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.
-Now that we have assured the Iranians of a path to nuclear weapons, how does that affect the ambitions of the Saudis?-
The Saudis have strongly implied they simply bought Pakistani nukes. There has been no denial on the part of the Pakistanis. Once Iran has the bomb they will use the estimated 30-50 thousand mines to block the Saudis in. Without the constant cash from oil sales the Saudi regime, which pays its citizens for simply not revolving, will collapse. This is the genesis of the Syrian revolt. Saudi Arabia wanted a pipeline to the Mediterranean. But Obama abandoning Iraq and then meddling in Syria has stymied that plan. The Saudis probably will not use nukes first, but as the regime becomes less stable they probably will. I have always thought that the first use by Muslims will be against other Muslims.
-Question: Do the rulers of Saudi Arabia defer to the religious leaders of Saudi Arabia as a political necessity or out of devotion to Islam?-
The Saudi king is the titular head of Islam. What he says goes. However, what he says had better conform to the broad view of what other Muslims think or he will be assassinated. One telling example of the hypocrisy occurred when a Saudi official who was advising suicide bombing against American troops got home one day to discover that his son had left a note saying he was off to Iraq to martyr himself. Dad got on the phone and had the secret police arrest his son before the boy could cross the border. Suicide bombing is for the unwashed masses, not the elite princes. This was widely publicized at the time and probably did not sit well with the masses. There must be a lot of pent up resentment which is only held at bay by the state paychecks.
-Would you agree that the Saudi Royal family knows it has an expiration date on the Arabian Peninsula and is the reason they are so heavily invested in global real estate, particularly in Switzerland and other perceived safe-havens?-
There are thousands of princes. Some will flee. Some are already living abroad. Some will probably try to stay and fight it out. After the fall, assuming a strong man government comes to power, the princes who fled will face legal action as the new government attempts to collect the stolen wealth. Most of the world, probably hungry for oil, will cooperate. Also, depending on what sort of government comes to power, the princes may be hunted down like Stalin hunted Trotsky.
-What will the collapse look like?-
Some will flee. Some will fight. Some of the army will remain loyal but large portions will join the rebels. It will look very much like Syria, but without a Russia or Turkey it will be less active and shorter than other civil wars in the region. Likely, Iran will occupy and massacre large portions of the populace. There is not much to eat there so starvation will be the rule.
The Saudis would be deposed within a year of their stopping support of radical mosques and schools. They need SOMEPLACE to send the radical clerics who graduate from their Islamic universities every year.
The Saudis export radical Islam in order to buy time for themselves -- and they are running out of both cash and time.
Radical Islam would collapse without cash support. You think the radical Imams in the mosques work a real job to make money (or COULD work a real job)? You think the congregation could support the mosque and imam by their own tithes?
Take away the money, the money that supports the mosques, the Western welfare money that lets illiterate Third Worlders survive in the West, and radical Islam would collapse quickly.
So many nations have all their eggs in one basket.
How ironic that we have so much oil that prices are plummeting worldwide. For decades, the alarmists have been telling us we were going to run out of oil by 1990, or 2005, or 2020, and that we better start building windmills and riding bicycles.
Yes, the same people who are warning us now about ‘global warming’
Like the difference between a breeze and a hurricane?
“The Saudis would be deposed within a year of their stopping support of radical mosques and schools. They need SOMEPLACE to send the radical clerics who graduate from their Islamic universities every year.
Radical Islam would collapse without cash support. You think the radical Imams in the mosques work a real job to make money (or COULD work a real job)? You think the congregation could support the mosque and imam by their own tithes?”
Sounds like a plan. There was a time when we needed saudi oil to keep our economy running so we tolerated Sauid supporting the spread of Wahhabism and OPEC price fixing oil at sky high prices. Our Presidents deferred to and protected them even after their nationals planned and executed 9/11. We fought wars in the M.E. that cost American lives, money and our reputation in the region to protect them.
We no longer need Saudi oil so its time to let the House of Saud come to an end. The only problem is what to use to counter Iran. Iraq under Saddam did that nicely but that is gone thanks to Bush and Oburka.
Depending on the time of year, my celebration will either be an outdoor barbeque(pork, natch) or a nice holiday ham if I have to celebrate indoors. Either way, champagne will be served. I'll make more detailed plans when we get closer. In the meantime, popcorn.
Who gets Mecca?
My vote would be to nuke Mecca. Reduce it to a glowing hole in the sand.
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.
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