Artículo No. 29 Saudi Arabia's Domestic and Foreign Challenges February 24, 2011 | Summary

Saudi Arabia’s king has announced increased spending on social welfare. While not significant from an economic perspective, the announcement shows that Riyadh takes its domestic and foreign challenges seriously. On the domestic front, these include an impending power transition and fallout over political reform. The foreign fears comprise concerns that unrest besetting Bahrain, Libya and Yemen will strike Saudi Arabia, too.

Analysis

Saudi King Abdullah announced Feb. 23 that Saudi Arabia would increase spending on housing by $10.7 million and will raise its social security budget by $260 million. Abdullah also reportedly ordered the creation of 1,200 more jobs in supervision programs and a 15 percent cost-of-living allowance for government employees. The announcement came the same day Abdullah arrived in Riyadh following medical treatment in the United States and subsequent rehabilitation in Morocco.

The announcement is not terribly significant in economic terms compared with the $384 billion spending plan announced in August 2010. It does, however, send a clear signal that Riyadh takes the political risks of possible social unrest seriously in light of the unrest in the Middle East.

Domestic Concerns

The Saudis have been grappling with their own domestic challenges since before the recent wave of regional unrest. High among these is an impending power transfer, which cannot be far off given the advanced age of the current Saudi leadership. The newly formed Allegiance Council comprised of Abdullah’s sons and grandsons, which is supposed to manage the succession, is an untested institution.

Another concern involves potential fallout from debate over political reform, which could anger the ulema, or religious establishment, and its supporters among the royal family. Prince Talal bin Abdul-Aziz’s call for political reform to avoid the kinds of protests in other countries in the region, along with calls by a minor Facebook group for March 11 demonstrations against the regime, are liable to get the religious establishment riled up.

Thus far, Saudi royals have been able to strike a careful balancing act between pushing social reforms and not angering the ulema. But regional unrest is likely to spur the Saudi regime to introducing more social and economic reforms at a time when the pending succession could weaken the royal family’s ability to deal with the backlash.

Foreign Concerns

In addition to internal problems, Saudi Arabia has genuine fears that regional unrest could spread to the kingdom. The Saudis have taken comfort that the unrest has not yet resulted in regime change. But as regime change is becoming a distinct possibility in Libya and unrest continues in Bahrain and Yemen, this comfort is diminishing.

Bahrain is of particular concern to Riyadh. The current Shiite unrest in the island kingdom has continued since Feb. 13. Even though the Bahraini regime seems to be gradually reducing the unrest by offering talks with the opposition and making other concessions, such as the release of Shiite political prisoners, Saudi Arabia is extremely concerned about emboldened Shiite political activity on its eastern flank — and thus increased Iranian influence in both Bahrain and the Persian Gulf. The Saudis fear that Iran — which already has asserted itself in both Lebanon and Iraq, where governments that are likely to give considerable sway to Iran are in the process of being formed — could use its leverage with Bahrain’s Shiite majority to change the balance of power in the Persian Gulf region. This would be a direct threat to the kingdom due to Saudi Arabia’s Shiite minority, which comprises 20 percent of the Saudi population — and is concentrated in the oil-rich northeastern region of the country near Bahrain. In light of this fact, it is unsurprising that Bahraini Bahraini King Hamad bin Isa al-Khalifa went to Saudi Arabia on Feb. 23 to meet with Saudi King Abdullah.

The turmoil in Libya meanwhile concerns Saudi Arabia because Libyan leader Moammar Gadhafi has based Libya’s political and social system on familial and tribal links along Saudi lines. With the Libyan regime losing control of the eastern part of the country and in a fight for survival, previously loyal tribes are defecting. Tribal defections in Libya are a reminder to Saudi Arabia of the importance of tribal support in sustaining the regime. Unlike many of the North African states, Saudi Arabia has ample ability to keep its tribes content via petrodollars, though Libya, too, had petrodollars.

At the same time, ongoing unrest in Saudi Arabia’s southern neighbor do not seem to be decreasing even though Yemeni President Ali Abdullah Saleh announced that he would not seek re-election in 2013 and that a national unity government should be formed instead. Like Saudi Arabia, Yemen is ultimately a tribal society, once more reminding Riyadh of its vulnerabilities. The Saudis also remember that Yemen has served as the staging ground for al Qaeda in the Arabian Peninsula for attempted attacks in Saudi Arabia. Moreover, Yemen’s al-Houthi rebels, against whom the Saudis fought not too long ago — and who have Iranian links — could try to take advantage of the situation and spill over into southwestern Saudi city of Najran near the Yemeni border, where a significant Ismaili population lives.

Calls for political reform in the region thus hurt the Saudis in three main ways: They come at a bad time given the pending transition; they could upset the delicate balance between the royals and the ulema; and Saudi Arabia’s Shia are likely to be empowered by any moves to reform the system.