It was the father of “Kim” Philby – he, too, a man of Her Majesty’s intelligence services – to support the American Standard Oil in Saudi Arabia, instead of the British and Dutch Royal Dutch Shell.

Whoever betrays once, always betrays, and his son “Kim” betrayed England so as to follow a Communist myth, at first as an infiltrator in the British intelligence services, and later as a refugee in the USSR – only to participate in the meeting held in the Andropov Institute where both  perestroika and glasnost were decided.

However, what is the situation of the economies of the Arab and Sunni oil producing countries, which have always supported and are currently weakening the Vienna agency to better fight against Iran, the Russian-Asian region and even the United States, which are now  the first producer, before the Saudis?

The issue is crucial not only for our economy, which still depends on oil, but for our political and strategic stability.

It is now clear that the Daesh/Isis is a military and political force which can change the political balance in  Mesopotamia and, indirectly, in the same countries it contributed to create: Saudi Arabia and Qatar, which is  fighting with Iran for the gas extraction area Pars-II, as well as the Arab Emirates, which use it as a force multiplier in the EU and Asia, as well as Turkey, which used it to destabilize Syria and fight the Kurds. Indeed, even some Western country supported the Daesh/Isis to oppose Iran.

Now, Al Baghdadi’s Caliphate has become too big and dangerous for everybody and this is the reason why the Russian Federation’s appropriate intervention has been seen with relief also by Russia’s Western competitors.

But Daesh/Isis is too strong a lure for many Muslims: 42 millions support it politically, as reported by a survey held in the Sunni Arab world – and 8.5 million Muslims might support it also militarily or financially.

In Syria 17% of the population supports the Caliphate, while in Algeria the Jund al Kilafah group is now part of this new jihadist international.

In Afghanistan the Caliphate’s network of Tehrik-e Taliban Pakistan is already operational, while in Uzbekistan the Islamic Movement has long been operating and refers to the experience of Daesh/Isis together with the Al Tawhid battalion operating in North Waziristan.

The Ansar al Sharia already operates in Libya and, in Derna, the Shura Council of the Islamic Youth. A Gaza Islamic State has emerged in Gaza and the Shura Council of the Mujahideen of the Jerusalem area is now in the Daesh/Isis orbit.

In the Lebanon we can find the Ahrar al-Sunna and the  Baalbek Brigade (the “Baalbek free Sunnis”), while in  Yemen the Shia Houthis are fought by Al Qaeda in the Arabian Peninsula, which supports the Caliphate against “the Iranian and American conspiracy”. In the Philippines the Bangsamoro Movement for Islamic Freedom has already set in, while in Jordan the Caliphate operates with the old Salafi networks. In Egypt  the Jund al Kilafah in Egypt is operational.

In Tunisia, the Ansar al Sharia, namely the Isis “section” we have already found in Libya, is active.

Are we sure that all this jihad ferment in the Sunni Islamic world shall not lead us to think of building a new geopolitics of the Arab world, along with the Shanghai Cooperation Organization, Israel and Asia on the Pacific coast?

In other words, while currently not even the huge wealth of the Gulf petromonarchies can support the Caliphate’ “sword jihad”, considering its size, it is extremely likely for the Daesh/Isis to compete for oil with the Sunni OPEC and go back to Osama Bin Laden’s old project: to destroy the apostate “Takfiri” Islamic governments, which are friendly to the “Jewish and Crusader” West.

Nevertheless Saudi Arabia’s crisis, triggered off by the cycle of low oil prices, has radicalized with two important variables: the slow pace of economic diversification away from the oil cycle and the extraordinary “cost of politics”, namely the cost of the huge royal family and its hangers-on.

According to the forecasts and calculations made by the International Monetary Fund, if the situation goes on like this, with a view to preserving its standard of spending (and internal security), Saudi Arabia shall reduce to zero its deposits and financial investment within the next five years.

Not to mention that, although it is true that the size of Saudi Arabia’s reserves is a state secret, according to the Barclays Bank, the Saudi proven reserves still rank second among the major world producers’.

The Saudi idea could be to be the producer/trader of others’ oil to finance its power projection outside OPEC and its economic transformation also during very long phases of low oil prices.

The poorest country in terms of proven reserves is Nigeria, with 37.44 million barrels/day and then Libya, with 48.47 millions (and here we understand that the idiotic attack on Gaddafi was, first and foremost, an attack on ENI, which processed 50% of Libyan oil, possibly in view of buying it) and the Russian Federation with 80 millions.

Over and above the countries which have been destabilized, namely Libya and partially Nigeria, all the countries with medium-high proven resources are against the old Saudi hegemony.

And – to ask a nasty and tricky question – what would happen if it were not possible for the Saudis to fund Daesh/Isis with a view to harming their competitors within  OPEC and possibly working or trading the oil extracted in the jihadist areas?

Reverting to the list of proven reserves, we have the United Arab Emirates, which do no longer passively follow Saudi Arabia’s strategic interest (97.8 billion barrels/day), Kuwait (104 billion barrels/day), Iraq (140.3 billion barrels/day) – and here we can easily understand how, with Daesh,  the Saudis wanted to weaken and defuse a strong competitor –  Iran (157,3 billion barrels/day), Canada (173.2 billion barrels/day), Saudi Arabia (268.8 billion barrels/day) and finally the less exploited country, Venezuela which, however, is in Latin America and plays no role in the Greater Middle East.

Taking possession of others’ oil, trading it and taking advantage of Iran’s relatively problematical situation so as to settle the long-standing match between Shiites and Sunnis.

These are all hypotheses which certainly circulate among Saudi decision-makers, who so far have enjoyed the US support, which might soon diminish.

Nevertheless the losses resulting from the drop in oil price  could block all these Saudi projects: the Arabian peninsula region recorded revenue losses to the tune of 360 billion US dollars, while currently Saudi Arabia alone has a 21.6% public deficit, which will level off at 19.4% next year.

Meanwhile, despite the above limitations, Central Asian oil and gas producers can better differentiate their economy and attract non-oil foreign capital.

This is the future race, after OPEC being reduced to a semblance of what it used to be. It was a Cold War organization and it will certainly not survive the new shift  of global strategic potential towards the East and Central Asian Heartland.

The Saudi oil industry, however, still generates 80% of State revenues.

The foreign currency reserves decreased by 59.8 billion US dollars out of a total of 664.5 billions while, for the first time in its history, last August Saudi Arabia sold 5.3 billion securities of its public debt.

Hence, if Iran holds out in its war by proxy against the Saudis, time may come when the effect of high levels of Saudi domestic spending, so as to support an increasingly insecure social peace, may combine with the effect of funding Sunni jihadists abroad, thus causing the rial collapse and destabilizing the region to an extent so far unimaginable.

Moreover, the US are increasingly less interested in managing the specific channel of petrodollars recycling set up by Kissinger after the Yom Kippur War. Currently the United States have to think about their shale gas and oil network, which requires massive investment.

Not to mention defence spending, another heavy drain on Saudi public finances: Yemen only and the activities in  Syria, with or without the Daesh/Isis, cost Saudi Arabia an additional 7%. Nevertheless, with a view to  preserving  the current level of internal and external defence, the Saudis shall increase spending for the armed forces by 27% over the next five years.

This is likely to be an untenable situation, considering the size and the huge cost of the royal family, who will not easily step aside.

Hence working on the assumption of a Qaedist or Caliphate attack on their old Saudi backers, with increased internal and religious instability, not caused by the welfare State, as well as a seemingly long-lasting trend of low oil prices, the US stepping out of the Middle East, the irrelevant role played by Europe, Russia’s and China’s pressure on Iran and Central Asia, we do not think that Saudi Arabia’s future  will be bright.

Giancarlo Elia Valori
Giancarlo Elia Valori

Giancarlo Elia Valori (twitter-logo@GEliaValori)

Honorable of the Académie des Sciences of the Institut de France.