Iran’s leadership has for years downplayed the impact of sanctions on the economy. Now that President Hassan Rouhani and the regime are compelled to make economic adjustments, they are facing predictable public anger and protests for which they were unprepared.
Bernard Haykel is a professor of Near Eastern studies at Princeton University and director of the Institute for Transregional Study of the Contemporary Middle East, North Africa, and Central Asia. He received his doctorate in Oriental Studies in 1998 from the University of Oxford. He has described his teaching and research as lying at the juncture of the intellectual, political, and social history of the Middle East, with particular emphasis on the countries of the Arabian Peninsula. In late December 2016, Haykel sat for an interview with Diwan to discuss Saudi Arabia and the broader Middle East.
Michael Young: Saudi Arabia is currently struggling with relatively low oil prices and has introduced an economic plan, known as Vision 2030, to cut spending and effectively reconfigure the economy away from its dependence on oil. Do you believe this plan can work, particularly since it seems to be generating a level of discontent in Saudi society?
Bernard Haykel: In general, I think that for rentier states such as Saudi Arabia—or Nigeria, Algeria, Venezuela, Iran, or Iraq—to diversify their economies away from oil and to build a private sector that isn’t dependent on oil is extremely difficult. In rentier countries, the state becomes the dominant economic engine in society. What the Saudis want to do—in particular the person responsible for the economic reform vision, Deputy Crown Prince Mohammad bin Salman—is to diversify their economy. Prince Mohammad realizes that the economy as presently constituted—where around two-thirds of the working population is employed by the government, where oil, water, and electricity are all heavily subsidized, where health and education are paid for by the government—is not sustainable. It would not be sustainable in the long term even if oil prices were to go back up to say $100 a barrel. And so Prince Mohammad wants to change all that by basically removing the subsidies, privatizing as much as possible the public assets of the kingdom, including a share of Saudi Aramco, the national oil company. There’s also talk of imposing taxes, not an income tax but other forms of taxation, such as a value-added tax or a “sin tax” on soft drinks, energy drinks, and tobacco. A new budget has just been announced and it has given them quite a bit of runway before they hit the wall of running out of financial reserves. If they don’t change they’re going to hit that wall and it will be very painful. By initiating these reforms and doing it in a gradual way, I think they are buying themselves time.
There will be resentment, maybe even resistance to the new reform policies. However, you have to realize that the Saudi population looks around the Middle East at the moment and sees chaos everywhere—in Iraq, Syria, Yemen, and parts of Egypt. I think they realize that even if things are bad economically for them and they lose a number of their state-provided entitlements, there’s no alternative really to what they have. And so I think that the government can in fact squeeze and push the population quite hard because of the present configuration of chaos and war throughout the Middle East.
MY: Is there a risk that resentment might produce reactions that lead to extremism?
BH: The Islamists in Saudi Arabia, those who think of Islam as a political ideology, are probably the most organized group in society. I imagine they could mobilize and use the economic resentment to oppose the regime. How successful might they be? I’m not sure. In fact, I don’t think that Islamists can pose a serious challenge to the government. And I say this because you have to remember that Saudi Arabia has been through a period when it had to deal with a Muslim Brotherhood opposition during the 1990s—the so-called Sahwa, or Awakening movement. Oil prices were extremely low then, but the government was still able to overpower the Sahwa. Then in the 2000s, you had an opposition that was led by Al-Qaeda, which was quite violent, and the government still managed to defeat it and to dismantle Al-Qaeda’s organized military presence in the kingdom. I think the population, because of these experiences, is inoculated against Islamism as a path that can provide a solution to the kingdom’s economic and political problems. And the government is extremely adept at using religion and religious scholars to dominate and control Saudi society.
MY: Vision 2030 is very much tied to the fate of Mohammad bin Salman specifically. What is his position within the royal family? After all he is the deputy crown prince, which means that he is not technically the person who will succeed King Salman, yet he has been given tremendous power.
BH: You have to remember that this is an absolutist monarchy. The king wants Prince Mohammad to manage the reform effort and no one in the royal family will stand up to the king on this. It is not in the nature of royal family politics to ever oppose the king if it is clear what his desire is. And his desire is very clear on the matter.
So Prince Mohammad will push this project through because that’s what the king wants. When the king dies, even if Prince Mohammad doesn’t become king I still think that the crown prince, Prince Mohammad bin Nayef, will continue along the same economic trajectory. The forces pushing the system and the government to reform the economy are like the laws of physics. It doesn’t matter who is in power, this has to happen for the economy to survive beyond the age of oil. And oil, as a commodity and a source of revenue, is going to become less and less important because the rest of the world is trying to wean itself off of oil. I think the Saudi royal family on all levels is fully aware of this reality.
MY: Who will be the next King of Saudi Arabia?
BH: If the king were to die today, then Prince Mohammad bin Nayef would be the new king. However, they do have a system in place now where the king—if, say, he were to live for another five to ten years, and he is an absolutist monarch—has the means to change the order of succession. In that case it could be Prince Mohammad bin Salman, or it could be someone else altogether. It doesn’t have to be Prince Mohammad bin Salman. You are dealing with a system in which the monarch effectively has the final say on these matters.
MY: Another project tied to the name of Mohammad bin Salman is the war in Yemen. He was a major factor behind Saudi intervention in that conflict and the conflict is going poorly. How is Yemen tied in to the succession question?
BH: According to Saudi government sources, and also to other Gulf Cooperation Council government sources, including Qatari sources, what was happening in Yemen was unacceptable to Saudi Arabia. Basically, Iran was building up a force with the Houthis that was comparable to Hezbollah in Lebanon. And Iran was going to try to use the Houthis as a way of putting pressure on the Saudi government by having them deploy missiles on the border. Basically to replicate the Hezbollah versus Israel model, but on the southern border of Saudi Arabia.
The Saudis are not going to accept this. For them, Yemen is their traditional backyard or sphere of influence and they will not permit Iran to create a non-state actor that is militarized, with missiles and rockets, who threatens their southern cities or other areas deep inside the kingdom. That was the reality that confronted Prince Mohammad bin Salman in 2015 when his father acceded to the throne. The war in Yemen is very much a partnership between him and Sheikh Mohammad bin Zayed, the crown prince of Abu Dhabi. What we have is a coalition of Saudi and Emirati forces. But they also realized that Yemen is very much like Afghanistan, it’s a tribal society into which you don’t readily send troops because you are likely to be defeated or incur massive casualties. They know that Yemen was the graveyard of the Ottoman Empire and, of course, of Gamal Abdel Nasser and the Egyptians in the 1960s—it was Nasser’s Vietnam. So they’re not going to repeat that experience. They also thought that air power, in the Israeli or American sense of ‘shock and awe,’ could resolve the situation by quickly defeating the Houthis and their allies. They have now realized that this is not the case.
From the Saudi perspective, Yemen doesn’t present easy solutions. They think that money to the tribes might solve it. But so far they haven’t been able to play the game of divide and rule, by buying off different tribes and thereby weaning the Houthis off Iran. So my sense, unfortunately, is that the war will keep going on and the Saudis will pursue their policy of blockading the country and using air power until such time as the Houthis or Iran give up, which is not likely to happen anytime soon. So it’s a terrible and tragic situation, especially for the Yemenis who are caught in the crossfire. It is possible to imagine that a grand bargain could be struck with the Iranians, not now but down the road after these two regional powers have weakened each other sufficiently. The Iranians could say, “Okay, Yemen for Syria, or Yemen for Lebanon,” or something like that. I don’t think this is something being contemplated right now but I can imagine it being part of a bargain down the road.
MY: We know that Saudi relations with the Obama administration were poor. How do they view the new administration of Donald Trump?
BH: My sense is that the Saudis are optimistic because a number of the key people around Trump are very anti-Iran, such as James Mattis, Trump’s defense secretary. They also know that Jared Kushner, Trump’s son-in-law, is quite anti-Iran. So they take some comfort in that.
Now on Trump himself, like many others the Saudis are not sure, because there is a profound contradiction between Trump’s pro-Vladimir Putin, pro-Bashar al-Assad position in Syria, and his anti-Iran views. They would like to see that contradiction resolved in favor of his remaining anti-Iran. It’s still very much a wait-and-see posture vis-à-vis the Trump administration’s Middle East policy, which I think is the posture of many people, whether in the region or elsewhere. We’re just not sure what Trump will end up deciding when it comes to the Middle East. It seems clear he will remain extremely pro-Israel, even supportive of the Israeli right-wing parties. But on Saudi Arabia, Iran, Syria, and Putin, things are not so clear.
MY: Isn’t there a contradiction in the Saudi position? They have moved closer to Israel because of their rivalry with Iran. Today they find themselves in step with a very right-wing government in Israel. Yet that’s everything they have always stood against. How can their relationship be resolved with regard to Israel?
BH: My sense is that the Saudis will never move closer to Israel or so close as to sell the Palestinians down the river. I think that for them the question of Palestine and Palestinian rights remains central, not least because the Saudi population cares about this and it’s not something they can forgo. So, I think when it comes to Israel they will want to see where it’s possible to coordinate with the United States and Israel against Iran, but not at the expense of the Palestinians. And that’s not easy to pull off. It’s a very delicate balance.
MY: In the famous interview that Obama gave to Jeffery Goldberg of The Atlantic, he had a remarkable statement in which he stated that Saudi Arabia should “share” the Middle East with Iran. This, coming after decades in which the United States effectively tried to contain Iran. How profoundly has the Saudi attitude towards America changed because of Obama?
BH: I think the Saudis think that Obama represented an exceptional situation in terms of U.S. foreign policy. To them, he doesn’t represent the norm as far as American relations with Saudi Arabia are concerned. He personally had ambitions to open up to Iran in the way that Richard Nixon opened up to China. I think the Saudis were very disappointed with Obama, the way [Israeli Prime Minister] Benjamin Netanyahu was disappointed with him. They felt he displayed a degree of arrogance about the way the region worked. He also showed no moral courage when it came to Syria and allowed the war to drag on. I think they hope that Obama was a passing phase and the U.S. will revert to being a stalwart supporter of its traditional allies in the Middle East.
My own view is that Obama came at Saudi Arabia with a lot of personal baggage. And the baggage perhaps had to do with Kenya, his father’s country. Obama thought of tribalism as something retrograde and not a feature of modern society. He saw Saudi Arabia as a tribal society, without modern institutions, and had no sympathy for that kind of structure. In contrast, he sees Iran as a country with institutions, with a hardline camp and a moderate camp, so it looks much more like a Western political set up, of course excluding the fact that it’s an absolutist theocracy, something the Obama administration went to great lengths to ignore. He also had personal experience growing up in Indonesia and saw over time that Indonesian society became much more religiously conservative, a change he attributed to Saudi missionary activities. I think this assessment of attributing the global Islamic and Islamist revival to Saudi Arabia alone is a mistake and a crude analysis by the former president.
With respect to Obama, the Saudis think and say, ‘We’ve never used oil as a weapon against you, except in 1973, and we learned our lesson and have never done it again. We’ve been responsible economic actors when it comes to oil production. We want American hegemony in the region, we welcome it. We were full partners in the Cold War against the Soviet Union and the communists. We’ve been good friends to you, why are you betraying us?’ And I think the first inkling of betrayal actually happened when they saw Obama abandoning Egyptian president Hosni Mubarak very quickly in 2011. So they never felt comfortable with Obama and I think they saw him as being both disloyal and arrogant, such that he felt he could redraw the rules of Middle Eastern politics, to the detriment of U.S. interests, not just Saudi interests.
I also think that behind Obama was Robert Malley, formerly of the International Crisis Group, who doesn’t see America as a force for good in the world. Rather, he sees it as an imperial power and feels it should break with that history of imperial hegemony. Again, Malley is someone who has no sympathy for the Saudis whatsoever. So, the Saudis would like this phase to pass and have someone today who is much more of a realist in power rather than someone who comes with an ideology and preconceptions about how the region ought to work.
MY: Back to the idea of the Saudis sharing the region. Implicitly, Saudi policy today seems to be drifting in this direction, in that today the Saudis believe that Iraq, Syria, and Lebanon are controlled by Iran. In other words, aren’t the Saudis starting to absorb that the region is subdivided between Iran and Saudi Arabia, or Iran and some coalition of Arab forces?
BH: I think that the Saudis are realists in the sense that they realize that Iran projects its power and has the ability to control countries through proxies, through non-state actors. However, they don’t like it and they would like it to stop. They would like America to think of Iran as a revolutionary country that is an irresponsible actor in the world system because of its use of non-state actors—a disruptive and malign force. They might admit to Iran having the upper hand in Lebanon or Syria—that’s the reality and they’re not going to keep banging their head against the wall about it. Will they try to reverse it or stop it? Absolutely. But they would like America to join in that effort, making this reversal more likely. On their own, the Saudis are weak and cannot reverse the tide of Iranian power.
Where one could make the case for Obama having been a realist is that if you are an American president and you want a Shia militia to stop doing something somewhere, you know there’s only one person to call to accomplish this, namely Iran’s supreme leader. Whereas if you are dealing with Sunni non-state actors, you can call Riyadh till the cows come home, but the Saudis will not be able to control Sunni militias. So, there’s a fundamental difference in the way Shia forces and Sunni forces answer to authority. Iran and the Shia are able to concentrate power in a hierarchical fashion, and make it accountable, whereas the Sunnis are fragmented and incapable of coordinating action in a unified manner.
MY: Traditionally the Saudis have sought to build a consensus in the Arab world and for a while they looked like they had succeeded in doing that over Syria. However, in the last couple of years this consensus has collapsed. Are the Saudis reviewing their foreign policy during the last five years to determine what went wrong? Why haven’t they been able to maintain this Arab consensus?
BH: I’m not sure whether they’re going back and revising what they’ve done. I think they see that, for instance, Prince Bandar bin Sultan tried to coordinate and arm certain Sunni opposition forces in Syria and the policy didn’t work, because the Syrians remained divided and the U.S. didn’t permit the Saudis to arm the Syrians with effective weapons, such as MANPADS for example. The bottom line is this: The Saudis were hoping that the United States would give them a free hand in arming the Syrian opposition and would get involved in the war against Assad in some direct fashion. Instead, the Americans constrained the Saudis when it came to providing arms and refused to get directly engaged militarily. I refer here to the infamous red line that Bashar al-Assad crossed with the use of chemical weapons and the White House did nothing to enforce its threat. The Saudis were quite shocked when that didn’t happen. Then they were shocked when the Russians got directly involved in Syria and the Americans did nothing about that either. Finally, the Saudis were also banking on the Egyptians remaining on side when it came to Syria. However, the Egyptians appear not to care about Iran’s involvement and seem to prefer an authoritarian dictator like Assad over his mainly Islamist Sunni opponents. They do not think of Iranian hegemony or of Shia sectarianism as threats in the same way the Saudis do.
Then there is the issue of the Muslim Brotherhood, which the Saudis don’t like for reasons related to domestic politics, because the Brotherhood can mount an effective ideological and political opposition to their rule. The leadership in Riyadh remembers that after the Iraqi invasion of Kuwait, most Muslim Brotherhood parties in the region, with the exception of Hamas, sided with Saddam Hussein against Saudi Arabia and Kuwait. Because of this, Riyadh didn’t want to work with the Muslim Brotherhood in Syria, so that an entire section of the Syrian opposition was off-limits for ideological and historical reasons. Then there is the question of what the Turks, who sympathize with the Muslim Brotherhood, are doing, and the Saudis have not had a good relationship with Turkey either. The only place where the Saudis seem to have had a fairly effective policy in Syria is whenever they coordinated with Jordan in southern Syria.
MY: Is there room for coexistence in the region between Saudi Arabia and Iran down the road?
BH: From the Saudi perspective, Iran is a revolutionary regime that wants to destroy the Saudi monarchy. Nor has the Iranian leadership made a secret of this from the time of Ayatollah Khomeini. The animosity against Saudi Arabia and specifically the royal family and the Wahhabi sect has been considerable, so there is no love lost there. I think the Saudis have a sense that this is a zero-sum competition with Iran. The Saudis see Iran as using non-state actors, and in particular Arab Shia populations, as a wedge to interfere in the politics of different countries, whether Iraq, Syria, Lebanon, Yemen, and potentially Bahrain, which worries them. Iran is able to do empire on the cheap by relying on Arab Shia to do its bidding. Moreover, the Saudis have a weak hand, so their central challenge consists of how best to play this game with a weak hand. Their hope is that some outside force will enter the conflict—whether it’s the Americans, ideally, or perhaps even the Israelis—and help strengthen their hand.
However, the one thing the Saudis are certainly going to do is build up their military.They’re going to try to improve their capacities so that they can defend themselves and not have to rely on the Americans to do so. The project of reforming and diversifying the economy and building up the military has to do with making Saudi Arabia a strong state that can defend itself. This is a huge challenge that is not something the Saudi government had seriously undertaken in the past, although there has been talk about such reforms being necessary for decades.
MY: One of the aspects of Saudi soft power, or what we can call soft power but often seems to be an aspect of hard power, is of course the religious dimension, namely Saudi financing of mosques and religious institutions. This has backfired somewhat because today there is a widespread perception in the West that the Saudis are purveyors of radical Islam. Is there any sense the Saudis are taking these attitudes into consideration and seeking to revise their approach?
BH: I think that the accusations against Saudi Arabia go like this: The Saudis have promoted an intolerant form of the faith and this intolerant form of the faith has led to jihadism. Such a view is false because the facts do not back it up. You can be intolerant and not be violent, and that’s true for Christians and Jews and other faiths as well. So, intolerance doesn’t necessarily lead to violence, though it can. Also, the form of Islam the Saudis have promoted is not a politicized form of Islam, it is a form of Islam that is obedient to political authority—it is quietist as opposed to being activist.
What has happened in the world of Islam since the 1970s is a revival of religious belief and action, and in particular the spread of a politicized form of the faith. And that revival has to do as much with Saudi efforts as it has to do with the Muslim Brotherhood in Egypt and the response to authoritarianism in the Arab world. I’ll just give you one small example: As you know, Iraq, Syria, Tunisia, Libya, and Egypt were all authoritarian states. The Saudis were not allowed to build a single mosque or open a single religious school in any of these countries. And yet today, the largest numbers of jihadists, excluding the ones from Europe, come from there. On a per-capita basis, Tunisia has the highest number of jihadists who have joined the Islamic State and yet the Saudis have had nothing to do with this phenomenon. So clearly something else is going on in the Muslim world that has to do with this revival. The revival happens to be a Salafi revival but Salafism does not just exist in Saudi Arabia, it’s present all over the world. It has roots in Yemen, India, Iraq, and so on. Without going into great detail, I think that the assertion that the Saudis are responsible for the jihadism we’re seeing around the world is simply not true. Global jihadism is due to a complex set of factors and cannot be attributed to a single cause or country.
MY: Even individuals in Saudi society? They’re not financing jihadi groups?
BH: They’re may be private individuals who are financing jihadist movements. However, the Saudis have been extremely diligent in controlling such flows, and this has been acknowledged by the U.S. Treasury Department and the CIA, who have said that the Saudis have been largely successful in cutting off public and private funding to jihadi movements. They’ve removed collection boxes from mosques and they’ve monitored flows of money through the banking system. So, if there’s money flowing to jihadists, its people who are literally carrying suitcases of cash, and that’s very difficult to stop. If you go to Saudi Arabia and you watch television or listen to the news, every five minutes there’s some public announcement about how the Islamic State is vile, how it has misconstrued and perverted Islam, and so on. There’s a huge public effort, at least domestically, to vilify the Islamic State.
There are many ways to become a jihadist, other than being a Salafist or a Wahhabi. You can end up becoming a jihadist by following other Islamic movements such as the Tablighis or the Muslim Brotherhood or Hezb al-Tahrir. You can become radicalized through traditional forms of Islam, and even through Sufi movements as we seen in Iraq, for example. This is something that has not been well understood in the West because it involves understanding Islamic history, theology, and law, which are complicated. What I do know is that if one wants to fight the jihadists effectively, one needs both Saudi Arabia and Iran on one’s side. I include the Iranians because they have played a very dirty role, as has the Assad regime, in promoting Sunni jihadism as well as Shia jihadism. Recall that throughout the American occupation of Iraq, the main conduit for Sunni jihadists fighting American troops there was Syria. Remember also that at the start of the uprising in Syria, the Assad regime liberated some 2,500 jihadists from Sednaya prison so that the conflict would end up becoming portrayed as one between the regime and the jihadists. That has to be factored in when fighting the jihadists.
MY: What is the greatest risk to the Saudi royal family in the coming decade?
BH: I think that the biggest risk is some external shock in the form of non-state actors that are deployed by Iran against the system. This could destabilize the country. I think that in terms of domestic politics the royal family has things well in hand. First of all, you have to realize that this is not a one-bullet regime, by which I mean that, unlike Syria, Iraq, Egypt, or Libya, the Saudi dynasty is not dependent for its survival on one individual. Anyone from the royal family can become king, so it’s not a system that’s dependent on a single person, which gives it resilience. Also, the Saudis have resources, in the form of oil rents, that they can use to buy social peace and I don’t see that going away. The Al Saud have legitimacy as well because they’ve been around since the 18th century. This is not a regime that was produced by a coup, it does not consist of military officers, and it has historically united a very tribal and divided country. In other words, it has symbolic and material resources that give it resiliency. Therefore, the main challenge would be some external shock that the regime cannot stop or resist.
This article was originally published by the Carnegie Middle East Center.
is a member of the board of directors of the Arab Gulf States Institute in Washington.
Tehran's difficulties, including major unrest at home and in Iraq and Lebanon, could make the Islamic Republic more amenable to a real compromise with its Gulf Arab neighbors.
AGSIW spoke with Sara Falaknaz about her visions and aspirations as one of the youngest elected members of the FNC.
Through its careful examination of the forces shaping the evolution of Gulf societies and the new generation of emerging leaders, AGSIW facilitates a richer understanding of the role the countries in this key geostrategic region can be expected to play in the 21st century.Learn More