Posted on 03/07/2016 3:40:27 AM PST by HomerBohn
To the casual observer, Saudi Arabia might seem like an emboldened nation that is asserting itself. They’ve been challenging Iran, fighting rebels in Yemen, threatening to invade Syria, and if some rumors are to be believed, they are currently trying to attain nuclear missiles from Pakistan. However, these aren’t the actions of a stable nation that is asserting its dominance in the region. These are the flailing death throes of a nation that is struggling to hang on.
Ever since global oil prices started to plummet, Saudi Arabia just hasn’t been the same. That’s no surprise. Since prices fell, other oil rich nations have been hurting as well. Russia’s economy has been on the ropes, Canada is plummeting into a recession, and Venezuela is on the verge of total collapse. However, there probably isn’t any nation on Earth that is more reliant on oil than Saudi Arabia. If anyone is going to be destroyed by low oil prices, it’s the Saudis.
The crux of the matter is that this country is running out of money. It doesn’t look like it at first glance. They’ve only recently started to dip into their enormous savings, and their debt to GDP ratio is remarkably low. However, they are hemorrhaging money at an alarming rate. They’ve been flooding the market with cheap oil to drown out their competition (a dangerous gambit for a government that receives 80% of its revenue from oil) , and they’ve been fighting several expensive proxy wars with Iran, which are not going so well. The situation is so dire that the IMF expects them to run out of money within 5 years.
For most countries this wouldn’t be such a big deal. They would just go into debt and kick the can down the road until their financial system crumbled after many years. But the Saudi’s can’t do that. Their government and their society is structured in such a way that they can’t maintain anything with debt. The reason why is that they are not a traditional nation-state.
In fact, Saudi Arabia is no state at all. There are two ways to describe it: as a political enterprise with a clever but ultimately unsustainable business model, or so corrupt as to resemble in its functioning a vertically and horizontally integrated criminal organization. Either way, it can’t last. It’s past time U.S.decision-makers began planning for the collapse of the Saudi kingdom.
In recent conversations with military and other government personnel, we were startled at how startled they seemed at this prospect. Here’s the analysis they should be working through.
Understood one way, the Saudi king is CEO of a family business that converts oil into payoffs that buy political loyalty. They take two forms: cash handouts or commercial concessions for the increasingly numerous scions of the royal clan, and a modicum of public goods and employment opportunities for commoners.
Essentially, Saudi Arabia runs on institutionalized bribery. They need cold hard cash to keep the population in line, to keep the ever-growing royal family rich and happy, and to make sure everyone is doing their job. It’s not like what you see in most Western nations, where much of the population has a misplaced sense of civic duty. This system needs cash, and can’t survive on IOUs.
The elites in this society demand a life of perpetual luxury, and government handouts are the only thing keeping the oppressed masses from rebelling. Once they run out of money, everything will fall apart from the bottom up.
But the financial situation isn’t the only problem with the Saudi kingdom. Much of their budget is being burned up from fighting their war in Yemen, which they are losing badly. Dozens of their Blackwater Mercenaries were killed in a missile attack last month, the Yemeni rebels captured one of their military bases two weeks ago (within Saudi territory no less), and last week Yemeni forces managed to capture over a hundred Saudi soldiers.
This is a regime that rules with fear and oppression. How can they do that when their own military can’t beat an insurgency in their own backyard? When the handouts and bribes grind to a halt, and their population is sick and tired of being dominated by the Saudi family, how long do you suppose it will take for them to rebel?
And on top of all that, Saudi Arabia is faced with a severe water crisis. They’re heavily reliant on underground aquifers that aren’t renewable, and they use more water per person than in many Western nations (in fact, twice as much as the average person in the EU). They could run out of water in as little as 13 years. This has prompted the Saudi regime to start taxing water for the first time, partly due to the water crisis, and partly due to falling oil revenues.
As you can see, there are a lot of existential threats bearing down on Saudi Arabia. Their proxy wars with Iran are bleeding their coffers dry just as oil revenues have reached record lows, their oppressed population is restless, they can’t meet the demands of their gluttonous elites, and they’re facing a nationwide environmental disaster that could grind everything to a halt.
In short, one of America’s strongest allies in the Middle East and the linchpin of the petrodollar, is facing a complete collapse, and it may happen within a decade. This could lead to chaos in the Middle East, and would have huge ramifications for the global economy. And at the end of the day, there really isn’t anything that can be done to stop it.
The state of Ohio is oftentimes referred to as the home of American presidents; Saudi Arabia appears to be the home of murdering Islamic terrorists.
Like the rest of the Muslim middle east, Saudis don't build anything, they contribute nothing and anything they have is because some Europeans came along, asked "who's in charge here? Hey, you! Wanna be rich? Take this money and keep the other tribes away while we drill the oil you have no idea is there." And the House of Saud was created.
Oh, and that would be different from the chaos that exists there now, and has existed for the last 50 years?
I studied Saudi Arabia extensively while getting my MBA. My goal was to become an expert for the company I worked for, which had operations there. I discovered that the royal family, now counted in the thousands, is hanging on to power by a thread. They use a secret police that would have made Heinrich Himmler green with envy. They control most of the levers of power. At the same time they finance virtually all of the religious schools which turn out students who, when the look around them, live in nothing like the world they are taught is the one and only world to live in. In my opinion, the entire society is unstable and ripe for self destruction.
While planning my escape from the country should things go badly, I decided that maybe working there was not such a good idea. I’d be amazed if the current Saudi government is still here twenty to fifty years from now. The big problem with the government is it can not change. If it appears to adopt newer modes or western notions it will be torn apart by its self-manufactured true believers. Change is not allowed in Islam.
Boohoo. The Saudis, sponsors of terror all over the world, keeping women in a status lower than animals, garner no sympathy from me. Let them pawn a few of those moon-sized rocks from the rings on their fat fingers.
If Saudi Arabia implodes (if the US allows them to collapse) we are in an Armageddon situation.
The regime has been stable due to her main export all these years, oil. Currently the Kingdom is under attack on all fronts by Iran and her proxies.
Iran seeks to take over Saudi Arabia and gain control over the Holiest Islamic sites, Mecca and Medina. IF THIS HAPPENS the entire Middle East with fall like a house of cards to a nuclear Iran, Hizbollah and more importantly, Russia and China.
During the Obama administration, all of America's allies have been abandoned, including Saudi Arabia and the last player, Israel.
If Saudi Arabia folds, Egypt will fold and if Egypt folds Israel will be with it's back against the wall. Then the “Samson Option” will come into play.
It is no wonder that Israel, Egypt, Jordan, Saudi Arabia, the Gulf States and many others are banding together in the absence of any coherent and normal US Foreign Policy.
If any of it becomes reality then the migrant crisis unfolding is just the first page.
I get dibbs on the oil.
But they need it at about $100 a barrel in order to keep their top-heavy bribeocracy going.
Saudi is a classic example of how unstable extraction economies really are. We may see the city based on seven mountains fall in our lifetime.
For all the nations have drunk of the wine of her immorality, and the kings of the earth have committed acts of immorality with her, and the merchants of the earth have become rich by the wealth of her sensuality.
Nuke it from orbit. It’s the only way to be sure.
The Saudi way of doing things sounds eerily similar to the business/political model of a fundamentally transformed America.
whatever happens in Saudi, can we, the USA, stay out of it?
Is this so different from the U.S.? Is it so different from any aging government body? Like the old Roman Republic; those seeking power figure out the quickest way to that power are handouts to the public. Power concentrates at the top. The lower classes swell; fueled by bread and circuses. The productive middle class is hollowed out and made irrelevant to those in power. Serfdom returns with a tiny ruling class and a vast, subservient populace relying on crumbs from their lords.
I saw the near tantrum the Saudi prince threw about the Keystone pipeline and our shale gas efforts. I truly believe they influenced our administration into killing it and are undermining our abilities to be self-sustaining and free of Middle East oil, hence the oil price collapse. They crash the price as oil to kill off our industry, just enough to not kill off theirs. It’s costing them in this effort and prices are beginning to rise.
But the observation that they are losing to nearby insurgencies is troubling. They are weak. S.A. would be a huge ‘get’ for the likes of ISIS. As we’ve seen where these leaders get toppled, ISIS has filled the vacuum each time.
Good post, thanks. I spent a lot of time in Saudi. The author describes the place to a T. We seem to be approaching days where Biblical prophecy comes true. I wonder how all of this figures with Psalm 83 and also Daniel.
I worked there in the 80s. I was all over the country. Made several trips there in the 90s. You and I can explain to folks all day but till you spend a bit of time there and get the “feel” it means nada. From Jeddah to Dammam the country reeks an atmosphere that can only be explained as spooky. The religious police, the Wahabis and the Shi’ites...then there are the southern tribes. Rumors of the fall of the House of Saud have been going on for decades but this time they may be true.
Good summary. They also had one of the fastest population growth rates in the world...meaning a lot more mouths to feed and people to muzzle.
But overall, the Royal Family does hang on by a thread. They were nearly toppled in 1979 (I think) in the Mecca attack - very nearly toppled, and it will take only slightly more organization than the Cologne New Year’s Eve mob to put their entire family in front of firing squads.
America shouldn’t have destroyed Saddam Hussein!
It is true he was a despot, but he was the glue that held the middle east in relative peace and protected Jews and Christians alike from being murdered.
Bushes I and II had to know this, but they allowed their minds to be clouded with conglomerate interests and therefore will go down in history as liars. Further, their actions paved the way for the Obama catastrophe.
At present, due to Obama’s imbecilic treachery and love of the Koran and ‘the pretty call to prayer’ the middle east will remain a muddled and highly dangerous place. The actions of these three ‘leaders’ have further exacerbated the dilemma by encouraging the infiltration by government fiat of millions of young, insane Muslims into western societies.
Nope, we are essentially tied to it. Excrement will hit the fan worldwide.
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