New book on Saudi Arabia important for the oil industry
Karen Elliott House’s unsettling new book on Saudi Arabia is an essential guide to the mounting problems facing the country
“They keep dying on me,” said Ronald Reagan of the decrepit men of the Politburo who, one after another, succeeded to rule the Soviet Union in the early 1980s. When a healthier Mikhail Gorbachev took charge in 1985, few Kremlinologists believed that the USSR would disintegrate within six years.
The Al Saud family, in command of Saudi Arabia since King Abdul Aziz fought his way to power in 1932, has lasted longer than the USSR. But, argues a new book by Karen Elliott House, the kingdom’s most difficult moments may be approaching. If collapse and chaos consume the country, the consequences will be much more severe.
Yet despite Saudi Arabia’s importance to the global economy – a quarter of the world’s traded oil comes from the kingdom – mainstream media have barely acknowledged the mounting threats to the regime’s stability. “Its fate is so important to the rest of the world,” writes House, “and the world is so vested in the maintenance of its status quo that it’s almost as if talking about Saudi Arabia might jinx that stability.” House’s book is a thorough jinxing.
The foundations are creaking. House, a former Wall Street Journal reporter, paints a detailed and convincing picture of the social, economic, religious and political threats that face the Al Saud family. On Saudi Arabia may be the most important book for the world’s oil industry in years.
Although oil income has soared in recent years, Saudi Arabia has failed to spread its wealth among the kingdom’s subjects. The economy has ossified. Saudi Arabia registered just 382 patents in the US between 1977 and 2010, notes House. South Korea and Israel between them registered more than 105,000 in the same time. Private capital is parked abroad because the government and oil-dominated economy offers nowhere else for it to be invested.
Forty percent of Saudis live on less than $850 a month. Many cannot afford a home. One of every three people in the kingdom is a foreigner; two out of three jobs are held by foreigners; and foreign workers account for 90% of all private-sector employees. Meanwhile, joblessness afflicts the Saudi young disproportionately: the unemployment rate among 20-24 year olds is 39%.
“Many of these young Saudis know that they are living third-world lives in a country that has more than $400 billion in foreign reserves and, in recent years, annual oil revenue in excess of $200bn.” And there are many young: 70% of Saudis are under 30 years of age and 60% are under 20. Government efforts to provide them jobs have failed. The net effect, writes House, “is a society that however tranquil on the surface, seethes with discontent”.
Unrest elsewhere in the region has yet seriously to trouble Saudi Arabia. But signs of success in Egypt or Libya in coming years may encourage the kingdom’s restless youth. The regime’s future may depend on failure elsewhere. King Abdullah’s response to the upheaval that unseated Egypt’s Hosni Mubarak, a long-time ally, was to pump billions of rials into the Saudi economy in an effort to pacify the population. “In today’s Saudi Arabia, money may buy passivity, but it rarely buys gratitude. Although Abdullah remains more popular than other leaders in the region, too many Saudis see corruption among the kingdom’s elite. Widespread access to the internet is undermining the hold of the Wahhabi religious authorities over young Saudis.
The regime has coped with previous threats to its authority, such as the stationing of US troops in the kingdom during the first Gulf war and, more recently, the home-grown terror attacks in 2003. It may muddle through again.
But House suggests things are different this time. The issue of succession hangs over Saudi Arabia’s future, suggests House. The youngest of the surviving sons of King Abdul Aziz (he fathered 45) are all in their late 60s. “What scares many is that the succession, which historically has passed from brother to brother, soon will have to jump to a new generation of princes,” writes House. Soon, only one branch of the Al Saud family will have power – leaving the bulk of 7,000 princes (of 35,000 others, if the offspring of Abdul Aziz’s brothers are included) in the cold.
It is not unimaginable that Saudi Arabia’s deep divisions – tribal, regional, religious – will “erupt into conflict”. Loyalty to the Al Saud family, not patriotism, has been the goal of the rulers. “Thus should royal family divisions, now festering beneath the surface, erupt over succession, little could prevent larger fault lines from cracking.” The outcome could be “Libya writ large”.
A new king may introduce reforms that prevent disintegration. Saudi Aramco offers an example of a different Saudi Arabia: within its compound in Dhahran, women drive and run large parts of the company, cinemas show films, Christians and Jews can worship and the religious police that prowl the streets elsewhere in the kingdom are prohibited – a “parallel society”, writes House, and one that she shows exists in many private homes in Saudi Arabia. Whatever is in Saudi Arabia’s future, though, “it is not democracy”, she notes.
Reforms may create expectations that the Al Sauds cannot satisfy. Tighter control and a policy of divide and conquer are just as likely. Those strategies are also dangerous, however. The regime has never tested mass violent repression and how the population would respond is unknown.
The warning signs are just across the causeway from Dammam, in Bahrain, where Saudi Arabia has tried to shore up an ally against the kind of Shia unrest that periodically threatens the kingdom’s oil-rich Eastern Province. The uprising in Bahrain has been “a mirror” in which the Al Saud myth – that monarchies, appointed by Allah, are sacrosanct – has been shattered.
House is too alarming about the threat posed from across the Gulf, suggesting Iran, through proxies or terrorists sharing its aims, might destroy Saudi oilfields: a devastating prospect, but an unlikely one. Nonetheless, the alliance between the Al Saud and the US is mutating, too. Neither party much likes the union. China’s emergence as a major importer of Saudi crude is changing the balance. The union between the US and the kingdom, once described by the Saudi ambassador to Washington Prince Bandar bin Sultan as a “Catholic marriage” has become, in the words of his brother, the foreign minister, a Muslim one.
That does not mean the US is less exposed to the problems facing its polygamous partner. “The stakes for all Americans are higher here than anywhere else in the Middle East,” House writes. Not just for Americans. Stability in Saudi Arabia has been a cornerstone of Western strategic interests. As the global economy struggles, the kingdom’s recent commitment to keep pumping as much oil as its clients need has been praised from the White House to the IMF. Dynastic disintegration would be disastrous for the world’s oil market. With House’s alarming book in hand, no one can say, as they did after the collapse of the Soviet Union, that they weren’t warned.