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The December 6, 2004 attack on the US consulate in Jeddah reminded the world of the enduring presence of Islamic terrorists in Saudi Arabia. This attack was significant for two reasons. First, it showed the desperation of the attackers, an indication that these forces have been considerably weakened. Second, this was the first terrorist violence in the Kingdom in over a year, the last having occurred in May of 2003.

After the May 2003 terrorist attacks in Riyadh, Prince ‘Abdullah entered into an agreement with leaders of the conservative Salafi movement: the regime agreed to clamp down on proponents of social and political reform and in return, Salafi leaders have agreed to help curb fundamentalist violence in the kingdom. This deal rekindled an alliance between the Salafis and the royal family dating back to 1744, which was reinforced in 1979 by deal between the royal family and the Salafis to ensure peace following the attack on the Main Mosque in Mecca. In the current agreement, the government arrested 13 dissidents in March of 2003. This has silenced the hopes of reformers in the kingdom, many of whom raised their voices during the “Spring of Riyadh” in early 2003 when the government entertained public dialogue on issues such as greater political freedom, a reevaluation of the rights of women, and educational reform.

Dr. Seznec noted that while the recent reform efforts and the return to Salafi-approved conservatism are important indicators of Saudi plans for dealing with terrorism, the most important challenge to Saudi Arabia’s future is the state of its economy. The main problem facing the kingdom is its burgeoning population under age 30, coupled with high unemployment (currently 30% of men under age 30). In a country of 23 million people, Saudi companies still import workers despite this widespread unemployment.

Foreign and private investment might improve the economic and employment situation, however, political conditions prevent it from doing so. King Fahd’s decision in the late 1970’s to divide government responsibilities between the royal family and a powerful civil service was mainly aimed at preventing future generations of royalty from abusing power and weakening the state. Under this arrangement, the royal family has only titular control of the oil industry, banking, and commerce regulation (although it still maintains control of defense forces). Civil servants, who benefit from the status quo, dominate the economy and consequently do not encourage the type of innovation and reform that encourages investors.

In order to address their current population’s needs, Saudis would have to create at least 200,000 jobs per year. The $40 billion necessary to do this could come from private Saudi funding, especially funds currently maintained outside of the Kingdom. The government has made efforts to create more jobs without changing the current system, such as establishing the Saudi Arabian General Investment Authority (SAGIA) to encourage foreigners to invest where Saudis themselves are disinterested. However, until the civil service loosens it control of the economy and there are greater limitations on the ability of royals to seize investments, privatization and investment efforts will continue to falter. It will take strong executive authority to change this environment. Although Prince ‘Abdullah is charismatic, he does not appear prepared to make such radical changes.

Dr. Seznec explained that the US is becoming increasingly irrelevant to Saudi Arabia. The invasion of Iraq, the Abu Ghraib prison scandal, the questionable treatment of prisoners at Guantanamo bay, and recent legal wrangling with Saudi merchants in New York City have contributed to Saudi disillusionment with US policy. As a result, Saudi Arabia has worked to establish a base of regional security in the Middle East. It has strengthened ties with its neighbors, including Syria, Iran, Yemen and Qatar. Additionally, the Kingdom is planning for future regional and global dominance in certain industrial sectors, namely the petrochemical industry.

The increasing importance of Asian interests in the Middle East is the salient factor guiding Saudi Arabia’s security and its economic strategy. At the same time, there has been a steady decline of US sales to Saudi Arabia, with sales of $10 billion in 1998 now ebbing to $3 billion for 2004. Ironically, the developing paradigm situates the older capitalist system of the US as increasingly bent on military and ideological empire, while China – the old ideological empire – is increasingly viewed as a lucrative capitalist presence.