SAUDI ARABIA

The Religious-Political Compromise
The modern state of Saudi Arabia is a kingdom established in 1932 by Abdul-Aziz bin Saud who united a series of fiefdoms covering the largest part of the Arabian Peninsula over the course of a 30-year long process, which began with the capture of Riyadh, the current capital, in 1902. However, the house of Saud's political fortunes started in 1744 when the tribal ruler, Muhammad ibn Saud was joined by the charismatic preacher, the 'salafist' cleric Muhammad abd-al-Wahhab, in a religious-political alliance that lasts until this day, which gave rise to the Saud dynasty. From 1744 to comparatively modern times, the Saud dynasty fought against all comers: Egypt, the Ottoman Empire as well as the tribes and fiefdoms of the Arabian Peninsula. The version of Islam practiced by al-Wahhab was based on the 'salaf', the earliest Muslim ancestors who were the Companions of Muhammad. The salaf are attributed as having given Islam its most authoritative sources such as the Sira (biography of the Prophet), and Hadith (traditions of the prophet). More importantly, the salafist approach rejects the notion that Islam can change or evolve and refutes notions accumulated since the very early and binding precepts of the faith (they hold to the idea of 'jihad' as the sixth pillar - one of Bin Laden's driving principles). 

The Saudi monarchy remains the central institution in the country. In 1992, the Basic Law of Government formalized the succession mechanism such that the monarch would have to be a son or grandson of Abdul Aziz bin Saud. The country's constitution is the Qur'an itself, and the dynasty has encountered fewer internal political setbacks than other countries of the region, giving Saudi Arabia an image of stability, which has also raised its diplomatic prestige. Although, the country has been rocked by bombing attacks in the recent decade, the greatest challenges to its stability came in the 1970's, when the country experienced unprecedented growth as oil prices rose sharply in the wake of the 1973 oil embargo. One of these setbacks was the murder of King Faisal by his nephew, Prince Faisal bin Musa'id, in 1975. King Khalid succeeded until 1982. He was followed by Fahd until 2005 when his half-brother Abdullah, the current king, ascended to the throne. There are no official political parties, and the only elections were held in 2005 at the municipal level. Some commentators, and the US government, tried their best to present these as a first step toward the adoption of some democractic principles, which could even lead to the formation of political parties. However, the high oil prices and increased revenues have enabled Saudi Arabia's generous distributive system to continue, allowing the government to procrastinate on political reform possibilities. 

It is very significant as the 'salafist' or 'Wahhabi' (as it is frequently called - 'salafist' is a better term) origin of the Saud dynasty means that much of its current legitimacy still relies on this religious aspect. Any attempt to modernize society, socially or materially, must have the tacit approval of the religious authorities, or ulama. Saudi rulers have also wielded 'Wahhabism' to their advantage when necessary. The 'jihadist' zeal of the salafists was useful in the al-Saud struggle to unite the Arabian Peninsula against the Ottomans and even their fight with the Hashemites (who for generations controlled the holy places of Mecca and Medina in the Hijaz), and with Yemen in 1934. Therefore, Wahhabism is a necessary element in the political compromise of Saudi Arabia. It has served its purpose as a mobilizing force, while it has also softened its ideological zeal such that in the 1990 (after Iraq invaded Kuwait) the Council of Senior `Ulama issued a fatwa allowing a foreign power, the United States, to defend the country. 

The Potential for Islamist Uprising in Saudi Arabia
The phenomenon of islamist opposition, considering that the very constitution of the Saudi Arabia is informed by an almost literal interpretation of the Qur'an and the Sharia, may seem like a paradox. Nonetheless, a newer and more ardently salafist movement exists, which has challenged the government on its ties to the West and over the corruption of the ruling family. While the official religious establishment, Wahhabist though it claims to be, has come to accept the need for compromise to achieve the Kingdom's political objectives, the 'seceders'- as prince Bandar, at one time Saudi ambassador to the United States, describes them - are criticizing the official ulama as being controlled by the state. 

While, much has been made of the a potential islamist uprising in Saudi Arabia after the events of '9/11', the roots of this drive for a purer or more salafist Islam precede it by more than 20 years. Although the Saudi monarchy has ruled in co-operation with the Wahhabi establishment, this very conservative Muslim sect that originated in Saudi Arabia in the 18th century, it has also witnessed a considerable degree of Islamist unrest. The House of Saud's legitimacy has rested on its ability to pursue development while serving religious interests and organizations. However, the rapid pace of industrial and economic development of Saudi Arabia in recent decades has disrupted traditional social structures and the kingdom has witnessed a conflict over the competing influences of the modernizing West and revolutionary Islamic Iran. In the late '70s a variety of opposition groups emerged in Saudi Arabia that even included a Communist Party (established 1975). The Islamic revolution in Iran, however, inspired common Saudis, and even army officers and members of the royal family, to channel their political grievances through what they may have regarded as a purer form of Islam.

The leaders of the religious revolt urged Saudis to overthrow the King (Khaled in this case), and called for the expulsion of all foreigners from the kingdom. There was public unrest in the Hijaz (the region of Mecca and Medina) in November 1979, only 6 months after the fall of the Shah. The revolt culminated on November 20 when the spiritual leader of the revolt, Juhaiman al-Ataiba, announced the rebellion officially in the name of a purified Islam at the Grand Mosque in Mecca. Juhaiman condemned, in recorded tapes and through the loudspeakers of the Mosque, the royal family's corruption and demanded a return to the values of the first centuries of Islam. The revolt ended inevitably with a storming of the Mosque and the death of 63 rebels. These events of more than 25 years ago may also provide an indication of the possible reaction of ordinary Saudis to the current crisis in the Middle East.

Much has been made of the connection between Al-Qaida and the Saudi government. Osama Bin Laden had official ties to the Saudi royal family through Prince Turki Bin Faisal, the Head of Saudi Intelligence. The latter provided funds to fuel the war, Jihad, against the Soviets in Afghanistan and the madrassas, the religious schools along the Pakistani-Afghan border. They promoted the Wahhabi Islam of the Saudis, which ultimately spawned the Taliban in Afghanistan. More importantly, the active involvement of the Saudis in Afghanistan diffused the tensions of 1979 and served as an outlet for Saudi Arabia's own dissidents, who joined the multinational Islamic force known as the Arab Afghans. The repercussions of the return of the war weary Arab-Afghans to their countries - Osama Bin Laden being their most infamous member - in the '90s destabilized internal politics widely and have accounted for much of the recent political violence in the Arab world. The existence of some friendly elements to Osama Bin Laden within the vast Saudi Royal Family and the intelligence services, remains likely and illustrates the extent of the problem. 

The appeal of radical Islamic alternatives has become more intense in the '90s as the frequent downturns in the Saudi economy produced widespread unemployment among university educated youth. Notably, 150,000 unemployed graduates of religious colleges have demanded the same social justice, wealth re-distribution and government services reforms of their peers throughout the Islamic world. The Gulf War also fueled the rise of Islamist opposition groups, as many Saudis have opposed the presence of foreign troops and women soldiers on Saudi soil and proposed an internal Arab solution to the dispute shortly after Iraq's invasion of Kuwait. Certainly the new monarch, Abdullah, who succeeded Fahd, will face important challenges for Saudi Arabia and the Middle East region as a whole in the next few years - if not months. As with any society that experiences sudden and dramatic economic growth, wealth in Saudi Arabia has been partly re-distributed to citizens through a wide range of benefits such as free health care, education, housing and interest free loans. However, Saudi society is becoming increasingly younger and 60% of citizens are under the age of 20. The fast and sharp population growth means that GDP pro-capita has declined, such that in relative terms Saudi oil revenues were higher in the 1970's than they are now. There are also several million migrant workers with little if any rights, which has created a problem of unemployment or underemployment for citizens as well as fueling security concerns, which persist in spite of the high oil prices of the past few years. Terrorist attacks in the post 9/11 period on its own soil (largely against expatriate housing facilities) have also fueled defense spending. 

There is also a contrarian approach, one that rejects the strictness of the salafists, as even within the official religious establishment (the ulama) there can be differences. For thirty years the Grand Mufti (the leading scholar of the ulama), Abdul-Aziz ibn Baz, granted the royal family favorable rulings in the most critical period of change (mid 1960's to the first Gulf War in 1991), the most controversial of which - from the salafist point of view - was the ruling granting permission to US troops to protect the country in 1990-1991 against the perceived threat from Iraq, after it had invaded Kuwait. Moreover, many among the educated urban classes and the Royal family itself are not especially devout or at least stray significantly from stereotypes of 'commitment' to the faith in western media. The ulama themselves have been co-opted by state salaries, cars and luxurious housing. Those Saudis with sufficient power and influence can close the prying eyes of the piety enforcers by simply banning the religious police from their neighborhoods. In general, the Royal Family has staved off extremist influence by paying it to 'stay away' from its business. In some cases this involves having the various princes support religious schools or charities in exchange for peace or 'a blind eye' toward the perceived debauchery and decadence of the court - a very 'mafia' like relationship. This is one of the aspects that has led to accusations that the Royal family has backed terrorists, including those who attacked the United States on 9/11. 

Relations with Iran
Saudi Arabia and Iran have not had good relations since the Islamic Revolution in 1979 that brought the Ayatollahs to power. The United States had backed the Shah's regime in Iran, which was one of the pillars of the American strategy of containing the Soviet Union in the Middle East. Iran, which maintained diplomatic relations with Israel pre-1979, received the best conventional military equipment offered by the United States such as the F-14 'Tomcat' fighters. Having been ejected from the country, The United States decided to back the traditional Sunni Muslim Arab states such as Jordan, Iraq and most prominently Saudi Arabia. Throughout the 1980's, relations between Iran and Saudi Arabia worsened as Khomeini called the Saudis American lackeys and used the annual Hajj pilgrimage as an occasion to foment revolt through protests staged by Iranian pilgrims. The American backing of a Shiite government in Iraq, including some prominent Ayatollahs, who had lived in Iran during the rule of Saddam Hussein, has raised Saudi concerns of a growing tide of Shiite power in the region. 

The sectarian violence in Iraq between Sunnis and Shiites has further boosted this idea, while Hezbollah's successful defence in the summer of 2006 in a month long war with Israel, has further boosted Shiite confidence. In February 2007, amid the building tension between Saudi Arabia and the Shiite world, Saudi Arabia sent Prince Bandar to Teheran to study efforts to ease tensions in Iraq and Lebanon. The Iranian nuclear power negotiator Ali Larijani visited Saudi Arabia, to seek the Saudi monarch's help in easing tension between his country and the United States over Tehran's nuclear program. The series of visits culminated with a visit to Riyadh by Iranian president Mahmoud Ahmadinejad in February 2007 to discuss ways to moderate tensions. The two leaders agreed to resist forces trying to "divide" the Islamic world, including preserving Iraq's national unity and preventing sectarian infighting in Lebanon - where Saudi Arabia has backed American calls to isolate the pro-Syrian camp. Indeed, even as Syria's entanglements with the Hariri case worsened its relations with Saudi Arabia, there have been clear signs that Syria, Iran's principal ally in the Middle East (excluding Shiite Iraq) is interested in revamping the relationship with the Saudi Arabia. This has gained further impetus thanks to Syria's support to the Mecca accord, which set the basis for the reconciliation between Fatah and Hamas through the formation of a national unity government in Palestine. No doubt Saudi Arabia was also interested in thwarting Iranian support for Hamas, by asking it to agree to form the National Unity government. 

Nevertheless, the United States remains very concerned about Iran because of the ties between the Iraqi Shiite leadership and Iranian authorities. As noted by Seymour Hersh, the US state department is separating the Middle East into 'extremist' and 'reformist' camps. Broadly speaking, despite a paucity of actual 'reform,' the Sunni states belong to the latter classification, by virtue probably of not being extremist (no word on where secular ruled and largely Sunni populated Syria stands in this equation). This policy is materializing on the ground through what Seymour Hersh has suggested are covert operations are being run or at least funded by Saudis to reverse the Shiite tide. Prince Bandar, the very same who recently visited Tehran, is said to be one of the key Saudi players in the strategy and he has maintained a close relationship with key players from the Bush administration, Dick Cheney and Elliot Abrams in particular. 

The long term prospect - and potentially an additional internal political risk - is that Saudi fears of the Iranian dominated Shiite wave, have aligned its foreign policy outlook with Israel. They have the same concern. Israel and Saudi Arabia also share a concern over the increased influence of Hezbollah in Lebanon. Moreover, Saudi Arabia is also concerned that should Iran continue to spread its influence unchecked, it could also fuel unrest among the Kingdom's own Shiite population, which is located in the strategic oil rich Eastern Province, where sectarian tensions are already high, and where Khomeini tried to foment revolt in the 1980's. It was in fact Saudi Arabia and the Sunni Gulf states that encouraged - and largely financed, or promised to do so - Iraq's 8-year war against Iran. 

Oil and the Elusive Diversification
Of course the main reason for the West's interest in Saudi Arabia is oil and New York's main oil futures contract, light sweet crude for delivery in March '07, was quoted at USD 59.39 a barrel, which is 20% higher than it was in January '07, when it was priced even below USD 50 a barrel. Problems faced by oil companies in Nigeria because of the Niger Delta separatists, have partly accounted for the recent price recovery as well as a very cold winter in North America and the end of the 'inundation' effect to lower oil prices before the US Mid-Term elections. However, where Saudi Arabia is concerned (as the largest oil OPEC and world oil producer), the International Energy Agency (IEA), which published its Mid Term Oil Market Report last February, noted a marked reduction in supply from non-OPEC countries. IEA suggests that key non-OPEC members such as Norway and Mexico have likely surpassed their peak production capacity, while Canada has yet to fully exploit the tar sands, because of the cost of industrial development that they imply - and the Canadian government has also announced that it would stop giving tax breaks for exploration in the tar sands. As demand continues to increase, OPEC countries, which supply roughly 30% of oil in the world, will play an ever more important role. Saudi Arabia, therefore, will therefore retain its strategic and economic importance, even as new untapped resources must be exploited in order to meet demand. 

Oil and Gas Journal says that Saudi Arabia has 261.9 billion barrels of proven oil reserves (65-70% is Light Crude) or a quarter of the world's conventional world oil reserves. Around two-thirds of Saudi reserves are considered "light" or "extra light" the most valuable grades of oil, with the rest either "medium" or "heavy". More than half of Saudi Arabia's reserves are based in eight fields, including Ghawar (the world's largest oil field, ca.70 billion barrels left) and Safaniya (the world's largest offshore oilfield, ca.35 billion barrels). The Saudi oil company ARAMCO (which controls about 98% of the Kingdom's reserves) has also embarked on a billion dollar project, named Qatif Producing Facilities Development Program (QPFDP) to add 800,000 bpd to its oil production. Asia now takes 60% of Saudi Arabia's oil and most of the country's refined products. Saudi oil is largely exported via oil terminals in the Persian Gulf at Ras Tanura and Ras al-Juaymah as well as Yanbu in the Red Sea. 

Heavy Oil to the Rescue 
There are disputes whether or not Saudi Arabia's oil reserves have been 'over' or underestimated. However, as the country slows production of its heavier grades of crude, its future production goals rest on development of the lighter oil grades present in areas near the inhospitable 'Empty Quarter' region at the Shaybah field. Nevertheless, the greatest potential for new oil finds lie in the difficult to extract, but untapped, heavy crude resources. Success would ensure the Kingdom's continued dominance of oil production for several more years. Heavy oil is very dense and expensive to bring to surface. It also has more sulfur, making it more difficult therefore more costly to refine than light crude. Technical innovation is needed to help develop the largely untapped heavy crude resources (which geologist believe exist in abundance in Canada as well as the eastern part of the hemisphere). Chevron has been experimenting a technique, using steam injection, to loosen the heavy and sludge-like oil, at a field in the neutral zone Saudi Arabia shares with Kuwait. The fact that steam extraction techniques have proven effective in drawing crude oil from the tar sands in Canada, which are much thicker than heavy crude, suggests the Saudis can be optimistic. 

Economic and Diplomatic Diversification
The 'heavy oil' project is of vital importance to Saudi Arabia, as despite efforts that started in the 1980's with the formation of a Saudi chemical industry, SABIC, the economy remains to this day almost entirely dependent on oil production and refining. However, King Abdullah, has promoted privatization and the Kingdom has shown more interest in developing the economy, having joined the WTO in 2005, which led to an increase in the amount of non-oil (but still oil related) petrochemical exports. Membership in the WTO has also forced Saudi Arabia to relax restrictions on foreign investment (FDI), and this too has increased. In 2005, FDI was estimated at some USD 5.6 billion, no doubt also favored by the reduced tax burden as corporate tax on foreign-owned firms has been reduced from 45 per cent to 20 per cent. Saudi Arabia also plans to build new cities, such as King Abdullah Economic City on the Red Sea, to attract investment and provide an outlet for employment to the young population. Saudi Arabia has also been diversifying relations with Russia, highlighted by the visit of President Vladimir Putin to the Kingdom in February 2007, while it has already opened to other countries in Asia. The diversification of foreign relations has strategic motives - Russia is a permanent member of the Security Council - but it is also prompted by practical need. Since 9/11, the perception of Saudi involvement (accented by Michael Moore's popular documentary 'Fahrenheit 9/11'), has encumbered Saudi citizens' visa applications to the West. Saudi businessmen don't want visa hassles, and despite the sordid past between the Soviet Union and Saudi Arabia, shared business interests should avoid bureaucratic difficulties. Putin was accompanied to Riyadh by a delegation of 60 business executives, who discussed investment and joint venture opportunities. In 2004, Saudi Arabia had already granted Russia's Lukoil Holdings rights to explore and produce natural gas in an area known as "Zone A," located near the Ghawar oil field.