hacker

. I was told by a Saudi on campus---and you'll forgive the anecdotal nature of this---that "we are a nation of managers". Why worry about your people working when they have such an extensive (and overly-generous) welfare state, at least as far as unemployment, when it can be supplied endlessly by oil revenue from the world's biggest single underground oil lake [field, whatever] in the world? The economy can plod along fine with twice as much unemployment as long as there's enough petrodollars to cover any deficit you care to incur in a given fiscal year?

Saudi Arabia has enormous cash reserves and can probably carry on for 5 years (according to Martin on GPS on CNN today), without worrying about a deficit. Perhaps longer if it cuts spending on things like funding religious madrases in foreign countries. This would be a good thing, since the Saudi version of Islam is the puritanical stuff that fundamentalists and fanatics adhere to.
BTW Saudi Arabia now no longer has the largest oil reserves (that would be Venezeula) nor is the largest producer (that is the US) but does have the lowest cost of production and has a very well run oil company (Aramco).

I believe that the export of its religion has made KSA one of the causes of Islamic radicalization in the last 30 years. I think its ironic that ISIS, which has adopted many of the puritanical views of Islam is now seen as a threat to the KSA.
However the difference between the places where ISIS and radicalization have traction and the KSA is that men in the KSA are content. They are happy being managers and maintaining their status in society. There is little exposure to the outside world, and competing ideas, except for those Saudis educated elsewhere. Thats why I think it will take until the third generation begins to wield power, for the rate of change to increase. It is only this third generation that has seen a significantly different world,

OK longish post, but there's a lot that needs to be said, or at least speculated upon and pondered:

You know, Robert Baer *did* say something in a couple of his books about Saudi Arabia's "proven oil reserves" being inflated (the official government statistics, that is, but I guess Mark Twain is just as applicable to the KSA as to any democracy). The same with Iran, he said, which is why Iran has an interest in both Iraq and the Magic Kingdom. And when I say "an interest in" I mean "they may take a fancy to the place and move in." The reason for this, he proffers, is that in order to pump the oil out you must pump water in; and many of the billions of barrels of "oil" in their underground wells/caverns/whatever-you-call-it which they are counting, are really billions of barrels of the water they pumped in.

If you want to see Robert Baer's books, I read Sleeping with the Devil: How Washington Sold Our Soul for Saudi Crude some years ago. After reading it, I thought, holy crap, these people are our "friends"??? (well, that's State Dept. talk for "strategic partner")

Link is to the Kindle version, but if you scroll down they also have it for paperback: http://www.amazon.com/dp/B000FBFO64/ref=wl_it_dp_o_pd_nS_ttl?_encoding=UTF8&colid=2S59BAW55XTIY&coliid=I24I9EEUAFMEJJ

I had NO clue that Venezuela now has more oil than the Magic Kingdom! That's quite a shocker. Now I knew that the United States was the largest producer. But I also knew we're the largest consumer (soon to be very, very much eclipsed by China in that wise). See, we don't pump a billion barrels and then let them sit (except for the SPR, if I remember correctly) so that we can expand and contract the surplus; we refine it, add a little ethanol (for shits and giggles, but more likely to prop up the farm subsidies) and pump the finished product into our pickup trucks and SUVs. If we did....WE would be Saudi Arabia! Take that, OPEC!

A documentary I saw on the possibility of Americans electing an isolationist president revealed something very few people, Americans, Europeans and east-Asians alike realize: a very, very very tiny bit of oil from the Middle East as a whole ever gets to, and is used by, the United States. The vast majority goes to our allies in Europe and Asia.

So I would think this ISIS and AQAP thing will affect you guys a lot more than us Americans & Canadians...has it been?

Probably their massive cash reserves came from the "petrodollars" following the 1973 October War debacle (Yom Kippur War if you're Israeli, or Ramadan War if you're from elsewhere in the Middle East). But that's just a guess, and I forget Dr. Mikhail's (one of my poli sci profs at UMBC, who is from Egypt) explanation of how the Petrodollars were made, exactly. Something about taking the cash reserves from jacking up prices by creating shortages in the U.S. and several other embargoed nations, lending them to a few banana republics, etc...thus turning a massive oil profits into gargantuan oil profits. (Do I have this correct, guys, or no?)

In other news, Edward Luttwak, in his seminal work on coups d'etat, explained why Saudi Arabia is immune to a banana republic-type "coup"; however:

The distinction between the bureaucrat as an employee of the state and as a personal servant of the ruler is a new one, and both the British and the American systems show residual features of the earlier structure. The importance of this development lies in the fact that if the bureaucrats are linked to the leadership, an illegal seizure of power must take the form of a 'Palace Revolution' and it essentially concerns the manipulation of the person of the ruler. He can be forced to accept new policies or advisers, he can be killed or held captive, but whatever happens the Palace Revolution can only be conducted from the 'inside', and by 'insiders'. The 'insiders' can be the Palace Guard as in ancient Rome, or the Ethiopia of the 1960s, and in a dynastic system they would seek to replace an unwanted ruler with a more malleable son.

[The above taken from Coup d'Etat: A Practical Handbook, by Luttwak, Edward. (Cambridge, MA: Harvard University Press, 1979.) pp. 19-20.] My point? at some point, it will happen; a revolution in the Magic Kingdom. It will have to happen from within the exclusive membership of this "Allegiance Council" of theirs; in other words, a prince from the "Abdul Aziz Line" (as stated above, the only ones eligible to be King/Crown Prince. (It almost sounds like the Catholic cardinals having a papal conclave, doesn't it?) A disgruntled Saudi prince, naturally a half-brother or, even better, an actual brother with a important position within the Council of Ministers, and aided by a few units of the National Guard pull off Luttwak's Palace Revolution as it must be done by insiders. (The Council of Ministers and top bureaucrats are either from the House of Sa'ud, or important leaders linked by marriage or other means to the House of Sa'ud.)

I do not think any of you said this yet (or maybe one of you did and I went over it too quickly). A word about the Cabinet: essentially, the council of ministers is a veritable majlis of the House of Sa'ud brothers/half-brothers; King Salman's title within his own cabinet is actually Prime Minister; the Crown Prince, Deputy Prime Minister; and the Deputy Crown Prince, 2nd Deputy Prime Minister. (Sources: the Factbook and Chiefs of State & Cabinet Members at https://www.cia.gov/library/publications )

(It's actually been done before: the 1964 coup against King Saud, who went abroad for cancer treatment--just like the Shah!--and another brother, Faisal, mobilized the National Guard. I think Faisal himself was shot at close range by his own nephew in 1975, which was a pity, because Faisal was a "reformer"....see what I mean?)

With the House of Sa'ud taking its cues from the Soviet Union (by that I mean, the leadership passing between three geriatrics within a short span of time) it may only be a matter of time. But if Salman turns out to be a reformer, let's just hope his own nephew doesn't pick up his own Smith & Wesson on a visit to the United States. Also, one of you alluded to the fact that Salman's own health is not good. When a leader is ill, dissidents within their own inner circle tend to like to hasten their demise...it's an old story!

But that's just my opinion; and only a few facts of which I'm aware. Even the CIA doesn't have as much information on the KSA as it does in most other countries, according to Baer, and knowledge is power. But read his book if you want a better understanding of the situation. (It's only $8 on Kindle...expensive for the average Kindle title, but well worth it; and it was a pretty popular book so I'd assume most public libraries have it.)

A documentary I saw on the possibility of Americans electing an isolationist president revealed something very few people, Americans, Europeans and east-Asians alike realize: a very, very very tiny bit of oil from the Middle East as a whole ever gets to, and is used by, the United States. The vast majority goes to our allies in Europe and Asia.

So I would think this ISIS and AQAP thing will affect you guys a lot more than us Americans & Canadians...has it been?

Oil is globally traded, so even though the US isn't reliant on Saudi oil it is still affected by the price changes that Saudi Arabia can bring about.

Sassenach wrote:

A documentary I saw on the possibility of Americans electing an isolationist president revealed something very few people, Americans, Europeans and east-Asians alike realize: a very, very very tiny bit of oil from the Middle East as a whole ever gets to, and is used by, the United States. The vast majority goes to our allies in Europe and Asia.

So I would think this ISIS and AQAP thing will affect you guys a lot more than us Americans & Canadians...has it been?

Oil is globally traded, so even though the US isn't reliant on Saudi oil it is still affected by the price changes that Saudi Arabia can bring about.

Yes, the oil market is based on fungible oil standards and global markets. Sure the US produces a load of oil which is consumes itself. But the global trade prices determine what US prices will be to a large extent. And the way to stop that is actually to detach from free trade in some way.

Also. Saudi Arabia is not just an oil producing state, it is a leader in OPEC, and so in combination with other states is more influential.

At the moment, the US and Saudi Arabia have between them increased production and projected production, causing prices to halve in six months. Not to make it cheaper for US consumers, but to undermine the Russian oil industry and so punish Putin. Laudable, but it shows the interconnectedness of the market.

And so ISIS etc have not impacted the prices we pay anything like as much as the production increases. Our at-pump-prices for petrol are falling as well, as is domestic gas, but of course more slowly for various reasons including taxes and lags based on purchase timing etc as well as companies wanting to ensure margins hold up as long as they can.

danivon

At the moment, the US and Saudi Arabia have between them increased production and projected production, causing prices to halve in six months. Not to make it cheaper for US consumers, but to undermine the Russian oil industry and so punish Putin

This is whats happened. But isn't the increase in oil production in the US simply the effect of fracking and the desire of domestic production companies to gain market share and sales?

Yeah, I'm not wholly convinced that the Obama administration has the ability to control the manipulation of the oil price even if they'd had the vision to see that it was possible. I'm sure they're happy to claim the credit for it though.

At the moment, the US and Saudi Arabia have between them increased production and projected production, causing prices to halve in six months. Not to make it cheaper for US consumers, but to undermine the Russian oil industry and so punish Putin. Laudable, but it shows the interconnectedness of the market.

I had forgotten about the Russian oil industry. I earnestly hope we screw the hell out of the bastards in the Kremlin. A "new cold war" would seem to me a little bit alarmist, but I do sympathize with the Ukraine. Is that what the President is really trying to do: undermine the Russian Government? Not to get off topic, but I wonder how long it will be before there's a coup. (In Moscow, not Washington...)

Global economics is a complicated thing, but simple at the point of supply and demand. I understand, yes, that the price of oil is still dependent on the global markets, even if one country depends less upon its center than others. As far as fracking, well, that is a problem indeed. It has produced the economic benefit, but at a cost to the environment.

God, wasn't the global economy simpler when Texas controlled it (or fed it rather)... In 1913, the United States produced 100 times the oil of Persia/Iran which, at the time, was the only significant oil-producing state in the region. It wasn't until the 1940's that that changed, and the United States (and later the world) began to depend on Saudi Arabia.

Yes the Obama administration wants to be known for economic prosperity and environmentalism. But you cannot always be both.

But at any rate I have not been able to get more information on King Salman. Just the obits of Abdullah and brief abstracts on the new king. I just hope if Salman turns out to be a reformer, he doesn't go the way of Faisal. It's interesting, we here seem to know this and that about the global economy and oil, and yet so little about one of the most important countries involved in it. Not through any fault of ours, but there seems to be so little in depth information on the Saudis.

I am going to look for more information on Muqrin. If he's the Crown Prince and the King has dementia, and the rest of the saudi royals know it--or at least several important ones--ten it seems like Muqrin will, as did Abdullah himself for a while, rule but not yet reign.

Did one of you already mention C.P. Muqrin was CINC of the National Guard, and the Minister of Defense for a while?

BTW the above statement about the Persian and United States oil came from David Fromkin's A Peace to End All Peace. I cannot reference a source online.

Sorry to make a 3rd post in a row, rather selfish of me on server-space, but I was wrong about Muqrin. There's a nifty article here about Saudi succession. Looks like I am right about there being potential problems.

As we all know the problems of Saudi succession originates from the fact that, when you marry a crap-ton of women, youu are probably going to have a crap-ton of children (or just die of sexual exhaustion).

And I said, there's a "deputy crown prince/second deputy PM" position. Unusual for a country to have a "deputy" crown prince, but I guess it ensures smooth succession; something you need when there's a crap-load of competing brothers & half-brothers.

If Salman himself dies, then the throne will pass to Muqrin as Crown Prince/Deputy prime minister. But Crown Prince Muqrins, as it so happens, is the LAST Saudi prince who's an actual son of the king who was--in every sense of the word--the father of his country. If you don't count prince Ahmed. Fortunately Muqrin is only 69, not 79, and no rumors of dementia, there. Also, Deputy CP Mohammed is only 55, and is also Minister of Interior (as well as Second Deputy Prime Minister).

They have a nifty little article of 23 January 2015, on BBC.com, detailing exactly how fragile and potentially explosive Saudi succession is going to be, or already is: http://www.bbc.com/news/world-middle-east-29792691

With all the brothers and half-brothers competing, I would not be surprised if this Allegiance Council become riddled with factions. I'm not sure how many members it contains, but Muqrin was elected by them. It seems we already have a Republic of Arabia: the selectorate just happens to be a very small one!

My prediction: "polite" palace coup (or worse, assassination) within the next five years (someone removed without having to use the army or kill anyone); full-fledged "palace revolution" (leading to a possible open revolt) within the next decade...but it all depends on who drops dead, and when.

Maybe I was being a little cynical. This Economist article Why the oil price is fallingfrom December gives 4 reasons:

1) global economic outlook is weak, lowering demand
2) while Iraq and Libya are facing conflict, their oil output is so far not affected
3) US production is up, meaning that demand on the global market from the US is down
4) Saudi Arabia and the Gulf states are increasing production to maintain market share

Part of (4) is about not letting rivals like Russia and Iran benefit.

http://www.slate.com/blogs/moneybox/201 ... ouble.html

Slate has done a great job at looking at the oil market. Production costs, and stresses on the budgets of the various regions.

Saudi Arabia ia well placed because its actual production costs are the lowest in the world. North american Shale, not so good.
Saudi Arabia also has, without affecting their current spending levels, almost 8 years of cash reserves if oil is at $83 a barrel....
The much lower current price is going to cause all oil producers great problems... But places like Venezeula, and Nigeria first...
It doesn't make sense for Saudi Arabia to cut production for economic reasons, or competitive reasons. More than any other producer they can weather the price decrease, and perhaps force other producers to mothball production... Thereby both harming them economically and gaining market share at an increased price (as competition disappears) as a result.

I agree with Ricky in that The Saudis are playing a long game and hoping to force others -- including American producers -- out of the market with lower prices.

There was an interesting article in Sat.'s WSJ

http://www.wsj.com/articles/karen-ellio ... utologin=y

The article focusses on the Deputy Crown Prince Mohammed (#3 in succession) as a positive development in terms of stability. He is the first of the grandsons of Abdul Aziz. The 69 year old Muqrin (#2 in succession) is the youngest son of Abdul Aziz. The new Deputy Crown Prince appears to settle the succession issue to the next generation. Since Prince Mohammed has no sons he is felt to be less threatening to others of that generation. He is also considered to be talented whereas there are many questions about Muqrin (although it is hard to discern whether they are about his competence or his lineage as his mother was a Yemeni concubine, not a wife).

It is my understanding that Ibn Saud had 44 recognized sons. I have read that Murqrin is the only remaining son considered capable of becoming King.

Further, I have read the allegiance council is made up of all the remaining sons of ibn Saud (8 per Wikipedia) and the sons of the deceased sons of ibn Saud (19 per Wikipedia).

So that's 27 votes; kind of like a papal conclave in the middle ages (when there were only ever a couple dozen cardinals who were capable of showing up). I wonder if they vote by secret ballot, or by open pronouncement.

It was my understanding that only the descendants of Ibn Saud's first wife, none of the others, could be king/crown prince.

JimHackerMP wrote:
It was my understanding that only the descendants of Ibn Saud's first wife, none of the others, could be king/crown prince.

No, that's not right.

I think we have to acknowledge that this is a messed up place (from our perspective) but that the alternatives (e.g. Iraq, Syria, ISIS, etc.) are worse. Sure, any reforms would be positive. But real politic has me favoring stability in SA.