CHAPTER 11

Too Late?

Like a rotting carcass, the House of Saud is beginning to decompose. This reality is ignored by its members and, except for perfunctory and infrequent mentions of their human rights record, by their friends. As usual, the people who are the source of decay are the last to admit their inability to halt it. In the case of the House of Saud's Western friends, the creeping awareness that a crisis is approaching is balanced by a selfish desire by those governments not to identify or assume responsibility for it.

The attitudes of the House of Saud and their Western support-ers aside - for the first time ever, the Saudi Government's failures, internal, regional and international, have converged to undermine it. Most significantly and dangerously, it is the irreversible internal pressures - the Saudi people's willingness to gather under an Islamic banner and their demands for substantial change in the way they are governed - which are almost out of control.

Even with its religious police acting independently and enforcing Islamic tenets harshly and indiscriminately, the House of Saud is failing to respond to the challenge of Islam expressed by recent emergence of powerful new Islamic groups such as the Committee for The Defence of The Legitimate Rights (of the Saudi people), The Advice and Reformation Committee and many militant organizations, all of which appear to command considerable pop-ular support. And the West can provide no protection against this drift.

Nothing is happening or is being planned to stop the process of deterioration in the internal situation of the country, nothing that would remotely alter or delay its progress towards Muslim dominance. On balance, any unexpected developments, such as the death of the seriously ailing King Fahd or the collapse of one of the many major banks with doubtful balance sheets, are likely to expedite the already advanced process of decay.

There is no better way to assess the prospects for the House of Saud than to look into the not-too-distant future. The year 1997 will do; it is not too far ahead and the elements which will make it a year of crisis are already in place. By 1997 the economic and financial problems will be much worse, even if we accept the understated official figures. By then the current official Saudi debt of over $60 billion will exceed $100 billion and the country will face a serious financial crisis which will affect all aspects of every-day life. For decades, money has served to neutralize the Saudi people's anger against the House of Saud and their wish for greater freedom. The imminent financial crisis will not affect the royal family; most members of the House of Saud have hoarded huge sums of money and have demonstrated an insensitive desire to continue to live at a lavish level regardless of the effect on their people. However, to do so will simplify the social and political confrontation which already exists, and soon it will be the House of Saud versus the rest of the Saudis except for a small number of wealthy merchants. It is a classic confrontation between the haves and the have-nots. The gap between the two is already wider than anywhere else in the world.

Recent official budget figures for 1993 show a deficit of $9 bil-lion, but there is clear evidence that the real deficit is considerably greater than the government figure. Once again the government failed to include borrowing by publicly owned companies such as ARAMCO, SABIC (Saudi Arab Basic Industries) and the electric-ity and telephone companies. In addition, the government failed to fund the social security system and delayed paying for construction projects. The real deficit for 1993 alone is $15-20 billion, somewhere between 30 and 40 per cent of total government income. According to officers of the International Monetary Fund who spoke on a non-attributive basis early in 1993, this is 'dangerously non-sustainable'.

At the time of writing, the prospects for 1994 are for another serious deficit. Despite a drastic 20 per cent reduction in the official budget aimed at assuaging IMF protests and objections, the Saudi Government appears unable to implement a real austerity programme and continues its game of 'creative' accounting. 1995 and 1996 promise more of the same.

As noted, by 1997 the country's debt will be well over $100 bil-lion, more than two years' worth of its present oil income of $45-50 billion. The country's ability to borrow on the international market or locally, already in doubt, will become more difficult or disappear completely. This has been confirmed by the rescheduling of over $9 billion in foreign military sales agreed with the USA in January 1994. But the rising cost of servicing the growing debt and an annual increase of population of over 4 per cent will offset any short-term rescheduling measures and future attempts at reducing the budget.

Cuts in the budgets of all departments except defence and the royal household cannot go deeper without serious political consequences. But defence commitments, the exceptionally high salaries of military personnel, signed military contracts and the greed of commission agents preclude a meaningful reduction where it is most needed. And the family's ways are entrenched and its members' needs, however unjustified, are increasing. The continuing effects of curtailing all areas of expenditure except these two will add to the problems of Saudi business and lead to a further lower-ing of the standard of living - already down over 50 per cent from its 1982 high. The government will be crippled and the pervasive anti-House of Saud feeling will lead to open defiance in the souk and the street. Meanwhile, the West will be unable to help. The people of America and Europe are not prepared to pay to save a royal family which squanders its country's wealth - not when the House of Saud's wasteful habits are legend. The people of the West are already reluctant to help the truly needy in nations such as Russia and Egypt, and concealing from them the reality of the Saudi crisis, much as the unpopularity of the Shah of Iran was concealed, only makes matters worse.

By 1997 Saudi Arabia's defence expenditure, according to the Washington Institute somewhere between 42 and 96 per cent of its oil income during any of the past ten years, will become an unsustainable burden. The country has several multi-billion-dollar contracts with the United States, Britain, France, Canada and Brazil (F-iS and Tornado aircraft worth $15 billion, plus helicopters, tanks and armoured personnel carriers, warships, torpedo boats and radar systems) and there are dozens of smaller defence contracts. Even without new commitments - and amazingly negotiations with both the USA and UK to buy more hard-ware are in progress - the money needed to meet major contracts amounts to $29-33 billion. Along with contracts for essential everyday hardware and the inflated salaries of members of the armed forces, the cost of these major contracts will maintain the defence budget at near, or perhaps over, the present unaffordable level. And it is axiomatic that military salaries cannot be reduced during a time of crisis and internal threats to the regime.

The budget of the royal family can be reduced, but the House of Saud shows no signs of doing it or understanding the need for it, and in any case it isn't as easy as it appears. The King shows no signs of understanding what is happening, the members of the family are increasing, and more and more members of the House of Saud are coming of age and want to join the billionaire league. In addition, some of them, including the King, have incurred huge debts which must be repaid to avoid the collapse of the local banking structure, already under considerable stress because of the limited amount of funds the local banks have in the international interbank system. King Fahd reportedly owes a local bank $1.5 billion and his relatives owe further billions to other local banks. To satisfy their rapid growth in number, their greed and their debts, the House of Saud will continue to pay its members unrealistically large salaries and interfere in commerce.

Beyond defence and the royal family, the third area of potential budget reduction is that of huge government subsidies of food; petrol, telephone and electricity systems; and other public services. But the political conditions in the country render any attempt in this area dangerous and most unlikely. In fact, precedent is against such a move. There was an unsuccessful attempt to reduce these subsidies in 1992, but the resulting outcry forced King Fahd to rescind his decision before it was applied and instead he had to increase some of the subsidies to placate the people. Maintaining the present policy and current prices without adjusting them to reflect inflation means subsidies will claim a greater part of the 1995 budget than of the present one.

A fourth area where cuts could be made, aid to friendly Arab neighbours such as Syria, Lebanon and Egypt, would - if carried to an extreme - considerably endanger the governments of these countries and have adverse effects on the stability of Saudi Arabia itself. These governments, threatened by internal Islamic movements, are needed by Saudi Arabia to protect itself against Iran and the growing Islamic militancy in the Sudan and other neighbouring countries. But even if Saudi Arabia were to opt for total cutoff of aid to Arab countries, the resulting $3 billion saving would not be enough to change its overall financial situation. Moreover, the financial claims on Saudi Arabia t(~ maintain its Arab and Muslim positions are increasing. The House of Saud's policy of trying to counter the increasing radicalization of Islam will create a need for it to lend financial assistance to new countries, such as Bosnia and the former Muslim republics of the USSR.

If substantial budget cuts are not possible, the seemingly avail-able remedy would be to raise money through privatising public companies. This has been looked into and discounted; most public companies, including the flag carrier Saudia, are too inefficient to be acceptable to an already suspicious public. As we have seen, the drastic steps needed to bring these companies to a level of acceptability to investors are unpopular in nature, to the extent of overweighing the expected benefits.

This leaves the most obvious of all remedies, an increase in the production or the price of oil. Doing either is more complicated than it sounds. Saudi Arabia is already producing over eight mil-lion barrels of oil a day. An increase in production is not a viable solution except in tight coordination with the rest of OPEC because a mere increase in volume would be offset by an equal or greater decline in price. A large increase in the price of oil is possible through adhering to the pre-set OPEC price, which the other producers would welcome, but this would undermine the House of Saud's all-important relationship with America, the only thing it has going for it. The effects of a small, 'tolerable' increase in the price of oil would be marginal and, as a remedy, inadequate. Without taking into consideration the inevitability of Iraq's re-emergence as an oil producer - with or without Saddam Hussein -manipulating oil production and prices is not an option. Indeed there are signs that whatever the increase in the demand for oil, it is likely to be met by the conversion to gas. Along with the re-emergence of Iraq as an oil supplier, the possibility of OPEC over-production or of Russia and some of the former Soviet republics modernizing their facilities and increasing their output, though remote, is real.

The financial crisis I am talking about exists today, in miniature, and it has been reported widely in America and confirmed by Secretary of Treasury Bentsen. It will reach its climax in 1997; the worsening conditions in the country will lead to an increase in the number of sit-down and other protests which have already taken place and will alter their nature and lead to violent confrontations. The Islamic fundamentalist movement is growing stronger by the day, already prompting mass arrests of clerics and academics, hardly a long-term solution. The House of Saud is divided; there are too many contenders for the throne and they are placing their personal ambitions above the family's survival. Support from the loyal, Government-sponsored religious leaders has evaporated and their groups are moving towards militancy and making their own claims (it was these groups which forced Saudi Arabia to cancel its participation in the UN-sponsored conference on population in Cairo). The pro-Western new class is restive. Rising expectations among Saudis continue to outstrip the royal family's ability or wish to meet them, and unemployment among recent college graduates is over 25 per cent. These situations which, except for feuds within the family, reflect an intrinsic Saudi objection to absolutism and the resulting abuse, have already been exacerbated by a serious decline in the standard of living. According to the World Bank, the per capita income in Saudi Arabia declined from $14,300 in 1982 to $7,000 in 1993 and even lower in 1994. Elasticity in this area - how much more the people are willing to tolerate - is near its limit. There is no doubt that demands for political reform will be reinforced by the inevitable further decline in the standard of living. The people are already blaming the House of Saud for frittering away the country's reserves, which dwindled from $140 billion in 1982 to a $60 billion debt a decade later, and for producing this unhappy state of affairs.

In the Arab sphere, even with the GCC, the coming three years are likely to see a worsening of Arab-Saudi relations. Other GCC members' attempts to respond to their peoples' demands for greater participation in their countries' affairs and have already produced the usual stupid Saudi objections to such things as the relatively liberal charters of their consultative councils. As a result, the GCC's effectiveness has been undermined and two members, Qatar and Oman, behave as if they were in open rebel-lion against Saudi dominance. Syria and Egypt are bowing to internal pressures and distancing themselves from Saudi Arabia and its totally pro-Western policies. Saudi Arabia is unable to pro-vide enough economic aid to keep Syria and Egypt in line, and they worry about its refusal to act on conditions within its territory and around it. Saudi relations with Iraq, Jordan, the PLO, the Yemen, Libya and the Sudan are already bad and those with Algeria and Tunisia are lukewarm. There is little chance of improvement in Saudi-Arab relations because that would require huge amounts of money and a change in direction; the House of Saud cannot offer more money and will not change its direction. The isolation of Saudi Arabia from the rest of the Arab nations will add to the unhappiness of its people.

The problem doesn't stop there. Saudi Arabia is fighting a rear-guard action in its formerly safe redoubt, the Muslim world. The preemption of its brand of conservative pro-Western and anti-communist Islam by militant Islamic movements has turned into an immediate challenge. In particular, the Bosnian situation is making life difficult for the House of Saud: in the eyes of the aver-age Saudi and Muslim, the Western failure to protect Bosnia 's Muslims is an unfriendly act directed against all Muslims. In addition, Iran, the Sudan and militant Islamic movements in Algeria, Egypt, Tunisia, Jordan, Pakistan, Afghanistan, Malaysia and other places are opposed to the House of Saud and are gaining strength. Their appeals to the people of Saudi Arabia are meeting with greater acceptance.

Time is against the House of Saud, and it has few supporters except in the West. It is true that the West does not respond to a crisis until it is too late, and in this case, the Clinton and other administrations are reluctant to go public with their concerns and shoulder the blame for something that has been in the making for decades. Nevertheless, attributing Western support of the House of Saud exclusively to the oversight, cynicism or foolishness of Western leaders is too facile. Even Western leaders who know lit-tle about world affairs, Reagan and Clinton come to mind, have knowledgeable advisers on whose empirical judgement they rely. The consistency of Western support regardless of who is at the helm suggests that the reasons for it are beyond individual whims and shortcomings.

In the past, the Western position consisted of overlooking the House of Saud's crimes against its own people and neglecting or encouraging its attempts to weaken the Arab and Muslim worlds. Support for the House of Saud was seen as producing results which outweighed the results of withholding support. This Western position must be re-examined, not only in terms of the overwhelming and increasing human misery it causes but also by assessing it against the failure of the House of Saud's internal, Arab and Muslim policies. The overwhelming ethical considerations aside, now there are equally overwhelming practical reasons for the West to change direction.

We should examine, however, the arguments behind the Western attitude. Oil, and what might happen to it were the House of Saud to fall, underlies the argument for the West's continued support of the House of Saud. The present dependence of the West on Saudi oil - it accounts for 25 per cent of US oil imports - would have surprised even Harold Ickes, the man who first foresaw it. Not only does the House of Saud guarantee the flow of huge quantities of oil at a reasonable price, but Saudi Arabia acts as an OPEC policeman, using its colossal oil reserves and its ability to produce so much oil so cheaply to force other producers into line.

As proven by Iran's militant Islamic government, however, there is no substitute for selling oil to the industrialized world. A change in the Saudi Government therefore, even to an Islamic rev-olutionary one, would not result in a complete cut-off of oil. What needs to be considered is the temporarily disruptive effect a take-over of the Government of Saudi Arabia would produce and what would follow in terms of oil prices. The odds are definitely against a take-over in Saudi Arabia producing a government as accommodating as the present one, and any assumption of power by Islamic forces or a combination of forces more accommodating to Islamist thinking will produce adverse effects on prices. Moreover, the use of the oil weapon to influence the policies of the Western world would in all probability ensue. An Islamic regime or one responsive to Islamic movements would not need Western support to survive. This is why the West prefers a pliant House of Saud.

In opting to support the House of Saud, Western leaders also take into consideration how a new government might affect the stability and unity of Saudi Arabia. Some accept that the House of Saud is to blame for following policies which perpetuated regional divisions within the country but believe its members to be committed to national unity and able to assert a functional if brutal authority. By contrast, there is fear that a new leader or ideology might cause enough turmoil to lead to a splintering of the tribal and religiously divided country into troublesome smaller states.

A third consideration is what the demise of the House of Saud would do to regional stability. Western leaders view the House of Saud as a moderating influence on the whole Middle East. They equate the potential disappearance of the House of Saud with regional instability and the spread of anti-Western radical movements. Furthermore, there is awareness that no one would be able to assume Saudi Arabia's moderating role.

Fourthly, though its Muslim policies have been discredited and overtaken by independent Islamic movements (including many radical ones), the House of Saud is seen as playing within Islam a role similar to its regional Arab one. Western leaders believe that a radical Islamic regime in Saudi Arabia could use Mecca and Medina to provide leadership the House of Saud failed to assume, with untold consequences.

Of course, the Palestinian problem, and Jerusalem in particular, and an out-of-date perception of what the absence of the House of Saud would do to reinvigorate the Arab will to do battle with Israel are major factors. The United States still believes other Arab countries would find it difficult to support any peaceful solution to the Palestinian problem or normalization of relations with Israel opposed by Saudi Arabia. In this case, they see Saudi Arabia as a swing decision-maker.

The above considerations were relevant to the West's support for the House of Saud at one time, but are they still? The simple answer is that they used to be relevant in terms of power policies but they stopped being so in 1992-3. Continuing to support the House of Saud is becoming more and more counterproductive. Time has run out on all the reasons for such support. The benefits of continuing to ignore the rights of the Saudi people and of subordinating the nation's oil policy to the House of Saud's wish to stay in power are cancelled by the monumental internal pressures against its members' abusive ways and low oil prices. The House of Saud will have to respond to these pressures or be toppled. Saudi Arabia's ability to influence Arab and Muslim countries is at or near its end. The House of Saud is no longer able to provide the Arab and Muslim leadership role which guaranteed Western support in the past. Saudi Arabia's involvement and influence on the Palestinian problem is marginal.

The Saudi people are determined to participate in the running of their country, to break the royal monopoly on power, stop the waste of the country's wealth, reform the judiciary and determine foreign and other policies. They do not want their oil used to bribe the West. They want an ordinary consumer-supplier relationship unencumbered by the personal interests of unpopular rulers. There is no Saudi taxi driver, teacher, religious leader, mer-chant, student or anybody else who sees the present oil policies as anything except an expression of the House of Saud's selfishness and detrimental to ordinary Saudis' welfare. The people see proper management of the country's oil resources as the way to their salvation, and the rising internal pressures on the House of Saud to change its oil policies have reached the point of no return. Either it changes them or it will face a popular uprising. The West's belief that it can keep the House of Saud in absolute power is wishful thinking. The West cannot occupy Saudi Arabia. It is not feasible and the problems it would create are greater than the ones it would solve.

The growing financial crisis will unite the people, focus their attention on these policies and create a wish to punish the leaders responsible for them. The role of the House of Saud as a unifier of the country, one of the few credits it can claim, is not enough to guarantee the loyalty of the people, and in any case many Saudis see the royal family as performing the opposite role, as a divider of the country. They see the separatist movements as protest movements against the House of Saud which would disappear with its demise. There is no way for the West to deny the legitimacy of the calls for change by the Saudi people.

The House of Saud's ability to influence Arab and Muslim policies is already a myth. The only influence it has left is with a small number of countries and this is vanishing along with the ability to afford the price of buying their loyalty. Moreover, the Saudi dependence on unpopular leaders - as demonstrated by its recent telling failure to divide the Yemen through bribing the South Yemeni leadership - has its limits. There is a lack of responsive-ness to Saudi ways because the countries involved are finding it harder to resist the demands of their own people to separate themselves from the policies of the House of Saud, and its behaviour. The same is true of the Muslim world. Within a short time, unless there is a change, Islamic movements in the Arab and Muslim worlds will be in a position to help overthrow the Saudi monarchy.

The effect the overthrow of the House of Saud might have on the Palestinian problem is exaggerated. Lack of funds means it exercises little influence on the situation now, and the Palestinians themselves have accepted the principle of a reasonable, peaceful solution to the problem. Rather than worry about what might happen, the West would do better to push harder for a resolution of the details of this problem with the direct participants with the aim of eliminating it as a source of Arab-Western and Muslim-Western friction.

There are now practical reasons for Western leaders to recon-cile their belief in human rights with their realpolitik interests. Continuing with present Western policies is leading to disaster. Except for John Kennedy, no Western leader has ever seen the inherent long-term damage that depending on the House of Saud causes to Western interests. Only Kennedy tried to guide the House of Saud toward more sensible policies which would guarantee its survival and make it a suitable partner and an acceptable deputy sheriff guarding Western interests. It is because the blind support provided by the West since Kennedy has backfired and been abused that the reasons for it are no longer valid. In other words, the reasons for supporting the House of Saud have destroyed themselves. Now the danger is not adopting new policies.

Because it is almost too late, the West needs to take drastic, immediate action - nothing less than a total reversal of policy. This is the only hope of stopping the assumption of power in Saudi Arabia by a militant Islamic regime that, like Khomeini’s Iran, would want to punish the West for its past mistakes. And while the results of the West attempting to distance itself from, and force changes upon, the House of Saud are both far from guaranteed politically and likely to produce temporary economic discomfort, the alternatives make the gamble worth taking. Trying to change the House of Saud leaves the West with options that include building bridges and encouraging the country's moderate Islamic movements at the expense of the militancy of the others. There are major Islamic elements which advocate dialogue with the West and discoursing and finding common ground with them is preferable to the wholesale demonization of Islamic movements. The present inaction helps the militants and encourages the House of Saud to maintain its repressive policies.

Steps must be taken - in short, forced on the House of Saud -to bring the present financial chaos under control. These steps must include introducing controls on the most obvious ways the country's wealth is being abused (the colossally wasteful habits of the royal family and the Ministry of Defence) and allowing Saudi Arabia to increase its oil prices. Reducing the level of armament procurement and a higher price for oil would affect the Western economies in the short term, but they are needed to appease the Saudi people. The money realized for Saudi Arabia from these moves must be rechannelled into projects aimed at improving education and health care, seeking alternative sources of water and maintaining the infrastructure of the country.

The West must force King Fahd to form an independent consultative council or another para-parliamentary body that would have real legislative powers. This would replace the present one, which reflects his will and pays little attention to the grievances and desires of the people. Religious discrimination against the Shias must cease. The monopoly of political power by members of the royal family must cease and so must their Government-supported involvement in trade. Above all, all Islamic fundamentalist movements must be dealt with as a political expression of anger rather than a collection of unreasonable fanatics whom the House of Saud and the West want to eliminate.

The process of succession must be organized and subordinated to the pressing needs for reform. The two princes in line to succeed Fahd, Abdallah and Sultan, are unfit for kingship, too old (in their 70s) to carry out the needed reform and should be forced to forgo their positions. And while the succession process after that is unclear, with many princes running for king, this potentially destabilizing situation should be manipulated. A 'Mr Clean' from within the ranks of the family, perhaps the relatively young Foreign Minister Saud Al Faisal, should be elevated to crown prince, and his ways, rather than Fahd's or the older generations', should prevail. After skipping to a representative of a new generation, the unwieldiness of the succession process must give way to a system which values talent above all other considerations.

Enforcing these measures is a tall order. Above all, it calls for massive interference in Saudi internal affairs. But this is not as novel as it sounds: the West already tells Saddam Hussein how to behave towards his Shias and Kurds and it tells Egypt and other countries how to manage their financial affairs. In addition, such interference is totally manageable, for the House of Saud cannot do without Western support nor can it resist by turning to other powers for help. Furthermore, it cannot punish the West by with-holding its oil because that would hasten the financial crisis and expedite the royal family's demise. Last but not least, taking a chance with a corrective programme is a better long-term defence of the supply of oil than the present policy of securing it through a regime which threatens to self-destruct and thus engenders the prospect of having to fight the Arab and Muslim worlds for oil.