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DUBAI and WASHINGTON — The ongoing standoff between Saudi Arabia and Iran is born out of the kingdom's economic woes, according to Gulf analysts. Saudi Arabia faces significant problems on multiple fronts, including new and serious domestic and foreign policy concerns.

"Its economy is suffering considerably from the low cost of petroleum, which, for complex reasons, Riyadh itself is helping to maintain," said Hussien Ibish,  senior resident scholar at the Arab Gulf States Institute in Washington. "Current tensions with Iran don't bode well for stability of oil pricing either. This economic pressure on the Saudi social and political system may help to explain the timing of the executions."

The Saudi government faces a period of unprecedented belt-tightening, with unavoidable cuts in public services, amenities, subsidies and other social benefits that the citizenry has come to expect over recent decades, Ibish said.

"Potential domestic discontent over this new period of quasi-austerity in Saudi Arabia cannot be allowed to spill over into challenges to the system," he said. "Therefore, the government may have been prompted to send a clear signal at this moment to Sunni extremists and Shia dissidents alike that any efforts to take advantage of the developing economic and social challenges will not be tolerated."

Iranian hardliners played into Saudi Arabia's hands by attacking the Saudi Embassy in Tehran after the executions on Jan. 2, according to Seyed Hossein Mousavian, former head of Iran's Foreign Relations Committee of the Supreme National Security Council, currently a visiting scholar at Princeton University.

Mousavian said the attack on the Embassy was fueled by hardliners in Iran to expand their influence.

"The timing of the executions are intended to both divert attention away from Saudi domestic woes, but also to address what Riyadh considers to be a real foreign policy problem: Iran's perceived influence in the region," said Dina Esfandiary, research associate and MacArthur fellow at the Centre for Science and Security Studies at King's College London.

"Its not secret that Riyadh was not supportive of the nuclear deal [agreed last year between Iran, the US and five other world powers] and fears for what it will mean for both Iran's regional influence, but also Riyadh's relations with the West," she said. "Stoking sectarianism to provoke Iran is a useful tool for this. And of course, Iranian hardliners walked right into that trap. Today, however, Iran is trying to de-escalate the crisis."

The timing of the execution of  Shiite cleric Nimr al-Nimr and 46 others  can be attributed to a number of reasons, said Shehab al-Makahleh, a political analyst and director of Geostrategic Media Middle East.

"The economic situation presents a reason to announce the execution at this time, which will lead to further political rift that would increase oil prices for both Saudi and other oil producers to yield more benefits and revenues, especially after Saudi Arabia last week announced planned cuts in spending and energy subsidies, a signal that the world's largest crude exporter is bracing for a prolonged period of low oil prices," al-Makahleh said.

When the Saudi budget was announced with a high deficit, he said, it upset many Saudis who sought further justifications for this deficit and the lifting of subsidies.

"The timing of announcements coincides with this deficit," al-Makahleh said. "The 2016 budget and reform announcements marked the biggest shake-up to economic policy in the kingdom for over a decade and aimed to cut the government deficit to 326 billion riyals [US $97.7 billion], down from 367 billion riyals or 15 percent of gross domestic product in 2015."

The Saudi government also said it was hiking prices for fuels, water and electricity, as well as gas feedstock used by industry, as part of politically sensitive subsidy reforms.

The execution also serves as an acid test for the new 34-state Islamic military alliance against terrorism announced on Dec. 14, al-Makahleh said,  and is a test for the newborn "strategic coalition" between Saudi Arabia and Turkey.

The further deterioration in political and diplomatic ties between Riyadh and Tehran also will affect the Yemeni dialogue slated for Jan. 14, most likely in Oman, and the coming talks between the Syrian opposition and the Syrian government on Jan. 25, al-Makahleh said.

According to Ibish, the Saudi attitude as expressed in the executions and subsequent policy decisions appears to be highly confident, if not brash.

Other states, including Sudan and Bahrain, have joined Saudi Arabia in breaking ties with Tehran. The United Arab Emirates and Kuwait, however, only downgraded their ties to Iran while maintaining trade links.

Despite the high-browed statements from Saudi Arabia and Iran, Esfandiary said the situation will not  evolve into a hot war.

"Neither side wants that," she said. "But both sides will evacuate frustrations vis-à-vis one another through the use of their regional proxies. It will also make resolving regional conflicts such as Syria and Yemen more difficult, given that they can only be resolved through Saudi-Iran dialogue."

Mousavian said the best way to resolve the current tensions would be through US involvement.

In Washington, the White House called on Saudi Arabia and Iran to de-escalate their conflict. White House spokesman Josh Earnest told reporters on Jan. 5 that it was not in the interest of the Saudi or Iranian leaders "to continue to foment the kind of violence that often leads to radicalization and terrorism."

Earnest said the White House was hopeful the rift would not endanger two strong US interests, the Syria talks and efforts to counter the Islamic State group, also referred to as ISIL or Daesh. It took "a lot of painstaking diplomacy to bring Iran and Saudi Arabia into this process several months ago," which Earnest said succeeded because the two nations' leaders "concluded it was in the interest of their country and their citizens to try to resolve the political situation inside of Syria."

US Senate Armed Services Chairman John McCain, R-Ariz., in the wake of the executions, released a statement supporting Saudi Arabia as "one of America's closest and oldest partners" and condemning Iran's reaction to the executions as "outrageous and dangerous." He said the US can question the justice of the action and still stand with the predominately Sunni  Saudi Arabia "to confront the terrorism of ISIL and its affiliates as well as the aggression and hypocrisy of the Iranian government."

McCain, a frequent critic of President Barack Obama's national security policy, blamed escalating tensions between Riyadh and Tehran — and "increased diplomatic tensions, growing regional security competition, new arms races and possibly nuclear proliferation" — on the perception that the US is withdrawing from the region after decades of policies intended to defuse an open war.

"Our allies and partners have entrusted much of their own security to the United States because they have believed that our commitments were credible," McCain said. "But this administration's hollow words, imaginary red lines and leading from behind have steadily eroded that credibility. Increasingly, our allies and partners question America's commitment to their security, and as a result, are taking matters into their own hands."

Pentagon Press Secretary Peter Cook said these tensions are not helpful to the fight against the Islamic State group. "Anything that can be done to reduce the tensions will be helpful," he said.

He added that he is not aware of anything that is going to affect the fight and the efforts of the coalition. "We're moving forward and we would hope that those partners that you mentioned will continue to move forward with us, and we see no indication they're not."

Email: amustafa@defensenews.com | jgould@defensenews.com | amehta@defensenews.com

Twitter: @awadz | @reporterjoe | @AaronMehta

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