Sunday, October 25, 2009

The break-up of the Saudi Kingdom into dozens of Tribes with Flags is about to begin in earnest....

Geopolitical risk is rising alarmingly for Saudi Arabia in the autumn of 2009. The civil war in Yemen has escalated into a national security nightmare for Riyadh. Hezbollah has once again checkmated Saudi ally Saad Hariri, the Prime Minister designate of Lebanon.

The US, mired in recession and Obama’s health care reform, plans to withdraw troops from Iraq, exhibits no real enthusiasm to pressure Israel to halt its settlements or forge a credible military deterrent against Iran’s nuclear programme. Saudi Arabia distrusts the ruling cliques in both Baghdad and Damascus. Meanwhile, Saudi Arabia has faced setbacks in the international oil, money and banking markets that will force Riyadh to roll back its traditional cheque book diplomacy, the fabled “riyal politick”.

The civil war in Yemen has fast replaced Iraq and Lebanon as the high stakes focus of Saudi diplomacy. Saudi troops once fought for the ousted Yemen royalist cause against Nasser’s Egyptian expeditionary force in the 1960’s, and Riyadh was horrified when South Yemen, with its capital at Aden, emerged as the only Marxist Leninist state in the Arab world. Saudi Arabia did its best to support conservative Sunni tribes in Yemen and the military regime of President Ali Abdullah Saleh after the collapse of the Aden regime in the early 1990’s. Yet the Yemeni government now faces a full-scale civil war in its northern Saada province with a Zaidi Shia tribal revolt that seeks secession. Yemen, like Iraq and Lebanon, has emerged as a de facto proxy battlefield for Saudi Arabia in its struggle against Iran for strategic preeminence in the Islamic world.

The Yemeni government has formally accused the Iranian government and Muqtada Al Sadr’s Jaaish Mehdi militia of supplying cash and weapons to the rebels. Iranian state media, in turn, has alleged that the Saudi Arabian air force participated in air strikes against the rebels.

Overt Saudi military intervention in the Yemen civil war, as in the 1960’s, is not unthinkable if President Saleh’s government fails to destroy the rebel militias. It is not coincidence that Yemen has also replaced Afghanistan as the global epicenter of Al Qaeda terrorist attacks against the kingdom. A Yemeni Al Qaeda suicide bomber almost assassinated Prince Mohammed bin Nayef, Saudi Arabia’s Deputy Interior Minister, in his Jeddah palace. Al Qaeda operatives have tried to bomb the US embassy in Sanaa. The kingdom’s risk calculus in Yemen is fast turning into a domestic and border security nightmare. Iraq has once again emerged as a major geopolitical threat to Saudi Arabia now that Barack Obama has decided to accelerate the withdrawal of 130,000 American troops. Saudi Arabia distrusts Prime Minister Nouri Al Maliki’s Daiwa Party, whose ideological progenitor was the same Iranian Revolutionary Guards (Pasdaran) that once fomented riots, bombings and subversion in Saudi Arabia’s eastern province in the 1980’s. The prospects of a precipitate American withdrawal and a sectarian civil war in Iraq is a national security threat for Riyadh.

The Saudis have historic relationships with the tribal confederations of Anbar and Diyala provinces, the seat of both insurgent ex-Baathists and Al Qaeda’s franchise in Mesopotamia. The Iraqi government clearly does not want an American or Saudi diplomatic rapprochement with Syria, the diplomatic fault line of the Arab world.

Saudi diplomacy has been frustrated in Lebanon and Palestine, no less than in Iraq. Similarly, a political vacuum in Lebanon is entirely inimical to Saudi Arabian interests.

Saudi Arabia is convinced that Syria and Iran will use Hezbollah’s status as a quasi-sovereign militia. Despite agreements in the presence of King Abdullah and Crown Prince Sultan at Makkah, Fatah and Hamas fought a bloody fratricidal war in Gaza and have still not developed a modus vivendi, despite Israel’s brutal military blitzkrieg last December. The election of the far right Likud politician Benjamin Netanyahu has frozen Saudi-inspired progress on an Israeli-Palestinian peace settlement ever since King Abdullah floated his historic peace plan in 2002. A stalemate in the Israeli Palestinian conflict and American inability to pressure Likud hurts status quo Arab powers like Saudi Arabia, Jordan and Egypt.

Lastly, international oil and financial markets have suddenly turned riskier for Saudi Arabia. Russia has overtaken Saudi Arabia as the largest oil producer in the world. The Kremlin took advantage of a classic free ride after Saudi Arabia engineered a 4.2 million barrel price cut, the biggest in the history of OPEC. The kingdom can no longer hope to attract the $500 billion in foreign investments and credit into its six economic free zones because of the global recession. The UAE withdrew from the GCC monetary union. The $16 billion owed to international banking syndicates by two feuding Saudi conglomerates (Saad, Al Gosaibi Groups) can well trigger another credit crunch in Saudi banking.

The collapse of the dollar since March decimates Saudi Arabia’s offshore wealth invested in US Treasury bills, a $400 billion hoard exceeded by only China and Japan. Saudi Arabia will post its first budget deficit since the oil crash of the late 1990’s. Saudi Arabia’s role as a financial superpower is correlated with its power and influence in the geopolitics of the Arab and Islamic world. Riyal-politick is no longer feasible on a lavish scale for Riyadh. The kingdom faces an autumn of risks.