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Net Assessment of Saudi Arabia

Dec. 9, 2015 The country is trying to limit the fragmentation in the Middle East caused by the Arab Spring, while facing numerous challenges at home.

Net Assessment

|September 20, 2017

Saudi Arabia’s petroleum wealth has allowed the country to weather the anarchy that has spread throughout the Middle East. However, the kingdom is under a great deal of internal and external strain, which will lead to its weakening over the course of the next few years. A weakened Saudi polity will worsen the region’s growing insecurity, given that Saudi Arabia is the only major state to have survived the Arab Spring and is playing the lead role in protecting against further erosion of state authority in the Middle East. The world’s largest exporter of crude is itself at risk of becoming a haven for jihadist actors, which is a worrying sign for the Arab regimes it is trying to prop up.

In an unusual development, Germany Foreign Minister Frank-Walter Steinmeier late last week publicly rebuked Berlin’s intelligence service for providing the media with a very blunt memo criticizing the Saudi regime for being a destabilizing force in the Middle East. Steinmeier said that the BND’s reported assessment was not the position of the German government. However, it is unlikely that the administration of Chancellor Angela Merkel disagrees with the assessment of its own intelligence service. Rather, this statement is an attempt at damage control and shows that the Germans do not want to publicly admit what they privately believe. The fact that the Germans leaked this memo also suggests that this is a view that is shared by many of its Western allies.

The memo speaks of the kingdom pursuing an “impulsive policy of intervention” since the current monarch, King Salman, took the throne almost a year ago. He then appointed his very young son, 30-year-old Prince Mohammad bin Salman, as deputy crown prince, defense minister and head of a newly formed economic and development affairs council, which is responsible for the country’s energy policy. Indeed, under the short reign of the father and son, the kingdom has accelerated efforts towards a more interventionist foreign policy, with the war in Yemen as a key example. However, the kingdom, for several years now, has been forced to find an alternative to its long dependence on the United States for national and regional security.

Washington has been pursuing a balance of power strategy in the region and, more importantly, wants regional states to take the lead in managing the Middle East. This shift in American policy comes at a time of great peril for the Saudis and the Arabs in general, given the meltdown of regimes in the region since 2011. But perhaps the most alarming change for the Saudis is that their closest ally, the United States, is cooperating on regional security matters with their worst enemy, Iran. As a result, the Saudis have been forced into the unprecedented position of having to protect their own interests against both Shia and Sunni states and non-state actors.

Role in the Arab World

One can certainly debate whether or not Saudi policies are working or making matters worse. But what is clear is that Saudi behavior is in keeping with the kingdom’s imperatives to prevent further erosion of state writ in the Arab world. What the Germans, other external powers or even the Saudis believe should be the direction of Saudi Arabia’s foreign policy counts very little. What really matters is that the country, despite being oil rich, suffers from inherent political and military weaknesses and is unlikely to succeed in stemming the tide of regional insecurity.

Economically, the country has been experiencing a recent downturn, as its reserves have fallen from $736 billion at the beginning of the year to just over $650 billion. Continued low oil prices could lead to their depletion within five years, the International Monetary Fund warned last month. Saudi expenditures, as a percent of GDP, stand at 50.4 percent, an increase of 10 percent from 2014. Riyadh will be running a budget deficit of more than 20 percent in 2015. This situation has forced the Saudis to start talking about production cuts. Ahead of last week’s OPEC meeting, the Saudis leaked to the media that they would be presenting a proposal for reducing output. While that proposal did not emerge, the fact that the Saudis have been seriously entertaining the idea speaks volumes about the economic pressure they are feeling.

However, between their still substantial reserves and the possibility that oil prices could rebound, the financial factor is not the core issue that threatens the Saudis. The core problem for the country is the fact that it does not have the capability to arrest much less reverse the decline of state authority and the related rise of non-state actors. In fact, the Saudis are challenged by a multitude of problems within their own borders but let us first examine the challenges on the external front.

Militarily, despite the frequent purchase of state of the art Western hardware and the recent intervention in Yemen, the Saudis remain a weak player. They sought to build a coalition of Sunni states to fight the Houthi-led opposition in Yemen but were rebuffed by Turkey, Egypt and Pakistan. Furthermore, the Arab coalition of the willing that the Saudis put together has not been able to dislodge the Houthis and their allies from the capital Sanaa and many other parts of the country. This highlights Saudi Arabia’s weakness. In fact, in recent days, there have been reports of Houthis making incursions into the three Saudi provinces of Najran, Jizan and Asir along the kingdom’s southwestern border with Yemen and seizing control of certain areas.

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The only place where they have been able to stabilize the situation is Bahrain, where the 2011 Saudi-led Gulf Cooperation Council task force quelled a Shia-led civil uprising that threatened the monarchy dominated by the Sunni minority. But even here the situation remains extremely fragile. The main tools that the Saudis have is cash and the ability to deploy Salafist-jihadists and other proxies in various theaters. The latter has proven to be disastrous given that it has benefited al-Qaida and, more significantly, the Islamic State.

With regards to financial assistance, the Saudis find themselves increasingly having to support a variety of regimes in the region. These include Bahrain, Jordan, Lebanon, Morocco and, most importantly, Egypt. Moreover, the Saudis are supporting a variety of non-state actors, particularly in Syria and Iraq where they are fighting both the Iranians and their Arab Shia allies, as well as IS.

Domestic Liabilities

The Saudis face their other critical challenge at home, where Islamic State has been staging attacks on Shia mosques and leveraging the region’s polarized sectarian climate to undermine the kingdom’s security. Meanwhile, the mainstream population, 70 percent of which is under the age of 30, needs to be kept satiated, which explains why King Salman has spent $32 billion on social spending and bonuses since he took the throne. Though the Saudis do not face an immediate risk of a public uprising, their problem is one that is intrinsic to any state governed by a royal family: transition of the monarch. They are in the midst of a historical transition to the third generation leadership, which is by itself problematic.

In addition, the manner in which the monarch has elevated his own son at the expense of many other more experienced brothers and nephews has created bitterness within the royal family. There is great trepidation regarding the ability of the king’s son to lead, especially as the elderly monarch is quite ill and could soon die or be incapacitated. Dissent within the royal family has been kept under wraps for the most part but there are serious questions about succession in the not-too-distant future.

Large amounts of cash and a sizable share of the global oil market can continue to insulate the Saudis from a sudden catastrophic loss of power. But it is not a panacea for their chronic inherent weakness, especially as regional conditions around them continue to degenerate. The sheer volume of issues that the Saudis have to deal with both on the domestic and foreign policy fronts is constraining Riyadh’s bandwidth. Saudi Arabia is already playing a defensive game, which is not going well. While the monarchy continues to prioritize the fight against Iran and its Shia allies, the biggest challenge it faces is from within and from the Islamic State, which is in the process of exploiting the Salafist kingdom’s ideology and its internal weaknesses.

The Saudis won’t be able to shape the regional security environment the way they want. On the home front, they will get by for sometime to come, though their ability govern will gradually erode.