Saudi Arabia Risks Shiite Unrest in Wake of Bahrain Turmoil

Violent protests in Bahrain provoked by discontent among majority Shiite Muslims risk spilling over to their co-religionists in neighboring Saudi Arabia, the world’s biggest oil exporter, analysts said.

Bahrain, a close Saudi ally ruled by the Sunni Muslim Al Khalifa family, has been rocked by unrest since Feb. 14 that has led to calls for the government’s dismissal and the creation of a constitutional monarchy after at least five people were killed as security forces opened fire on demonstrators.

Saudi Arabia has a Shiite minority concentrated in its eastern oil-producing hub that also complains of discrimination. Any spread of unrest into the country, which holds one-fifth of the world’s oil, risks pushing crude prices above the 2 1/2-year high reached this past week. Authorities arrested 38 people after clashes involving Shiite pilgrims in the holy city of Medina two months ago.

A member of the Saudi royal family, Prince Talal Bin Abdul Aziz, warned in an interview with BBC Arabic TV that unless King Abdullah introduces more political participation and human rights, Saudi Arabia may also see protests.

“Unless problems facing Saudi Arabia are solved, what happened and is still happening in some Arab countries, including Bahrain, could spread to Saudi Arabia, even worse,” Prince Talal told the London-based TV broadcaster in an interview aired late Feb. 17.

Credit-Default Swaps

Credit-default swaps on Saudi Arabia surged on Feb. 18 on concern political unrest in Bahrain will spread to the kingdom.

Swaps on Saudi Arabia, used as a measure of confidence in the country although it has no debt, jumped 10.5 basis points to 137, the highest since July 2009, according to CMA. Contracts on Bahrain rose for a fifth day, climbing 18 basis points to 302, the highest in 17 months.

Saudi Arabian shares yesterday retreated for a fifth day. The benchmark stock index, the Tadawul All Share Index, rose 0.30 percent at 11:10 a.m. today.

“There is tension right now and now you have the added situation in Bahrain that may ignite the spark,” said Christoph Wilcke, an expert on the country at New York-based Human Rights Watch, by phone from Munich. “This anger has the potential to spill over.”

Bahraini authorities backed down from a standoff with protesters yesterday in a bid to ease tensions, pulling tanks and armored personnel carriers from a central square. Crown Prince Salman bin Hamad Al Khalifa, speaking on Bahrain TV, said the country is entering a phase “in which we will discuss all our issues sincerely and honestly.”

16 Miles Away

Unrest in Bahrain, which is linked to Saudi Arabia by a 26- kilometer (16-mile) causeway and whose capital, Manama, is only a four-hour-drive from its Saudi counterpart, Riyadh, has in the past spread across the border. In 1995, the Saudi government arrested a large number of Shiites in its Eastern Province on suspicion of involvement in protests taking place in Bahrain, according to Human Rights Watch.

Saudi Foreign Minister Prince Saud al-Faisal and counterparts from other members of the six-nation Gulf Cooperation Council pledged to Bahrain they will stand “united in the face of challenges” and wished it “continued progress, security and stability” at an emergency meeting on Feb. 17 in Manama, the official Saudi Press Agency said.

‘Second-Class Citizens’

“The events in Bahrain are being followed very closely by both the government and the citizens of Saudi Arabia,” Ibrahim AlMugaiteeb, president of the Human Rights First Society, in the Saudi city of al-Khobar, said by e-mail. “The Saudi government has to treat the Shiites the same way Sunnis are treated in the kingdom if they want long-term stability.”

Tawfiq AlSaif, a prominent Shiite activist from the eastern region of Qatif, called last year for the government to appoint Shiites as ministers and ambassadors as a first step toward ending their treatment as “second-class citizens.”

Saudi Arabia’s royal family maintains a strict version of Sunni Islam. It prohibits the public observance of other religions and limits the practice of other branches of Islam.

It has a Shiite minority estimated at between 10 percent and 15 percent of the population, according to Human Rights Watch. Most live in the Eastern Province, where state-owned Saudi oil company Saudi Aramco is based, and in which they constitute 75 percent of the population.

‘Significant Discrimination’

The U.S. State Department noted in a human rights report on Saudi Arabia published in 2009 that Shiites in the kingdom face “significant political, economic, legal, social and religious discrimination condoned by the government.”

The latest religious violence broke out in Medina on Dec. 16 during the Shiite festival of Ashura, injuring several people. In February 2009, clashes between Shiite pilgrims and religious police led to the arrest of some of the pilgrims and sparked disturbances in towns in the east of the country.

In addition to religious restrictions that forbid them from building mosques and discourage prayer meetings, Shiites are taught only about Sunni Islam at schools, are often disqualified as witnesses in court, can’t serve as judges in ordinary courts and are excluded from high-ranking government or security posts, according to Human Rights Watch.

While Saudi King Abdullah has taken some steps by promoting dialogue between the different strands of Islam, he hasn’t taken any concrete action to combat discrimination and harassment of the Shiites, said Wilcke. Now that the 86-year-old monarch is out of the country, recuperating after medical treatment in the U.S., Interior Minister Prince Nayef bin Abdulaziz, who is effectively in charge in his absence, could take a harder line, he said.

Iranian Influence

There are concerns that Shiite-led Iran, Saudi Arabia’s main regional rival, is backing the protests in Bahrain, Sratfor, an Austin, Texas-based intelligence-consulting group, said in an e-mailed statement on Feb. 17.

Iran has increased its regional influence since a Shiite- led government took power by winning elections in Iraq after the U.S.-led overthrow of Saddam Hussein. Kuwait, which has a 30 percent Shiite minority, last year broke up what it said was an Iranian spy cell, prompting Saudi authorities to call for U.S. allies in the Persian Gulf to step up security cooperation.

Saudi religious leaders have in the past accused Iran of encouraging violence by Shiite minority groups in the region. In November 2009, Saudi Arabia’s grand mufti, Sheikh Abdul Aziz al- Sheikh, said the Iranians were “cooperating in sin and aggression” by backing Shiite insurgents in Yemen in a conflict that drew in the Saudi army.

U.S. Diplomats

Still, U.S. diplomats in Bahrain, cited in a 2008 cable released by WikiLeaks, said they had found “no convincing evidence of Iranian weapons or government money here since at least the mid-1990s.” They were responding to charges by Bahraini authorities that local Shiite opposition groups were supported by Iran.

Saudi Arabia has condemned popular uprisings against Middle Eastern rulers this year, and backed Egyptian President Hosni Mubarak until he was overthrown by protest movements last week. Iran welcomed Mubarak’s fall and also that of Tunisia’s Zine el Abidine Ben Ali, whose Jan. 14 flight from the country after a month of demonstrations ignited the unrest in the region.

The potential for protests in Bahrain to oust the kingdom’s Sunni rulers is a major strategic threat to Saudi Arabia, said Ayham Kamel, an analyst at the Eurasia Group in Washington, which monitors political risk.

“Inspired by their counterparts in Bahrain, Shias will seek greater social, economic, and religious equality,” he said. “Regionally, Saudi Arabia’s stability is at risk if the Shia opposition succeeds in toppling the Al Khalifa regime.”

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net.

To contact the editors responsible for this story: Willy Morris at wmorris@bloomberg.net; Andrew J. Barden at barden@bloomberg.net.

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