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Analysis Secretary of Defense Ash Carter meets with King Salman Abdulaziz on July 22, 2015.Carter and The King of Saudi Arabia meets to discuss issues of importance. (DoD photo by U.S. Army Sgt. 1st Class Clydell Kinchen) (Released)

Published on August 10th, 2016 | by Guest

9

What If Saudi Arabia Collapses?

by Theodore Karasik and Joseph Cozza

The Saudis are entering a period of immense uncertainty as the kingdom moves forward with the National Transformation Plan (NTP) and Vision 2030 announced by Deputy Crown Prince Mohammed bin Salman (MBS) in April. Vision 2030 aims to streamline the bloated state bureaucracy, increase private sector investment, and curb youth unemployment in order to end the kingdom’s dependency on oil.

The NTP and Vision 2030 could make Saudi society more vibrant and sustainable. Or they could undermine the kingdom’s relative stability and create devastating consequences for the greater Middle East region, as well as global energy and financial markets.

Although many Arab states faced mounting protests and calls for political liberalization during 2011’s Arab Spring, Saudi Arabia maintained relative peace and stability. However, changes to the kingdom’s socio-economic system could lay the groundwork for similar dissent by sparking demands for social and political reforms while undermining Saudi cohesion.

The Conditions for Collapse

To reduce Saudi Arabia’s budget deficit, Vision 2030 calls for a phased reduction of the subsidies offered to Saudi nationals and promises to increase private sector employment. If economic growth and job creation fail to meet expectations, discontent could catalyze demands for liberal political reforms that will require serious input from the kingdom’s clerics. Saudi Oger’s bankruptcy and expat layoffs may be a sign of labor shedding that is required system wide. According to Saudi economist Fadl al-Boainain, “declining corporate profitability has made the foreign workforce a target for managements seeking to cut fixed financial obligations.” In January, a Saudi businessman speculated that by the end of 2016 one million expats may leave the country given the financial squeeze stemming from plunging oil prices.

However, successful implementation could also trigger demands for greater reform from a rising capital class that is less economically dependent on the state.

Politically disenfranchised foreign nationals, the majority of Saudi Arabia’s working class, and marginalized Shi’ites in the Eastern Province would likely echo these demands. Shi’ites, who have historically faced a great deal of discrimination and extreme poverty, have a history of anti-Al Saud activism. Ultimately, calls for reform could ignite passionate anti-government protests, leading to uprisings that could at least create instability even if not triggering its collapse. To regain control, the regime would deploy the Saudi Arabia National Guard (SANG), comprised of tribal forces loyal to the monarchy. There is a key question that Gulf Cooperation Council (GCC) observers are asking: If the Al Saud rulers turn to SANG to maintain their ruler, where will other power ministries, like the Ministry of Interior and its army of police forces, fit in this scenario?

In addition, Vision 2030’s bureaucratic, social, and economic reforms could also alienate key elites. The kingdom has used bureaucratic appointments to ensure support from competing tribal and familial factions. Consolidating or replacing these elites with technocrats would remove their incentive to support the government in the event of a significant threat. Altering the line of succession to promote MBS, as has been suggested, could engender further resentment and open hostility within the royal family. The older generation of Al Saud leaders do not like bowing down before a young prince. The possibility of greater social reforms could also alienate the powerful religious establishment that dominates Saudi society.

Vision 2030’s plan to open Saudi Aramco, the nation’s state-owned oil conglomerate, to public investment would also necessitate more transparency within the secretive company, which could expose high-level corruption and elite manipulation, further undermining the public’s trust in critical state elites and institutions. “Assessment of Aramco’s value by public markets might require the disclosure of any relevant audits of Saudi oil fields, which rumors suggest may have been conducted quite recently in secret”, wrote Perry Cammack, an associate in the Middle East Program at the Carnegie Endowment for International Peace. “An IPO would require the company to show a level of transparency unprecedented in its history, and frankly, just as unprecedented for the ruling family.”

In the event of contentious anti-government uprisings, the monarchy would feel pressured to offer change. The most likely scenario would be the promotion of MBS, a reformer with a great deal of youth support. This promotion is unlikely to quell elite resentment and could further inflame tensions among the monarchy, rival family members, and the religious establishment. If MBS offers liberal reforms, he would likely lose the support of the ultra-conservative Wahhabi clerics. Yet if he fails to provide reforms, resistance to the Saudi rulers could grow based on regionalism and tribalism in the Hijaz, Nejd, or the Eastern Province. Neither scenario bodes well for the monarchy. Though he has a loyal following in the military, MBS’s military excursion in Yemen has received substantial criticism, creating the conditions for a coup if destabilization escalates under his stewardship.

Hostile elites with competing clientele bases would see state collapse as an opening for greater power. Since the kingdom’s unification in 1932, an overarching Saudi identity has been elusive. Saudi nationalism is a new concept. The state has been united by the cooptation of elites and the promotion of Wahhabi ideology, which while popular in the Nejd heartland faces rejection from the country’s Shi’ite minority. Not all Saudi Sunnis, meanwhile, practice this branch of Sunni Islam.

With an embattled central state, many tribal elites would strive to carve out autonomous regions, restore their pre-unification authority, and potentially dissolve the modern Saudi state. To exert their power, these tribal leaders would draw defections from tribal kin in the armed forces. Disaffected royal family members with their own loyal bases of support could also openly challenge King Salman’s successor (whoever that will be) if instability persists.

In the face of significant social upheaval, elite abandonment, and military defection, the SANG could not realistically prevent the state from sliding into civil war and collapse. GCC states are aware of this scenario and operational plans to contain this potential implosion are already under consideration.

Consequences for Region and the World

The collapse of the Saudi state would have grave implications for the region and the world. As illustrated by Libya, Syria, and Yemen, state collapse creates a vacuum for radical jihadist groups to claim new territory. Currently, al-Qaeda in the Arabian Peninsula (AQAP) is pushing against the Saudi border with Yemen and the Islamic State (ISIS or IS) in Iraq and Syria poses a constant threat to the kingdom’s north. Thus, civil war, instability, and high levels of sectarian tension would likely be fertile ground for these groups to grow and expand their control, threaten the holy sites, and perpetuate regional instability. Washington’s national security establishment has expressed concerns about turmoil escalating in Saudi Arabia if MBS’s reform agenda fails to achieve its objectives. Some see the kingdom at a crossroads and fear that the kingdom’s collapse would benefit the Islamic State. Regarding MBS possibly becoming the next king, one anonymous Saudi expert told NBC News, “It’s him or it’s ISIS.”

The July 4 attacks in three Saudi cities (Medina, Jeddah, and Qatif) underscored the significance of the militant Salafist-Jihadist threat not only to the country’s security but also Al Saud’s prestige and Islamic legitimacy as the Custodian of the Two Holy Mosques. The intended attack by IS adherents on the Prophet’s Mosque during the end of Ramadan signals the Islamic State’s intent to usurp the Al Saud much as the apocalyptic leader Juhayman al-Otaybi did when he seized the Grand Mosque in 1979. “This attack has made it very clear that ISIS does not seem to believe in any moral red lines whatsoever,” said Fahad Nazer, a leading expert on Saudi Arabia. “Even al-Qaeda, which is certainly brutal in its own right, has never targeted Muslims in their houses of worship. ISIS has done that repeatedly.”

A civil war in the Arabian Peninsula would also challenge long-standing alliances. Instability, the threat to the holy cities, and the possibility of jihadist gains would encourage states with high stakes (Egypt, Jordan, Iran, Pakistan, U.S., etc.) to react. In fact, UAE officials have even made contingency plans for a potential state collapse in Saudi Arabia, a risk which none of the kingdom’s neighbors can afford to ignore. These states would certainly move to secure the holy sites and combat terror cells, but solving the civil war would be a massive challenge. There would be considerable pressure to support the Saud family, but supporting the Wahhabi religious establishment over a reform movement would cause domestic complications in some of these countries that resent the kingdom’s influence across the region.

Pakistan, which has a “special bilateral relationship” with Saudi Arabia obligating their military to defend Mecca and Medina and protect Saudi Arabia’s territorial integrity, would face the most pressure to intervene militarily on behalf of the Saud government should turmoil intensify. The two nations have a long history of military and security cooperation, and there is little doubt that Pakistan would act to protect the Al Saud rulers. In addition, the Egyptian military is present in the northern border areas of Saudi Arabia helping to augment Pakistani forces supporting SANG and the Saudi border guard.

Iran and Oil

The geopolitical tsunami that would result from Saudi Arabia’s collapse would have enormous consequences regarding Iranian influence across the region. From Iraq to Lebanon, and from Yemen to Syria, the struggle on the part of hardline Sunni Islamists to counter Shi’ism and Iran’s reach would enter a new phase should Saudi Arabia cease to exist as a unified nation-state. It is not entirely clear how Iran would react to state-collapse in Saudi Arabia, especially considering instability in the region would present a security risk to shipping and trade in the Persian Gulf. Although Iran would likely avoid direct involvement in a conflict in the Arabian Peninsula, it would certainly attempt to capitalize on a regional power vacuum created by a diminished Saudi Arabia by consolidating its political and military influence in Yemen, Iraq, Syria, Eastern Saudi Arabia, and, if instability spreads, Shi’ite-majority Bahrain. Diminished oil output by its regional rival would also increase demand for Iranian oil, boosting their economy. There is also no clear Sunni successor state to check Iran’s regional influence. Egypt’s economy is too weak, and Jordan is surrounded on all sides by instability.

Finally, Saudi Arabia as a failed state would send international markets into free fall. State collapse in Saudi Arabia would halt oil production, significantly increasing the price of oil and dramatically weakening global economies. Such an increase would spark a severe global economic crisis. The longer Saudi Arabia is destabilized, the more difficult it would be for the world to pull out of the crisis and recover. The socio-political ramifications of such an economic shock could be catastrophic and disastrous for both the region and the world. If the government faces large-scale demonstrations calling for social and political liberalization while facing tribal, familial, and religious elite abandonment, the result could be instability, civil war, and/or state collapse.

Again this result is far from inevitable. The Saudis might be able to successfully implement the Vision 2030 reforms while ensuring elite and citizen support. The country must also be open to course corrections in the event of economic turmoil or elite resentment in order to prevent instability.

Photo: US Secretary of Defense Ashton Carter with Saudi Crown Prince Muhammed bin Nayef

Theodore Karasik is the senior advisor of Gulf State Analytics (@GulfStateAnalyt) and Joseph Cozza is a contributor to Gulf State Analytics.


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9 Responses to What If Saudi Arabia Collapses?

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  1. avatar Monty Ahwazi says:

    First of all I really don’t give a rat’s ass if the sheikdom fails! The sooner the better! Then the idea of this sheikdom’s economy becoming independent of crude oil is like saying ISIS won’t commit any other criminal acts tomorrow!! Of course the sheikdom has enough sand grains to keep Intel in business with silica for the next 2000 years! May be that’s what that SOB (MBS, Wahabbi) is talking about!! ???

  2. avatar Abdalla says:

    That is what you wish rather than the real situation of the Kingdom of Saudi Arabia. From 1932 and late 1960s Saudis used to pay high taxes to support the government, citizens also donated to build the Army. Thus, when the country gained wealth from oil, Saudis were paid generously. What will happen if the economy did not recover soon? The country undoubtedly will face a strong shake that will not lead to the collapse of the state but to awakening the citizens and mobilizing them to re-make history and preserving their country.
    The country has survived severe circumstances during 1960s, 1970s and 1990s. After the terrorist attack on the USA in 2001 there were many speculations about the future of the country but it has now been 15 years since then and the country is more secure, prosper and united.

  3. avatar Eddie Leong says:

    The big assumption is that Oil prices will forever stay low. That may not happen as many countries with high costs for oil production would have collapsed long before KSA. Oil fields that are shut down may cost a lot to re-start and hence oil entering the market will be less and Oil price will rise again.

    Next, the assumption is that today’s very low worldwide economic growth is not going to rise. That again is premature. Human ingenuity has not diminished and there will be new economic drivers in the coming years.

    Third, KSA has embarked on a wise strategy…to be self-sufficient in food, energy, water and other critical resources. Technology is already available and affordable even for a desert environment to achieve these goals.

    The Saudis are intelligent and are just as capable to help themselves through adversity.

  4. avatar Lawrence N. Allen says:

    Saudi Arabia is not going to fail and one gets the feeling that the author fears the liberalization which is a sane policy. The price war was caused by Barack Obama who doubled U.S. fossil fuel production through fracking and increased off shore production. Fracking is not sustainable politically and neither are coal exports. It would not hurt the U.S. economy and would have a positive effect on alternative sources were the price of gasoline to return to where it should be, about $6.50 per gallon. The point is the Obama policy that caused the price war in the first place is not sustainable It is important to note that Saudi Arabia is a leader in solar, including technologies that remove excess carbon dioxide from the atmosphere.

  5. SA collapse would be catastrophic to Saudis and some in the region but that maybe good in fighting terrorism as SA has been instrumental in promoting terrorism through its huge promotion of extremist Islamist ideology of Wahhabsim around the globe and its financial backing of terrorist organizations like Taliban, AQ, and ISIS. In any case it will be a total chaos for the region for some times but the final outcome maybe good for the world..

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