Saudi Arabia, the oil rich kingdom that is the birthplace and former home of Osama bin Laden, has staved off the widespread popular protests that have swept across the region since January. The country’s oil-rich Eastern Province, bordering Bahrain, has witnessed protests from the minority Shia Muslim population. In March, Saudi Arabia sent troops to Bahrain to support its royal family after a month of protests. We speak with Toby Jones, author of Desert Kingdom: How Oil and Water Forged Modern Saudi Arabia, on the role of Saudi Arabia in suppressing the Bahrain uprising, as well as its own. “We shouldn’t assume that there is a lack of interest on the part of Saudi citizens in achieving some sort of democratic or political reform. There are deep frustrations in Saudi society,” says Jones.

JUAN GONZALEZ: We turn now to Saudi Arabia, the oil-rich kingdom that is the birthplace and former home of Osama bin Laden. On Thursday, a senior extremist linked to al-Qaeda surrendered to Saudi authorities. Khaled Hathal al-Qahtani is thought to be the first operative to turn himself in after U.S. Special Forces killed Osama bin Laden on Sunday in Pakistan.

In recent months, Saudi Arabia has staved off the widespread popular protests that have swept across the region since January. The country’s oil-rich Eastern Province, bordering Bahrain, has witnessed some protests from the minority Shia Muslim population. In March, Saudi Arabia sent troops to Bahrain to support its royal family after a month of protests.

Seventy percent of Saudi Arabia’s almost 19 million people are under the age of 30, and last year unemployment was at 10 percent. In a bid to pacify Saudi citizens, King Abdullah, the 87-year-old head of state, has distributed over $100 billion in social handouts since February.
Municipal elections are planned for September. Women will not be able to run for seats or vote in the elections, and there have been some protests organized by women to end the Kingdom’s discriminatory laws. Saudi Arabia has no political parties.

To discuss the situation there, we’re joined by Toby Jones, assistant professor of history at Rutgers University. He was previously Persian Gulf analyst for the International Crisis Group. He’s the author of Desert Kingdom: How Oil and Water Forged Modern Saudi Arabia and is working on a new book project, America’s Oil Wars.

Welcome to Democracy Now!

TOBY JONES: Thanks for having me.

JUAN GONZALEZ: Well, why has Saudi Arabia escaped the widespread popular movements that have swept through the Middle East and the Arab world?

TOBY JONES: Well, for a number of reasons. The first is that it possesses the incredible ability to police its own population, which is not dissimilar from other autocratic regimes in the region. But it also has oil wealth and an almost unlimited ability to pay out, and to co-opt potential dissidence, which we saw the King and the royal family attempt to do in early and mid-March by passing out, as you noted, over $100 billion in inducements to encourage people not to take to the streets.

But we shouldn’t assume that there is a lack of interest on the part of Saudi citizens in achieving some sort of democratic or political reform, that there is absent in Saudi Arabia the political will for precisely the kind of thing that happened in Egypt or Tunisia, Yemen, Syria or Bahrain. There are deep frustrations in Saudi society. There are anxieties about the ailing nature of the political system, corruption within the royal family, and a deep desire to see fundamental change.

AMY GOODMAN: Can you talk about how Saudi Arabia has repressed its own protests as well as moved into Bahrain to support the government in the fierce repression of the pro-democracy movement there?

TOBY JONES: Well, in addition to using financial and other kinds of social inducements to convince its citizens not to take to the streets, at least not for now, the Saudis have also rolled out a series of other measures, some security-based, initially responding to the possibility of a popular uprising in mid-March. The Kingdom blanketed its streets with heavy security presence, discouraging people from gathering publicly.

But they’ve also done another thing, which is very important and has not totally escaped notice but is important to keep in mind, particularly in light of the demise of Osama bin Laden and the continuing concern about the global war on terror: Saudi Arabia has also renewed a set of relationships with the religious establishment, empowering Islamists, as part of this wave of responding to popular mobilization, using the religious clergy and religious scholars to attempt to delegitimize popular protest and also to basically encourage citizens to remain quiescent. The reestablishment or the re-empowerment of the religious clergy is a new thing under King Abdullah. When he came to power in 2005, he actually took fairly serious measures to roll back the authority of the religious establishment, which he saw both as a source of embarrassment but also as a potential threat to Saudi power, to the power of the royal family. So the fact that some of his early efforts or some of his most recent efforts are being systematically undone and that the clergy are enjoying a kind renaissance, if you will, should be a source of concern.

The decision to intervene in Bahrain is linked directly to anxieties on the part of the Saudis about the potential for a democratic demonstration effect. They worry that if there were popular uprisings or if there was a successful regime change in Bahrain, that that might somehow sweep across the Saudi borders and encourage Saudi citizens to pursue a similar path. But there’s also another element, and that is something that is perhaps particular to the Saudis and the Bahrainis. There is a deep sense of anti-Shiism and sectarianism in the Kingdom. So, the specter of Shia political power in Bahrain, so soon after Iraqi Shias came to enjoy predominance and power in Saudi Arabia’s most powerful northern neighbor, was too much for the Saudis to bear. And so, they preemptively intervened, militarily occupied Bahrain, in order to stamp out the possibility of Shia empowerment there.

JUAN GONZALEZ: And the issue of the U.S. relations, especially in view of the fact that the continuing total lack of rights for women in Saudi Arabia, that our government never mentions a word about or talks about that—how is the Kingdom able in this age, with all the modern communications that we have, to continue to suppress the rights of women and yet receive virtually no condemnation anywhere in the rest of the world?

TOBY JONES: Well, they certainly don’t receive political condemnation from the powers that be here in the United States or elsewhere. And it has to do with the Kingdom’s ability to supply the quintessential industrial resource—right, its role—and not only just providing oil, but in being the most important global producer of oil on the planet. It has the ability to shape markets, to make up for shortfalls, to exceed capacity, everywhere, makes it more vital than lots of other places. And this has long been most important and the single most important political priority for American policymakers, and for Western policymakers more broadly. Women’s rights, in the grand scheme of things, then, from the perspective of the State Department or the White House, they almost hardly matter.

AMY GOODMAN: Can you talk about Osama bin Laden and Saudi Arabia? You were talking about the empowerment of the clergy. Talk about his history. He is from Saudi Arabia.

TOBY JONES: Right. Well, his citizenship is contested by the Saudis, who claim that he’s actually Yemeni in origin. But his father was an important contractor in Saudi Arabia, ran a major construction business. He first came of age working for Aramco, the Arabian American Oil Company, in Saudi Arabia, but then became a main contractor to the Saudi state. And bin Laden was one of his many children and sort of came of age in the Saudi political system and education system, grew up in the 1970s and in the 1980s, in a moment when Saudi Arabia was renewing its Islamic credentials, partly in response to a crisis in late ’70s, re-empowering the religious establishment and encouraging a certain interpretation of Islam, a particularly kind of virulent one. Bin Laden took note, traveled from Saudi Arabia to Afghanistan to participate in the anti-Soviet jihad there, or at least to provide services, and was radicalized in the context of the Afghan jihad, returned to Saudi Arabia shortly after the conclusion of that war. In 1990 and 1991, actually offered his services and the services of the Mujahideen to the Saudi royal family to defend the Kingdom from Saddam Hussein, who had just invaded Kuwait. He was politely rebuffed, and then left the Kingdom and went to Sudan, eventually on his way to Afghanistan, where he formed al-Qaeda and began fighting the global crusade against—the global war against the United States.

AMY GOODMAN: And talk about the U.S. support for the Mujahideen and Osama bin Laden, when they were fighting the Soviets in Afghanistan, and then, of course, they set their sights back on the United States.

TOBY JONES: That’s right. I mean, al-Qaeda, bin Laden and the phenomenon of global terrorism and global jihad is the direct outgrowth of the Afghan jihad. So the United States made a strategic decision in the late 1970s under the Carter administration, and then a set of policies that was accelerated under Reagan, to equip and aid the Mujahideen in rolling back the Soviets and pushing them back out of Central Asia, for lots of reasons, but most importantly, as Carter articulated in 1980, because they were too close to the Persian Gulf. That was the site of our vital interests, and we were willing to do whatever necessary to protect them. So the decision to support the jihad and the Arab Afghans, as well as the Afghani Mujahideen, is the context from which al-Qaeda and bin Laden emerged, along with a whole host of other folks.

That first generation of al-Qaeda jihadis, beyond 9/11, who began carrying out attacks in Saudi Arabia and Morocco and elsewhere, were trained on the battlefields in Afghanistan and in the camps there. It would be—it’s not entirely right that the United States directly armed bin Laden. They armed lots of other bad guys who had relationships with bin Laden. It is entirely appropriate to see bin Laden—to understand both his credibility, his legitimacy and the sources of his radicalization as being a product of American policy in Afghanistan in the 1980s.

JUAN GONZALEZ: I want to go back to Saudi Arabia for one moment to talk about this whole issue of the government’s attempt to rehabilitate former fighters. Basically, it provides enormous leniency to those who turn in their weapons and agree to reintegrate into Saudi society. Could you talk about that, especially the numbers who have come from—those who have been released from Guantánamo that Saudi Arabia has accepted back and put into these reeducation programs?

TOBY JONES: Well, it’s remarkable. The Saudis, on the one hand, do in fact have—they fear the power of al-Qaeda to do harm, and they were confronted with al-Qaeda in the Arabian Peninsula in 2003, 2004 and 2005, began a campaign inside Saudi Arabia. AQAP now continues to exist in Yemen and would like very much to do harm to the Saudis. So the Saudis are nervous about the power of terrorists to continue to do damage inside the Kingdom, both to threaten the royal family but also to potentially undermine its economy.

But it’s taken the path of dealing with these forces and these individuals by—precisely by rehabilitating them, by putting them in facilities that attempt to indoctrinate them. They bring in established clergy to essentially reeducate these folks, rehabilitate them. They’re provided with various subsidies and services, and then they’re reintegrated into family life, and into social life more broadly. So it’s a kind of catch-and-release program for suspected or for real terrorists.

One of the interesting paradoxes here is that when the Saudi state arrests liberals—not terrorists, but folks who demand things like constitutional monarchy, the creation of a constitutional monarchy, women’s rights, an end to corruption—those folks are imprisoned, and they’re left to stay there.

AMY GOODMAN: Finally, what Saudi Arabia is doing now? In the piece you wrote, “Counterrevolution in the Gulf,” you talk about it pursuing policies that could destabilize the whole Persian Gulf.

TOBY JONES: Right. Well, the intervention in Bahrain has got to be one of the most deeply troubling things that the Saudis—and they’ve done a lot of troubling things, right? But the decision to intervene, to militarily occupy Bahrain, has been justified. Although there are lots of different motives, it’s been justified as a response to what the Saudis claim is Iranian meddling. Much of the assumption—many Gulf Arabs assume, as do many American policymakers, that there are preternatural connections between Shias in the Arab world, whether they’re in Iraq, Bahrain or Iran, that because they’re co-religionists, they share a single political objective, and because we view Iran as the single most important bogeyman in the region, this matters. The Saudis have used this precisely to frame their intervention in Bahrain, that we’re taking out—we’re checking the possibility of Iran to establish either a fifth column or a front line so close to Saudi Arabia’s oil-producing region in the Eastern Province. So, by framing things both in sectarian terms and as a response to Iranian power, for which there is no evidence, the Saudis are in fact escalating and provoking a potential regional crisis.

AMY GOODMAN: Toby Jones, I want to thank you for being with us, assistant professor of history at Rutgers University, previously with the International Crisis Group, a political analyst of the Persian Gulf, author of Desert Kingdom: How Oil and Water Forged Modern Saudi Arabia.

Saudi Arabia tightened its control of the media on Friday, threatening fines and closure of publications that jeopardised its stability or offended clerics, state media reported.

The desert kingdom and major U.S. ally has managed to stave off the unrest which has rocked the Arab world, toppling leaders in Tunisia and Egypt.

“All those responsible for publication are banned from publishing … anything contradicting Islamic Sharia Law; anything inciting disruption of state security or public order or anything serving foreign interests that contradict national interests,” the state news agency SPA said.

Saudi Arabia follows an austere version of Sunni Islam and does not tolerate any form of dissent. It has no elected parliament and no political parties.

The tighter media controls were set out in amendments to the media law issued as a royal order late on Friday. They also banned stirring up sectarianism and “anything that causes harm to the general interest of the country.”

Almost no Saudis in major cities answered a Facebook call for protests on March 11, in the face of a massive security presence around the country.

Minority Shi’ites have staged a number of street marches in the Eastern Province, where most of Saudi Arabia’s oil fields are located.

Shi’ites are said to represent between 10 and 15 percent of the country’s 18 million people and have long complained of discrimination, a charge the government denies.

Saudi authorities arrested two Shi’ite bloggers from Eastern Province this week, adding to a total of 160 Saudis detained since February, according to a Human Rights Watch report in April.

Clerics played a major role in banning protests by issuing a religious edict which said that demonstrations are against Islamic law.

In turn, the royal order banned the “infringement of the reputation or dignity, the slander or the personal offence of the Grand Mufti or any of the country’s senior clerics or statesmen.”

King Abdullah has strengthened the security and religious police forces, which played a major role in banning protests in the kingdom.

The amendment published on Friday detailed punishments for breaking the media laws, including a fine of half a million riyals ($133,000) and the shutting down of the publication that published the violation, as well as banning the writer from contributing to any media.

 

Saudi Arabia is once more seeking to shape events in the Arab world, encouraged by a regional upheaval that is threatening to bring down regimes in neighbouring territories and to harm national security in the process.

When King Abdullah acceded as monarch in 2005, hopes were high in the kingdom, as well as in the US administration, that the vacuum in the Arab world could be filled with a more activist Saudi leader, able to improve the regional situation to the benefit of the US-allied Arab “moderates” and to the disadvantage of Iran.

But those hopes were soon dashed.

The inadequacies of the Saudi foreign policy-making machine, a lack of Saudi political will partly due to the king’s age and inclinations, and regional and US obstruction, saw efforts to promote intra-Palestinian peace run into the sand.

Mediation on other fronts - Lebanon, Sudan and Somalia - came to naught.

Backbone of Bahrain

This year, the Saudi leadership has watched with horror as the US has in effect rerun 1979 by abandoning a strategic ally - in this case President Mubarak of Egypt instead of the Shah of Iran.

Washington even appeared to sympathise with what Riyadh considers to be Iran’s de facto allies - the Shia opposition in Bahrain.

The Saudi response to events in Bahrain - located a short drive from the Eastern Province where Saudi Shia are relatively populous - has been to stiffen the al-Khalifa regime’s backbone by once again sending its troops into the Bahraini fray. The Saudi Arabian National Guard last intervened in 1995.

Saudi Arabia has come to the aid of the Bahraini ruling family

The Saudi mission is dressed up in a flimsy flag of convenience, that of the six-country Gulf Cooperation Council (GCC), whose assent has seen nominal UAE and Kuwaiti military contributions too.

However, it is Saudi troops that are underpinning al-Khalifa control in the Gulf island, just as Saudi money lubricates the al-Khalifa patronage power.

Yemen has for several years been Saudi Arabia’s pre-eminent security concern. This is due to al-Qaeda’s presence there, as well as perceived Iranian penetration and the threat of internal Yemeni secessionism.

Yemen face-off

The Saudi alliance of convenience with Yemeni President Ali Abdullah Saleh has however recently collapsed. Saudi Arabia has once again given heft to an apparent GCC initiative - a “peace plan” that requires the Yemeni leader to hand over power to his vice-president.

As both Yemeni government and opposition party representatives are expected to gather shortly in Riyadh to explore the deal, the determining issue will be whether there is a Yemeni will to agree to its terms.

Without such domestic agreement, there will be no Saudi-led breakthrough, even allowing for Riyadh’s political influence, resources and ability to talk to an array of challengers to Mr Saleh’s rule, including Islamist, tribal and secessionist elements.

Yemeni opposition leaders and the GCC have called for President Saleh to step down
Riyadh’s view of the Arab uprisings is shaped by the kingdom’s long-standing concern of maintaining stability in the face of internal and external threats.

Saudi military options have been exercised in Bahrain just as they were 18 months ago in Yemen, in facing down a Yemeni Shia group that had crossed its borders.

As Arab uprisings threaten to increase Iranian and al-Qaeda opportunities in neighbouring territories, Saudi Arabia will attempt to counter them with force, or diplomacy and largesse, as appropriate.

Syrian alternatives

Baathist Syria is not, however, a neighbouring concern. It has long been distrusted as an Iranian ally that has proven unwilling to work with perceptible “Arab” interests.

The Saudi government cannot hope to try to directly influence the regime or events on the ground. In common with the US and Israel, it is not sure that the alternative would be to its advantage, even if it disadvantaged Iran.

Saudi Arabia’s internal authority appears firm because of a mixture of patronage, security and a concern among many nationals - Sunni and Shia - that they stand to lose if the regime is directly challenged.

However the “virus” of popular demands is an uncomfortable spectacle for the al-Saud, seeing, as it does, regional events through the prism of national security and strategic competition.

Saudi Arabia shares with the US a desire to ensure that Iran is also affected by regional popular protests.

But Riyadh does not see Washington as a decisive upholder of this shared interest.

As a result, Saudi Arabia will act unilaterally where it can in order to further its interests. But it is liable to be stymied by a mixture of its own political inadequacies and the force of local events that have a life of their own.

Is a counter-revolutionary tide beginning to favour the “strongmen” of the Arab world, whose regimes appeared a couple of months ago to be faltering under the impact of the Arab Awakening?

From Libya to Bahrain and Syria to Yemen, leaders are clinging on to power despite intense pressure from pro-democracy protesters. And the counter-revolution has so far had one undoubted success: the Bahraini monarchy, backed by troops from Saudi Arabia and other Gulf states, has brutally but effectively crushed the protesters in the island kingdom. Pro-democracy leaders are in jail or have fled abroad. The majority Shia population is being terrorised by arbitrary arrests, torture, killings, disappearances, sackings, and the destruction of its mosques and religious places.

In three other countries despots under heavy assault have varying chances of survival. A month ago in Yemen it seemed likely that President Ali Abdullah Saleh was on his way out, but he still has not gone and has mobilised his own demonstrators, gunmen and security forces. Nevertheless the army has publicly split and the probability is that he will finally depart.

In Syria protests are continuing across the country despite frequent shootings, but President Bashar al-Assad will take a lot of displacing because of his determination to stay, the strength of his security apparatus and the tight grip on power of the minority Allawi community.

In Libya Muammar Gaddafi teetered on the verge of defeat two months ago when rebels had seized the east of the country and there were demonstrations in Tripoli. Since then he has rallied a core of support and the rebels in Benghazi would collapse if they did not have the backing of Nato airpower. Nevertheless he is likely to go simply because Britain, France and the US are committed to his departure.

All this is very different from what happened in Tunisia and Egypt, where the military and political establishments believed they could get rid of the regime but keep the rest of the state intact. This could not be done in Libya or Syria because the regime and the state are too intertwined.

In Yemen the state is too weak to get rid of the leader, while in Bahrain democracy means a revolutionary transfer of power from the minority Sunni to the majority Shia. The counter-revolution has other advantages. Its leaders are no longer being caught by surprise. Defenders of the status quo no longer think their defeat is inevitable and have recovered their nerve. They can draw on the loyalty and self-interest of state employees and on sectarian allegiances.

The attitude of outside powers to the overthrow of the status quo differs from country to country. The US was in two minds over support for Mr Mubarak, but did not condemn the Saudi armed intervention in Bahrain or the subsequent terrorising of the Bahraini Shia. Washington has a very different attitude to Arab autocracies in North Africa and far more strategically important Gulf oil states allied to the US. Unspoken also as a factor in US thinking is the degree to which revolution or counter-revolution will help or hinder America’s traditional enemy in Iran.

Only in Libya has the struggle between rebellion and the state turned into outright war. The rebels have plenty of support, but they still only control a quarter of the population and they remain militarily weak. Their most important card is Nato air strikes and even these have not enabled the anti-Gaddafi forces to advance beyond Ajdabiya or break the siege of Misrata.

The counter-revolution is showing that it has more going for it than seemed likely two months ago. This only appears surprising because well-established authoritarian regimes went down so swiftly in Tunisia and Egypt. Police states have had time to rally their formidable forces of repression, but even this may not be enough to quell newly politicised populations which believe they can end autocratic rule.

By Patrick Cockburn

What’s more important than Libya? At least four other countries.

The outcome of the unfinished revolution in Egypt will affect the prospects for democracy across the region. The outcome in Yemen, where Al Qaeda’s most dangerous branch is headquartered, is important to the struggle against terrorism. A change in Syria, Iran’s closest ally in the Arab world, would upend the balance of power on Israel’s northern borders.

And then there’s the Persian Gulf kingdom of Bahrain, where troops from Saudi Arabia and other Sunni Muslim countries have intervened to quell a Shiite Muslim uprising. It might seem odd to include a power struggle in a quasi-country of half a million citizens on a list of major strategic issues, but the crisis in Bahrain qualifies.

About two-thirds of Bahrainis are Shiite, but Sunni Muslims hold almost all the power. After Shiite groups staged increasingly violent demonstrations to demand more democracy, the government cracked down — and when the Bahraini police faltered, Saudi Arabia and other neighboring countries stepped in with troops.

Opposition groups say more than 400 activists have been arrested; the Bahraini government has refused to disclose the number of arrests. Human Rights Watch has charged that at least seven detainees have died in custody and that some may have been tortured.

Last week, the government announced that it was outlawing the largest — and most moderate — Shiite political party, but then backpedaled after an international outcry.

Why does all this matter? Because Bahrain isn’t the only Arab state on the gulf with a sizable Shiite population. Iraq has a Shiite majority and a Shiite-dominated government. Saudi Arabia is ruled by Sunnis, but it has a significant Shiite minority in its oil-rich eastern province. In all three countries, Shiite Muslims have historically been treated as an oppressed underclass — but now, watching other Arabs win more rights, they’re demanding equality too.

Bahrain matters, as well, because Saudi Arabia treats it as a virtual protectorate. The Saudi royal family doesn’t like to see Shiite Muslim demonstrators demand the head of any monarch; it’s too close to home.

Besides, in the view of many Sunnis, Bahrain’s Shiite protesters look like puppets in the hands of Iran, the Shiite Muslim behemoth across the gulf that has long tried to assert itself as the region’s dominant power.

The fear among many U.S. officials, though, is that the Sunni-Shiite unrest in Bahrain could turn into a self-fulfilling prophecy. If the Bahraini government stops negotiating with the moderate Shiite opposition, it risks radicalizing its own population — and driving some of them into the arms of Iran. Another outcome could be a conflict between Sunni and Shiite that would cross several borders.

In a worst-case scenario, warned Charles Freeman, a former U.S. ambassador to Saudi Arabia, a Sunni-Shiite split could prompt the pro-U.S. government in Iraq to ally itself with Iran, scrambling the basic foundation of U.S. security policy in the area, which aims to make Iraq a bulwark against Iran.

“The strategic stakes in Bahrain are higher than many outside the region appreciate,” Freeman said.

The Obama administration has been urging the Bahraini government to negotiate. Last week, the State Department’s top Middle East hand, Jeffrey Feltman, rushed to Bahrain to try to reopen talks between the government and the opposition.

But the administration has been notably gentle, because it wants the Bahraini royal family to stay in power and it doesn’t want to offend Saudi Arabia.

In a speech last week, Secretary of State Hillary Rodham Clinton said the U.S. “strongly condemned the abhorrent violence committed against peaceful protesters by the Syrian government.” But on Bahrain, she merely warned that “security alone cannot resolve the challenges.” (“We know that a one-size-fits-all approach doesn’t make sense,” she explained.)

Another official said the administration is promoting reform throughout the Arab world, but it’s also reassuring rulers in places such as Saudi Arabia and Bahrain that it won’t insist on immediate change. “It doesn’t have to come fast,” he said.

Defense Secretary Robert M. Gates and national security advisor Tom Donilon visited Saudi Arabia this month to try to patch up the U.S. relationship with King Abdullah, who was furious when Obama backed the overthrow of Egyptian President Hosni Mubarak. Both U.S. and Saudi officials said the meetings helped repair the U.S.-Saudi alliance on issues such as Iran. But they said there was no sign of any Saudi moderation on the issue of Bahrain, which the Saudis consider their backyard.

The gulf has long been a central focus of U.S. foreign policy, both because it’s the source of much of the world’s oil and because it’s the frontier between the pro-American Arab monarchies and anti-American Iran.

That’s why the U.S. has a naval fleet there — headquartered, as it happens, in Bahrain.

Now Bahrain is at risk. Hard-liners have opted to use an iron fist, to see whether repression can restore stability; reform, they say, can come later. If they turn out to be wrong, the consequences could be dire.

By Doyle McManus

For three months, the Arab world has been awash in protests and demonstrations. It’s being called an Arab Spring, harking back to the Prague Spring of 1968.

But comparison to the short-lived flowering of protests 40 years ago in Czechoslovakia is turning out to be apt in another way. For all the attention the Mideast protests have received, their most notable impact on the region thus far hasn’t been an upswell of democracy. It has been a dramatic spike in tensions between two geopolitical titans, Iran and Saudi Arabia.

This new Middle East cold war comes complete with its own spy-versus-spy intrigues, disinformation campaigns, shadowy proxy forces, supercharged state rhetoric—and very high stakes.

“The cold war is a reality,” says one senior Saudi official. “Iran is looking to expand its influence. This instability over the last few months means that we don’t have the luxury of sitting back and watching events unfold.”

On March 14, the Saudis rolled tanks and troops across a causeway into the island kingdom of Bahrain. The ruling family there, long a close Saudi ally, appealed for assistance in dealing with increasingly large protests.

Iran soon rattled its own sabers. Iranian parliamentarian Ruhollah Hosseinian urged the Islamic Republic to put its military forces on high alert, reported the website for Press TV, the state-run English-language news agency. “I believe that the Iranian government should not be reluctant to prepare the country’s military forces at a time that Saudi Arabia has dispatched its troops to Bahrain,” he was quoted as saying.

The intensified wrangling across the Persian—or, as the Saudis insist, the Arabian—Gulf has strained relations between the U.S. and important Arab allies, helped to push oil prices into triple digits and tempered U.S. support for some of the popular democracy movements in the Arab world. Indeed, the first casualty of the Gulf showdown has been two of the liveliest democracy movements in countries right on the fault line, Bahrain and the turbulent frontier state of Yemen.

But many worry that the toll could wind up much worse if tensions continue to ratchet upward. They see a heightened possibility of actual military conflict in the Gulf, where one-fifth of the world’s oil supplies traverse the shipping lanes between Saudi Arabia and Iran. Growing hostility between the two countries could make it more difficult for the U.S. to exit smoothly from Iraq this year, as planned. And, perhaps most dire, it could exacerbate what many fear is a looming nuclear arms race in the region.

Iran has long pursued a nuclear program that it insists is solely for the peaceful purpose of generating power, but which the U.S. and Saudi Arabia believe is really aimed at producing a nuclear weapon. At a recent security conference, Prince Turki al Faisal, a former head of the Saudi intelligence service and ambassador to the U.K. and the U.S., pointedly suggested that if Iran were to develop a weapon, Saudi Arabia might well feel pressure to develop one of its own.

The Saudis currently rely on the U.S. nuclear umbrella and on antimissile defense systems deployed throughout the Persian Gulf region. The defense systems are intended to intercept Iranian ballistic missiles that could be used to deliver nuclear warheads. Yet even Saudis who virulently hate Iran have a hard time believing that the Islamic Republic would launch a nuclear attack against the birthplace of their prophet and their religion. The Iranian leadership says it has renounced the use of nuclear weapons.

How a string of hopeful popular protests has brought about a showdown of regional superpowers is a tale as convoluted as the alliances and history of the region. It shows how easily the old Middle East, marked by sectarian divides and ingrained rivalries, can re-emerge and stop change in its tracks.

There has long been bad blood between the Saudis and Iran. Saudi Arabia is a Sunni Muslim kingdom of ethnic Arabs, Iran a Shiite Islamic republic populated by ethnic Persians. Shiites first broke with Sunnis over the line of succession after the death of the Prophet Mohammed in the year 632; Sunnis have regarded them as a heretical sect ever since. Arabs and Persians, along with many others, have vied for the land and resources of the Middle East for almost as long.

These days, geopolitics also plays a role. The two sides have assembled loosely allied camps. Iran holds in its sway Syria and the militant Arab groups Hezbollah in Lebanon and Hamas in the Palestinian territories; in the Saudi sphere are the Sunni Muslim-led Gulf monarchies, Egypt, Morocco and the other main Palestinian faction, Fatah. The Saudi camp is pro-Western and leans toward tolerating the state of Israel. The Iranian grouping thrives on its reputation in the region as a scrappy “resistance” camp, defiantly opposed to the West and Israel.

For decades, the two sides have carried out a complicated game of moves and countermoves. With few exceptions, both prefer to work through proxy politicians and covertly funded militias, as they famously did during the long Lebanese civil war in the late 1970s and 1980s, when Iran helped to hatch Hezbollah among the Shiites while the Saudis backed Sunni militias.

But the maneuvering extends far beyond the well-worn battleground of Lebanon. Two years ago, the Saudis discovered Iranian efforts to spread Shiite doctrine in Morocco and to use some mosques in the country as a base for similar efforts in sub-Saharan Africa. After Saudi emissaries delivered this information to King Mohammed VI, Morocco angrily severed diplomatic relations with Iran, according to Saudi officials and cables obtained by the organization WikiLeaks.

As far away as Indonesia, the world’s most populous Muslim country, the Saudis have watched warily as Iranian clerics have expanded their activities—and they have responded with large-scale religious programs of their own there.

The 1979 Iranian revolution was a major eruption that still looms large in the psyches of both nations. It explicitly married Shiite religious zeal with historic Persian ambitions and also played on sharply anti-Western sentiments in the region.

Iran’s clerical regime worked to spread the revolution across the Middle East; Saudi Arabia and its allies worried that it would succeed. For a time it looked like it might. There were large demonstrations and purported antigovernment plots in Saudi Arabia’s Eastern Province, which has a large population of Shiite Muslim Arabs, and in Bahrain, where Shiites are a distinct majority and Iran had claimed sovereignty as recently as 1970.

The protests that began this past January in Tunisia had nothing to do with any of this. They started when a struggling street vendor in that country’s desolate heartland publicly set himself on fire after a local officer cited his cart for a municipal violation. His frustration, multiplied hundreds of thousands times, boiled over in a month of demonstrations against Tunisian President Zine al-Abidine Ben Ali. To the amazement of the Arab world, Mr. Ben Ali fled the country when the military declined to back him by brutally putting down the demonstrations.

Spurred on by televised images and YouTube videos from Tunisia, protests broke out across much of the rest of the Arab world. Within weeks, millions were on the streets in Egypt and Hosni Mubarak was gone, shown the door in part by his longtime backer, the U.S. government. The Obama administration was captivated by this spontaneous outbreak of democratic demands and at first welcomed it with few reservations.

In Riyadh, Saudi officials watched with alarm. They became furious when the Obama administration betrayed, to Saudi thinking, a longtime ally in Mr. Mubarak and urged him to step down in the face of the street demonstrations.

The Egyptian leader represented a key bulwark in what Riyadh perceives as a great Sunni wall standing against an expansionist Iran. One part of that barrier had already crumbled in 2003 when the U.S. invasion of Iraq toppled Saddam Hussein. Losing Mr. Mubarak means that the Saudis now see themselves as the last Sunni giant left in the region.

The Saudis were further agitated when the protests crept closer to their own borders. In Yemen, on their southern flank, young protesters were suddenly rallying thousands, and then tens of thousands, of their fellow citizens to demand the ouster of the regime, led by President Ali Abdullah Saleh and his family for 43 years.

Meanwhile, across a narrow expanse of water on Saudi Arabia’s northeast border, protesters in Bahrain rallied in the hundreds of thousands around a central roundabout in Manama. Most Bahraini demonstrators were Shiites with a long list of grievances over widespread economic and political discrimination. But some Sunnis also participated, demanding more say in a government dominated by the Al-Khalifa family since the 18th century.

Protesters deny that their goals had anything to do with gaining sectarian advantage. Independent observers, including the U.S. government, saw no sign that the protests were anything but homegrown movements arising from local problems. During a visit to Bahrain, Secretary of Defense Robert Gates urged the government to adopt genuine political and social reform.

But to the Saudis, the rising disorder on their borders fit a pattern of Iranian meddling. A year earlier, they were convinced that Iran was stoking a rebellion in Yemen’s north among a Shiite-dominated rebel group known as the Houthis. Few outside observers saw extensive ties between Iran and the Houthis. But the Saudis nonetheless viewed the nationwide Yemeni protests in that context.

In Bahrain, where many Shiites openly nurture cultural and religious ties to Iran, the Saudis saw the case as even more open-and-shut. To their ears, these suspicions were confirmed when many Bahraini protesters moved beyond demands for greater political and economic participation and began demanding a constitutional monarchy or even the outright ouster of the Al-Khalifa family. Many protesters saw these as reasonable responses to years of empty promises to give the majority Shiites a real share of power—and to the vicious government crackdown that had killed seven demonstrators to that point.

But to the Saudis, not to mention Bahrain’s ruling family, even the occasional appearance of posters of Lebanese Hezbollah leader Hassan Nasrallah amid crowds of Shiite protesters pumping their fists and chanting demands for regime change was too much. They saw how Iran’s influence has grown in Shiite-majority Iraq, along their northern border, and they were not prepared to let that happen again.

As for the U.S., the Saudis saw calls for reform as another in a string of disappointments and outright betrayals. Back in 2002, the U.S. had declined to get behind an offer from King Abdullah (then Crown Prince) to rally widespread Arab recognition for Israel in exchange for Israel’s acceptance of borders that existed before the 1967 Six Day War—a potentially historic deal, as far as the Saudis were concerned. And earlier this year, President Obama declined a personal appeal from the king to withhold the U.S. veto at the United Nations from a resolution condemning continued Israeli settlement building in Jerusalem and the West Bank.

The Saudis believe that solving the issue of Palestinian statehood will deny Iran a key pillar in its regional expansionist strategy—and thus bring a win for the forces of Sunni moderation that Riyadh wants to lead.

Iran, too, was starting to see a compelling case for action as one Western-backed regime after another appeared to be on the ropes. It ramped up its rhetoric and began using state media and the regional Arab-language satellite channels it supports to depict the pro-democracy uprisings as latter-day manifestations of its own revolution in 1979. “Today the events in the North of Africa, Egypt, Tunisia and certain other countries have another sense for the Iranian nation.… This is the same as ‘Islamic Awakening,’ which is the result of the victory of the big revolution of the Iranian nation,” said Ayatollah Ali Khamenei.

Iran also broadcast speeches by Hezbollah’s leader into Bahrain, cheering the protesters on. Bahraini officials say that Iran went further, providing money and even some weapons to some of the more extreme opposition members. Protest leaders vehemently deny any operational or political links to Iran, and foreign diplomats in Bahrain say that they have seen little evidence of it.

March 14 was the critical turning point. At the invitation of Bahrain, Saudi armed vehicles and tanks poured across the causeway that separates the two countries. They came representing a special contingent under the aegis of the Gulf Cooperation Council, a league of Sunni-led Gulf states, but the Saudis were the major driver. The Saudis publicly announced that 1,000 troops had entered Bahrain, but privately they concede that the actual number is considerably higher.

If both Iran and Saudi Arabia see themselves responding to external threats and opportunities, some analysts, diplomats and democracy advocates see a more complicated picture. They say that the ramping up of regional tensions has another source: fear of democracy itself.

Long before protests ousted rulers in the Arab world, Iran battled massive street protests of its own for more than two years. It managed to control them, and their calls for more representative government or outright regime change, with massive, often deadly, force. Yet even as the government spun the Arab protests as Iranian inspired, Iran’s Green Revolution opposition movement managed to use them to boost their own fortunes, staging several of their best-attended rallies in more than a year.

Saudi Arabia has kept a wary eye on its own population of Shiites, who live in the oil-rich Eastern Province directly across the water from Bahrain. Despite a small but energetic activist community, Saudi Arabia has largely avoided protests during the Arab Spring, something that the leadership credits to the popularity and conciliatory efforts of King Abdullah. But there were a smattering of small protests and a few clashes with security services in the Eastern Province.

The regional troubles have come at a tricky moment domestically for Saudi Arabia. King Abdullah, thought to be 86 years old, was hospitalized in New York, receiving treatment for a back injury, when the Arab protests began. The Crown Prince, Sultan bin Abdul Aziz, is only slightly younger and is already thought to be too infirm to become king. Third in line, Prince Nayaf bin Abdul Aziz, is around 76 years old.

Viewing any move toward more democracy at home—at least on anyone’s terms but their own—as a threat to their regimes, the regional superpowers have changed the discussion, observers say. The same goes, they say, for the Bahraini government. “The problem is a political one, but sectarianism is a winning card for them,” says Jasim Husain, a senior member of the Wefaq Shiite opposition party in Bahrain.

Since March 14, the regional cold war has escalated. Kuwait expelled several Iranian diplomats after it discovered and dismantled, it says, an Iranian spy cell that was casing critical infrastructure and U.S. military installations. Iran and Saudi Arabia are, uncharacteristically and to some observers alarmingly, tossing direct threats at each other across the Gulf. The Saudis, who recently negotiated a $60 billion arms deal with the U.S. (the largest in American history), say that later this year they will increase the size of their armed forces and National Guard.

And recently the U.S. has joined in warning Iran after a trip to the region by Defense Secretary Gates to patch up strained relations with Arab monarchies, especially Saudi Arabia. Minutes after meeting with King Abdullah, Mr. Gates told reporters that he had seen “evidence” of Iranian interference in Bahrain. That was followed by reports from U.S. officials that Iranian leaders were exploring ways to support Bahraini and Yemeni opposition parties, based on communications intercepted by U.S. spy agencies.

Saudi officials say that despite the current friction in the U.S.-Saudi relationship, they won’t break out of the traditional security arrangement with Washington, which is based on the understanding that the kingdom works to stabilize global oil prices while the White House protects the ruling family’s dynasty. Washington has pulled back from blanket support for democracy efforts in the region. That has bruised America’s credibility on democracy and reform, but it has helped to shore up the relationship with Riyadh.

The deployment into Bahrain was also the beginning of what Saudi officials describe as their efforts to directly parry Iran. While Saudi troops guard critical oil and security facilities in their neighbor’s land, the Bahraini government has launched a sweeping and often brutal crackdown on demonstrators.

It forced out the editor of the country’s only independent newspaper. More than 400 demonstrators have been arrested without charges, many in violent night raids on Shiite villages. Four have died in custody, according to human-rights groups. Three members of the national soccer team, all Shiites, have also been arrested. As many as 1,000 demonstrators who missed work during the protests have been fired from state companies.

In Shiite villages such as Saar, where a 14-year-old boy was killed by police and a 56-year-old man disappeared overnight and showed up dead the next morning, protests have continued sporadically. But in the financial district and areas where Sunni Muslims predominate, the demonstrations have ended.

In Yemen, the Saudis, also working under a Gulf Cooperation Council umbrella, have taken control of the political negotiations to transfer power out of the hands of President Ali Abdullah Saleh, according to two Saudi officials.

“We stayed out of the process for a while, but now we have to intervene,” said one official. “It’s that, or watch our southern flank disintegrate into chaos.”

By BILL SPINDLE and MARGARET COKER

With the recent turmoil across North Africa and the Gulf, investors are now becoming increasingly concerned that the ‘political contagion,’ as the wave of upheaval has come to be known, may flow over into Saudi Arabia as well.

The worry is that the protests in various parts of the Arab World will embolden Saudi youths, or the minority Shiites in the east, to revolt in a similar fashion.

The country supplies about 12% of global oil production and sits on at least a fifth of the world’s oil reserves.

By being on the eastern border of the Kingdom, Bahrain is near key parts of the country’s crude reserves. Although doubtful that Saudi Arabia would be drawn into the contagion, “the fear factor could potentially force oil prices higher and leave the equity markets lower”, Gary Dugan, CIO at Emirates NBD, told CNBC.

Using information from the Energy Information Administration (EIA) for 2009: If you take of Saudi Arabia, and add to that other major oil exporters in the region that have seen turmoil in recent days, such as OPEC members Libya and Algeria, you’re looking at roughly 16% of total oil production that could be at risk. Pricing the risk premium in the current environment will prove to be a daunting guessing game for traders.

Saudi Arabia faces a problem that was a major driver of protests in Tunisia and Egypt to begin with: Youth unemployment. Data by the Central Department of Statistics & Information (CDSI) estimates that 39% of Saudis between the age of 20 and 24 were unemployed in 2009 – up from 28.5% in 2000. But in its most recent report, Saudi Banque Fransi adds that the Kingdom has an “enormous stash of oil wealth it can draw on to finance schemes to sooth popular frustrations without exerting too much strain on its budget”. Saudi Arabia held an estimated $440 billion in net foreign assets in 2010.

Amid the ongoing geopolitical instability, Dugan points out that he has seen “international investors largely retreat from the MENA markets with only hedge funds opportunistically buying local bonds at low price levels.” Emerging market equity funds had net outflows of $5.45 billion last week, according to EPFR.

Indeed, the political future of Saudi Arabia is far from certain. King Abdullah is 87 years old and has spent a lot of time abroad recently for treatment. The crown prince is an octogenarian as well, while the plan for succession is unclear. Angus Blair, head of research at Beltone Financial, told CNBC that “Saudi Arabia will not be excluded from the profound changes sweeping through the Arab world”. He also expects to see reforms through the Shura Council, which is “likely to be awarded more powers as part of a long term program of increased devolution of power”.

The cost of insuring exposure to Saudi Arabia risk for a five-year period rose 15 bps to 140 bps on Friday, according to Markit.

By Yousef Gamal El-Din

Two antigovernment protesters in Yemen’s southern port of Aden died in fresh clashes Thursday, witnesses said, bringing the death toll in a recent spate of violent demonstrations against President Ali Abdullah Saleh to at least four.

In the capital San’a, thousands of protesters squared off with Saleh supporters in violent clashes at a main intersection Thursday morning and afternoon, according to witnesses.

The demonstrations in the capital were the latest and most raucous in a series of daily melees here, triggered by the resignation of Egypt’s Hosni Mubarak. Opposition parties organized much larger, but peaceful, protests in San’a earlier in the month amid unrest elsewhere in the Arab world, following the January revolt in Tunisia. In response, Mr. Saleh has pledged economic and political reforms, including a promise not to run again in 2013.

Opposition leaders had called off more protests, but students and young activists have stepped into the void, organizing a series of smaller, impromptu demonstrations across town, which have drawn in crowds of armed government supporters.

Uniformed security forces weren’t in the vicinity during the San’a scuffles, in which protesters tore down a median barricade between the two sides and clashed with sticks, clubs, chains and makeshift weapons, like desk legs and pipes. Occasional shots rang out from guns fired into the air, but there were no reports of fatalities.

About two thousand took up positions on either side of one of the capital’s main intersections. Government supporters lobbed repeated volleys of stones, injuring dozens of protesters, many of whom retreated to a nearby hospital.

The two sides made occasional charges at each other, according to witnesses. Dumpsters and tires were set ablaze.

Pro-government demonstrators chanted “With our soul and our blood, we will sacrifice for Ali” as they clashed with opposition who shouted “The people want the regime to fall” and “After Mubarak then Ali.”

In the early afternoon, most antigovernment protesters marched out of the area toward San’a University, where about 200 gathered for another rally, according to witnesses. But about 20 minutes after they arrived, government supporters, armed with sticks, clubs and pipes, charged the group, sending the protesters fleeing for the gates of the university.

Many were caught trying to get through the narrow entrance and were beaten. Others fled into side streets.

The clashes marked the seventh consecutive day of violence in the capital. After a few hours, protesters and government supporters regrouped in front of San’a University in opposing rallies, but the atmosphere was much more festive, with both sides dancing at times. It was the first time that demonstrations in the capital extended into the night.

But in Aden, a restive town home to an active secessionist movement, protests have careened on through the evening. On Wednesday, witnesses said security forces opened fire on demonstrators in the city’s al Mansora neighborhood, killing two.