Is Saudi Arabia Stable?

Saudi Arabia appears, on the surface, to have escaped the Arab Uprisings untouched. Five experts on Saudi Arabia discuss the kingdom’s prospects for maintaining stability.

Saudi Arabia appears, on the surface, to have escaped the Arab Uprisings untouched. Yet its political trajectory and future stability remain uncertain. The kingdom is not immune to rising pressures, from concerns about wages and unemployment to the effects of social media activism, sectarianism, and the price of oil. Are government responses to these pressures indicative of an impending change or a sign of state strength?

Five experts on Saudi Arabia discuss the kingdom’s prospects for maintaining stability. Each provides a different perspective on a particular set of domestic issues and government responses.

The Eastern Province: A Bellwether for the Kingdom
Frederic Wehrey

Two years after the start of the Arab uprisings, the threat of regional chaos has helped shield the house of Saud from the dissent brewing at home. In a time-worn strategy, the ruling family has skillfully portrayed itself as a bulwark against the specter of communal strife and civil war brought about by rapid and uncontrolled political change. Regional sectarian tensions—exacerbated by Sunni clerics and state-owned media—have spilled over, casting a chill over cooperation and coordination between Sunni and Shia activists in the Kingdom —to the benefit of the monarchy. In tandem, a campaign of massive subsidies and carefully calibrated reforms has been used to produce consent among an increasingly restive younger generation.

A key question confronting the kingdom now is whether the diminishing returns from such a strategy are sufficient in light of spreading disenchantment that could, at some point, mutate into something more serious. Among activists and reformists across the country, there is the growing sense that the National Dialogue and municipal council elections were fundamentally hollow reforms that yielded little in the way of actual political or economic change. Confronted with a regime that has typically presented itself as a gatekeeper for dialogue among the kingdom’s sects and regions, these young activists have found new spaces in social media to share ideas and find common ground. So far, such activity has not yielded anything resembling a coherent popular movement or political force.

That said, a number of grievances have arisen that are shared by disparate sectors of Saudi society: low wages, unemployment, infrastructural neglect at the municipal and provincial level, and—perhaps most importantly—protests over the incarceration of political dissidents. On top of this, the previous tools of social control—familial and clerical authority—may be showing the strains of overuse.

If there is one corner of Saudi Arabia that provides a laboratory for observing these dynamics at work, it is the Eastern Province, which has witnessed sustained and seldom-reported protests since 2011. True, the region carries its own unique grievances related to sectarian discrimination against its Shia citizens.   But many of the protesters’ calls are echoed by activists elsewhere in the country, albeit at lower decibel levels: the release of political prisoners, greater power for elected municipal councils, an independent judiciary, a constitution, and economic reforms. In this respect, the province should not be treated solely as an isolated pocket of discontent, but rather a sort of bellwether for the overall health of the country.

Frederic Wehrey, senior associate in the Middle East Program at the Carnegie Endowment for International Peace and author of Sectarian Politics in the Gulf:  From the Iraq War to the Arab Uprisings

Stable for Now
F. Gregory Gause

Ironically, questions about Saudi stability tend to arise after the Saudi regime has recently demonstrated its resiliency in the face of regional crisis—and the Arab Spring is no exception.

There are two central reasons that Riyadh was the major Arab state least affected by the upheavals of the last few years. The first is that it has plenty of money in the bank. Only one major oil exporter, Libya, faced a regime-shaking crisis in 2011, and the regime there fell because of external intervention. Because the Saudis (and other oil exporters) had enjoyed a ten-year period of rising prices, the skids of the patronage state were well greased. To remind everyone of how good they have it, King Abdullah committed to spending $130 billion on such public provisions as education allowances, unemployment benefits, higher wages, and low-income housing—even as demonstrations were gaining momentum around the region. That commitment put a dent in Saudi financial reserves (which total approximately $700 billion), but hardly exhausted them. The second reason explaining Saudi stability is the presence of serious divisions in Saudi society along sectarian, regional, and ideological lines. Disparate groups in Egypt and Tunisia could put their differences aside and come together against their dictators because their common national identity is relatively strong, while postponing the fights for power we see in those countries now. In Saudi Arabia, potential axes of regime opposition do not have the levels of contact and trust to join forces against the regime.

What could change the picture of Saudi stability? Obviously, a dramatic and sustained reduction in the price of oil would eventually lead to a fiscal crisis in the Kingdom, calling into question the patronage base of the regime. A serious split in the ruling family, when power finally passes to the next generation of princes, could also shake the regime. If the two scenarios happened simultaneously, the chances of regime survival would decrease markedly.

F. Gregory Gause, professor of political science at the University of Vermont and a senior non-resident fellow at Brooking’s Doha Center.

Oil, Jobs, and Long Term Stability
Steffen Hertog

There can be no revolution without a deep socio-economic crisis. Saudi Arabia hasn’t had such a crisis yet. On the back of its large oil revenues and even larger overseas financial reserves, it can provide enough employment for young male job-seekers—the crucial segment of the population—in the public sector to defuse any large-scale revolutionary anger.

The sustainability of this policy depends on simple arithmetic: oil prices and production levels on one hand, and domestic employment and subsidy costs on the other. The latter have been increasing rapidly and are likely to continue doing so, albeit at a more measured pace, due to continued growth of the working-age population. But even under pessimistic oil price assumptions, the kingdom will not run out of money for at least a dozen years. For the time being, it continues to run significant surpluses, as the oil price at which the government breaks even lies around $80 per barrel, a good deal below current prices.

While the kingdom’s mid-term outlook is the envy of its non-oil-producing peers in the region, the long-run outlook is cloudy if not bleak. The spending binge since the mid-2000s has made economic activity more dependent on the state budget. The share of private sector wages in GDP lies below 10 percent, compared to 40-50 percent in mature economies, meaning little self-sustained demand is generated. Most private sector jobs continue to be held by foreigners. In 2011, less than 400,000 of 4 million expatriate-held jobs in the private sector paid a salary of more than 3,000 Saudi Riyals ($800). This means that at prevailing wage levels, there were precious few positions for which Saudis would even consider applying, let alone successfully compete against migrant job seekers.

Recent government efforts forcing employers to increase their share of Saudi employees have increased the number of privately employed nationals, but the new quota system is complex and hard to monitor; employers have developed a variety of evasion techniques. As long as an open migration system forces nationals to compete with Asian workers at rock-bottom wages, businesses will have strong incentives to prefer foreigners, undercutting the private sector job creation for nationals that is needed for long-term stability. The use of low-cost labor has also led to stagnating or declining productivity, moving the kingdom away from the post-oil “knowledge economy” it strives to build.

In the long run, Saudi Arabia will have to undergo a painful shift away from both public sector over-employment and dependence on migrant labor. Such a shift means short-term pain for both citizens and business. Times are probably too good to impose such pain right now. Once the state reaches its fiscal limits, however, the forced shift away from state dependence would be all the more sudden and violent. This does not guarantee revolution, but it would mean potential for serious instability for the first time in decades.

Steffen Hertog, senior lecturer at the London School of Economics and Political Science and author of Princes, Brokers, and Bureaucrats.

Looming Political Shift

Christopher Davidson

One of the most active current Twitter conversations, loosely translated as Salaries are not enough, is almost entirely Saudi-based and is mostly in Arabic.  With hundreds of tweets per second and millions per week, it is causing great alarm within elite circles and in many ways encapsulates the multitude of problems that the Al Saud regime is now facing.  The size, content, and voracity of the debate caught the international media’s attention.  Complaining of ever-growing wealth inequalities across the kingdom, along with rising poverty, corruption, and unemployment, the conversation is helping prove that Saudi Arabia’s social contract with its citizens is now publicly coming unstuck.

More importantly, it is also demonstrating that powerful new modernizing forces—in this case globalizing communications technologies that can neither be co-opted nor controlled by the state—are having a huge impact on a restless, hitherto traditional society that now enjoys one of the highest broadband and smartphone penetration rates in the world.  Indeed, Saudi Arabia now generates more tweets per capita than the United States.  Able to access new media platforms that finally allow for unfettered free speech, and undoubtedly emboldened by the demonstration effect of mass uprisings and denunciations of authoritarian rulers in neighboring states, Saudis—from all walks of life and regardless of sect—are undoubtedly mobilizing.  Even members of the ruling family are breaking ranks and wading in, with some describing the ‘looming crisis’ and others publishing open letters of ‘defection.’

What’s also clear is that the kingdom’s enormous Arab Spring public spending program—now amounting to hundreds of billions spent on subsidies, welfare, and public sector job schemes—isn’t having the desired effect.  Clearly hoping that the uprisings of 2011 would be a short blip and that the ongoing revolutions—notably in Syria and Egypt—could be ‘managed’ by Saudi wealth injections, the aim was to pacify the backyard and buy the political acquiescence of citizens until the storm had passed, even if it meant pushing up the breakeven oil price and increasing the kingdom’s now perilous dependency on global oil demand.  The reality, however, is that a fundamental shift in political order is now taking place across the region, and in many ways is just beginning.  Large, youthful populations are signalling their discontent with opaque authoritarian politics and the mismanagement of national resources.  There is no valid academic explanation for why Saudi Arabia should remain exceptional to this shift.

Christopher Davidson, lecturer of Middle East Politics at Durham University and author of After the Sheikhs.

Reforming at Their Own Pace
Fahad Nazer

A common perception among casual observers portrays Saudi Arabia as an anachronism: a country whose political and social institutions are relics of a bygone age and do not reflect the demands, realities—or sensibilities for that matter—of a “modern” state.

However, those who follow developments in the kingdom closely over an extended period of time—particularly  since the end of the first Gulf War—tend to consider the tentative steps the government has taken towards political, social, and economic reform as reflective of some level of awareness among Saudi leaders of the changing demographics and political culture of the kingdom.

These steps also suggest that leaders are more attuned to the pressures exerted from the outside, especially since the Arab Spring swept the region, than some might assume. Critics characterize them as mere cosmetic “window-dressing” intended mainly to placate Western critics who—ever since it was revealed that the majority of September 11 hijackers were Saudi—have been emboldened to scrutinize what were once considered purely domestic concerns, including  what is being taught in Saudi schools. However, taking the long-view suggests a less dismissive—or  cynical—reading  of these initiatives.

Noteworthy reforms include instituting periodic national dialogues that bring together Saudis from different ends of the political and religious spectrums to debate the challenges facing the kingdom, expanding  the consultative Shura council (which now includes 30 women), and holding nation-wide elections for municipal councils—which gave Saudis their first taste of democracy. These are not indicative of an acute case of political sclerosis, as some have claimed.

In 2011, King Abdullah took another calculated risk by declaring that women would be eligible to participate and run in the next round of elections in 2014. Much like his pet project, the King Abdullah University for Science and Technology (a coeducational, graduate level university aimed at preparing Saudis to compete in a global  economy), the king’s initiatives to empower Saudi women roiled conservative elements, who continue to view most reforms as inherently antithetical to the Islamic precepts and mores upon which the country was founded.

Nevertheless, the recent crackdown on outspoken advocates of reform has given many observers pause. While Saudi leaders don’t seem nearly as averse to reform as some critics maintain, they do seem to prefer to implement it at their own pace and on their own terms.

Fahad Nazer, political analyst at JTG Inc and former political analyst at the Embassy of Saudi Arabia in the United States.

This article is reprinted with permission from Sada.  It can be accessed online at:http://carnegieendowment.org/2013/08/15/reforming-at-their-own-pace/gigx

Related Posts

  • The Kingdom Divided The reality for most Saudis is far-removed from the Kingdom’s reputation for extravagance. Official unemployment stands at 10 percent, but unofficial estimates place it as high as 20 percent. The latest official figures reveal that 670,000 families—approximately 3 million out of a total […]
  • Saudi Vision 2030: Winners and LosersSaudi Vision 2030: Winners and Losers Saudi Arabia’s grand plan for economic reform might expand employment and transparency, but there would also be losers.
  • Saudi Arabia’s Yemen GambitSaudi Arabia’s Yemen Gambit Saudi Arabia’s lack of clear goals in Yemen is worsening the security vacuum and potentially undermining the kingdom’s national security.