The House of Saud is stronger than ever

Last night, the BBC’s Newsnight broadcast a skit about the impending collapse of the Saudi economy. The flagship show’s diplomatic editor, Mark Urban, provided grim narration to each new set of figures. The mood music suggested it was not unreasonable to expect four chaps on horses riding over the hill, and fiscal armageddon playing out before the end of the year. One slide showed that the Saudi government’s cash reserves had now dropped to $650 billion. This, one could tell from the tone in Urban’s voice, was a bad omen.

Six hundred and fifty billion dollars. I’ll say it again. Six hundred and fifty billions dollars. Do you know what the UK’s cash reserves are? A tenth of that. How much is the UK borrowing compared to its gross domestic product? At the last count – around 90 per cent. For Saudi that figure hovers well below two per cent – the lowest such GDP-debt ratio in the world. (Compare that to the slump of the eighties and nineties, where borrowing was running at eighty per cent).

The broad thrust of the BBC’s argument was that Riyadh is spending so much on weaponry, they are going to bankrupt themselves. Yet these are purchases made at the government’s discretion. They don’t have to spend more than any other country in the world on fighter jets, tanks and diamond-encrusted rocket launchers; they’re choosing to do so. And just like that, they can choose not to – freeing up considerable amounts of spending power. And the kingdom has a second bow in her financial quiver – tax. It doesn’t really have any. At least not for Saudis.

So the idea that Saudi Arabia is going to be “bankrupt in five years”, as Al Jazeera recently put it, is fanciful. There are still plenty of levers King Salman and friends can pull to keep the show on the road.

Still, all this excitable reporting has led many to believe the House of Saud itself is going down. Without the cash, they argue, the monarchy will never be able to maintain their generous welfare state, crucial for keeping order.

After Egypt’s President Hosni Mubarak fell in 2011, within a month the Saudi government had offered up well over $100 billion dollars to their citizens in extra welfare payments. Now, the situation is very different – and such expensive measures are arguably not needed. Employment is slowly creeping up – and the government recently launched a new commission to further address the problem. Crucially, Saudi employment is now rising at twice the rate of non-Saudi employment. Then you have Saudi women getting municipal votes, that’s gone well with – well, roughly half the population.

Look around the region and you see further incentives for Saudis to resist calls for change. While Tunisia might have worked out OK, revolutions in Egypt, Yemen and Syria have resulted in poverty, hunger and butchery. The House of Saud, at least amongst the majority Sunni population, is much, much more popular than the Western media makes out. This isn’t apologism, and it’s also not a lie.

What would really happen if the House of Saud collapsed? Daesh would be there in an instant, or at least the hardcore ideologues would be. Makkah and Medina up for grabs? Abu Bakr Al-Baghdadi is chomping at the bit, as Daesh’s not-so-nuanced communications strategy makes clear.

And let’s talk about Iran. Does anyone honestly think that Iran – the shrewdest tactical thinkers in the region, the strategic dons who have got the West dancing to their tune – are really going to start a full military confrontation with Saudi Arabia? Why should they? It would invite retribution from the United States. Israel would have a crack, as they tend to when their enemies are weak (see Syria).

The Iran-Iraq war is a long time ago, but the memories are still there. Why would Hassan Rouhani opt for frontal conflict as retribution for the death of Sheikh Nimr Al-Nimr, when he can do what Iran have completely perfected, through decades of practice, painful errors and embarrassment – proxy warfare.

Contrary to perception, proxy warfare is not a case of the Revolutionary Guard ringing up the Hezbollah or Hamas headquarters and saying: “Bomb here”. It’s a complex game of paying the right commanders, identifying capable groups, ignoring boastful chancers, flattering egotists, and providing arms to the right people at the right time.

Turkey is getting better at it, Pakistan is very good at it, but arguably, the Iranians are the masters. The Saudi intelligence services are rubbish (as are the British, the Americans, and pretty much everyone else), and the Iranians know this. There is scope to up the ante in Yemen, there is scope to up the ante in Syria. There is a merry dance going on now with envoys being withdrawn, embassies being sacked by rioters – a lot of hot air that feeds nationalist sentiment but falls short of conflict. All-out war between the two countries almost certainly isn’t going to happen.

So if economic collapse is off the table, popular revolution is unlikely and invasion from Iran is still a John McCain fantasy, what else? Saudi Arabia’s biggest problem remains its Eastern Province. The execution of Sheikh Al-Nimr was an extraordinary miscarriage of justice. Even if Al-Nimr was a firebrand, killing him alongside terrorists was wrong, yet it was also never going to solve the “problem”; unrest. This was a signal to Iran that despite losing in Yemen and losing in Syria, Saudi Arabia was still strong. It was also a warning sign not to try and cheat the loosened sanctions and build a nuke. We shouldn’t mistake Saudi Arabia’s foreign policy weaknesses as evidence the kingdom is about to collapse. It ain’t gonna happen, for now.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.