02 | Demand Destruction | OPEC drama kings

Is the UAE's departure from OPEC mostly about Gulf geopolitics and kings defending their regimes, or the outlook for oil demand? There is, as ever, a lot of context required to answer this question.

Hosted by energy and climate finance expert Kate Mackenzie, and Tim Sahay from the Net Zero Industrial Policy Lab at Johns Hopkins University. They co-author The Polycrisis newsletter, which explores connections between energy, geopolitics, climate change, finance and industry. 

• Produced by Sarah Allely
• Original music by Russell Stapleton
• Mixed by Bethany Stewart

Contact us at: polycrisispodcast@gmail.com

Links:

Mohammed bin Zayed's Dark Vision of the Middle East -  NYT, September 2020 

How Midnight OPEC Dealmaking Won Gulf Unity at Africa’s Expense - Bloomberg, June 2023  

Transcript

SPEAKER_01 0:10

Welcome to the Polycrisis, where we look at our interconnected crises, the whole being bigger than the sum of its parts. All the episodes for our first season, Electric World Order, are available now and season two is in development. In the meantime, we have a special bonus season, demand destruction. Iran's closure of the Strait of Hormuz has made this the biggest energy shock in our history. Each episode, we'll discuss the implications and geopolitics of this crisis that's arisen from the war in the Middle East. I'm Kate McKenzie, a Sydney-based energy and climate finance expert.

SPEAKER_00 0:47

And I'm Timsa High. I'm with Johns Hopkins University in the US, where I co-direct the Net Zero Industrial Policy Lab. I'm speaking to you from my home in New York City. Military action has restarted between US and Iran. Missiles have been fired at American warships and Iranian boats. Iranian drones have attacked the UAE's Vajra oil facilities. Last week we had the shock announcement that the UAE was quitting OPEC. So how are these events connected? And what does this change at OPEC mean for the energy transition?

SPEAKER_01 1:24

Let's start with the economics and then we'll get into the geopolitics of this. So I'm going to kick off with the economics or the oil economics really, the oil strategy behind the UA decision. This was a really big shock when it was announced. I was really, you know, stunned, kind of like mid-sentence when I saw the um the headline. It comes about in a context though, just in the kind of oil market OPEC context that has actually been evolving for a few years. So it's not just about the war. I think there are elements of the war that play into it. But just for a sort of historical context, um, the United Arab Emirates has been unhappy about OPEC policy for at least a few years. They have felt that they are unfairly having to restrict their oil production to comply with OPEC's policy. And of course, OPEC, you know, being a cartel, they want to operate in concert to support oil prices where deemed necessary or possible. The UAE is one of the most powerful players in OPEC, or was the really most powerful member of OPEC, apart from Saudi Arabia. They're not like the biggest producer, they weren't even the second or third biggest. I think they were like fourth or or even fifth, depending on how you count Iran in that mix, but they did maintain some spare capacity, you know, also like a pretty rich country. So that gave them a bit of leverage, and there had been this tension between the UAE and Saudi Arabia over whether to maintain um production cuts or whether to just like pump. And that had that had been going on for a while.

SPEAKER_00 3:17

So when you say spare capacity, like what is spare production capacity and why is it so important to oil economics?

SPEAKER_01 3:24

So having spare capacity means you've got the you you you can switch it on, you know, we sort of talk about like, oh, you can turn on a tap or something. Obviously, it's not that simple, but you could relatively easily start pumping more oil. And if you're a country or an oil producer that can do that, um you in a sense, you know, you have some, you hold some cards in the game where everyone else, say the poorer oil-producing countries, um, are just wanting to pump as much as they can because they just need the money right now. So they can't afford to be strategic and think long term. Um, and that's been which has been what Saudi Arabia in particular has wanted to do. You know, this was part of the strategy of OPEC, really, but particularly for Saudi Arabia, wanting to sell less now in order to keep the price a little higher than it would have otherwise been and maintain, you know, long-term demand for oil or main or sorry, maintain their long-term revenue. Um so yeah, it g it gives you more leverage as well, you know, like you've you've got you've got some you've got an option there.

SPEAKER_00 4:31

Yeah, yeah. I mean, I've always sort of sort of spare capacity as sort of like the real power of a of a c of the players in the cartel to really drive out their competitors, right? So if all of a sudden you decide to increase your production and you collapse oil prices, then pretty much everybody else gets screwed and they really get the message who's the who's the top boss in this cartel, right? And so the Saudis have really played that role and they've tried to increase their capacity to drive out, you know, the shale guys, for instance, right? Like in the in the 2020 crisis.

SPEAKER_01 5:06

Yeah, yeah, exactly, exactly. And and you know, as as we know, that was not very effective in 2020. But getting into the like more recent history of OPEC, um Saudi Arabia is again, you know, around 2024, they were trying to, you know, maintain, implement and maintain um some production cuts to again, you know, support the oil price, but it was not not super effective. And um UAE has been known to be producing above what it's meant to be producing um under the under the quota system of OPEC and OPEC Plus. And um yeah, that that that's been a big source of tension. Um so Saudi Arabia actually started cutting, um it gets a bit complicated when we talk about like cutting back the cuts, or they started winding back or supporting, you know, reducing the production cuts, i.e., expanding oil production last year. That that that was actually believed to be more about trying to discipline the non-compliant members of OPEC by like, like you say, you know, having this threat and saying, like, we're gonna wield this threat um of increasing production and driving down prices if you guys don't fall into line more with our uh quota, with our restrictive quotas. But this gets into something I want to talk about more, which is this like, what is the long-term strategy of Saudi Arabia and the UAE and why are they different?

SPEAKER_00 6:37

So why are they different? I mean, I think that the picture you were painting was spare production capacity, something that the Emirates are sort of chomping at the bit to to try and increase their production, and the Saudis are sort of holding them back, you know, saying, keep the quota. What else, what else is going on between the two of them?

SPEAKER_01 6:55

Well, there okay, so the the the reason they have this different perspective or different strategy is that for Saudi Arabia, well, there's three reasons really, Saudi Arabia is far more dependent on oil revenues for its own um economic well-being and um you know it it its fiscal position than the UAE, right? So Saudi Arabia has what what is called like a fiscal break-even target price for oil, which I think is around$80, and they they actually sort of declare this, I think, fairly openly. Um Saudi Arabia can can produce oil and make a profit at, you know, way less than that. They can produce for I think around$10 a barrel, but they need it to be, they need the price to be quite a lot higher than that because the whole way the country is structured, you know, it's a it's a big population, um, obviously it's, you know, a an autocratic regime, but you still need to keep your population happy. And in order to do that, they have to spend a lot of money on, you know, nice, um, you know, very nice sort of social supports and, you know, well-paid public service jobs and and all sorts of things. Whereas the UAE doesn't have that need. It's not, it's not so dependent on its oil revenues. It's a smaller country, smaller population. Um, it's diversified away from oil a lot more successfully. And um, and I think there's this other suggestion as well, um, of of their just their sort of like longer-term beliefs about the outlook for oil.

SPEAKER_00 8:26

Yeah, I mean, I find that I find that the most interesting part of this, which is which is this long-term belief of, you know, that famous quote by that Saudi um energy minister Sheikh Yamani, where he was like, you know, the the Stone Age did not end because we ran out of stones. The oil age is not going to end because we have run out of oil, but because people find better, superior alternatives. And, you know, it seems like the Saudis still believe in the oil age going on forever, while the Emirates are profoundly sort of thinking off peak oil.

SPEAKER_01 9:00

I don't know if it's so much a difference in belief as a difference in ability. I think both of them, and you know, like that quote, that like that's quite a famous quote in the oil world, that Stone Age running out of stones thing. To me, like that actually underscores how much Saudi Arabia has always feared or has long feared the end of oil demand. And that's why they don't want oil prices to be too high as well as too low, right? So it's a similar I I think that both countries have a very sort of healthy uh fear of the end of oil demand or a peaking and and you know, decline of oil demand, um, as they should because it's so important to them, right? But um the UAE just has more flexibility, they just have more options, you know. They've they've got uh I think their dependence on oil revenue for their foreign um income from oil revenue is something like um 40 or 50 percent versus Saudi Arabia's is, you know, 80. It's like it's it's quite it it's quite a big difference um between the two. Obviously, the UAE is like this, you know, foreign um international hub for all sorts of things, and Saudi Arabia hasn't done that so successfully. So I I yeah, I think it's the same fear, but expressed differently, like different strategies.

SPEAKER_00 10:18

Yeah, but it also it almost feels very rational on the Emirati's part to want to break out from OPEC and and you know, I mean their picture seems very attractive because it's very simple. It basically says there's not that much oil to be sold in the world, everybody's going clean and green. What do we do, lads? Let's just like pump the barrels, let's pump the bloody barrels. And so if you just pump the barrels, you're gonna collapse the oil price and you're gonna have to learn to live with the lower oil price, which you know nobody else in OPEC really can, because you know, they're populist countries like Saudi Arabia or Angola or you know, these these uh developing countries that are quite poor and haven't really diversified away from oil. And so the rest of them really want those prices high and and production restricted. And it's that small, sort of radical micro-state UAE that can that can afford to to just bump out and see the future more clearly in some sense and say, you know what, we might as well get a larger share of a shrinking pie.

SPEAKER_01 11:18

Yeah, and it's uh it's also like how how you view the future, right? And like whether, you know, how how how do you value your revenue now versus in the future, like it's a it's partly a call about your own like economic status now, but it but it's also a call on your like it's all it's also a decision about yeah, how you view the future of of oil demand. And it's like, well, who knows? I mean, I think there's a lot of, you know, there's so many uncertainties about it that there's like obviously a rationality to to just going, well, just sell as much as we can now for whatever we can get.

SPEAKER_00 11:51

Yeah, I guess it's worth remembering that OPEC came about in 1960 when a bunch of newly sort of decolonized countries uh tried to assert control over their own oil that was largely run, owned, operated, managed by the actual cartel, which was international oil companies, you know, your Shells and BPs and exons and etc. And so from 1960 to 19 um uh 70s, 80s, the these sort of newly independent um oil countries um became landlords and drove out the drove out the international oil cartel um companies. And you know, that that that's been this sort of way in which uh a lot of people, particularly in the West, view OPEC purely negatively, purely as a cartel that is sitting around, you know, dictating production to keep prices high, and it's just a bunch of nasty people deciding prices. And I've never thought about OPEC that way. You know, I've always thought about OPEC as part of the new international economic order, where a lot of resource-rich countries um became newly independent and actually said, you know what, this is our resource, it's our oil. We decide to manage it for our people's benefits, for our infrastructure, for our tax bases, not for your profits. And, you know, obviously you could you could argue that, you know, over time that that those newly independent countries uh ended up uh sort of enriching a small set of elites or whatever, but it is it is genuinely sort of a progressive sort of vision of owning the resources of your land. And and and and in that sense, OPEC is, you know, it's not progressive or regressive, it's just it's just what it is. It's it's it's a choice between who should be extracting uh resources from your land, who should be owning the profits, and um, you know, are your citizens going to get any welfare checks and shareholder dividends, or are the shareholders gonna get all the dividends, right?

SPEAKER_01 13:46

Yeah, who was it? I I don't know who it was who said described OPEC as like the most successful kind of post-colonial alliance, or I've I've heard it described like that, and I yeah, I ever since I ever since I heard that, I'm like, I I sort of think of it that way too, you know. It's like, well, yeah.

SPEAKER_00 14:04

Yeah, I mean, I I think that's exactly right. Most successful oil, you know, uh resource nationalism um of developing countries. And you know, people have tried to create similar cartels with tin and bauxite and wheat and all kinds of other commodities, and they haven't really worked out. There's something special about oil in that it is in huge demand by the world, right? So you you can really actually make a serious developmentalism through oil revenues in a way that you really can't out of other commodities save maybe copper, you know, in the case of Chile or something. But um, yeah, it's just been hard for developing countries to actually assert technological and political control of their resources.

SPEAKER_01 14:50

Yeah, I mean it's it's like ridiculously hard in most cases. But I I just want to make one more point about this before we get onto the, you know, the more geopolitical, sort of bigger picture, which is kind of ironically, though, it's some of the smaller and poorer members of OPEC who have not been faring very well under OPEC quota regimes in the last few years. Um, there was a really interesting story in Bloomberg News about two years ago about how the jostling between Saudi Arabia and UAE over quota production allocations basically led to like the poorer African members, um, I guess primarily at the time as Angola, Nigeria, can't remember who else, they had to bear the brunt of quota production um cuts, right? So that UAE could kind of prevail. You know, it's ironic, like these are the, again, you know, these are the countries that have far less of a a far less powerful hand to play in oil markets globally and within OPEC. Um, and they're the ones that that are not being lifted up by OPEC. And then Angola is one of the countries that subsequently left OPEC. And understandably, I guess, you know, compared to Nigeria, I think Angola has somewhat more, um quite a bit more, you know, diversification away from oil. So I I guess a bit a bit like um UAE, uh in UAE relative to Saudi Arabia, whereas Nigeria is really an oil, like they're really an oil economy. You know, Angola's got a couple other um irons in the fire there, like in terms of resources and exports. Um, but yeah, and who else? Um Ecuador also quit, Qatar, that's a bit of a different case. But you know, it's just interesting that not, you know, that that that some of these countries are really not seeing their interests served by being in this cartel with these bigger, more powerful oil-producing countries anymore.

SPEAKER_00 16:45

I mean, I I've I've been sort of just thinking about what are the ways in which we, the rest of the world, think about the Emirates, right? So the UAE, you know, you you I don't know, you talk to somebody in America or in London, you know, in one of these big rich places where the Emirates have a lot of financial wealth stashed away and they're investing in the AI companies and they're investing in the banks, and they're just, you know, they're these big like checks that everybody wants. And so there's one picture of the Emirates was fabulously wealthy, sort of Rontier state, which is a bunch of kings that own um the oil wealth, and they enjoy total autonomy from the state. There's no parliament uh to hold you account, you know, there's no people practically speaking. It's like one million citizens and nine million non-citizens that live in your kingdom. So that's that's one picture of the the of the Emirates as a Rontier state. There's another picture which is just it's a really tiny state. It's like Abu Dhabi and Dubai, and it's like a million nationals and you know, a total about nine or ten million people. So that's a a microstate that doesn't really rely upon its citizens to do most of the work. It relies upon foreigners. And those foreigners are largely, you know, hyper-educated subcontinental people, you know, people that I grew up with in Bombay, um, you know, people from Pakistan. You know, these are the people who are the skilled professionals in the Emirates. You know, my aunt was there as a doctor in Dubai, you know, earning herself a pretty penny after retirement from the Indian Army. Um, and um, and then, you know, the the the third way in which people think about the Emirates is it's just a playground for the world's rich people, right? So a bunch of tax-dodging expats, you know, that's the picture that that that people have, and a lot of illicit money and oligarchs from a bunch of different countries and and you know, owning land and property and stashing away their wealth um in in the emirates. And I guess the last way people think about it, or at least I think about it, is um it's a real creature of the Anglo-American Empire, right? The emirates were created by the Brits and the Americans. Um and they they they really um to this day are very much part of the Anglo-American sort of protection um imperial world. Um, and in that in that role, you know, they have become really, really close to the Israelis um and to the Americans, uh, particularly over the last five years, um, and uh become sort of a part of this sort of anti-Iran sort of coalition, which is US, um, Israel, and UAE, in a way that Saudi Arabia has sort of tried to steer a bit clearer off. Um, and that divide between the Saudis and the Emirates as to sort of which geopolitical bloc are we sort of truly in. Um, you know, and the Saudis have tried to seek a detente with Iran, you know, they negotiated a detente with Iran um under sort of Chinese mediation. The Saudis um are trying to sort of find sort of military packs with um Pakistan. They signed a uh a sort of a mutual uh self-defense sort of uh pact with Pakistan, which is if we get attacked, you come to our aid. And you know, they've they've been sort of uh trying to negotiate uh sort of nuclear weapons from Pakistan in case the Iranis get a nuclear weapon. Can you guys, Pakistan, help us out with the nuclear weapon, etc.? So the Saudis have been sort of playing a diplomatic game, which is not just being part of the US Israeli bloc, but actively trying to seek other partners and in particular sort of a detente with Iran in a way that the Emirates are absolutely not. And and you know, these things matter because as soon as the war started, the Iranians obviously knew that a bunch of warships and uh sorry, a bunch of planes and missiles um that are being um hurled at Iran are coming out of the Gulf Kingdoms, and so they relentlessly bombed UAE, right? So that the uh the I think something like 3,000 bombs, missiles, drones were launched by Iran into UAE. And uh that's where the Emirates sort of um military defense pact with the Israelis really helped, something called the Abraham Accords that was signed in the first Trump term, where they basically had an anti-missile sort of umbrella, air defense umbrella that knocked out most of those Iranian drones and missiles, not all of them, which you know, many of them hit the American bases and the radar installations and the ports and the oil facilities, etc. So they've been under relentless attack by the Iranians uh since the war began.

SPEAKER_01 21:33

How much of this UAE aligning more with Israel and the US? How much of it is down you you seem to be attributing it to this kind of like the the fact that the the Emirates are these like Western sort of Anglo financial playgrounds that that that that's part of it? But is it also like the geographical, just the geographical proximity that they feel more exposed?

SPEAKER_00 22:00

To Iran and um oh yeah that I mean they're just across the Gulf, right? So so you shoot at something with your short-range missiles, which the Iranians have built a huge buffer capacity of these short-range missiles, and you know they can keep shooting at them till kingdom come. Uh while it's very hard for the Iranians to shoot long-range missiles, which they have very much, much fewer in their arsenal to shoot them all the way to Saudi Arabia or all the way to Israel. So they've really pummeled each of the Gulf Kingdoms that are just across the Gulf from them. Um and that's you know part of their asymmetric escalation strategy by the Iranian military is to cause pain to the Gulf Kingdoms, uh, and in particular to disable the American air bases in those Gulf Kingdoms so that you know these attacks um by uh the US and Israel cannot take place onto the Iranian homeland. So that's that's sort of part of the logic of why you would expect the Saudis to be a little bit okay with Iran. Well, they're for the Emiratis, at least for the Emirati royal leadership, Sheikh uh MBZ, uh Mohammed Ben Zayat, you know, they they just they they want the Americans and the Israelis to finish the job and do regime change in Iran. Um, you know, and that's the that's gonna be very tricky because they basically would have to make a bet that the Americans and the Israelis are indeed capable of disarming Iran um and getting rid of their missiles and drones, which you know, two months into the war it seems like um is just not winnable.

SPEAKER_01 23:36

But that yeah, and that seems to be the bet that they're making, right? And there's like okay, so there's there's two other elements to this, at least, which which um I'm you know curious to know what you think about them right now. When the announcement came out that that the UAE was leaving OPEC, um I know there was a bit of chatter around about this report that had come out a week earlier that the UAE was seeking a dollar swap line with the US. Okay, and I should um try and explain the significance of a dollar swap line. We we wrote about this uh a couple of years ago, um, but dollar swap lines are very valuable to any country. Most of the countries that have uh permanent dollar swap lines are the the rich countries of the world. Um but it's something that, you know, developing countries and any country that's facing the prospect of like some kind of you know run on run on its economy, basically, like the equivalent of a bank run on your on your economy or you know, a plunge in your currency, it's something that you really want to have because it means that you know you can get, you know, very you you can you can swap your own currency for dollars, which is the currency that that really counts when things are bad. Um so yeah, so the report that the UAE was seeking that um has been linked, was was linked to the OPEC decision. Um I don't know what you think about that, Tim. But then and then the other thing is, you know, obviously the um Yemen and Sudan, these these kind of like other theatres of of conflict between or so proxy conflict between the UAE and Saudi Arabia. But but yeah, on the the dollar swap line and the UAE kind of you know really kind of going all in, I guess, on a on a US alliance, like financially and and militarily.

SPEAKER_00 25:24

Yeah, I mean the Emirates are part of the GCC, they have a currency peg against the US dollar. And so if they want to defend that peg, you know, they might they might just sell their US treasuries. And if you sell a bunch for US treasuries, you know, maybe you might want to tell the Americans, hey, we are planning to do this, we would rather not sell a bunch of our treasuries. Like, do you guys want to help us out? To which the American Fed can respond, no, you're perfectly fine selling off your treasuries. Like, you know, it's it's okay for you to do that. You should go first to defend your currency with your US treasuries rather than asking us for a swap line. So that's so basically there's been this negotiation between the Emirates and the US Fed. And the US Fed is at the end of the day a technocratic body that is not going to make a political decision such as, well, you seem to have gotten yourself in a pickle, and you know, you're in a geopolitical pickle and you're asking us for help. But there's another wing of the US state, which is the US Treasury, which is acutely just underneath the US government and US administration, that can just make a political decision. Yes, you are our friend, yes, you are in a pickle, and therefore we should give you um uh a temporary sort of swap line where you can exchange your durums for dollars. And so, you know, you could imagine that as part of sort of a far-reaching sort of bargain between the Trump government and the Emirati government, which basically says a quid pro quo, which is you exit OPEC, you ramp up production, you bring oil prices down. That's going to really help me in my midterms, and I might win my re-election campaign in the midterms, but you know, you need to bump up your production, at which point the Emiratis would say, Yeah, sure, we'll do that. Can we have these swap lines, please? Or can we have this fund from the Treasury, you know, so a few billion dollars to to help out a friend. So, so that is the that is the kind of political calculation, which is purely a sort of a geopolitical, financial, statecraft, whatever you want to call it. But it's clearly a mix of economic motivations and geopolitical or political motivations, which, you know, is is is exactly what the you what we wrote about in that piece that you were referencing, the New World Order piece, which is the dollar is never just about the dollar, it's about the US sort of political position or imperial position, if you want it that way, in the world. And, you know, the largest wards of the IMF, you know, which are the countries that the con that the IMF sort of gives these massive dollar loans to, and it's all places that are hugely of geopolitical significance. It's Egypt, it's Argentina, it's Pakistan, you know. So so these are huge countries in geopolitically sensitive parts of the world where the IMF um, you know, has routinely intervened against the advice of a bunch of IMF technocrats, but you always get the sense that at the end of the day it's the shareholders of the IMF, with the US having, you know, largest sort of veto power um in the IMF board that can make these calculations. So, in that sense, it's not all that surprising that something like this is going on, and it has caused a big fuffle, right? So the American technocrats are really pushing back and saying the Emirates are exactly the wrong kind of entity to give um dollar support to because they have an enormous stash of dollar treasuries that they should be using.

SPEAKER_01 28:48

Yeah, I mean, I don't want to go too far down like a rabbit hole of like the politics of dollar swaps, but it's I mean, that it's not it's not always it's not like purely a technocratic decision, is it? Even when it's made by the Fed, it's like as interesting like which countries got dollar swap lines during the global financial crisis and then which ones have sort of permanent ones, and um even when these decisions are made technocratically, like there's still a lot of politics and a lot of like history, and um because you know, like did did did the really debt distressed countries in get them during COVID? You know, they were the ones that really needed them, like some of these like lower, lower income countries that were, you know, i coming up against the prospect of defaults, and you know, that that would have really that would have really um shored them up, right? Like these, you know, African countries that they didn't get them. So um, I mean they're not strategically significant, but I guess they're not also like not technocratically significant or whatever.

SPEAKER_00 29:46

But I but but but I really think that this idea of economics and security, like what are the two wings of the American state that have a lot of autonomy in making decisions? And you basically realize that there's the dollar that underpins American power in the world, and there's the American military that underpins power in the world, right? And the dollar is tech, you know, under the control of the Treasury Fed kind of US London kind of nexus, and the military, you know, is something that is this sort of extended thing that can give you air defense cover. So if you think about the Emirates, like they need both the dollars and they need the air defense cover. And you know, they go to the Pentagon to get or the Israelis to get that air defense cover, and they go to the US Treasury or the US Fed to get the dollar swap lines. So in that sense, you know, we really have to start thinking about energy, economics, and empire together, um, which is you know what we have done in this kind of conversation. And when you have a giant petrostate um like the Emirates under attack, you know, all of these parts of the American state have to be mobilized to defend them.

SPEAKER_01 30:57

Yeah, I mean, I think I would add as as well as the three, as well as the like dollar military and um and and energy dominance, there's also there's also like the tech stack as well now, isn't there? Basically, yeah, way way ways in which the US um in particular, but not but you know, not just the US, but you know, mostly the US is able to um exert discipline and control over other countries is is through these these interdependencies, these things that are really hard to kind of for any country to or almost any country to sort of cut themselves off from. Um I mean, you know, China being one that's probably like the most, you know, has has has the most um agency in that regard and and and the most preparedness to to exercise it. All right, so what about this uh what about these Yemen and Sudan proxy wars and how does that, like, how is the tension between the Emirates and Saudi Arabia playing out there and and how does that like what's the connection there with uh Mohammed bin Zayad, the you know, the the Saudi, um, the UAE's ruler, MBZ? Can you can you elaborate on that for us? And like how does that fit into what's going on now with the world?

SPEAKER_00 32:30

I mean, it has the character of a sort of a Shakespearean player, like you really have to think about, you know, these like kings with a lot of power, drunk on a lot of power, and their rivalries and their courts, and you know, cooking up schemes to remake the entire Middle East. That's that's really how you got to think of Mohammed bin Zayed. And, you know, there's not been too many profiles of him in um in the English press. And, you know, that's largely because of Emirati's sort of dark money um in the US and UK. But there was a wonderful profile of him in in the New York Times in 2020. And the title is Mohammed bin Zayed's dark vision of the Middle East's future. And it paints him as this extremely ambitious king who has a plan to reshape the entire region's future. And he's the one whose protege is Mohammed bin Zalman, you know, the young Turk king of Saudi Arabia, um, who was a crown prince and was is known to be his protege. And together they've hatched a lot of plans. You know, in 2013, they together helped the Egyptian military crush the Arab Spring that had elected the country's first elected uh Islamist president in 2013. In 2015 in Libya, you know, they step into the civil war and they defy the UN embargo. Um, you know, they get into the civil war in some in Somalia and become a power broker in the Horn of Africa. And then he joins the Saudi war in Yemen, uh, you know, which was uh against the Iran-backed sort of Houthi militias. So, you know, these these two kings have really operated together. So it's they're kind of falling falling out in 2019-2020 with the end of the Yemen war, when the um, you know, Saudis basically realize that they can't crush and defeat the Houthis, and the Emiratis are, you know, basically determined to continue to intervene in the civil war in in Yemen. And uh, you know, they've been backing the RSF in the civil war in in Sudan. So those are now two giant wars in Yemen and Sudan that have displaced millions of people, you know, besieging cities, starving civilians, uh, where MBZ has indeed played a very, very dark role as a power broker. And the Saudis have been sort of on the end of trying to, on the other end of those conflicts, backing, you know, the other side of those, of those, of those wars. And so this kind of friction between them in in oil is really part of a larger breakdown um between the Saudis and the Emirates on what is the future of the Middle East and North Africa and the Horn of Africa.

SPEAKER_01 35:08

Okay, so like really simple question though. Aren't they aren't they both like broadly interested in stability? Is this just coming down, you know, if they've kind of previously been pretty good allies? Is this just coming down to strategic differences or is this like direct, is this more of a direct rivalry around who is the most powerful state in the region?

SPEAKER_00 35:29

I mean, there's definitely a personal rivalry and personal animosity, as you might expect, between a protege and you know, his erstwhile sort of supporter. Um, but there is, as you pointed out, a deeply economic difference between uh Saudi Arabia that wants to modernize and diversify the kingdom, has 50 million mouths to feed, and the emirates and the emirates that are, you know, a much smaller place where the king has a lot more autonomy and can do basically what he wants. And so so the differences between them are grounded in both personal animosity, rivalry, different, different visions for the future. And you know, the Yemen uh civil war was a huge difference where Yemen borders Saudi Arabia and Israel far away from the Emirates. And so at some point the Saudis basically realize they they need to come to a deal with the with the Houthis. Um, and that that kind of backs into this this question about can the Saudis live with a dominant uh Iran in the Persian Gulf, while the Emirates absolutely cannot and may be determined to go down fighting.

SPEAKER_01 36:33

Yeah, it's so much about like how they each see their their sort of like long-term survival, isn't it, by the sound of it? And then and then the different like it's really fascinating how much just the different population sizes that they each need to support plays into this as well, and then you know, the relative, the relative oil wealth and non-oil wealth that that each of these two countries have.

SPEAKER_00 36:56

Yeah, I mean, and and how they use their oil wealth, right? So that oil wealth, you know, particularly going into London and particularly going into the US and really propping up, you know, the Trump regime where MBZ um, you know, has made a huge effort to to bribe and lobby a bunch of people in the Trump court, you know, including his son-in-law and and so on, and trying to curry favor with the AI lords in Silicon Valley by giving them an open checkbook for their data centers of their dreams. And so there there really is a, you know, you really, as I said, it's like a Shakespearean kind of a uh a play that that that we need to be thinking in terms of, and definitely not narrowly, only in terms of oil and economics.

SPEAKER_01 37:40

Yeah, it's so interesting, like it just goes to show that yeah, we can't we can't just view like the oil part of this in isolation, and we can't view the the the war in isolation either. You know, it's all like there's yeah, there's so many interconnected things, like like we're always saying. Alright. You've been listening to episode two of our bonus season of the polycrisis. I'm Kate McKenzie.

SPEAKER_00 38:05

And I'm Tim Sahai. We publish a newsletter about the political economy of climate change, amongst other things. You can sign up for that and find out more about us at thepolycrisis.org or in our show notes.

SPEAKER_01 38:17

Our producer is Sarah Allerly, Russell Stapleton composed our excellent music, Tiffany Stewart is an excellent engineer, and Sarah Ellery is also our executive producer.