THE STRATFOR WEEKLY
30 January 2004
Saudi Arabia: A Balancing Act
Summary
The Saudi government continues to try to regain its footing after
shifting relations with the United States brought on by the Sept.
11 attacks and, more concretely, the war in Iraq. The government
faces internal pressures from al Qaeda-related militants and also
from broader sectors of Saudi society, while external pressures
from the United States continue. Several incidents this week
exemplify this ongoing balancing act by Riyadh: the awarding of
natural gas exploration contracts to four non-U.S. firms, the
withdrawal of diplomatic recognition by the United States for 16
Saudis attached to the Saudi Embassy in Washington and the deadly
shoot-out with militants in Riyadh on Jan. 29.
Analysis
As Stratfor has pointed out on several occasions, one of the key
goals of the U.S. war in Iraq was to put increased pressure on --
and effect change in -- Saudi Arabia, an erstwhile ally that is
also the focal point of al Qaeda. That pressure was felt and
started to yield results even before Washington sent troops into
Iraq, but the level and pace of cooperation from Saudi Arabia did
not, and does not, match Washington's desires. This is less a
factor of pure intransigence on the part of Riyadh than it is the
reality that the Saudi regime faces at home -- a population that
in many respects is much more sympathetic to al Qaeda -- and its
ability to make at least a show of projecting Islamic power --
than to the ruling regime.
For the Saudi leadership, directly challenging the potential al
Qaeda threat is as dangerous as NOT acceding to U.S. pressures --
and perhaps even more so. The Saudi government long dealt with
challenges to its rule from more ideological Islamist elements by
redirecting and "exporting" Wahhabi militancy. This not only
expanded Saudi Arabia's reach abroad -- giving it an additional
tool beyond oil for influencing foreign nations -- it also kept
the pressure off of the regime itself, which was seen more and
more as growing corrupt and moving away from the true faith. The
latter impression represented a significant challenge to the
House of Saud, which to a large degree draws its legitimacy from
remaining the custodian of the holy cities of Mecca and Medina.
When Riyadh brought the U.S. military into the country at the
time of the first Iraq war in 1991 to stave off a fate similar to
Kuwait's, the overwhelming perception of an imminent threat drew
broad understanding from the populace. But the public mood
changed after the war, when the extent of the death and
destruction in Iraq became apparent and the blame was passed
through the U.S. forces to the House of Saud, which invited them
in to begin with. The retention of the U.S. bases in the country
added fuel to the fire of those opposing the regime who used the
U.S. presence as a rallying point and an example of the
disloyalty and deviance of the Saudi regime, which opponents said
sullied the sacred soils of Saudi Arabia with U.S. military
personnel.
From its start, al Qaeda eyed regime change in Saudi Arabia as a
way to rectify the perceived lack of strong Wahhabi leadership. A
key step toward achieving this goal was the removal of U.S.
forces from the country. As long as the U.S. military had a
strong presence in Saudi Arabia -- something not only justified
by the continuing threat from Iraq, but also encouraged by Riyadh
for its own security -- al Qaeda had little chance of staging a
popular uprising in the face of the combined power of the Saudi
leadership and the U.S. military.
For Riyadh, then, the presence of U.S. forces was both a saving
grace, staving off internal and external aggression, and a source
of danger, contributing to domestic opposition to the regime and
to the rise of domestic militancy. The resulting internal threat
to the regime was stifled and deflected, with Osama bin Laden --
the personification of the opposition -- leaving the country and
targeting U.S. military facilities and operations abroad.
After Sept. 11, however, the Saudi government's combination of
repression, redirection and overlooking al Qaeda and its
supporters at home was no longer acceptable to the United States.
Washington made it clear that there were only two categories of
nations: those in support of the United States and those in
support of the terrorists. Straddling the line was not a choice.
While countries like Iraq, Iran and North Korea took on the label
of the Axis of Evil, the subtler but more important pressures
were directed at the also-rans: Saudi Arabia, Syria and Pakistan,
with another eye abroad on Indonesia. But chief among these was
Saudi Arabia, at the very heart of Islam, the Middle East and al
Qaeda.
For Washington, complete cooperation from Riyadh is necessary not
only to deny material and moral support to al Qaeda, but also to
shape the actions and decisions of other Islamic states in the
region. In Riyadh, it was clear that, while the U.S. government
did not necessarily want the regime to collapse, it had little
patience for such excuses as the Saudi government slowly
addressing the al Qaeda threat. The withdrawal of U.S. forces
from Saudi Arabia, an easy decision on Washington's part once it
had access to Iraq, was used by the Saudi regime as a way to
balance the increasing crackdown on al Qaeda and its supporters
domestically.
By being seen as ousting the U.S. military, Riyadh hoped to
regain the moral authority in the kingdom and minimize the
backlash from targeting militants. But the removal of U.S. forces
also removed some of the security from the Saudi regime,
something officials knew they could not replace. The catch-22 for
Riyadh continues as the government tries to assure its own
survival while balancing internal and external pressures. If
Riyadh is too quick to act internally, it could create a
situation where the government itself becomes the physical target
of militants. If too slow, it allows the militants to recruit and
gain strength for a future move against the government -- or it
encourages the United States to take punitive action against the
regime and potentially even prepare to take maters into its own
hands.
Each move against militants both internal and external, then, is
carefully matched with some sign or symbol to the people of Saudi
Arabia to try to retain the respect and authority of the
populace. Thus the regime must find ways to counteract other
domestically unpopular but internationally necessary moves, like
the recent decision to end support for Chechen militants.
Riyadh's distribution of natural gas exploration and production
contracts during the week of Jan. 26 is part of this
counterstrategy. On Jan. 26-28, Riyadh parceled out the rights to
explore three new natural gas exploration zones (A, B and C), two
of which are in the Rub al-Khali, or Empty Quarter. The goal is
to help fuel domestic energy needs and allow the export of an
even greater percentage of Saudi oil production. The opening of
the natural gas sector, seen by many foreign energy firms as a
stepping-stone to openings in the more lucrative oil sector, had
been in negotiations with major U.S. energy firms for years.
Talks dissolved over differences in access and revenues, and were
tainted further by degrading relations between Riyadh and
Washington.
When the new exploration concessions were finally announced, U.S.
companies were conspicuously absent from the list. Instead,
Russia, LUKoil, China's SINOPEC, Italy's ENI and Spain's Repsol
won the concessions, with the Chinese and Russian firms each in
direct partnerships with Saudi Aramco in their respective zones
and the two European companies sharing the third concession with
Saudi Aramco.
Riyadh's decision to go with LUKoil and SINOPEC, which have
little experience in natural gas operations, appears to defy
traditional economic considerations. Even the decision to give
one block to ENI and Repsol, which can handle the task easily,
seems a less viable option than handing the contracts to larger
firms like Royal Dutch-Shell, ChevronTexaco or ExxonMobil. The
choice of partners is clearly politically motivated, and the
message is clear -- Saudi Arabia is not a tool of the United
States and its energy resources are not falling into U.S. hands.
It is the direction of the message -- to the people of Saudi
Arabia rather than to Washington -- that is interesting to note.
Years-long discussions with U.S. firms were already faltering,
and Riyadh expects little blowback from Washington on this.
Instead, in order to preserve a sense of internal legitimacy and
(they hope) stability, Riyadh is willing to trade economic
viability and technical expertise for symbolic partnerships.
Both Russia and China are seen in Saudi Arabia and elsewhere as
the key competitors to Washington in the realm of international
foreign policy. By offering them access to the gas fields, and
excluding U.S. and British firms, Saudi Arabia is signaling --
and even flaunting -- its resistance to U.S. pressure. As a
trade-off, Riyadh expects Moscow and Beijing to offer support in
the international arena and dissuade any U.S. move or excessive
pressure on Saudi Arabia. From the Saudi viewpoint, it does not
hurt to have two key friends permanently in the U.N. Security
Council should Washington try to retrace its Iraq path in Saudi
Arabia.
Russia and China are both quite happy to oblige the kingdom: They
will gain access to Saudi Arabia and experience in natural gas
operations. LUKoil, for example, is particularly satisfied given
its -- thus far -- unsuccessful bid for offshore natural gas
operations in Venezuela. LUKoil already plans to pump $200
million into the operation in Saudi Arabia over the next five
years, and hopes for a 15 percent return on investment. More
important for LUKoil, however, will be the knowledge gained in
the operations. SINOPEC also will gain experience and hopes to
parlay the gas explorations into future access to the Saudi oil
sector. For Beijing and Moscow, there is the opportunity to gain
an additional presence in the region.
But as the Saudi government tries to balance its international
relations and maintain internal cohesion, Washington continues to
remind the regime of U.S. goals in the war against terrorism, and
the desired assistance from Riyadh. In a clear message to Riyadh,
Washington revoked the diplomatic status of 16 Saudis and asked
them to leave the United States. The Saudis reportedly were not
working on the embassy grounds, but instead "teaching Islam
outside the embassy and therefore not entitled to diplomatic
status," a U.S. State Department official told AFP on Jan. 28. In
the past, such issues would be quietly ignored or quietly
discussed. Instead, Washington publicized the issue, complete
with declaring the 16 Saudis persona non grata.
The message from Washington is that the window of acceptable
activity by the Saudi government is narrowing, and previously
overlooked infractions are now inexcusable. While this was a
minor diplomatic incident, it clearly has deeper significance
given the current state of relations between the two nations. As
Iraq nears a state of nominal stability, Washington will begin to
set its sights farther afield to maintain the offensive in the
fight against al Qaeda. Already there is talk of a new offensive
in Afghanistan, perhaps to pre-empt an expected offensive by the
Taliban and keep the militants on the defensive during the
upcoming elections. But other locations, from the Horn of Africa
to Syria to Saudi Arabia could fall under U.S. sights, and Riyadh
will carefully gauge its reaction to the diplomatic dustup to
remain just outside the U.S. area of operations.
At the same time, Riyadh continues its internal crackdown on
militants and has stepped up operations as the country fills with
Islamic pilgrims performing the Hajj. A shoot-out with suspected
"major" terrorists in Riyadh on Jan. 29 left at least five Saudi
security officials dead after a raid on a suspected militant
hideout. The raid comes amid concerns that al Qaeda could stage
operations during the Hajj against Western or government targets
in the country, or will use the influx of pilgrims to recruit and
network.
For Riyadh, then, pressure is only mounting at this time: A
failure to act internally is just as potentially dangerous as
action. Riyadh has few places to turn for assistance and respite.
While Moscow and Beijing certainly will take advantage of the
Saudis' tough luck, there is little chance at this time that they
would come to the kingdom's aid physically should internal
cohesion fail or U.S. forces move. The Islamic world remains
fractured, with former pariahs like Libya handing over nuclear
materials to the United States, and Iran negotiating backroom
deals with Washington. Al Qaeda is apparently resetting its
sights on the royal family as well.
How long the leadership can juggle these issues is unclear, but
what is apparent is that a deep-seated crisis is boiling in Saudi
Arabia -- and there is little sign of the heat being turned down
anytime soon.
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