Is Saudi Arabia Next?

March 6, 2011 by TMO 

With a wave of pro-democracy fervor sweeping the Middle East, could the region’s richest powerhouse, Saudi Arabia, be next to fall?

Or perhaps the question should be: Can oil money buy stability?

By Lauren Frayer 

Weeks ago, the answer seemed to be “yes.” While revolutions took hold in Tunisia and Egypt, the Persian Gulf’s richest and most entrenched kings and sultans seemed to be riding out the unrest around them unscathed. But over time, the movement has spread to surprising places such as Oman and Bahrain, where wealthy monarchs had until now been able to placate their populations by doling out oil money in place of democratic freedoms. Now protests are scheduled for March 11 and 20 in Saudi Arabia — a development that was unthinkable just weeks ago.

“All bets are off as far as any certainties in the entire region. While each and every country has an individual set of circumstances — demographics, economics and politics — each is being affected by this wave of revolution moving through the region,” James Denselow, a researcher in Middle East security at King’s College in London, told AOL News. “Each government is responding in its own way, and no one is immune. The Saudis have been least touched by events, but I think there’s every chance that things will happen.”

Essentially, the proverbial deck of dominoes has begun to fall, and it’s got everyone wondering who could be next. For Saudis, it’s the billion-dollar question — quite literally.

Saudi Arabia sits on what the U.S. Department of Energy estimates to be at least a fifth of the world’s known oil reserves. The kingdom is by far the world’s largest oil producer. Oil comprises 90 percent of Saudi exports and 75 percent of government revenue.

With that money, the kingdom has long managed to buy its subjects’ loyalty. Saudis have no voting rights and are prohibited from organizing into political parties. The king is essentially the whole government — its legislative, judicial and executive branches combined in one man. A council of ministers and a consultative assembly are underneath him, with nominal powers. The royal family dominates most of those posts.

Even the slightest hint of unrest in the kingdom is enough to make the world’s financial markets quiver. When the 86-year-old Saudi king suffered a slipped disk in his back last fall, oil spectators went wild. But the Saudi finance minister told reporters today that protests roiling the Arab world have had no impact on his kingdom.

“We haven’t seen any adverse impact on the Saudi economy,” Finance Minister Ibrahim al-Assaf said. That’s despite the fact that Saudi stocks slipped to nine-month lows this week.

King Abdullah was out of the country for three months, having surgery in New York and recuperating in Morocco. He returned home to the Saudi capital Riyadh last week and immediately took steps to placate would-be protesters. State employees got a 15 percent pay raise, and the king ordered $10.7 billion to be pumped into the country’s development fund, which provides interest-free loans to Saudis who want to build homes, get married or start small businesses. A few days later, he promised that any temporary government workers will have their contracts made permanent.

“Concessions by the royal family to the people are a symbol of them trying to pre-empt protests and get ahead of the curve,” Denselow said.

“Other governments, including [Egyptian President Hosni] Mubarak’s before he left, tried to do the same thing: appease the people by giving them carrots before having to use any sticks. The problem comes when these protests occur, and let’s face it, this is a country that’s not really used to handling democratic freedoms or protests particularly well.”

Al-Assaf said that what Denselow referred to as “carrots” — a massive package of economic incentives totaling $37 billion — would go into effect today.

But for the first time in the royal family’s nearly 80-year reign, it may not be enough. Over the weekend, more than 100 leading Saudi academics and activists posted a statement on the Internet calling for sweeping reforms, including swapping out Saudi Arabia’s absolute monarchy for a constitutional one.

“The current situation … is full of reasons for concern,” the statement said. “We are seeing … a receding of Saudi Arabia’s prominent regional role for which our nation was known and the … prevalence of corruption and nepotism, the exacerbation of factionalism and a widening in the gap between state and society.”

That language is hauntingly similar to complaints by protesters in Egypt, Tunisia, Libya, Yemen, Bahrain and Oman. And it spells trouble for the Saudi king.

Like those countries, about two-thirds of Saudis are younger than 30, and many of them are unemployed. There’s an 18-year waiting list for government-subsidized housing — meaning many young people must delay marriage for decades, because having an apartment is a cultural prerequisite.

Those voiceless masses got some surprise sympathy from an unlikely corner last week: a Saudi prince, albeit one who holds no official government role. In an op-ed for The New York Times, Alwaleed bin Talal bin Abdulaziz Al-Saud, a grandson of Saudi Arabia’s founding king, wrote that “unless many Arab governments adopt radically different policies, their countries will very likely experience more political and civil unrest.”

“The facts are undeniable,” he wrote, citing the Arab world’s relative youth, high unemployment, and unmet needs for housing, health care and education. “The gap between the haves and the have-nots is widening.”

Young Saudis also share technology with their Arab brethren across the Middle East, watching pan-Arab satellite TV stations like Al-Jazeera and logging in hours on social media.

Facebook pages calling for Saudi protests later this month have received several thousand followers. But activists say they believe authorities are also tracking them online. Police stymied attempts to hold rallies in the Red Sea city of Jeddah last month, after learning of the protest plans on Facebook.

“They are watching closely what people are saying on Facebook and Twitter,” Saudi blogger Ahmed al-Omran told Reuters. “Obviously they are anxious as they are surrounded with unrest and want to make sure we don’t catch the bug.”

As Saudi dissidents become emboldened by the unrest in surrounding countries, Riyadh and Washington are both beginning to panic. If Saudi Arabia’s oil flow were disrupted, even for a short time, world energy prices could skyrocket, resulting in shortages and social unrest not just confined to the Middle East.

Washington wants to avoid that at all costs but also finds itself in a sticky situation. U.S. officials can’t say that Egyptians and Libyans deserve democracy but that Saudis don’t. They might work furiously behind the scenes to prop up King Abdullah’s regime, but they have to be mindful of what that looks like to the masses.

“The more they seem to be involved, the more likely these protests are to flourish, because Western meddling, as it’s seen, is one of the factors involved in this whole revolution,” Denselow said. “It’d be very hard-pressed for any Western government to come out on TV and say at one minute they’re supporting the rights of the Egyptian or Libyan people, but they can’t support the rights of the Saudi people. That would just be a complete disaster.

“There will be a public face, one saying, ‘We encourage reform in Saudi Arabia, we welcome the king’s decision to give out these subsidies,’” he said. “But privately, they’ll be concerned with shoring up their traditional interests in the country.”