The end of the process of the succession to the throne from one brother to another, and the nomination of the son of King Salman - Mohammad bin Salman al-Saud - as deputy crown prince, minister of defence and de facto head of the Saudi economy, has stirred internal turmoil and tensions inside the royal family. An unnamed Saudi prince, one of the grandsons of the monarchy's founder, went as far last fall as asking for the removal of King Salman. Some of the initiatives of the new deputy crown prince - such as the possible listing of ARAMCO, as is rumoured- might affect the "comfort zones" of members of the royal family and generate resentment. If this leads to animosities and rivalries coming out into the open, it would open a new phase in Saudi politics with very crucial implications for medium-term stability.
This strife in the royal family comes at a time when the regime is confronting the frustration of a middle class increasingly eager to enjoy greater social freedom but still suffering under the straitjacket imposed by the Wahhabi clergy. However, the monarchy has an extremely limited margin to manoeuvre in fulfilling these aspirations: the regime is based on the alliance between the al-Saud family and the Wahhabi clergy, the latter providing legitimacy to the former in exchange for a quasi-free rein to impose the most fundamentalist version of Islam on Saudi society.
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It is doubtful that the timid reforms taken by the king, such as opening municipal elections to women voters and candidates, will be enough to assuage the increasingly vocal aspirations of the middle class. Social media in Saudi Arabia has become an extremely vivid and lively channel for thinly-veiled sarcasm and criticism of the royal family and the status quo. At the same time, the monarchy has to deal with an increasingly restless Shia minority in the eastern provinces - where a great part of the kingdom's oil reserves are located. This Shia minority - about 3.5-4 million people out of a native population of about 24 million - took to the streets during the "Arab Spring", and there are regular occurrences of violent unrest in the east. The beheading of Sheikh Nimr al-Nimr, a vocal critic of the Saudi regime, was a warning not only to the Shia population but also to Iran.
This rise of domestic tensions comes at a time when the regime has much less ability to use subsidies and handouts to assuage social frustrations. Taking into account the domestic budget expenditures plus the cost of supporting the al-Sisi regime in Egypt and anti-regime groups in Syria as well as the war in Yemen, Saudi Arabia needs a price of $110 a barrel - at current production levels - to balance its budget. But a barrel of Brent is now hovering around $40, with no prospects of a significant increase in price. The kingdom had a budget deficit of $98 billion in 2015. This year's budget plans to reduce subsidies for water, electricity and petroleum products and is based on a restructuring of the economy - including privatisations, the introduction of a VAT and a diversification of activities to reduce the 90 per cent reliance on oil revenues. Nevertheless, the 2016 budget still assumes a deficit of $87 billion on the basis of an oil price in the low $40 per barrel. While Saudi Arabia's ample foreign currency reserves still provide a cushion, they are shrinking too fast for comfort - at an average of $18 billion a month since last summer. In this context, it would not be surprising if the regime were to drop the peg of its currency to the dollar in the course of the year.
The monarchy is also under increased pressure at the international level: It is now facing an Iranian rival for regional prominence that is buoyed by the lifting of sanctions and which will not be deterred by low oil prices from pumping crude oil out at maximum capacity. Saudi efforts to get rid of Tehran's point man Bashar al-Assad are getting nowhere; in fact, the Syrian ruler has consolidated his position recently.
In the meanwhile, the Saudis are stuck in a war in Yemen which is not only tremendously costly but which is not achieving the objective of destroying the Iran-supported Houthi insurgency. Even more alarming is the fact that there seems to be no endgame to the war and that pictures of the terrible casualties of Saudi bombings are now generating adverse reactions in the Arab public.
More broadly, there is a growing international resentment against the regime's blind eye to Wahhabi clergy proselytising the kind of Islamic fundamentalism which feeds violence and terrorism in different parts of the world. Harsh punishments for "offences" which would not be considered as such elsewhere, and the increased recourse to beheadings (157 in 2015) do not improve the regime's image in the world.
This comes in a context where the pact between the monarchy and the US sealed on the USS Quincy in February 1945, according to which the US would provide military security to Saudi Arabia against US access to oil supplies, is fraying at the seams. With the US close to energy self-sufficiency, increasingly reluctant to stay the world's policeman, and embarking on a normalisation of relations with Iran, the Saudis consider that they might soon be on their own. They have noticed how Washington didn't hesitate to ditch an old ally such as Mubarak in Egypt.
This combination of internal and external factors makes for a very jittery Saudi regime. While there is no underestimating the resilience of the monarchy, a regime under pressure might be prone to shed its traditionally cautious foreign and security policy. As there is no abatement of tensions between Riyadh and Tehran, the explosive component of the Sunni/Saudi - Shia/Iranian confrontation will continue to fuel volatility and conflict in West Asia.
Claude Smadja is President of Smadja & Smadja, a Strategic Advisory Firm
Twitter: @ClaudeSmadja