Is Saudi Arabia (or ISIS) Ready for the Country's Predicted Oil Shortage?

Is Saudi Arabia prepared for its potential oil crisis and the significant social instability it will cause within its own borders? Yes and no -- and ISIS is standing ready to exploit this inconsistency. In fact, ISIS may even expedite this oil crisis in its ongoing quest to destabilize Saudi Arabia.
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This is the second in a series of political risk and prediction blog posts derived from Dr Aziz's upcoming political comic book, The Global Kid (note: 100% of sales will go to global education non-profits that help youth reach their potential).

In recent years, everyone from Citigroup to the Brookings Institution and Wikileaks has predicted Saudi Arabia -- the world's biggest oil exporter -- will face an oil shortage by 2030. More recent estimates suggest this could happen by 2020. The reality is the country isn't even the world's biggest crude oil producer anymore (America took over the lead in 2014). Is Saudi Arabia prepared for its potential oil crisis and the significant social instability it will cause within its own borders? Yes and no -- and ISIS is standing ready to exploit this inconsistency. In fact, ISIS may even expedite this oil crisis in its ongoing quest to destabilize Saudi Arabia.

PREPARING FOR THE OIL CRISIS, SORT OFLocal energy demand has soared in part due to Saudi Arabia's population increase by 17 per cent in the past 10 years. The government has responded sensibly, exploring oil alternatives for domestic energy use. In April, Prince Abdulaziz bin Salman, deputy minister of petroleum and mineral resources, noted the government's commitment to curbing growing energy consumption by a fifth by 2030 through its Saudi Center for Energy Efficiency. In June, Saudi Oil Minister Ali al-Naimi said "we recognize that eventually ... we are not going to need fossil fuels" thanks to solar power.

This sounds like a step in the right direction. But will this preparation be sufficient if the oil crisis hits sooner than the 5-15 year estimate? Probably not. First, the reality is that the crisis could be expedited thanks to ISIS' growing presence in Saudi Arabia. ISIS' most recent attack came on August 6 with a suicide bombing on a police compound mosque and the extremist group has unsurprisingly vowed more. To further destabilize the country, it is plausible ISIS will attack oil facilities -- much like al Qaeda did in past years (note: in 2006, it attacked the Eastern province's Abqaiq oil processing facility).

Second, when the oil crisis hits, social instability will be significant. Let's not forget that Saudi Arabia currently derives over 45 percent of the country's GDP, 80 percent of its budget revenue and 90 percent of its export earnings from oil. With an ISIS-expedited oil crisis, the government will not be in a position to provide the same level of social welfare to its citizens that it has historically. This is a problem that will logically create bursts of unrest in a way the country has not yet experienced. And sensitive social groups -- including unemployed youth, women and Shias -- will be even more frustrated, likely feeling even more excluded from the government's policies and the country's diminishing wealth.

ISIS AND SENSITIVE SOCIAL GROUPS Look for recurrent social tensions involving these sensitive groups to resurface in a significant way when the oil crisis hits -- and for ISIS to try to exploit their frustration. Consider youth who even today are increasingly becoming more vocal against their government -- so be it on YouTube and Twitter. If we factor in that youth unemployment stands at over 30 percent and an expedited oil crisis then gives them less social welfare, it's only logical that ISIS will try to benefit. Let's not forget that more than 2,000 Saudi nationals have already joined ISIS to fight in Syria and Iraq. In July, the Interior Ministry announced it had arrested 400 suspected members of ISIS, including those who recruited youth via Twitter and propaganda sites. Last August, Saudi police arrested eight people suspected of recruiting youth to join ISIS.

As for women, there has been some positive momentum given gender employment reforms by the late King Abdullah Abdulaziz. But the reality is 60 percent of the country's jobless are female and the unemployment rate for women is over 30 percent. Some women have on occasion staged sit-in protests outside government offices over their jobless plight. Expect more if an oil crisis hits. And given that al Qaeda has attempted to recruit Saudi women online, as recent as last year, it is plausible for ISIS to target this increasingly frustrated group as well.As for the Shia minority who has historically felt persecuted by the government, there will undoubtedly be more protests and instability. This is mostly because of ISIS' larger goal to create a major sectarian war in Saudi Arabia - back in May, ISIS attacked two Shia mosques in a two-week time period. And it has repeatedly called for Saudi Sunni youth to "kill" Shias in their borders. The Shia minority has since formed civil defence groups to protect themselves and even the Saudi authorities have boosted security in the Shia-populated Eastern Province as a precautionary measure. But with an oil crisis, naturally expect more instability surrounding this group - ISIS' targeted attacks on this group will only increase amid rising instability in the country.


Many have said it before, but let's spell it out again:Step 1: Diversify the Economy!The good news is that Saudi Arabia's leaders are already clued in on this. There have been legitimate efforts to develop the private sector, including telecommunications, entrepreneurship and power generation to reduce the economy's oil dependence. But will this be sufficient, especially if the oil crisis hits sooner than expected?

Step 2: Create Non-Oil Sector JobsThese new industries in the private sector will of course lead to new jobs. But the key will be to make sure they are being offered to unemployed youth, women and Shias. Make them see they are part of the country's new economic path.

Step 3: Publicize these Policies Any non-oil job creation strategies need to be actively publicised to these sensitive social groups. This communication will help reduce their likely sense of alienation from government policies. Educate all citizens about this notable shift in policy and economy away from oil dependence and towards new industries and entrepreneurship.

The bottom line is this shift away from oil dependence will ultimately serve the country and its citizens well when the predicted oil crisis finally hits. Because this crisis may occur sooner than we think -- thanks to ISIS' growing presence in Saudi Arabia -- the government must act now.

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