New Zealand’s relationship with Saudi Arabia faces increasing scrutiny

While New Zealand’s problematic but lucrative relationship with China gets lots of attention, there’s another important and similar relationship with Saudi Arabia that receives less interest. International analyst Geoffrey Miller explains why Riyadh is too important for Wellington to ignore.

New Zealand’s new ambassador to Saudi Arabia, Barney Riley, has his work cut out for him.

Foreign affairs minister Nanaia Mahuta last week announced Riley as her choice for the new Head of Mission in Riyadh.

Riley is an experienced diplomat and is no stranger to the Middle East. He has previously served as New Zealand’s Ambassador to Egypt and as deputy at New Zealand’s Embassy in Iran.

The Saudi-New Zealand relationship is in a delicate position. On the one hand, trade is booming. NZ’s exports to Saudi Arabia are now worth some $750m annually, an increase of over 30% since 2017.

But an even more lucrative free trade agreement with Saudi Arabia, and the other five countries that make up the Gulf Cooperation Council (GCC) grouping, remains elusive. The deal was agreed to in principle back in 2009 – but remains unratified. Under the National Government, a supposed quick-fix solution to try and get the arrangement over the line – Murray McCully’s infamous “Saudi sheep deal” – only ended up making things worse.

For New Zealand, the Gulf could be the embodiment of the diversification strategy that Jacinda Ardern and Nanaia Mahuta routinely call for in their speeches about China. Indeed, New Zealand’s meat and dairy are perfect complements to Saudi Arabia’s mainly oil-based exports. A free trade deal between New Zealand and the GCC grouping should, in theory, be an easy sell for both sides – and a much easier and more natural arrangement than, say, one with the EU, where agriculture is a major sticking point.

But there are political realities to consider – starting with Saudi Arabia’s role in the war in Yemen.

In February, it emerged that Air New Zealand – 52% of which is owned by the NZ government – had been servicing aircraft engines for the Saudi military.

At the time, Jacinda Ardern swiftly condemned the arrangement, saying “it just doesn’t pass New Zealand’s sniff test”.

Air New Zealand hastily terminated the contract.

But subsequent questions over both Air NZ’s work for other militaries – including that of the United Arab Emirates (UAE), a major Saudi ally – and wider concerns over the handling of NZ’s export controls regime by the Ministry of Foreign Affairs and Trade (MFAT) only kept the story going. A review was soon launched, led by a top former public servant, David Smol.

The announcement of the review has not entirely succeeded in taking the heat off MFAT. This week, Ben King, MFAT’s deputy chief executive for policy, faced pointed questions at a select committee hearing from Golriz Ghahraman, the Green Party’s foreign affairs spokesperson. One retort from Ghahraman, in response to a lengthy explanation by King on the approval of military items for training purposes, ended with “So training people to become better at war crimes is OK?”

Saudi Arabia entered Yemen’s civil war in 2015 at the request of Yemen’s President, after Houthi rebels took over the country’s capital, Sanaa. The UN Security Council – which at the time included New Zealand – effectively legitimised the Saudi-led intervention under Resolution 2216, which called on the Houthis to withdraw.

Six years later, the UN now calls Yemen the world’s worst humanitarian crisis, with 80% of the population reliant on aid. More than 130,000 people have been killed in the war, including some 13,000 civilians, while around 85,000 children are estimated to have died of starvation.  In 2019, a UN panel found that both sides in the war may have committed war crimes. A naval and air blockade by the Saudi coalition – with the aim of stopping the Houthis from receiving supplies from their main ally, Iran – has only made the humanitarian situation worse.

From the Saudi point of view, the situation in Yemen – its direct neighbour – is an existential threat. Houthi drone and missiles are now routinely fired into Saudi Arabia itself, often targeting oil facilities.  Moreover, the Saudi position that the Houthis are really just a proxy for its main rival, Iran, is not entirely without foundation. Especially since the Arab Spring, Iran has been taking advantage of conflict and instability in countries such as Syria, Iraq and Yemen to expand its influence throughout the Middle East.

But whatever the details, the war in Yemen has become Saudi Arabia’s equivalent of the Vietnam War for the United States – a never-ending quagmire. The horrific nature of the war – and the killing of dissident journalist Jamal Khashoggi – have largely overshadowed the Saudi government’s recent attempts at reform and modernisation, under its Vision 2030 programme.

Even the US, traditionally one of the Saudi Arabia’s closest allies, is now distancing itself: one of Joe Biden’s first foreign policy decisions was to withdraw US support for the war. Riyadh is now desperately trying to find way to extricate itself from the conflict. However, the Houthis are currently in the ascendancy and are not particularly interested in a ceasefire.

Ultimately, the Air New Zealand affair was a reminder that trade can never be separated from wider foreign policy issues. In that sense, the challenges that New Zealand is facing in its relationship with Saudi Arabia are hardly unfamiliar. After all, New Zealand frequently encounters the same kinds of trade vs. human rights dilemmas in its dealings with China.

New Zealand is hardly alone in wanting to run a mile from any association with the grim realities of the war in Yemen. But if it wanted to, it could play a crucial role in brokering a solution. Unlike the United States, New Zealand has historically had a good relationship with both Saudi Arabia and Iran, the Houthis’ biggest backer. The embassies in Tehran and Riyadh were the first that New Zealand opened in the Middle East.

The size of the Saudi market means that it will never rival China’s importance to New Zealand in its own right. But Saudi Arabia’s leadership role and clout in the wider Gulf and Middle East region mean that its significance for New Zealand’s future trade is much greater than one might first assume. The war in Yemen probably needs to end before any free trade negotiations can resume. But like Beijing, Riyadh is too important to ignore.

Geoffrey Miller is an international analyst at the Democracy Project. He has lived and travelled extensively in the Middle East and is a fluent Arabic speaker.

This article was originally published on the Democracy Project.