Revolution in Saudi Arabia would be a 'disaster for US': memo to Obama

Dubai (Platts)--21Jan2013/908 am EST/1408 GMT

Revolution in Saudi Arabia and the possible overthrow of the ruling House of Saud would be a "disaster" for US interests while prolonged instability would cause havoc in oil markets and the economy at large while handing Iran a "strategic windfall," a former US intelligence official said in a recent analysis.

In a memo to President Barack Obama as he prepared to be sworn in for a second term in office, Bruce Riedel, senior foreign policy fellow at the Brookings Institution's Saban Center for Middle East Policy, said that while revolution in Riyadh was unlikely at this time, the "Arab Awakenings" made it a possibility.

The Saudi royal family enjoys "unique strengths and legitimacy" thanks to its alliance with the religious establishment and the king's role as custodian of Islam's two holiest shrines. "The combination of religious piety and vast revenues has so far been sufficient to stave off the kind of unrest that has shaken much of the Arab world in recent years," said Riedel, who served as adviser to Obama during the 2008 presidential campaign.

The analysis on Saudi Arabia, published on the Brookings Institution's website January 17, is part of a larger document compiled by a group of experts entitled "Big Bets and Black Swans, A Presidential Briefing Book" and contains policy recommendations for Obama's second term.

Riedel notes that Saudi Arabia, listed in the document as a black swan, is the US' oldest ally in the region and any political instability in the oil-rich kingdom would have implications not only for the US but for Saudi Arabia's Gulf neighbors, which he said could not survive without Saudi Arabia.

"Nevertheless, revolutionary change in the kingdom would be a disaster for American interests across the board. As the world's swing producer, prolonged instability in Saudi Arabia would cause havoc in global oil markets, setting back economic recovery in the West and disrupting economic growth in the East" he said.

"...the overthrow of the monarchy would represent a severe setback to America's position in the region and provide a dramatic strategic windfall for Iran. The small oil-rich monarchies of the Gulf would be endangered, as would the Hashemite Kingdom of Jordan."

Because of the US' close ties to the Saudi monarchy, its options would be limited in the event of a revolution, he said. Instead, Obama should re-establish trust with King Abdullah and urge him to move more rapidly on his reform agenda, even if the effort is likely to have limited results.

"In the meantime, you should ensure the best possible intelligence is available to see a crisis coming, put in place measures to limit the impact on the global economy of any disruption to oil supply, be ready to shore up neighboring kingdoms and sheikhdoms, and then try to ride out the storm," Riedel said, addressing Obama.

While Saudi Arabia was a "proven survivor," it faces threats from al-Qaida in Yemen while the recent Arab revolutions "pose the most severe test for the kingdom since its creation," he said, noting that the kingdom faces the same demographic challenges that brought revolution to Egypt and Yemen, namely a young population and very high unemployment.

"Extreme gender discrimination, highly restricted freedom of expression, longstanding regional rivalry with revolutionary Iran across the Gulf, and a restive [Shi'ite] minority add to the explosive potential," Riedel argued.

If an "Awakening" takes place in Saudi Arabia, it would "probably look like the revolutions in other Arab states," Riedel said, noting that demonstrations had already taken place in the oil-rich Eastern province by the minority Shi'ite Muslim population. Protests in Sunni Muslim areas closer to the capital or in the remote south near the Yemeni border would be even more problematic since they could snowball and spread across the country.

The succession issue "adds another layer of complication," he said, referring to the advanced age and frail health of both King Abdullah and his half-brother Prince Sultan, the crown prince and there is no clear succession beyond.

"If Abdullah and/or Salman both die as unrest unfolds, and a succession crisis ensues, then the kingdom could be even more vulnerable to revolution," Riedel said.

"For the United States, revolution in Saudi Arabia would be a game-changer. While the United States can live without Saudi oil, China, India, Japan and Europe cannot," he added. "Any disruption in Saudi oil exports either due to unrest, cyber attacks or a new regime's decision to reduce exports substantially will have major impacts on the global economy."

--Kate Dourian, kate_dourian@platts.com

--Edited by Maurice Geller, maurice_geller@platts.com

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