Middle Israel: What buried Arabia?

It takes no historian, economist, or fortune-teller to predict the shocks and tremors that will accompany the rapidly approaching downfall of the Saudi royal house.

What will begin with panic in the energy markets will likely proceed to other commodity markets, from precious metals to food staples, and from there the road will be short to mayhem across the major stock, currency, bond, and derivatives markets.

Other side effects - like the inability to sell jets, tanks, and vessels to a newly anti-American Riyadh - may initially win less attention, until it emerges that those alone will cost thousands of American jobs.

Fortunately, some people - including George W. Bush - do get the imminence and gravity of this nightmare scenario. Unfortunately, even they, and even now, still think that the root of the Saudi malaise is in that vast country's politics. In fact, that is merely the symptom: The root of the problem - there as elsewhere in the totalitarian Middle East - lies in its sociology.

In Saudi Arabia, the regime has skillfully kept the people at arm's length, throwing in their direction crumbs from the massive wealth with which Allah blessed the country that is the center of His worship, while clutching the lion's share to their own princely bosoms.

Yes, during those increasingly distant years when the local per-capita income was higher than $20,000 (it is now well under half that level, and still declining) the government generously offered free health-care and education. In reality, however, life expectancy (63) and the per-capita number of doctors remained low even by Middle Eastern standards, while infant mortality remained high.

The reason is simple: While Riyadh abolished tuition, it never instituted what the Jews decreed already 2,000 years ago: compulsory education. And when people are not raised to value self-development nor led to actively seek enlightenment, they indeed avoid them. The result is a catastrophic rate of illiteracy (40 percent according to the Encyclopedia Britannica) and a widespread lack of basic tools with which to accomplish social mobility and personal fulfillment.

The royal house will hopefully forgive us for suspecting that this policy was neither coincidence nor miscalculation; rather, it was, and remains, part of a cynical ploy aimed at shackling those with humble origins, much the way serfdom served that purpose for medieval Europe's feudal nobility.

THE DESIRE to freeze the anti-meritocratic social order so that a family of several thousand princes can perpetuate its grip on power was applied even more sinisterly in the labor markets.

There, the royal house engineered a system whereby 70% of the economy's jobs are handed to foreign workers, mainly ones from beyond the nearby Indian Ocean, who in turn are evicted within three years of their arrival.

As would befit the outlook of a regime for whom social paralysis has become an article of faith, the financial and industrial systems have also been structured in ways that were expedient for the select few, and catastrophic for the rest. That is why the local stock market was sealed for foreigners, while the industrial sector was chained to the oil industry.

Sadly, no single mineral or crop can, in the long run, sustain an entire nation. Cuba has learned that about its sugar, Zambia has learned that about its copper, and the US Confederacy learned that about its cotton. Mexico, by contrast, was wise enough to industrialize and diversify its oil-rich economy, ultimately offering more future with less crude to a population more than four times the size of Saudi Arabia's.

The Saudis, of course, knew better, and thought the riches they found under their feet without even shedding a drop of sweat to mine them, would generate them fortunes endlessly, even as they squandered every third petrodollar on arms and much of the remainder on princely hedonism, while repressing their subjects and funding troublemakers the world over.

One is at a loss to seek throughout history a comparably brazen, stupid, and criminal combination of theft, waste, oppression, obscurantism, hypocrisy and belligerency. Morally, economically, and socially - it is predestined to collapse.

Sadly, the kingdom's recent toying with reform - like the much-heralded live broadcasts from the king's rubber-stamp "consultative council" of royally appointed political eunuchs, and the pathetic plan to hand over the labor market to the local population - are too little and way too late.

To be effective, Saudi Arabia's heavily unemployed workforce (an estimated 40%) would have had to be educated decades ago, and allowed economic access to the country's riches.

Similarly, the kingdom should have fashioned itself as a modern immigrant state, by welcoming and quickly naturalizing newcomers from nearby, overpopulated and fellow Sunni Muslim Egypt.

Yet to do that the Saudis would have had to cease being the selfish anti-developers that they so tragically were, and remain.

For their part, however, Westerners seeking Mideastern emancipation must understand that before they can participate in democratic elections, the region's masses must first be educated and employed, albeit nominally. The people who toppled communism were such. That is exactly why the people who currently oppress the Middle East are so loath to spread enlightenment and prosperity: from their viewpoint, those are bad for business.

Like the fall of the Berlin Wall, the fall of the Saudi kingdom will reflect a widespread sense of disgust with a morally bankrupt regime. Yet, unlike the fall of the Wall, which offered the West moral vindication and strategic breakthrough, the fall of the house of Saud will generate geopolitical chaos and moral perplexity.

Hopefully, the next time it recruits allies, Washington will evince interest not only in what their leaders do for America, but also in what they do for their subjects.

This article speaks to issues no one will publicly raise in DC. That doesn't mean this scenario hasn't been extensively discussed at very high levels.

The current administration is trying to assist the Saudi monarchy to remain in place at least until some sort of reasonably stable (and pro-US) succesor regime is in place in Iraq. I believe the administration's concern over the viability of SA and the need for finding a more potentially more stable and petroleum rich Persian Gulf state to be the locus of US poer in the Gulf and the Arab world was at least as significant a reason for the war to unseat Saddam as any other. This strategic rationale cannot be acknowledged for obvious reasons but it is powerfully compelling if one accepts the initial premises that the US must play a commanding role in trying to minimally stabilize the Arab world and assure access to abundant hydrocarbon energy supplies from the Persian Gulf region.
Any crisis in SA presents major challenges for the US a sudden implosion could present the US with a kind of global crisis overload that would have literally incalculably bad consequences.

The very rapid and for the size of the operation very smooth removal of all US military material and personnel (except for the staff of the FMS funded PM for the SA National Guard) after the Saudi's requested we depart after we had dispatched Saddam's regime points to detailed preplanning done well in advance. That would seem to indicate that CENTCOM with SECDEF approval has been given serious thought to specific actions to be taken if the SA govt collapses. In this case that makes US planning light years in advance of the miserable performance of the Carter administration as the Shah's government imploded.

One aspect of the US attempt to assist the Saudi's without being pulled in to their problems is the constant public freindly and supportive commentary from high level official from the Pres. down. This includes the constant and nauseating 'religion of peace' comments. The President and those around him have, I believe, no illusions about the nature and prospects of the House of Saud. They do understand the cyclone of multiple crisis that could be unleashed by the collapse of the SA monarchy. For starters another energy crisis that would be more severe than the one triggered by the fall of the Shah. While world energy production has increased so has demand since 1978. Particularly energy demands on the market by China are increasing at a rapid rate. A shutoff of Saudi oil even for a short while could easily set off a major bidding war between Europe, North America and the Far East. Because demand is increasing exponentially this would mean energy prices would stabilize at a much higher level after the initial crisis of supply had passed. The new Saudi regime would be particularly relentless in trying to employ the oil weapon to jack prices and bring a flush of prosperity to SA to validate the virtues of a really Wahhabist regime.
Other oil producers would be happy to cash in on the price hike gravy train and be unwilling to show much 'flexibility' over price or production. (This is also a significant piece of why the US has been so civil and cooperative with a Russia under Putin. Russian policy has been two face d to say the least but their huge energy resources is the key to US appeasement of Moscow.)

Conversely it is likely the new regime, if one stabilized in a reasonable time, would renounce the foreign debt the old regime had accumulated. Proposing at best that there be lenghty debt payment holiday and that the loans be written down to a fraction on the dollar and reshecheduled over a very long period. By using the oil weapon Japanese and Hong Kong-PRC finace sources would step forward to provide what ever short term debt financing needed. (Even though the Europeans would take a major hit on debt renunciation it is likely the French and Germans out of spite and to curry favor with the ruling fanatics would also offer new money in exchange for slighly lower oil prices.

Debt renunciation would strike the largest US investmnet banks a huge blow. With their large portfolios of questionable paper they would be exposed to potential default. This would lead the US government to do a crash drill operation to prop up the giat banks exposed to failure. The impact wihin the US could be dicey with a potential for a rolling financial crisis to get going if the Treasury didn't take really fast action to bail out some of the giats with essentially free loans. (Think how the Rats would demegog bailing out Citibank while a combination of credit crunch and energy fueled infation bump sowed economic chaos for tens of thousands of average American families.)

This leads to the final aspecxt of the potential bad outcomes that a sudden destabilization of SA could lead to:
The return to power of a McGovernite-Carter style Rat administration as Americans vote their wallets and massively reject the Republicans for not stopping the simultaneous economic crisis, energy crisis, and general foreign policy disasters. The rats of course would embrace an 'America the Guilty' foreign policy replete with transforming the US armed forces into a lightly armed force good for only multilateral substative military cosmetic operations under the aegis of the UN or NATO and where no concievable US national interest would be involved. On the home front there would be a massively bureaucratized 'energy poily' approach replete with heavy regulation of all energy use and lots of money spent on DOE controlled 'alternate energy programs' (which would assure thier minimal effectiveness. Along with this would be a relentless onslought of 'green regulation' that would be directly punitive towards the Rocky Mountain West. (Imagine Klamath Basin as a mild and inconsequential sort of action in comparison to what the renascent EPA and other enviro nuts in BLM and Interior could spin up. All in the name of enviromental friendly energy efficient policy.)

Hard to imagine that the fate of a few thousand corrupt Arabs could have such a negative impact on the US but it could if the Bush administration doesn't successfully carry out its very high stakes foreign policy in Iraq and the Persian Gulf.

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