm the tension between the Kingdom and Iran, starting with putting an end to missile and drone attacks either from Iranian territory or the Yemeni Houthis. 

Certainly that formed part of the private talks with Putin, although how much influence Putin really has with Iran isn’t clear. What seems to be the case is that the Iranian central government increasingly is a tool of the Islamic Revolutionary Guard Corps, or IRGC, which is utterly ruthless and aggressive and appears to do whatever it wants. 

The central government is left with making excuses and denying reality, or simply supporting IRGC operations even when they cross various red lines that could trigger retaliation against the regime. 

The only ace Iran has are nuclear weapons, but it is still anyone’s guess that if Iran actually tests a nuke, what would the United States and Israel do? If the IRGC takes over the nuclear program, then the chance for a general war will rise exponentially.

Thus on balance, in the big picture as it is today, the Russians are probably just as anxious to develop better economic and political ties with Saudi Arabia as the Kingdom is anxious to enlist the Russians in stabilizing the area. 

The wild card is not either Russia or Saudi Arabia, but the United States, which has lost a lot of influence and credibility in the entire region. Worst of all, no one any longer trusts Trump, a huge reversal from even a year ago.