It’s Time for the United States to Start Worrying About a Saudi Collapse

As if there weren’t already enough problems to worry about in the Middle East, Saudi Arabia might be headed for trouble.

From plummeting oil prices to foreign-policy missteps to growing tensions with Iran, a confluence of recent events is mounting to pose some serious challenges for the Saudi regime. If not properly managed, these events could eventually coalesce into a perfect storm that significantly increases the risk of instability within the kingdom, with untold consequences for global oil markets and security in the Middle East.

Here are some of the percolating problems that could throw the country off kilter.

Fissures Within the Royal Family. Last week, the Guardian published two letters that an anonymous Saudi prince recently circulated among senior members of the royal family, calling on them to stage a palace coup against King Salman. The letters allege that Salman, who ascended to the throne in January, and his powerful 30-something son Deputy Crown Prince Mohammed bin Salman have pursued dangerous policies that are leading the country to political, economic, and military ruin. In an interview with the Guardian, the prince insisted that his demand for a change in leadership not only had growing support within the royal family but across broader Saudi society as well. “The public [is] also pushing for this very hard,” he claimed. “They say you have to do this or the country will go to disaster.” The article, which includes the letters, written in Arabic, has been shared more than 15,000 times.

The Yemen War. The longer it drags on, the greater the risk that the Saudi intervention against Houthi rebels could become a serious source of internal dissension. In its story on the prince’s letters, the Guardian reported that “many Saudis are sickened by the sight of the Arab world’s richest country pummelling its poorest.” Particular blame is attached to Prince Mohammed bin Salman, who also serves as the kingdom’s defense minister and by all accounts has been the driving force behind the war effort. Tagged with the unofficial nickname “Reckless,” Prince Mohammed bin Salman has been accused of rushing into Yemen without a clear strategy or exit plan, resulting in mounting costs in blood and treasure, an ever-expanding humanitarian crisis, and growing international criticism.

Economic Problems. Thanks largely to Saudi policy, oil prices plummeted by more than 50 percent in the past year. Facing a market glut due to the U.S. oil boom, Saudi strategy has been to maintain high production, fight for market share, allow prices to collapse, and wait for higher cost producers, particularly in America, to be driven out of business. With cheaper oil spurring increased demand and squeezing out excess supply, the theory was that higher prices would return before the kingdom ever felt any real economic pinch.

But it hasn’t quite worked out that way — at least not as quickly as the Saudis anticipated. Indeed, Saudi Arabia’s 2015 budget was based on the assumption that oil would be selling at about $90 per barrel. Today, it’s closer to half that. At the same time, the Saudis have incurred a rash of expenses that weren’t planned for, including those associated with King Salman’s ascendance to the throne (securing loyalty for a new king can be expensive business) and the war in Yemen.

The result is a budget deficit approaching 20 percent, well over $100 billion, requiring the Saudis to deplete their huge foreign exchange reserves at a record rate (about $12 billion per month) while also accelerating bond sales. The Saudis have reportedly liquidated more than $70 billion of their holdings with global asset managers in just the past 6 months.

While there’s no danger that the kingdom will run out of money anytime soon, the longer this trend of large budget deficits, lower oil prices, and declining foreign exchange reserves continues, the more nervous international markets will become — with potential implications for key indicators like credit rating and capital flight. Adding to long-term concerns is the fact that Saudi net oil exports have been in slow decline for years as internal energy consumption rises dramatically. Indeed, analysts now suggest that rapidly expanding domestic demand could render the kingdom a net importer of oil by the 2030s. It goes without saying that such a development poses a mortal threat to the kingdom, where oil sales still account for 80 to 90 percent of state revenues. More

 

Is The Latest Attack In Saudi Arabia The Beginning Of A Resistance Movement?

The latest attack in Saudi Arabia could be the beginning of a resistant movement against the current regime, as well as with Yemeni hostilities carried out by the House of Saud, Catherine Shakdam, Beirut Center for Middle East Studies told RT.

At least 15 people were reportedly killed in an attack on a mosque in Asir province in Saudi Arabia yesterday. A suicide bomber struck a mosque used by the army. The Interior Ministry claims the attack was carried out by Islamic State (IS, formerly ISIS).

RT: Do you think this was Islamic State again?

Catherine Shakdam: I don’t think so. I think it has more to do with the beginning of resistance movements against the Saudi regime, inside of Saudi Arabia rather than just some form of ISIS backlash. Because of where the attack actually took place – in Asir, which is a southern province of Saudi Arabia; we had province right next door to it, in Jizan, where tribes have already declared that they were against the Saudi regime and that they would organize resistance movements against them and actually fight them and reject the legitimacy.

I think that what we’re seeing today is really just an extension of this. And it has a lot to do with the Yemeni war. I’m not saying that the Yemeni are responsible – not at all. What I’m saying is that because of this war a lot of people now within the kingdom are going to react against Riyadh and trying to organize a resistance movement against them, against this dictatorship. And they are reacting. I think even though it was an attack directed against a mosque, it has more to do with who they were targeting – and it’s really just security forces rather than just civilians. So it is not to be confused with the type of the time that we have seen previously, for example, in Qatif, where Shia mostly was directly targeted. It is kind of a different type of attack here.

RT: Compared with other countries in the region, Saudi Arabia was seen as relatively safe from terror attacks until recently. Do you see such attacks becoming more frequent in the future?

CS: It is a possibility. And only because the Saudi have actually funded… terrorism, for decades. You can trace it back to the 1960s when they first allowed elements from the Muslim Brotherhood to come into exile in Saudi Arabia – they were welcomed them with the open arms. And this is today coming back to bite them. All those funds that have been allocated to radical movements across the Middle East and even beyond this. They have tried to open up, I would say, radical fronts in America, in Europe and all over the world. And today those elements that they have leaned on to maintain a strong hand on the Saudi people is actually coming back to haunt them. And they are paying the price today.

http://www.rt.com/op-edge/311841-terrorism-saudi-arabia-attack/

 

 

Saudi Arabia is ‘biggest funder of terrorists says Hillary

Saudi Arabia is the single biggest contributor to the funding of Islamic extremism and is unwilling to cut off the money supply, according to a leaked note from Hillary Clinton.

The US Secretary of State says in a secret memorandum that donors in the kingdom still “constitute the most significant source of funding to Sunni terrorist groups worldwide” and that “it has been an ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority”.

In a separate diplomatic cable published by WikiLeaks last night, the militant group which carried out the Mumbai bombings in 2008, Lashkar-e-Toiba, is reported to have secured money in Saudi Arabia via one of its charity offshoots which raises money for schools.

Saudi Arabia is accused, along with Qatar, Kuwait and the United Arab Emirates, of failing to prevent some of its richest citizens financing the insurgency against Nato troops in Afghanistan. Fund-raisers from the Taliban regularly travel to UAE to take advantage of its weak borders and financial regulation to launder money.

However, it is Saudi Arabia that receives the harshest assessment. The country from which Osama bin Laden and most of the 9/11 terrorists originated, according to Mrs Clinton, “a critical financial support base for al-Qa'ida, the Taliban, Lashkar-e-Toiba and other terrorist groups, including Hamas, which probably raise millions of dollars annually from Saudi sources, often during the Haj and Ramadan”.

These pilgrimages, especially the Haj, are described as a “big problem” in another cable dated 29 May 2009. Detailing a briefing from the Saudi interior ministry to Richard Holbrooke, the US envoy to Afghanistan and Pakistan, it notes: “The Haj is still a major security loophole for the Saudis, since pilgrims often travel with large amounts of cash and the Saudis cannot refuse them entry into Saudi Arabia.”

It also quotes one of the officials admitting that the Haj is “a vacuum in our security”. The huge annual influx of Muslims from around the world offers a prime opportunity for militants and their donors to enter the kingdom to exchange funds, launder money through front companies and accept money from government-approved charities.

The memo underlines that the US supports the work of Islamic charities, but is frustrated that they are so easily exploited to fund terrorism.

“In 2002, the Saudi government promised to set up a charities committee that would address this issue, but has yet to do so,” Mrs Clinton's cable reads, before seeming to admit with disappointment that merely “obtaining Saudi acknowledgement of the scope of this problem and a commitment to take decisive action” has proved hard. More

 

Tomgram: Patrick Cockburn, How to Ensure a Thriving Caliphate

Think of the new “caliphate” of the Islamic State, formerly the Islamic State in Iraq and Syria (ISIS), as George W. Bush and Dick Cheney's gift to the world (with a helping hand from the Saudis and other financiers of extremism in the Persian Gulf). How strange that they get so little credit for its rise, for the fact that the outlines of the Middle East, as set up by Europe’s colonial powers in the wake of World War I, are being swept aside in a tide of blood.

Had George and Dick not decided on their “cakewalk” in Iraq, had they not raised the specter of nuclear destruction and claimed that Saddam Hussein’s regime was somehow linked to al-Qaeda and so to the 9/11 attacks, had they not sent tens of thousands of American troops into a burning, looted Baghdad (“stuff happens”), disbanded the Iraqi army, built military bases all over that country, and generally indulged their geopolitical fantasies about dominating the oil heartlands of the planet for eternity, ISIS would have been an unlikely possibility, no matter the ethnic and religious tensions in the region. They essentially launched the drive that broke state power there and created the kind of vacuum that a movement like ISIS was so horrifically well suited to fill.

All in all, it’s a remarkable accomplishment to look back on. In September 2001, when George and Dick launched their “Global War on Terror” to wipe out — so they then claimed — “terrorist networks” in up to 60 countries, or as they preferred to put it, “drain the swamp,” there were scattered bands of jihadis globally, while al-Qaeda had a couple of camps in Afghanistan and a sprinkling of supporters elsewhere. Today, in the wake of the invasions of Afghanistan and Iraq and an air power intervention in Libya, after years of drone (and non-drone) bombing campaigns across the Greater Middle East, jihadist groups are thriving in Yemen and Pakistan, spreading through Africa (along with the U.S. military), and ISIS has taken significant parts of Iraq and Syria right up to the Lebanese border for its own bailiwick and is still expanding murderously, despite a renewed American bombing campaign that may only strengthen that movement in the long run.

Has anyone covered this nightmare better than the world’s least embedded reporter, Patrick Cockburn of the British Independent? Not for my money. He’s had the canniest, clearest-eyed view of developments in the region for years now. As it happens, when he publishes a new book on the Middle East (the last time was 2008), he makes one of his rare appearances at TomDispatch. This month, his latest must-read work, The Jihadis Return: ISIS and the New Sunni Uprising, is out. Today, this website has an excerpt from its first chapter on why the war on terror was such a failure (and why, if Washington was insistent on invading someplace, it probably should have chosen Saudi Arabia). It includes a special introductory section written just for TomDispatch. Thanks go to his publisher, OR Books. Tom

Why Washington’s War on Terror Failed

The Underrated Saudi Connection

By Patrick Cockburn

[This essay is excerpted from the first chapter of Patrick Cockburn’s new book, The Jihadis Return: ISIS and the New Sunni Uprising, with special thanks to his publisher, OR Books. The first section is a new introduction written for TomDispatch.]

There are extraordinary elements in the present U.S. policy in Iraq and Syria that are attracting surprisingly little attention. In Iraq, the U.S. is carrying out air strikes and sending in advisers and trainers to help beat back the advance of the Islamic State of Iraq and the Levant (better known as ISIS) on the Kurdish capital, Erbil. The U.S. would presumably do the same if ISIS surrounds or attacks Baghdad. But in Syria, Washington’s policy is the exact opposite: there the main opponent of ISIS is the Syrian government and the Syrian Kurds in their northern enclaves. Both are under attack from ISIS, which has taken about a third of the country, including most of its oil and gas production facilities.

But U.S., Western European, Saudi, and Arab Gulf policy is to overthrow President Bashar al-Assad, which happens to be the policy of ISIS and other jihadis in Syria. If Assad goes, then ISIS will be the beneficiary, since it is either defeating or absorbing the rest of the Syrian armed opposition. There is a pretense in Washington and elsewhere that there exists a “moderate” Syrian opposition being helped by the U.S., Qatar, Turkey, and the Saudis. It is, however, weak and getting more so by the day. Soon the new caliphate may stretch from the Iranian border to the Mediterranean and the only force that can possibly stop this from happening is the Syrian army.

The reality of U.S. policy is to support the government of Iraq, but not Syria, against ISIS. But one reason that group has been able to grow so strong in Iraq is that it can draw on its resources and fighters in Syria. Not everything that went wrong in Iraq was the fault of Prime Minister Nouri al-Maliki, as has now become the political and media consensus in the West. Iraqi politicians have been telling me for the last two years that foreign backing for the Sunni revolt in Syria would inevitably destabilize their country as well. This has now happened.

By continuing these contradictory policies in two countries, the U.S. has ensured that ISIS can reinforce its fighters in Iraq from Syria and vice versa. So far, Washington has been successful in escaping blame for the rise of ISIS by putting all the blame on the Iraqi government. In fact, it has created a situation in which ISIS can survive and may well flourish.

Using the al-Qa'ida Label

The sharp increase in the strength and reach of jihadist organizations in Syria and Iraq has generally been unacknowledged until recently by politicians and media in the West. A primary reason for this is that Western governments and their security forces narrowly define the jihadist threat as those forces directly controlled by al-Qa‘ida central or “core” al-Qa‘ida. This enables them to present a much more cheerful picture of their successes in the so-called war on terror than the situation on the ground warrants.

In fact, the idea that the only jihadis to be worried about are those with the official blessing of al-Qa‘ida is naïve and self-deceiving. It ignores the fact, for instance, that ISIS has been criticized by the al-Qa‘ida leader Ayman al-Zawahiri for its excessive violence and sectarianism. After talking to a range of Syrian jihadi rebels not directly affiliated with al-Qa‘ida in southeast Turkey earlier this year, a source told me that “without exception they all expressed enthusiasm for the 9/11 attacks and hoped the same thing would happen in Europe as well as the U.S.”

Jihadi groups ideologically close to al-Qa‘ida have been relabeled as moderate if their actions are deemed supportive of U.S. policy aims. In Syria, the Americans backed a plan by Saudi Arabia to build up a “Southern Front” based in Jordan that would be hostile to the Assad government in Damascus, and simultaneously hostile to al-Qa‘ida-type rebels in the north and east. The powerful but supposedly moderate Yarmouk Brigade, reportedly the planned recipient of anti-aircraft missiles from Saudi Arabia, was intended to be the leading element in this new formation. But numerous videos show that the Yarmouk Brigade has frequently fought in collaboration with JAN, the official al-Qa‘ida affiliate. Since it was likely that, in the midst of battle, these two groups would share their munitions, Washington was effectively allowing advanced weaponry to be handed over to its deadliest enemy. Iraqi officials confirm that they have captured sophisticated arms from ISIS fighters in Iraq that were originally supplied by outside powers to forces considered to be anti-al-Qa‘ida in Syria. More