King Abdullah's Intransigence

In the Muslim religion, there are two main factions: Sunni, which compromises about 3/4ths of all Muslims, and Shia, which for the most part comprimises the remaining 1/4th. The main Shiite power is Iran. There are large Shia populations in Saudi Arabia and next door in tiny Bahrain, though the majority (and the ruling families) are both Sunni. Iraq is also now a mainly Shiite country, who's political structure is also mainly Shia, including PM Maliki. Over the last few weeks, the Shia minority in Bahrain have begun a nasty revolt against the ruling family, demanding political and social changes, including a constitutional monarchy (like Britain's) where the real power passes from the monarchy to a democratic government. In Saudi Arabia, the Shia population is centered in the eastern part of the country, which also happens to be the main oil producing region, near the Persian Gulf.. and right across the Gulf from Iran. It's in this part of Saudi Arabia that a "Day of Rage" is being planned mainly by the Shia population there, who are demanding the same thing as their Bahraini cousins are demanding.. a constitutional monarchy. Intermingled amongst this mess is the US 5th Fleet, now stationed in Bahrain. Thus has the nightmare of the House of Saud arrived.

This last Friday, Saudi Arabia began shipping nearly 10,000 security personnel into this region in anticipation of the "Day of Rage" protests. Earlier in the week, there were reports of Saudi tanks heading into Bahrain, which ultimately proved to be false. This report sent the price of Brent Crude up nearly $10 in early trading before mellowing out later in the day. The opposition is expecting upwards of 20,000 people to march in Riyadh itself, despite the Saudi authorities banning all demonstrations, with bigger ones planned in the Shia areas of the east. The protestors are organized, and in facebook messages are encouraging their Sunni brethren to join them in demanding a constitutional monarchy and an end to the corruption which has enriched the Saudi royal family beyond imagination. Despite being the world's largest producer and exporter of oil and a phenomenally wealthy country as a whole, much of that wealth does not reach the lower classes; about a fifth of all Saudis are dirt poor. There are literally hundreds of thousands of engineers in Saudi Arabia who cannot find work, despite first class educations from Western universities. Unemployment, especially among the young population (which thanks to a very high birth rate is exploding in number) is quite high. In short, here we are yet again-- unemployment, poverty and disenfranchisement.

In an attempt to head off the coming unrest, Saudi King Abdullah unveiled a $34 billion social aid package, including unemployment benefits for the first time. While crude is at $100+ per barrel, he can afford it. But Abdullah may not be able to keep all of his promises. A week ago or so he promised to increase output to make up for the loss in Libyan production. Many important analysts believe that Saudi Arabia does not have the capacity to make such promises, and a Wikileaks document released some time ago stated that senior Saudi officials acknowledge that their total oil reserves and capacity have been vastly overstated. The production hike has not happened so far. Worse, the Saudis slapped a tax on all oil exports to Asia and Europe: "Top oil exporter Saudi Arabia has raised the price of its flagship Arab Light crude oil in April to customers in Asia, State oil giant Saudi Aramco said on Saturday. Aramco set the price at Oman/Dubai plus $1.95 a barrel, up 65 cents from March. The price to the United States was reduced by 30 cents to parity with Argus Sour Crude Index and the price to northwest Europe was raised by 80 cents to BWAVE minus $3.40" Seems that our Saudi friends want to do their part in support of the 5th Fleet.


Part of this is very likely due to something I explained in earlier posts regarding grains-- hoarding. There have been some suggestions that Asian nations have begun doing just that. Yesterday Senator Rockefeller (D-WV) became the third senator to ask the Obama Administration to begin tapping the US Strategic Oil Reserve, which at about 724mm barrels of oil amounts to about sixty days worth of imports (12mm barrels per day). On today's "Meet the Press" White House Chief of Staff Bill Daley said that President Obama was indeed considering such a move. If the asian nations begin hoarding in a meaningful way, we could actually see $4.00/gal gasoline within a few weeks.  


In Saudi Arabia, the government is trying to dissuade young people from protesting, threatening long jail sentences and other measures. Saudi authorities also seem to be trying the same tired trick used by Mubarak, Saleh, Qaddafi and others on the boil that "foreign agents" are behind a lot of the protests; Saudi authorities have mentioned that large numbers of "Iranian and Iraqi" Shiites were participating in the Bahraini demonstrations-- and in the case of Iran, I would'nt doubt this. If the demonstrations are large ones and the crackdown is particularly harsh-- live fire and all-- this puts several nations in a serious position, beginning with us. Do we condemn the Saudi crackdown and send them down the river like we did with Mubarak-- or do we stand shoulder to shoulder with the Royal Family ? The US Government stood shoulder to shoulder with the Shah of Iran and paid a steep price for that one. How many times will the US be seen to help crush democracy protestors, with US ammo no less ? Iranian meddling will undoubtedly help unhinge the situation. There have been reports that King Abdullah has told the Bahraini authorities that if they do not put down the Shia revolt, he will send in troops who will. Should you see anything like this come to pass, be afraid-- very afraid. Iran will not lightly tolerate Saudi tanks mowing down Shia civilians who simply want the right to vote. Not that mowing down Shia civilians is a problem in Iran, mind you-- it's done regularly to protesters in Tehran. 


There is a chance that the protests in Saudi Arabia and Bahrain simply fizzle out-- lets hope so. It's really too bad that these Royal families refuse to allow a constitutional democracy or any sort of real representation by the people. Jordan and Morocco are both {now} moving in this direction, and wisely in my opinion. But Saudi King Abdullah does not seem to see the writing on the wall as did the Kings in Jordan and Morocco. Indeed he was reported to have suffered a minor stroke when on a conversation with President Obama a couple weeks ago; he was urging Obama to stand shoulder to shoulder with Mubarak. One stubborn old man's pride might bring down the House of Saud-- and with it quite possibly will go any hope of an economic recovery for us as gas soars past $6.00/gal.