Saudi Arabia Defies Turmoil as Guardian of Status Quo
Saudi Arabia is leading a counter- revolution against the sweeping political changes in the Middle East by using money, force and religion.
As popular movements for democracy toppled leaders in Egypt and Tunisia and began threatening neighboring Bahrain and Yemen, Saudi Arabia’s Al Saud royal family strengthened control over the Arab world’s biggest economy. Once restrictive of the Muslim clerics, King Abdullah offered money and new censorship powers for their loyalty as he doled out 500 billion riyals ($130 billion) nationally in housing grants and other sweeteners.
The Al Saud have “positioned themselves as the guardians of the status quo,” Christopher Davidson, author of “Power and Politics in the Persian Gulf Monarchies,” said in response to e-mailed questions. “We are seeing a resistance to genuine reform by using a mixture of carrots and sticks.”
Four months of political unrest have shaken the Middle East as citizens demand civil rights, higher living standards and the ouster of autocratic regimes. Yet Saudi Arabia, the self- proclaimed economic powerhouse and leader of the Gulf states, is showing itself as unhindered by the events, sending in troops to end protests in Bahrain and quelling smaller demonstrations in its own Eastern Province.
In Riyadh yesterday, Finance Minister Ibrahim al-Assaf told 1,200 conference delegates, including officials from JPMorgan Chase & Co., Moody’s Investors Service and BNP Paribas SA, that the Saudi economy was on track for stronger growth.
“I’d like on this occasion to note that the financial and economic situation in the kingdom is stable, thank God, and we have not noticed any abnormal financial movements despite unprecedented events taking place in the region,” he said.
The economy is forecast to expand 5.3 percent this year, compared with 3.8 percent last year, National Commercial Bank said on May 15. Egyptian growth may slow to about 1 percent this year, the International Monetary Fund said on April 11.
U.S. companies are pursuing investments in the Saudi kingdom. General Electric Co. (GE) announced contracts valued at more than $500 million this month. Saudi Basic Industries Corp. (SABIC) and Exxon Mobil Corp. (XOM) were awarded contracts this month to develop a project in the eastern coastal city of Jubail.
To quell the impact of the region’s unrest, Abdullah turned to “the official religious establishment,” Christopher Boucek, an analyst at the Carnegie Endowment for International Peace in Washington, said in a telephone interview. “Other countries in the region don’t have the ability or resources to do this.”
The senior religious scholars responded by issuing a statement calling protests un-Islamic ahead of a so-called Day of Rage on March 11. Protesters stayed off the streets.
Saudi Arabia arrested more than 160 dissidents since February as part of the government’s crackdown on protests, Human Rights Watch said in April.
Earlier in the year, Tunisia’s President Zine El Abidine Ben Ali and Egypt’s Hosni Mubarak were toppled, the first leaders to go as uprisings spread. Demonstrators and security forces are still facing off in Syria and Yemen. In Libya, NATO forces are two months into a bombing campaign against Muammar Qaddafi as he battles with rebels.
The allegiance from King Abdullah’s 110,000-man National Guard and the Interior Ministry, controlled by Prince Nayef, wasn’t challenged during the unrest.
Abdullah, who is 87 this year, dispatched soldiers to help the fellow Sunni Muslim monarchy in Bahrain crush protests led mainly by Shiites, who make up the majority of the island’s population.
The Saudi-led Gulf Cooperation Council also may admit Morocco and Jordan as the group seeks to counter “the wave of political change in region,” Ayham Kamel, an analyst with Washington-based Eurasia Group, wrote on May 13.
Under a pact dating back to 1744 between the Al Saud ruling family and Muhammad bin Abdul Wahhab, the kingdom has maintained an austere brand of Islam, known as Wahhabism, in return for the Sunni hierarchy’s acceptance of the crown.
The king renewed the alliance with clerical power at home “to present a solid front against the events that are sweeping the region,” Theodore Karasik, director of research at the Dubai-based Institute for Near East and Gulf Military Analysis, said in a phone interview.
Political loyalties have their costs. Of the expenditure announced by Abdullah in February and March, $67 billion went to funds for housing, religious groups and the military, according to a royal decree issued by the king.
“The state religious establishment was very well compensated,” said Boucek at Carnegie Endowment.
Abdullah issued a royal decree banning media services from publishing anything that “violates” Islamic law, “harms the reputation” of clerics, and threatens internal security, the official Saudi Press Agency in Riyadh said on April 29.
“The kingdom is reacting to events and anticipating things will get worse,” Simon Henderson, director of the Gulf and Energy Policy Program at the Washington Institute for Near East Policy, said in response to e-mailed questions.
To pay for the new spending, Saudi Arabia needs an oil price of between $80 to $85 a barrel, according to Banque Saudi Fransi (BSFR) in Riyadh, Jadwa Investment Co. and National Commercial Bank. That compares with the original 2011 budget requirement of $65 a barrel, National Commercial Bank said.
Crude oil for June delivery was $98.13 a barrel on the New York Mercantile Exchange at 12:42 p.m. London time. Futures have risen 42 percent in the past year.
“Saudi Arabia has saved a lot of money during this oil price rise to get them through a potential period of an oil- price decline,” Brad Bourland, chief economist at Riyadh-based Jadwa, said in an interview today. “They aren’t fragile to the point that if they didn’t meet their break-even price a fiscal crisis would occur.”
Oil revenue this year is expected at 828.2 billion riyals and Saudi Arabia will record a budget surplus of 62.8 billion riyals, National Commercial Bank said. Expenditures may exceed the initial 2011 budget by as much as 15 percent, al-Assaf said yesterday. The government in August announced a five-year, $384 billion economic development plan.
“Subsidies and expenditure are being increased across the board in order to appease the religious establishment, the security services and public sector workers,” said Davidson, who is at Durham University in northern England. “This is in parallel to increasingly repressive statements aimed at frightening people into staying at home.”
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