Iran. Is­lamic State. Cheap oil. Saudi Ara­bia’s King Sal­man has his hands full

▶ ▶ The set­back in re­la­tions with Iran is just one of Saudi Ara­bia’s many prob­lems ▶ ▶ “They’re sur­prised when peo­ple have a neg­a­tive re­ac­tion”

Bloomberg Businessweek (North America) - - Contents -

The col­lapse in Saudi re­la­tions with Iran af­ter the ex­e­cu­tion of a prom­i­nent Shi­ite cleric marks a grim start to the new year for Saudi Ara­bia’s King Sal­man. Since suc­ceed­ing his half-brother, Ab­dul­lah, who died in Jan­uary 2015, the 80-year- old Sal­man has gone to war in Ye­men, faced Is­lamic State-backed sui­cide bomb at­tacks in­side his bor­ders, and watched ri­val Iran sign an his­toric nu­clear ac­cord bro­kered by the U.S., the king­dom’s strong­est ally for the past 50 years. Crude oil, the lifeblood of the Saudi econ­omy, has re­mained cheap, de­priv­ing the coun­try of bil­lions in rev­enue.

On Dec. 28 the Saudi fi­nance min­istry an­nounced big spend­ing cuts for 2016. Ac­cord­ing to Luay al-kaht­teeb, a vis­it­ing fel­low at the Brook­ings Institutio­n’s Doha Cen­ter in Qatar, one item that did in­crease was mil­i­tary spend­ing, ris­ing to 25 per­cent of the bud­get (vs. 18 per­cent in the U. S.). A week later, the king­dom ex­e­cuted 47 pris­on­ers it la­beled ter­ror­ists, in­clud­ing the Saudi Shi­ite cleric Nimr al-nimr. Days later, Saudi Ara­bia’s al­ready strained re­la­tions with pre­dom­i­nantly Shi­ite Iran were in tat­ters. Af­ter pro­test­ers set fire to the Saudi em­bassy in Tehran, the king­dom cut re­la­tions with the Is­lamic Repub­lic.

Some an­a­lysts say al-nimr’s ex­e­cu­tion was a way to bait Iran into over­re­act­ing. That would help the Saudis iso­late the ri­val na­tion, as well as give them an ex­cuse to slow down peace talks on Syria, which the United Na­tions has ten­ta­tively sched­uled for Jan. 25 in Geneva. Now that Rus­sia is at the ta­ble, the Saudis are con­cerned that any deal will leave the Iran- and Rus­sia-backed Syr­ian Pres­i­dent Bashar al-as­sad in power, as forces co­a­lesce around the goal of de­feat­ing Is­lamic State. The Saudis see As­sad as a pup­pet of Shia Iran who rules over a Sunni-ma­jor­ity coun­try. Since the em­bassy was at­tacked, Saudi Ara­bia has ex­pressed con­tin­ued sup­port for the peace talks.

Those who know the Saudis best think it’s un­likely they planned very far ahead. “I ac­tu­ally don’t think the Saudis cal­cu­lated what the im­pact would be on the re­gion,” says James Smith, who served as U.S. am­bas­sador to Saudi Ara­bia from 2009 to 2013. The Saudis lack a cer­tain self-aware­ness,

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