The fragility of the state and clerical partnership is highlighted by the social and demographic issues bedeviling the Kingdom. Saudi Arabia's population is quite young – 60% of Saudis are 20 years old or younger. Their prospect for finding fulfilling jobs is not promising. Some 70% of Saudis cannot afford to own their own home. Approximately 40% of Saudis live below the poverty line. With 25,000 princes and princesses owning most of the valuable land in the Kingdom and all receiving a stipend and a share of the fortune, the income inequality is significant. Moreover, Saudi Arabia's economy depends on foreign labor to function. There are 19 million Saudis and 8.5 million guest workers, suggesting they could become a significant force in any period of social unrest depending on the reason.
Another disruptive social trend is the fact that 60% of Saudi college graduates are women but they only represent 12% of the work force. These young, educated women are demanding greater rights such as the right to drive a car. As these social pressures increasingly clash with the conservative Wahhabi Islamist religious dictates, the King has been forced to seek policies that keep the various pressures under control. The Saudi-Wahhabi relationship has been, and remains crucial to the stability of Saudi Arabia. That is why the King has spent in excess of $130 billion on new stipends and projects to buy political and social peace in the country since the start of the Arab Spring.
In the past there have been some very brief periods of instability within Saudi Arabia, but they have been resolved with only minor adjustments to the controlling power. There is not much known about the temperament or views of the Saud grandsons. When that transition occurs not only might the internal structure and society of Saudi Arabia change, but the role the country plays in the Middle East as an influencing political power and in the global petroleum industry as a moderating force may all change. In what ways may it change? We don't know, and doubt anyone else knows. What we do know, however, is that the succession change will usher in a new era for the House of Saud, and we should all be paying attention to any preliminary acts.
Eoin Treacy's view The willingness or otherwise of disenfranchised princes to accept another branch of the ruling family's ascent to power represents a potential black swan for the global energy sector. Saudi Arabia has been spared the unrest seen in other Middle Eastern countries not least because of subsidies paid to its citizens. Logically, as the population increases and domestic consumption of the country's largest export increases the state's ability to continue to fund lavish payoffs will decrease assuming a constant oil price. Of course oil prices are anything but constant and how this situation plays out could have significant effects either up or down.Back to top