Britannia Radio

 Saudi Arabia's House Of Cards

Change is coming very soon to the Middle East—Egypt’s government after Mubarak (he is dying of caner), Iran after it obtains nuclear weapons (they may already have one or two), and Saudi Arabia, run by a an aging royal family. See article below. As the US retreats from the region, the instability will grow.

Dr. Steve Carol

Prof. of History (retired)

Associate Producer and

Official Historian of

Middle East Radio Forum

www.middleeastradioforum.org

Middle East Consultant to

Salem Radio Network News

 

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Present Dangers: Saudi Arabia 's House Of Cards

Ilan Berman, FORBES 07.13.10, 6:00 AM ET www.forbes.com/2010/07/12/saudi-arabia-royalty-oil-opinions-columnists-ilan-berman.html

 

How stable is Saudi Arabia ? Not very, according to at least one member of the Kingdom's ruling class. Last month Prince Turki bin Abdul Aziz Al Saud, a prominent dissident now in exile in Cairo , issued an open letter to his fellow royals, urging them to abandon their desert fiefdom for greener pastures. According to the prince, the current social compact between the House of Saud and its subjects had become untenable, with the government no longer able to "impose" its writ on the people and growing grassroots discontent at the royals "interfering in people's private life and restricting their liberties." His advice? That King Abdullah and his coterie flee the Kingdom before they are overthrown--and before their opponents "cut off our heads in streets."

 

Or so the story goes. Reports of Turki's missive have understandably made a splash in the Iranian press, with Riyadh 's regional rival engaging in some thinly veiled schadenfreude. But the actual letter itself is exceedingly hard to come by, at least in its English translation. Were it not for a report from the country's official news agency denouncing the communiqué, you might think the entire episode was made up.

 

Real or fabricated, however, the warning is instructive. Seventy-eight years after Abdul Aziz ibn Saud triumphantly carved out his kingdom on the Arabian Peninsula following a quarter-century of warfare against rival tribes, Saudi Arabia is living on borrowed time. And the likely culprit of its eventual undoing is the one commodity that allowed ibn Saud to secure international legitimacy in the years following his country's founding: oil.

 

The problems start with the Kingdom's notoriously opaque energy sector. As veteran oil trader Matthew Simmons pointed out in his 2005 book Twilight in the Desert, "What we know about the Kingdom's oil is pretty much what Saudi Aramco, the Petroleum Ministry and the royal family want us to know."

Indeed, empirical facts about Saudi energy wealth are exceedingly hard to come by. Today, the world's largest deposit of proven oil resides not in the Persian Gulf, but in North America . That is because, despite its claim to global energy dominance, Saudi Arabia has refused to allow objective, independently verified measurements of its oil reserves. ( Canada , by contrast, has permitted both the U.S Energy Information Administration and the Paris-based International Energy Agency to conduct a comprehensive assessment of its energy potential, with spectacular results.)

 

The reasons for Riyadh 's reticence are obvious. No major new energy fields have been found in Saudi Arabia since the 1970s, and the chances of such discoveries are now, in Simmons' words, "remote." This means that the Kingdom's position at the head of the world oil class is fragile; if Saudi reserves are found to be more modest than publicly proclaimed, its status as an energy superpower might be at risk.

 

For the moment, at least, the House of Saud still retains considerable muscle in that department. Saudi Arabia is currently estimated to be capable of producing a whopping 12.5 million barrels of oil daily, an increase of nearly 4 million barrels from just five years ago. (Because of the global recession, output this spring was far short of that--just 8.5 million barrels a day.) And, according to the U.S. Department of Energy, at current production levels the Kingdom's 264 billion barrels of reserve crude will last just over seven decades.

 

Saudi Arabia's energy wealth might run out much sooner than that, however, thanks to the country's ballooning entitlement class. The actual size of the Saudi royal family is subject to some debate, but informed estimates a few years ago placed the number at more than 30,000 members, with some 4,000 princes each afforded a luxurious monthly stipend of tens of thousands of dollars apiece. And because of officially sanctioned polygamy, their ranks are swelling exponentially, projected to reach 60,000 or more by 2020.

Needless to say, their allowances, and the attendant extravagant indulgences, are possible solely because of Saudi petrodollars. All of which has prompted an insatiable appetite for ever greater production and consumption of the Kingdom's lifeblood.

 

Grassroots prosperity, meanwhile, has headed in the other direction. Since the oil boom of the 1970s, per capita income in Saudi Arabia has constricted precipitously, falling from $28,000 in the early 1980s to below $7,000 in 2001. In other words, average Saudis have experienced a devastating reversal of economic fortune, even as the royal cohort that rules over them has become more numerous, indulgent and bloated.

 

In recent years, the House of Saud has begun to get wise to the destabilizing potential of this disparity. King Abdullah's ascension to the Saudi throne in 2005, following the death of his long-incapacitated half-brother, Fahd, was seen by many as the start of a new era of incremental reform within the Kingdom. Real remedial change has been slow in coming, however. As researchers from Human Rights Watch recently pointed out, the past five years have seen some incremental progress on judicial independence, freedom of the press and gender equality. But glaring disparities--not least in the economic sphere--continue to persist, perpetuating a seething, impoverished underclass.

 

For Washington , the Kingdom's growing fragility poses a significant conundrum. The issue of Saudi stability has been on the U.S. government's radar since at least the mid-1970s when, in the aftermath of the Arab oil embargo, the Pentagon contemplated contingency plans to secure Saudi oil reserves in the event of sustained political upheaval. Over time, however, military planning took a back seat to political symbiosis. To paraphrase former CIA agent Robert Baer, the United States effectively decided to "sleep with the devil," protecting Saudi Arabia in exchange for preferential access to its crude. In the process, Riyadh became an essential energy supplier to the United States .

 

Not much has changed, even after 9/11. To be sure, Saudi Arabia's outsized role in the Sept. 11 attacks--and its subsequent indirect troublemaking in Iraq and Afghanistan--have led many to question the durability, and the advisability, of our historic partnership with Riyadh. But in practical terms, the same old corrosive status quo still obtains. Over the past decade, when adjusted for the war in Iraq and the global economic downturn, the amount of oil America receives from the Saudis has remained largely the same--an average of 1.25 million barrels a day, or 12% of total U.S. oil imports.

 

Which brings us back to Turki's warning. The prince's communiqué may have been long on hyperbole, but its admonition was apt. The domestic compact created over the past seven decades by the House of Saud is simply unsustainable in the long run. And its dissolution, when it eventually happens, is likely to be ruinous for the Kingdom. Given America 's deep and enduring reliance on Saudi crude, it could be devastating for us as well.

 

All of which makes a compelling case for serious thinking about the long-term viability of the Saudi state--and what the United States needs to do in order to prevent such a catastrophic collapse, or at least to manage it.