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It is very hard to evaluate the scale of internal threats to the Saudi monarchy, but the broader context for its concern is clear: Saudi Arabia finds itself isolated, abandoned by its longstanding American ally, at odds with China, and pressured by Russia’s sudden preeminence in the region. The Saudi-backed Army of Conquest in Syria seems to be crumbling under Russian attack. The Saudi intervention in Yemen against Iran-backed Houthi rebels has gone poorly. And its Turkish ally-of-convenience is consumed by a low-level civil war. Nothing has gone right for Riyadh.

Worst of all, the collapse of Saudi oil revenues threatens to exhaust the kingdom’s $700 billion in financial reserves within five years, according to an October estimate by the International Monetary Fund.

For decades, Riyadh has presented itself as an ally of the West and a force for stability in the region, while providing financial support for Wahhabi fundamentalism around the world. China has been the kingdom’s largest customer as well as a provider of sophisticated weapons, including surface-to-surface missiles. But China also has lost patience with the monarchy’s support for Wahhabi Islamists in China and bordering countries.

According to a senior Chinese analyst, the Saudis are the main source of funding for Islamist madrassas in Western China, where the “East Turkistan Independence Movement” has launched several large-scale terror attacks. Although the Saudi government has reassured Beijing that it does not support the homegrown terrorists, it either can’t or won’t stop some members of the royal family from channeling funds to the local jihadis through informal financial channels. “Our biggest worry in the Middle East isn’t oil—it’s Saudi Arabia,” the analyst said.

China’s Muslims—mainly Uyghurs in Western China who speak a Turkish dialect—are Sunni rather than Shia. Like Russia, China does not have to worry about Iranian agitation among Shia jihadis, and tends to prefer Iran to the Sunni powers.

More pertinent than public diplomacy, though, is where China is buying its oil.

Nonetheless, China’s oil import data show a significant shift away from Saudi Arabia towards Russia and Oman (which China considers part of the Iranian sphere of influence). Russia’s oil exports to China have grown fourfold since 2010 while Saudi exports have stagnated. Given the world oil glut, China can pick and choose its suppliers, and it is hard to avoid the inference that Beijing is buying more from Russia for strategic reasons. According to Russian sources, China also has allowed Russian oil companies to delay physical delivery of oil due under existing contracts, permitting Russia to sell the oil on the open market for cash—the equivalent of a cash loan to Russia.

China’s interests in Syria coincide with Russia’s. Both have reason to fear the growth of ISIS as a magnet for their own jihadis. Thousands of Chinese Uyghurs make their way into Southeast Asia via the porous southern border of Yunnan province, with financial assistance from Saudi supporters and logistical support—including passports—from local Turkish consulates. Chinese Uyghurs were implicated in the bombing of Bangkok’s Erawan Temple last August, and have linked up with ISIS supporters as far south as Indonesia. Turkey reported last month that most jihadists crossing its border into Syria to join ISIS are Chinese Muslims.

Everything seems to have gone wrong at once for Riyadh. The only consolation the monarchy has under the circumstances is that its nemesis Iran also is suffering from the collapse of oil revenues and the attrition of war. Iran began withdrawing its Revolutionary Guard forces from Syria in December, largely due to high casualties. The high cost of maintaining the war effort as Iran’s finances implode also may have been a factor. Iran’s Lebanese Shia proxy, Hezbollah, has suffered extremely high casualties, virtually neutralizing its whole first echelon of combat troops. And Russia has shown no interest in interfering with Israeli air strikes against Hezbollah.

The oil price collapse turns the competition between Saudi Arabia and Iran into a race to the bottom. But the monarchy’s panicked response to its many setbacks of the past several months raises a difficult question. In the past, the West did what it could to prop up the Saudi royal family as a pillar of stability in the region, despite the Saudis’ support for jihadi terrorism. Soon the West may not be able to keep the House of Saud in power whether it wants to or not.

Full Article: By David P. Goldman on January 3, 2016 in David P. Goldman, Spengler,
http://atimes.com/2016/01/saudi-arabia-in-policy-hell/

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