Wed | Dec 7, 2016

The Saudi factor

Published:Friday | February 13, 2015 | 12:00 AM
In this photo provided by the Saudi Press Agency, Britain's Prince Charles, left, meets with Governor of Riyadh Faisal bin Bandar bin Abdel Aziz, in Saudi Arabia, Tuesday, February 10, 2015. (AP Photo/SPA)

Saudi Arabia was born out of the collapse of the Ottoman Empire at the end of World War I, when the victorious Allied powers made a land grab for the spoils.

In the aftermath of the Great War, the Russian and the Austro-Hungarian Empires also crumbled, leaving large swathes of the planet ready for plunder.

The Arabian Peninsula was a backwater for Constantinople, with various warring tribes sparring in the barren desert. Ibn Saud was the leader of one of the larger clans, and with the help of Wahhabi religious warriors, he defeated the other tribes and proclaimed himself king in 1927.

Ibn Saud had a large debt with the Wahhabis, and he allowed their ultraconservative clerics to play a prominent role in the new nation.

In order to consolidate his political power, he took 22 wives, each from one of the opposing tribes and factions. This knitted the kingdom into an extended family. Yet, he had other problems to confront. The Saudis were poor. Their sole sources of revenues were the export of pearls and the fees paid by pilgrims visiting Mecca and Medina.

oil found

However, King Ibn Saud's economic problems were solved in 1931 when an American geologist drilling for water struck oil instead.

In 1933, a consortium of the four largest US oil companies paid the king US$170,000 in gold to win the concession to drill for oil. The company went on to become Aramco, and it was the start of Saudi Arabia's deep relationship with the US.

Unfortunately, King Ibn Saud had another challenge. His country was surrounded by powerful rivals. The Shia's were on his eastern border, just across the Persian Gulf. The French and British had large protectorates along his northern border, and his oil riches were an easy target for any major power.

That was why the king was more than happy to meet FDR in 1945, as he returned from Yalta. The American leader offered him military protection, in exchange for exclusive access to Saudi oil. It marked the start of a symbiotic relationship that has often been tense and full of contradictions; nevertheless, one country cannot survive without the other.

Moreover, the relationship has been between the Saud family and the US.

Ever since its birth, the country has been ruled by Ibn Saud or one of his sons. Unlike most monarchies which used primogeniture to pass the crown down the bloodline, Bedouin tradition relies heavily on a gerontocracy form of government, where rule was passed to the most senior sons. Not only was this done to centralise power, but it also gave a stake to the various clans and tribes that comprised the fledgling nation.

never an easy process

Given that Ibn Saud had 45 sons, the process was never easy. The transitions were often marked by social unrest, and the losers had to be paid off handsomely.

Since Ibn Saud's death in 1953, the country has had six monarchs. The first one, Saud, was deposed for incompetence. The second, Faisal, was assassinated by his nephew. The third, Khalid, skipped over his two older brothers, but turned out to be incompetent, as well.

Excess money often led to lifestyle mistakes, which were extremely frowned upon by the ultra-religious clerics and the general population.

Prince Fahd began running the country from the sidelines and took over in 1982. However, he also had lifestyle issues, and was replaced by King Abdullah in 2005. Fortunately, the country found itself with a pious competent leader, and the incoming king, Salman, seems to be cut from the same cloth.

Nevertheless, he faces many of the same challenges of his predecessors.

Saudi Arabia is a country that needs modernity, but it is restrained by tradition. This conflict results in bouts of aggression, rebellion and repression. Crown Prince Muqrin is Ibn Saud's last surviving son, but he is 69 years old and many people are looking at who will be next.

Mohamed Bin Nayef was named the Deputy Crown Prince. He is from the so-called third generation, and marks a new era for the kingdom. Having studied in the United States, and with close contacts within various Western intelligence agencies, he will get on well with Washington.

He led Saudi Arabia's counter-terrorism unit and helped rein in Al Qaeda. In return, there have been four assassination attempts against him, and it is unclear how the leading factions, such as the Abdullah, Faisal and Sudari clans will react.

A lot of princes will need to be paid off, and for that Saudi Arabia will need much higher oil prices.

A firm understanding of the pressures facing the Saud family provides insight into the future of the international oil market.

n Dr Walter T. Molano is a managing partner and the head of research at BCP Securities LLC.

wmolano@bcpsecurities.com