Tension mounts following Riyadh's protest ban

08 March 2011

Government announcement that it will crackdown on protests marks the start of a tense week

On 5 March, one day after protests in Al-Khobar, Saudi Arabia’s Interior Ministry announced it would crackdown hard on any illegal protests in the kingdom. The announcement marks the beginning of a tense week in Saudi Arabia. And for the region.

Given the speed of the descent into chaos in Egypt, Libya and Tunisia, it is hardly surprising that polliticians, traders and business people are growing increasingly concerned that the unrest could spread to Saudi Arabia, disrupting global oil supplies.

While few people outside Saudi Arabia have much knowledge of what is happening in the kingdom, and fewer still understand the inner workings of the Saudi royal family, there is a growing awareness of the many divsions and tensions that exist in the kingdom, particularly from its growing young population.

It is not surprising then that an online call for a ‘Day of Rage’ in the kingdom on 11 March is causing concern in the oil markets, where Brent crude hit new highs on 7 March of above $118 a barrel.

Protests have been called to demand free elections, the release of political prisoners, and more freedom for women. It is unclear if the Interior Ministry’s promise that protests would be met by security forces authorised to use “all means necessary” to prevent demonstrations would frighten people away from the streets, or result in the kind of deadly clashes that occurred in Bahrain in mid-February. But the pre-emptive statement is a clear mesasge to the world, as well as to Saudi Arabians, that Riyadh is in control.

Oil markets are on edge, threatening the fragile recovery in the global economy and the Saudi Stock Exchange (Tadawul), had been plunging as even local retail investors get nervous about what will happen on 11 March.

But after announcing a $36bn package of handouts to citizens to help alleviate economic concerns of protesters, the kingdom has now shown its tougher side.

It is impossible to know in advance if the announcement will succeed in preventing protests, but it has certainly given a short-term boost to investors in the kingdom with the Tadawul immediately recovering 7 per cent, suggesting retail investors are hopeful it has ensured stability.

Saudi Arabia is entering a worrying period though. With the population growing increasingly skewed towards the young (a trend that will not go away anytime soon), and an economy struggling to grow fast enough to provide them with enough jobs, a backlash against the traditional seat of power seems inevitable unless significant steps are taken to reduce people’s frustrations .

However, the real difficulty for the king, and the area where he has shown great skill in the past, is balancing the conflicting demands of reformers and conservatives. Saudi Arabia’s conservatives feel as strongly about the need to retain its hard line interpretation of Sharia law as the reformers do about social, and political liberalisation.

King Abdullah may be able to relieve the immediate pressure through a long-awaited government reshuffle, but the aging, and generally liked king will not be around forever. The uncertainty surrounding the handover of power in the future, and the long term direction of the country, mean protests could become inevitable, unless the pace of political reform is quickened.




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