Saudi Arabia's underlying tensions

In light of the mass protests that have affected Tunisia, Egypt and elsewhere, attention has shifted to other countries in the region potentially susceptible to a similar outbreak of wide-ranging social unrest. The Economist Intelligence Unit do not expect to see a repeat of the ongoing events in Egypt (or, indeed of Tunisia) in the near term, reflecting a host of differences between Saudi Arabia and its North African peers.

First, one of the main differences is the role of the clergy, which subscribes to a fundamentalist strain of Islam, and which has a long-standing pact with the Al Saud ruling family, predating the establishment of the Kingdom of Saudi Arabia in 1932. As such, any movement that went so far as to seek to end Al Saud rule would not only be up against the country's founding family and the well-equipped security forces, but would also potentially find itself arrayed against the clerics (in a country that contains the holy cities of Mecca and Medina).

Second, the Saudi government is far better placed to deal with the immediate economic grievances that have helped to drive the protests elsewhere-namely, rising living costs and, in particular, increased foodstuffs prices. With healthy fiscal revenue (especially in light of the present high oil prices) and a huge stock of official reserves, the Saudi leadership is well-placed to maintain wide-ranging subsidies on electricity and food, as well as potentially offering a plethora of jobs in the public sector (although this would reverse the ongoing policy to encourage Saudi youths to join the private sector).

Despite this, however, in the longer term, some of the factors that have contributed to the protests elsewhere in the region could well play a role in fomenting unrest in Saudi Arabia. In particular, finding sufficient, well-paid jobs for Saudi Arabia's legion of graduates is a major challenge, and one that is unlikely to dissipate soon given the fact that some 38% of the population is under the age of 14. According to official statistics, over 10% of the population are unemployed, with a 2009 report from the Central Department of Statistics indicating that over 40% of those in the 20-24 year old age group are jobless. In an indication that public unhappiness at the unemployment problem is beginning to spill on to the streets, some 200 unemployed teachers demonstrated outside the Ministry of Education in January (such protests are a rare occurrence in the kingdom). In addition, the ruling family could find itself especially exposed to public anger because of the paucity of alternative available political scapegoats, reflecting the absence of democratic institutions in the country (Saudi Arabia came a lowly 160th out of 167 countries in the Economist Intelligence Unit's 2010 democracy index).

Meanwhile, in an echo of the situation in Tunisia, Egypt and Yemen, succession concerns are afflicting the ruling family, with King Abdullah bin Abdel-Aziz al-Saud convalescing in Morocco after two operations on a herniated disc, and the crown prince, Sultan bin Abdel-Aziz al-Saud, thought to be suffering from cancer. The next in line to the throne, the interior minister and deputy prime minister, Prince Nayef bin Abdel-Aziz al-Saud, is in his late 70s, and there is a risk that his generally conservative views (in contrast to King Abdullah's more liberalising tendencies) may trigger a backlash from the kingdom's youthful and segregated population (which, revealingly, has embraced social networking sites with enthusiasm). Overall, therefore, although at present the situation in Saudi Arabia is probably not conducive to the outward explosion of public anger witnessed in Egypt and Tunisia, the ingredients are certainly there.

It is important to note that, although the instability in Tunisia and Egypt has had major implications for the region, thus far the wider world has not been particularly directly affected. This would certainly not be the case should mass demonstrations against the ruling regime spread across Saudi Arabia. Such an outcome would no doubt have a dramatic effect on the international oil price (even if oil output was not curtailed), which would in turn attract the close attention of the US (the world's largest oil importer) and China (which has surpassed the US as a market for Saudi oil). Nonetheless, in light of the fact that the Suez Canal has kept running and oil and gas operations in Egypt have been little affected, we would not expect protesters in Saudi Arabia to target the oil sector. In addition, even if they did, most of the oil installations are well protected (owing to the terrorist threat) or are located deep in the desert (or increasingly offshore). The composition of the workforce of the state oil firm, Saudi Aramco, which is majority Saudi, should also protect it to an extent from the ire of discontented unemployed locals. Indeed, given the Saudi population's reliance on the country's oil wealth (either via subsidised living or public-sector jobs), it is possible that maintaining oil output could be one issue on which the rulers, the protesters and the US and China could all agree on.