One of the more surprising news to hit the tape yesterday was that Saudi Arabia, exasperated and desperate by Russia's relentless support of the Syrian regime and refusal to abandon the Syrian army thus facilitating the Qatari plan to pass its natgas pipeline to Europe under Syria, had quietly approached Putin with a proposal for a huge arms deal and a pledge to boost Russian influence in the Arab world if only Putin would abandon Syria's Assad. It will hardly come as a surprise to anyone that in the aftermath of yesterday's dilettante mistake by Obama which alienated Putin from the western world (and its subservient states such as Saudi Arabia of course), has just said no. It will certainly come as no surprise because as we explained previously, the biggest loser from Russia abandoning Syria (something we predicted would never happen) would be none other than Russia's most important company - Gazprom - which would lose its energy grip over Europe as Qatar replaced it as a nat gas vendor. What is shocking in all of this is that Saudi Arabia was so stupid and/or naive to believe that Putin would voluntarily cede geopolitical control over the insolvent Eurozone, where he has more influence according to some than even the ECB, or Bernanke. Especially in the winter.

From AFP:

On July 31, President Vladimir Putin, a strong backer of Syrian leader Bashar al-Assad, met Saudi Arabia's influential intelligence chief Prince Bandar bin Sultan, after which both Moscow and Riyadh kept a lid on the substance of the talks. "Every two years, Bandar bin Sultan meets his Russian counterparts, but this time, he wanted to meet the head of state," said a European diplomat who shuttles between Beirut and Damascus. "During the meeting at the Kremlin, the Saudi official explained to his interlocutor that Riyadh is ready to help Moscow play a bigger role in the Middle East at a time when the United States is disengaging from the region." Bandar proposed that Saudi Arabia buy $15 billion (11 billion euros) of weapons from Russia and invest "considerably in the country," the source said.

This is where it gets funny:

The Saudi prince also reassured Putin that "whatever regime comes after" Assad, it will be "completely" in the Saudis' hands and will not sign any agreement allowing any Gulf country to transport its gas across Syria to Europe and compete with Russian gas exports, the diplomat said.

Right. Of course, if Saudi is found to have lied about this tiny factoid, it will be none other than the US who would step in and defend its brand new "allies" in the Syrian government.

In 2009, Assad refused to sign an agreement with Qatar for an overland pipeline running from the Gulf to Europe via Syria to protect the interests of its Russian ally, which is Europe's top supplied of natural gas. An Arab diplomat with contacts in Moscow said: "President Putin listened politely to his interlocutor and let him know that his country would not change its strategy." "Bandar bin Sultan then let the Russians know that the only option left in Syria was military and that they should forget about Geneva because the opposition would not attend." Russia and the United States have been trying for months to organise an international peace conference between Assad's regime and the opposition to take place in Geneva, but so far to no avail. Asked about the Putin-Bandar meeting, a Syrian politician said: "As was the case before with Qatar and Lavrov (in talks), Saudi Arabia thinks that politics is a simple matter of buying people or countries. It doesn't understand that Russia is a major power and that this is not how it draws up policy." "Syria and Russia have had close ties for over half a century in all fields and it's not Saudi rials that will change this fact," he added. The meeting between Bandar and Putin came amid tension between Moscow and Riyadh over the conflict in Syria, as Russia has accused the Saudis of "financing and arming terrorists and extremist groups" in the war which has killed more than 100,000 people since March 2011. While there was no official reaction to the meeting, Russian experts also said Putin had apparently turned down the Saudi offer. According to military expert Alexander Goltz from online opposition newspaper Ejednevny, "such an agreement seems extremely improbable."

Of course it is, because as JPM and Goldman are to the US government, so Gazprom is to Russia.

What is most interesting here is that Russia is now actively stretching its wings against not only the US but its chief foreign allies abroad. Which only means that a confrontation with Israel, directly over Iran or otherwise, is only a matter of time.