30.10.2014 Author: Viktor Mikhin

Saudi Arabia: on the Verge of Tough Decisions

NEO Collage 121Saudi Arabia is once again in the center of international events. The international community is primarily interested in consequences of Saudis’ adopting the decision to maintain the capacity of produced crude oil at the same level and to lower prices for its oil. There are various comments on this topic: ranging from conspiracy (the one about international conspiracy) to a detailed analysis of the international economy and the world oil market.

The Saudis themselves explain their actions quite simply: Since the USA produces shale oil and fully provides itself with this raw material Riyadh is left with no choice but to seek new markets, mainly in the Asian continent. However, as they say, the market there has long been occupied and divided. Riyadh has to dump and force other companies out, using its low prices. At the same time a decision was made not to reduce the amount of raw materials and, no matter what the difficulties are, to keep its OPEC quota at the same level.

Meanwhile the elite of Saudi Arabia has already sounded the alarm. Prince Al-Waleed bin Talal Al Saud, in an open letter to the ministers, expressed concern about the decline in oil prices and their impact on the economy. Furthermore, he was surprised by the position of Minister of Petroleum, Ali al-naimi, who previously understated the impact on the country’s financial situation as oil prices fell below 100 dollars per barrel. Since then, the price of Brent has almost come down to 80 dollars per barrel. The Prince noted that the kingdom’s budget in 2014 is 90% dependent on oil revenues, and the decline in price is a disaster which cannot be unmentioned. Judging by what is happening, the Saudi authorities are trying to correct public opinion in the country. The Saudi media promote the view that lower prices are not bad, and the Gulf countries can deal with this by cutting expenditure or by using reserves and loans.

Other OPEC countries of the Gulf are also willing to lower oil prices in order to maintain market shares and to cope with the threat of shale oil production growth in the USA, although it can affect their economies. Indeed, demand for these raw materials is hardly growing at a 100 dollar rate, which is why the price decline to $ 80 per barrel would stimulate the growth of the world economy, as well as reduce expenditure of countries buying oil.

Incidentally, the Saudis themselves explain their decision not to lower “black gold” production rates, stating that freezing of development of separate fields costs a lot of money. Moreover, it is worth it to take into account the fact that every migrant worker working in the oil industry accounts for 3-4 Saudis, who manage the entire process of oil production and control foreigners’ work. Each local resident, comfortably settled in a ministry or an office with air conditioning and working at best till 2:00 pm, earns a considerable salary for his “hard” work. Dismissal of guest workers would entail automatic dismissal of locals, which would cause an undesirable reaction in the kingdom, where the inner climate is extremely tense.

For example, the Penal Court of Saudi Arabia has just sentenced a prominent Shia preacher Ayatollah Nimr Al-Nimr to death. This decision was based on allegations of his inciting the Shia population to riots. The reason for this were Al-Nimr’s statements in which he, in particular, urged to move the Shia Eastern Province (which is, by the way, rich in oil) out of the control of Riyadh and to annex it to Bahrain. The preacher was arrested during a massive Shia minority demonstration in the east of the country, and what’s more, he was injured during detention. Futhermore, the arrest of Ayatollah so influential among Shia Saudis did nothing to stop the riots, but provoked new ones, involving human deaths.

It should be pointed out that the Shia demonstrations in the Eastern Province have regularly taken place from February 2011 onwards and are brutally dispersed by the authorities. Representatives of the religious minority accounting for about 10% of the total population believe that the country authorities are not doing enough to protect their interests and appropriate little money to development of the province. As a result, the Ministry for Internal Affairs of the Kingdom declared a ban on near-term rallies, demonstrations and strikes, “as they conflict with the Sharia law and traditions of the Saudi society.”

Such actions of the Saudi authorities could become a field of operation for the various international organizations which protect human rights and promote democracy. However, not a single voice of condemnation is heard from these organizations, which are under the wardship of Washington. It is understandable, since these fighters for “human rights” put all their efforts into targeting only Russia, its internal and external policies.

However, independent journalists, in cooperation with the English Guardian, have criticized in their reports from the Kingdom “the continuing pressure on the opposition, including arbitrary arrest and detention, unfair trials, torture and other ill-treatment that occurred during the last four years” in the Kingdom. The French newspaper Le Monde sticks to the same view, noting the recent increase in the level of repression in Saudi Arabia.

Saudi Arabia which is an absolute monarchy is governed according to Sharia. In order to interpret these rules in compliance with the today requirements, there exists in the country the Council of Ulama (Islamic scholars) who study the Islamic law and its interpretation and issue fatwas (prohibitions) on actions that do not conform to the Sharia law. For instance, in February 2008, the US magazine Parade (appendix to The Washington Post) published the list of the most brutal dictators of the present. The Saudi King took the 4th place, losing only to the then leader of DPRK, Kim Jong-Il, to Sudan President, Omar al-Bashir, and to President of Burma, General Than Shwe. However, since then, little has changed in the Saudi Kingdom.

At the same time, it should be noted that besides the common for Muslim countries prohibitions, for example, that of participation in extremist activity, they sometimes issue rather curious fatwas. For example, “buffets” are officially under ban in the country because, not knowing the price of consumed food, one can become intolerably ignorant. Citizens of the state are also forbidden to marry foreigners. Moreover, the Saudi men cannot use gilded mobile phones – they are meant only for women. However, legislative bans are even tougher for women – they are forbidden to drive. The Saudi women do not intend to put up with such state of affairs. They regularly express their protest in social networks and even come out on prohibited rallies, calling for permission to drive vehicles. Every now and then they organize races of protest in the course of which they deliberately drive despite the official prohibition.

Yet, besides all these issues, there are two problems that the Royal Household needs to resolve as quickly as possible. One of them is very complex relations with Syria and the financed terrorist organizations which allegedly fight against Bashar Assad’s regime. None other than the US Vice President Joe Biden accused monarchs of the Gulf of creating and financing terrorist organizations such as the Islamic State of Iraq and the Levant, now known as the Islamic State (IS), Jabhat al-Nusra, and little-known to everybody but Washington Khorasan group. It’s the leaders of IS who, after returning to Iraq, threaten to expand their activity to the Saudi territory as well and dethrone the Saudi dynasty which, according to jihadist preachers, wallowed “in debauchery, digression from the true Islam, and ties with the West, above all, with America.”

It is no wonder that right after US President Barack Obama urged the states to establish an anti-terrorist organization, Riyadh did not only reaffirm its agreement, but was the first, along with the US air forces, to authorize bombing of Syrian territory. All Saudi newspapers at a moment’s notice started publishing photos of glorious “Falcons”, who caused “irreparable damage” to the enemy. However, for some reason they bombed mainly oil wells and other Syrian infrastructure facilities, destroying industrial, not military, plants. The Arab media reported that Syrian authorities secretly warned the Saudis that Damascus had warcrafts and missiles, noting that on the Saudi territory there were also many industrial, in particular oil, facilities. Right after that the activity Saudi falcons’ reversed and photographs of “heroic” pilots disappeared from the press.

The most important problem which the royal house faces is the very old age of the king and his official successor. It should be reminded that the King Abdallah bin Abd Al-Aziz al Saud is now 91 or perhaps even more because when he was born only Muslim calendar existed and dates of birth of the royal family’s offspring was recorded only for the sake of genealogy of the Sauds dynasty. The official successor, Prince Salman bin Abd al-Aziz Al Saud is about 78 years old, and he is seriously ill. Given these facts, it is possible that a kind of “carriage race” will take place in the near future. The still unwavering tradition that only a son of the founder of Saudi Arabia, Ibn Saud, can succeed to the crown is likely to be changed and another relative of the founder of the kingdom will become the king. A hidden bustle, and more likely, a fierce fight for the throne can be already observed. For many overage princes educated in the United States and Great Britain, accustomed to the playboy life style and possessing huge sums of money thanks to oil industry the dull reality of the strict Islamic laws is a burden. They struggle by all means to occupy the most important positions of power. It will be natural that if someone from the “young” princes aged 50-60 years comes to power, the foundations of the Saudi society will be reconsidered.

The range of tasks and problems which the Royal House of the Sauds now faces is rather broad and complex. This range of tasks is constantly pressing on Saudi rulers, forcing them to act on an impulse, to rush from one extreme to another in search of, as it seems to them, “adequate solutions”. The world will soon learn whether the current princes will manage to resolve these problems, to build a new modern society or whether they will continue to live on oil wealth. Another oil price “race” will, undoubtedly, only accelerate this process.

Victor Mikhin, corresponding member Russian Academy of Natural Sciences, exclusively for the online magazine “New Eastern Outlook”.

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