US moving away from Saudi, says Ian Bremmer, president of Eurasia Group

How do you see the GCC region’s geopolitical tensions playing out in 2016, ­especially with Saudi Arabia and Iran?

The Saudi-Iran row really concerns me because I think both the Saudi and the Iranian governments have reasons to escalate. The proxy wars have been intensifying, the Iranians have been getting a lot stronger and energy prices are touching the floor. Also, [there is] an internal succession issue that plays out in support of nationalism as Deputy Crown Prince Mohammed Bin Salman tries to expand his power.

At the same time, the Iranian government – especially the hardliners – are scared after putting this nuclear deal in place. They need to show their national credentials and they do not want to lose their elections. They certainly do not want to start seeing the theocracy road as the foreigners and the investments start to come in. Unfortunately, we are in an environment where there is a lot to play for and where people think that the future of the regimes are at stake. There is a lot of insecurity in the leadership of both the Saudi and the Iranian governments. There are very few countries outside the region that have any ability or willingness to intervene in a constructive way.

What are your views on the situation in Yemen?

The ceasefire was never really in place and the Saudis called officially to end it. If you want to talk about proxy wars between the Saudis and the Iranians, Yemen is not the first place you go. The Iranians have not been as strong a player there. The Saudis have lost a lot of capital and leadership in fighting what has been sort of an enormously uphill battle in Yemen. There is a lot of terrorism on the ground. The economy is in a complete free-fall. It was horrible before this occurred. And you are also seeing a lot of civilians
getting killed.

Again, what I think it shows is that the Saudis are increasingly isolated. They asked the -Pakistanis for help – they did not get it. They asked the Emiratis for help – there was a limited support on the ground. I mean there has been some cash, but not so much directly, especially after dozens of Emiratis soldiers fell in Yemen.

Ultimately, what you see in Saudi Arabia as a player is not only [that it is] insecure domestically but, around the region, a lot of other countries see that they are insecure and, as a consequence, they are hedging away from them. Yemen is one of the places where that is playing out.

Generally, Saudi Arabian soldiers do not fight on the ground as they believe in air strikes, but, with a lot of cash on hand, they were able to get soldiers from other countries. Do you think that, with low oil prices and budget deficits, Saudi Arabia might change its strategy? 

They will continue with the current strategy because, at the end of the day, security is always the last thing that goes in terms of a crunch defense budget and a crunch fiscal environment.

The Saudis are going to be spending a lot on security, both the security environment in their own country – their border security – and also fighting radicalism directly across their borders. Certainly, Yemen is going to stay on top.

It seems that the US administration is moving away from the Gulf. How do you view this change? 

Many Saudi leaders have asked me why the Americans are pivoting toward Iran. I have said they are not; however, they have been pivoting away from Saudi Arabia. The US-Iran relationship is not particularly close. It is better than it was, of course, but we just saw Airbus announcing they are going to sell more than a hundred aircraft to the Iranians, while Boeing is not doing that.

The US is keeping sanctions on. The Supreme Leader is going to keep talking about America as at least a reasonably great [enemy]. Iranians still have an alliance with -Syria’s Assad, with the Russians and Tehran is supporting Hezbollah, and then we have massive human rights issues in Iran.

In the long term, as the theocracy goes away, there is a lot for the Americans to do with Iran within five to ten years’ time. I believe that the US-Iran relationship will ultimately be stronger than [that of the US] with Saudi Arabia, but it is not going to happen immediately.

I do not see any time in the near future either under Obama or the next President [when] you are going to see a Republican-led Congress really cozying up with the Iranians.

What do policymakers, business leaders and economists watch out for in 2016 as far as geopolitics are concerned?

They have to watch out for the beginning of a true creative destruction of the geopolitical environment. I have talked about the G-Zero for many years, as it is coming. [The term ‘G-Zero world’ refers to an emerging vacuum of power in international politics created by a decline in Western influence and the domestic focus of the governments of developing states.]

In 2016, G-Zero is really here and that plays out not just in the Middle East but also in the fact that the trans-Atlantic relationship is the weakest it has been in 75 years. The responses of the Americans and the Europeans to crises as they emerge are going to be much more fragmented, much less aligned and much weaker.

As a market participant, you might say, ‘Oh, the geopolitical risks are going to go away, so I am going to buy the market when it is low.’ However, that is not the case, as it is much more structural this time around.

Any particular region to watch out for in 2016?

Of course, the Middle East. Leaving that aside, most of the metastasis of that conflict comes into Europe and Russia. So, those are the places you are mostly worried about. We won’t be worried about the Western hemisphere and Greater Asia.