Petro kingdom at risk? 2016’s Mideast power matrix and the Chinese definition of ‘crisis’

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By Norman Bailey

Predictions that events in Saudi Arabia will be key to regional developments in 2016 have much merit.

A number of analyses and New Year predictions have centered lately on what events might happen during 2016 involving Saudi Arabia. Certainly, several recent events might lead to such conclusions, to wit:

1. The Saudis suddenly announced the formation of a notional “military” alliance of 34 Sunni Muslim countries, supposedly to confront terrorism. Islamic State has threatened to attack the Kingdom in retaliation.

2. The 2016 Saudi budget has slashed expenditures by 14 percent, due to falling oil prices, which in turn are largely due to its own policies. Saudi Arabia has been burning through its huge monetary reserves at an accelerating rate.

3. A Saudi journal interviewed Israeli foreign ministry Director General Dore Gold, following the granting of a visa to an Israeli academic to attend a conference in Riyadh. Neither of those things would have happened without the approval of the government.

4. The wall of Wahhabi clerical dominance was breached as women not only voted for the first time in municipal elections, but stood for office, and twenty were elected.

2016 Middle EastThe Saudi refusal to restrict production and sale of oil in order to keep prices down and damage competitors such as the U.S. frackers has infuriated both Russia and Iran, allied in the effort to keep Assad of Syria on his throne in Damascus.

Both countries are hurting economically and financially as a result of Saudi stubbornness. But the Saudi kingdom has a major vulnerability in this regard. Its Eastern province, bordering the Gulf, concentrates most of the Saudi oil production and also happens to be majority Shiite.

An Iranian-sponsored Shiite rebellion against the regime in Riyadh, resulting in sabotage of the oil facilities, including the fields themselves, would send the oil price skyrocketing, solving the Iranian and Russian financial problems, but very likely plunging the rest of the world into another great recession, this time with no possibility of spending its way out of it since with rare exceptions (Germany, Canada) all the relevant countries are heavily over-indebted already.

The Saudi authorities are well-aware of the dangers to which they are exposed and are taking security measures internally and trying to solidify their position regionally.

Enter Israel. A solid Sunni southern arc in the Middle East from Egypt to the Gulf would include Israel, formally or informally, and recent developments indicate that it might even end up being formally. It will be recalled that Israel now has representation in the UAE, although it is accredited to an international organization located there. Still, the Emiratis had blocked it until now.

What happens in the kingdom will affect every country in the Middle East, including Egypt, which is dependent on Saudi and Gulf-state largesse to keep it afloat economically.

President al-Sisi this month gave two talks in which he reiterated his call for a reformation of Islam. They were resolutely ignored by the majority of the Western media. The importance of Egypt to Israel as well as to any hope for the reformation of Sunni Islam need not be emphasized.

The structure of the Middle East is beginning to take shape: a southern arc including Egypt, Saudi Arabia, the Gulf States, Jordan and Israel confronting a northern arc from Iran, through what’s left of Iraq, Alawite Syria and Lebanon, torn in two by Islamic State of Iraq and Levant (ISIL) and its terrorist allies confronted on the east and north by the Kurds, who are fighting ISIL at the same time as they are being attacked by Turkey, which is also providing ISIL with access to the Mediterranean for importing recruits and exporting oil.

All of this would be bad enough without an uprising in eastern Saudi Arabia, but such a development would convert the relatively stable southern arc into another area of chaos serving Iran’s interests well.

Israel in the meantime has been following a cautious and deliberate policy of cooperation with Egypt and Jordan, rapprochement with Saudi Arabia and some of the Gulf states, staying out of the Syrian civil war, and strengthening its defensive and offensive military capabilities, with new anti-missile systems and additions to its submarine fleet.

Great caution should be taken with reference to any renewal of relations with Turkey and above all, advanced planning must take place in case of the scenario involving the petrokingdom outlined above.

The Chinese word for “crisis”, however, “danger and opportunity” should always be kept in mind — there are present and possible future dangers for Israel in the region, but there are important opportunities as well.

Norman A. Bailey, Ph.D., is Adjunct Professor of Economic Statecraft at The Institute of World Politics, Washington, D.C., and a researcher at the Center for National Security Studies, University of Haifa. This column was also published by Globes, the Israeli business daily.