Omanis recently took part in massive demonstrations in the northern city of Sohar and were knocking on the doors of Abu Dhabi. Both Saudi Arabia and the UAE, the last dictatorial powers in the region cannot ignore democracy. The people of the Gulf are fed up with the Gulf ruling elites and have awakened from their 40 year old slumber. It’s true that they’re not as poor as the Egyptians or Tunisians, but they are become increasingly more aware that a country’s wealth belong to the state and the state alone.

Some wikileaks documents suggest that peak oil production levels in the Gulf have already been met and that current supplies will only be sufficient for a couple more decades. These backward political regimes have lead to poor planning and corruption. The future for the youth is not so great.

Bahrain has given us a glimpse of what lies ahead in the future. Its oil reserves have diminished and its unable to change its fiscal policy or  turn itself into a modern state. For decades bahrainis have contributed towards the state but were denied any meaningful political representation by the ruling family. They were left with few options and hence took matters into their own hands. The Al Khalifa regime responded by using live ammunition and immediately unleashed their Pakistani mercenaries on the demonstrators. The regime had showed its true colours.

The regimes of both Saudi Arabia and UAE gave the Al Khalifa family unlimited moral support in crushing the protests by all means necessary. Both regimes tried to bribe their populations with financial incentives in order to stop the protests from spreading. The Saudi King Abdullah announced a 36 billion dollar spending program, which was promptly rejected by the protestors who felt insulted.

Saudi protestors chose the 11th of March as their day of rage, and openly called for overthrowing Al Saud’s regime. Had live ammunition been used on the protestors it would have catalysed protests in the Emirates. Thousands of UAE nationals are ignored by the oil rich states of Abu Dhabi and Dubai and live in modest conditions in the poor Northern Emirates. The majority are angry at the huge economic gap in wealth between the different federations  and at being excluded from participating in major policy decisions. Some are curious why large coastal lands were sold to foreign investors.

Also, a large number of stateless people live in both the Emirates and Saudi Arabia. They were born and brought up in the country of their grandfathers, yet find it perplexing that the regime’s friends nationalises Indians and westerners.

‘Melodrama” and ”Middle East” are words that sit comfortably in the same sentence. But who would have thought, as the world thrilled to the peaceful revolt by millions of ordinary Tunisians in January, that just three months later two of the region’s bad-cop regimes - Riyadh and Tehran - might be seen to be verging towards war?

They are on snarling terms already. Amid the clamour for rights and reform across the Middle East and North Africa, the irony of these heavyweights coming to blows is that each is as repressive as the other - but none of that will stop the rest of the region, and the world, lining up to take sides.

For now it’s a cold war, fought by proxies elsewhere. In Lebanon, the Saudi-backed Sunnis have lost significant ground to the Iranian- and Syrian-backed Hezbollah, which now controls the levers of power in Beirut.

In the current crises, Riyadh and Tehran face-off in Bahrain - Tehran is backing the majority Shiites; Riyadh had thrown its lot in with the minority Sunni monarchy, as it attempts to smash the protest movement. And Yemen, on the Saudis’ southern border, is the most likely next point of friction between the two.

Historically, they have pulled in opposite directions. Saudi Arabia is Arab and Sunni; Iran is Persian and Shiite. Both invest hugely in spreading their beliefs to the farthest corners of the Muslim world. Iran lines up with the so-called Arab rejectionists - Syria, Hezbollah and Hamas. The Saudis line up with Egypt, Morocco, the Gulf statelets and the Palestinian Fatah faction. Riyadh pulls with Washington; Tehran against.

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

How that plays out will be intriguing in what has become a ”yes, but …” geopolitical, global crossroads. The permutations tantalise. If the Damascus regime of Bashar al-Assad collapses, what are the implications if the Syrian alliance with Tehran fractures? What becomes of Syria’s joint sponsorship, with Iran, of Hezbollah in neighbouring Lebanon and of Hamas in the Palestinian Occupied Territories?

All these are ”yes, but …” issues, as much for Damascus as for Tehran. Given that Syria remains, technically at least, at war with Israel, can we assume that any new order in Syria would rush to throw over Hezbollah and Hamas? Even Israel, as much as it loathes the Tehran-Damascus-Hezbollah-Hamas quartet, is wary of who and what might replace Assad in the Syrian capital, because just as the interim regime in Cairo is shifting away from the ousted regime’s alliance with Israel, there is no guarantee that a new Syrian leadership will be any friendlier to Tel Aviv.

What if Syria dumped Iran as an ally - but was to pick up expansionist Turkey as a new best friend in the region? Likewise, how might the regional balance be altered if Tehran was to lose Damascus as an ally, but in turn was to pick up Shiite-controlled Iraq and liberated Egypt, which this week revealed that it was resuming diplomatic relations with Tehran?

The official spokesman for the Egyptian Foreign Ministry told reporters: ”We are prepared to take a different view of Iran; the former regime used to see Iran as an enemy, but we don’t.” Similarly, the ministry confirmed that new Foreign Minister, Nabil Elaraby, was considering a visit to the Hamas-controlled Gaza Strip. As a return on the Americans’ huge blood-and-treasure investment in deposing Saddam Hussein and thereby delivering Iraq from minority Sunni control to a majority Shiite government that is becoming increasingly relaxed and comfortable in its dealings with Tehran, the US has handed the Iranian regime a rare gift. Yes, the ayatollahs might lose Syria as their Arab champion, but here is Arab Baghdad and Washington’s lock-step ally Cairo beckoning Tehran with open arms.

The Saudis are furious with Washington over the loss of Sunni control of Iraq and over Barack Obama selling out the Egyptian leader, Hosni Mubarak. Such is the chill between the two countries that Riyadh recently refused official visits by the US Secretary of State, Hillary Clinton, and by the Defence Secretary, Robert Gates. A measure of Saudi determination - maybe that should be ”desperation” - is that when Riyadh saw a need to quell the unrest in Bahrain, it ignored pleas from Washington and sent its own troops over the causeway that links Bahrain to the kingdom.

This is a regime that ordinarily pays others to fight its battles - see its funding of Iraq in its 1980s war with Iran; or has relied on allies - see American wars against Saddam Hussein in 1991 and in 2003.
Ramping it all into a religious conflict, a senior Saudi official was quoted: ”King Abdullah has been clear that Saudi Arabia will never allow Shia rule in Bahrain - never.” In turn, Iran’s President, Mahmoud Ahmadinejad, has warned the House of Saud that it ”should learn from Saddam’s fate”.

The stakes for the US are huge - a third of its imported oil comes from Saudi Arabia, and Bahrain hosts the US Navy’s Fifth Fleet, which patrols vital sea lanes through which a fifth of the world’s oil supplies are shipped. Equally, Riyadh and other capitals in the region have openly speculated on pursuing their own nuclear programs, if Tehran is allowed to persist with its program.

The story of the Washington response to all of this is circuitous.

The Western military intervention in Libya is dressed up as a humanitarian act, but don’t be fooled, writes Robert Kaplan of the Centre for a New American Security in The Wall Street Journal. Arguing that in foreign policy all moral questions are really questions of power, Kaplan observes: ”We intervened twice in the Balkans in the 1990s, only because Yugoslav dictator Slobodan Milosevic had no nuclear weapons and could not retaliate against us; unlike the Russians, whose destruction of Chechnya prompted no thought of intervention on our part.”

Was that then the rationale for Washington’s decision to throw its superpower weight behind the Libyan intervention? Not entirely - orchestrated leaks from the Obama White House reveal that a critical element in the decision to join the attacks on Libya’s leader, Muammar Gaddafi, was the message such an action would send to Tehran.

As reported by The New York Times, failure to act against Libya would be seen by Tehran as a failure by Obama to follow through on his claim that Gaddafi had ”lost the legitimacy to lead”, as a confirming sign of weakness that Obama also would not follow through on his vow that he would never allow Iran to build a nuclear weapon.

Benjamin Rhodes, a senior aide present for the talks, was quoted: ”The ability to apply this kind of force in the region this quickly - even as we deal with other military deployments in Iraq and Afghanistan - combined with the nature of this broad coalition, sends a very strong message to Iran about our capabilities, militarily and diplomatically.”

In a broadcast translated into Persian and beamed into Iran to mark last month’s Persian new year, Obama told Iranians: ”So far, the Iranian government has responded by demonstrating that it cares more about preserving its own power than respecting the rights of the Iranian people. These choices do not demonstrate strength, they show fear.”

In this context Libya is presented as a sideshow. The real contest is with Tehran, which the Americans want to see stopped in its nuclear tracks - and whose tilt for the balance of power in the entire region they have blocked.

But the Arab uprisings were something of a get-out-of-jail-free card for Iran. In January, Washington was happy in the belief that it was boxing Tehran in with economic sanctions; a deal with Russia to halt weapons deliveries to Tehran; and a computer virus called Stuxnet, which was eating its way through the centrifuge machines in the Iranian uranium enrichment program.

Fast-forward to the present, and Washington’s Arab allies are more preoccupied with their own longevity and - ka-ching, ka-ching - Iran is doing better than the sanctions might have allowed, thanks to the crises in the region driving oil to $US100-plus a barrel.

In all of this, Washington’s key ally in the region was to be Riyadh. But the contempt for the US coming out of the Saudi capital is visceral - in the view of the princes, the Bush administration botched by toppling Saddam, thereby delivering Iraq to Tehran; and the Obama administration is condemned equally for selling out Mubarak, and allowing the grubby rank-and-file Egyptians to have a meaningful vote.

In these twin efforts, Washington is seen to have dislodged two great stones in what was a Sunni wall that effectively thwarted Iranian ambition. Likewise, in refusing to go along with Saudi efforts to resolve the Palestinian crisis, Riyadh saw Washington prolonging the issue that Iran used to great effect in stirring the Arab street.

Washington, it must be noted, does not have a mortgage on hypocrisy in the region. The Americans look morally bankrupt - leading the charge against Gaddafi and dumping long-standing allies Mubarak in Cairo and Zine El Abidine Ben Ali in Tunis, while at the same time allowing the leaders of Bahrain, Yemen and Syria to get away with murder in confronting protesters.

But, like the US, the Iranian ayatollahs are into picking winners and losers. Initially they simply ignored the growing unrest in allied Syria, but when that became unsustainable, they took to casting the demonstrations against Assad as the work of Israeli-trained provocateurs.

The revolts in Tunisia and Egypt, according to the Tehran spin, were belatedly inspired by Iran’s 1979 revolution. And while it champions the ”Islamic awakening” rights of the demonstrators who are being brutalised by the regime in neighbouring Bahrain, it whitewashes out of the equation its own brutal suppression of Iranians who have attempted to revive the mass protests that erupted in the wake of Iran’s disputed presidential election in 2009.

For the mullahs, the region’s uprisings are a day-by-day proposition. They might posture endlessly about the holy Shiite suffering in Bahrain, but they know - and they know that their people know - the revolts in Tunisia and in Egypt were a secular lunge for a kind of democracy which, if successful, will make their theocracy a sad venture by comparison.

But for now, Iranian security forces have arrested opposition leaders and tightened media censorship and control of the internet and social media. In the region, the Iranian leadership observes a greater level of difficulty for Washington in achieving the three elements of its regional policy - a region from which the oil flows freely; in which Israel is protected; and in which citizens enjoy basic human rights, or at least to the extent that they do not attack US interests, as expressed by Thanassis Cambanis, of Columbia University. Or, to quote the Hillary Clinton lexicon - ”stability”.

As they happily crack the heads of the few who dare to take to the streets in Iranian cities, the mullahs cannot believe the Sunni Saudis were mug enough to send forces into Bahrain to put down an uprising by Shiites.

Despite endless complaints from Riyadh, there has been little to substantiate its claims that Iran is deliberately manipulating events in Bahrain - even US diplomats have reported no signs of Iranian intervention in the Bahraini protests.

It was only after the Bahraini regime unleashed its brutal attacks on demonstrators that posters of the Hezbollah leader, Hassan Nasrallah, appeared in the crowds and that calls were made for the ousting of the royal family. Iran did beam broadcasts of Nasrallah’s speeches into Bahrain, but foreign diplomats back the protest leaders’ denial of claims by the regime that they have received money and weapons from Tehran.

For the Saudis, the uprisings are a horrific moment. Abutted by all of Jordan, Yemen, Iraq and Bahrain, Riyadh views the varying degrees of unrest in all four as a threat to its own stability. Others agree.
Kaplan grinds all this into a single, core question for Washington: ”Which regime [will last] longer: Saudi Arabia’s or Iran’s? If the Saudi monarchy turns out to have more staying power, we will wrest a great strategic victory from this process of unrest; if Iran’s theocracy prevails, it will signal a fundamental eclipse of American influence in the Middle East.”

Answers to that question thrown up by some analysts, make the call in Tehran’s favour.

In a joint-paper, Ruth Hanau Santini, of the Brookings Centre on the US and Europe, and Emiliano Alessandri, of the German Marshal Fund, see the balance of power in the Persian Gulf shifting in Iran’s favour, ”just as it did in 2003, with the US-led war in Iraq”.

They write: ”Regional power shifts, rising oil prices and progress in its nuclear program all seem to have combined to boost Iran’s external ambitions.

”The authority of Saudi Arabia, which has long served as a counterbalance to Iran, the bastion of regional stability, and the guarantor of Israel’s survival, has been severely weakened by the ongoing turmoil.”

Reviewing Washington’s options, the paper concludes: ”Iran’s calculus that the current level of unrest will turn to Tehran’s advantage, without it having to lift a finger, makes it an especially difficult interlocutor.”

By Paul McGeogh

Saudi Arabia, the world’s largest oil producer and the regional domino whose fall the West fears most, yesterday announced that it would ban all protests and marches. The move – the stick to match the carrot of benefits worth $37bn (£23bn) recently offered citizens in an effort to stave off the unrest that has overtaken nearby states – comes before a “day of rage” threatened for this Friday by opponents of the regime.

The Saudi Interior Ministry said the kingdom has banned all demonstrations because they contradict Islamic laws and social values. The ministry said some people have tried to get around the law to “achieve illegitimate aims” and it warned that security forces were authorised to act against violators. By way of emphasis, a statement broadcast on Saudi television said the authorities would “use all measures” to prevent any attempt to disrupt public order.

Already, as The Independent reported yesterday, the ruling House of Saud had drafted security forces, possibly numbering up to 10,000, into the north-eastern provinces. These areas, home to most of the country’s Shia Muslim minority, have been the scenes of small demonstrations in recent weeks by protesters calling for the release of prisoners who they say are being held without trial. Saudi Shias also complain that they find it much harder to get senior government jobs and benefits than other citizens.

Not only are the Shia areas close to Bahrain, scene of some potent unrest in recent weeks, but they are also where most of the Saudi oil fields lie. More than two million Shias are thought to live there, and in recent years they have increasingly practised their own religious rites thanks to the Saudi king’s reforms.

But the day of protest called for this Friday was – perhaps still is – likely to attract more than restive Shias in the east. There have been growing murmurs of discontent in recent weeks; protesters have not only been much emboldened by the success of popular uprisings in Tunisia and Egypt, but online channels of communication by those contemplating rebellion have been established. Some estimates indicate that as many as 20,000 were planning to protest in Riyadh, as well as in the east, on Friday.

The jitters of the Saudi regime will be at least equalled in many parts of the world where sympathy for democracy movements is tempered by a reliance on petrol, which most people – for all the special pleading of the haulage industry – can just about afford. Saudi Arabia sits on a fifth of the world’s oil reserves.

The past week, with conflict disrupting all but a trickle of Libya’s oil production, has seen the Brent barrel price climb to $103, with UK pump prices swiftly going up to £1.30 a litre. The rise in the price per barrel was caused not just by the Libyan strife – the country produces only 2 per cent of the planet’s oil needs – but also by the prospect of further unrest in the region, although not the threat of full-scale breakdown in Saudi Arabia.

Yesterday, alarmist voices were not slow to exploit fears. Alan Duncan, an international aid minister and a former oil trader, raised the prospect in an interview with The Times of the price of crude rising well beyond 2008’s record of $140 a barrel, to $200 or more.

“Do you want to be paying £4 a litre for petrol?” he asked. “I’ve been saying in government for two months that if this does go wrong, £1.30 at the pump could look like luxury.” He outlined a “worst-case scenario” in which serious regional upheaval could propel the price to $250 a barrel, and thence to British drivers paying £2.03 a litre. London is now considering not imposing the planned 1p rise in fuel duty.

Sons of Libyan leader Muammar Gaddafi have failed to persuade prominent Saudi clerics to issue religious rulings against a revolt that is threatening to bring down the veteran leader, Al Arabiya television said on Monday.

The Saudi-owned channel said on its website that Gaddafi’s son Saif al-Islam had contacted one cleric, Salman al-Awda, and Saadi Gaddafi had reached out to a second, Ayedh al-Garni, but both rejected their calls.

“You are killing the Libyan people. Turn to God because you are wronging them. Protect Libyan blood, you are killing old people and children. Fear God,” Garni said he told Saadi.

Garni made the remarks on air on Sunday, the website said, adding Awda gave the same message to Saif al-Islam.

Awda has a weekly television show on Saudi-owned pan-Arab channel MBC1 and has been praised by al Qaeda leader Osama bin Laden before as a religious scholar he felt did not toe the government line. Garni gave lectures in Libya last year.

Gaddafi’s forces have been trying for days to push back a revolt that has won over large parts of the military and ended his control over eastern Libya. Gaddafi has accused followers of al Qaeda of staging the protests in the east, where Islamists have clashed with government forces in the past.

Saudi Arabia is the birthplace of Islam and the ruling al-Saud family see the clerical establishment, who have wide powers in society, as the leading authority in mainstream Sunni Islam.

The world’s top oil exporter is nervous that protests sweeping the region, which have included its neighbours Bahrain, Oman and Yemen, could ignite dissent on its own territory.

Activists have set up Facebook pages calling for protests on March 11 and 20 in Saudi Arabia. These have attracted over 17,000 supporters combined. Last week King Abdullah, a close U.S. ally, ordered wage rises for Saudi citizens along with other benefits in an apparent bid to insulate the kingdom from the wave of protests.

Gaddafi has long been an unpopular figure in Saudi Arabia, which once accused him of plotting to assassinate the king.

Clerics close to the government have said it is not the place of religious scholars to back protests or otherwise. But others have said Gaddafi is an illegitimate ruler and denounced him as an apostate.

More than 100 Saudi academics, activists and businessmen have called for major reforms including the establishment of a “constitutional monarchy” in the kingdom, in an Internet statement on Sunday.

“We will submit these requests to King Abdullah at a later stage,” said Khaled al-Dakhil, a political science professor at the King Saud University and one of the 132 signatories of the petition.

“We have high hopes that these reforms will be implemented,” Dakhil told AFP. “Now is the time.”

The petition posted on the Internet calls for the election rather than appointment of a Shura consultative council, and the creation of a constitutional monarchy — a demand that led to the arrest of activists in 2003-2004.

It also calls for expanded female participation in social and political life in the oil-rich Gulf country.

Saudi Arabia controls one-quarter of the world’s oil reserves, but unemployment among the conservative kingdom’s youth stands at 10 percent and women are largely kept out of the workforce.

Despite warnings by a senior member of the Saudi royal family, Prince Talal bin Abdul-Aziz Al-Saud, that “anything could happen” in the kingdom unless it speeded up reforms, the ageing monarchy has been slow in introducing reforms.

Another petition from journalists, lawyers and activists, labelling themselves as the “youth”, also addressed King Abdullah on Wednesday, urging him to introduce reforms.

The group demanded reducing the average number of members of the consultative council and the cabinet to 45, and 40 respectively, and allowing women to be present in both.

Saudi Arabia held landmark municipal elections in 2005, allowing citizens to choose half the members of their local councils. Women were however banned from participating.

But in 2009, the government extended the tenure of existing municipal councils by two years.

Meanwhile, two appeals for a “Day of Rage” in Saudi Arabia on March 11 have been posted on Facebook urging political, social and economic reforms in the kingdom. One had 12,600 fans by Sunday night.

Another Facebook page calls for a “Saudi revolution” on March 20, following in the steps of cyber-activists who led uprisings in Tunisia and Egypt that ousted their respective presidents Zine El Abidine Ben Ali and Hosni Mubarak of Egypt, the latter a close ally of Riyadh.

The revolts have also spilled over into Yemen, Bahrain and Oman.

In an apparent bid to keep his citizens happy, King Abdullah last week announced a boost in social benefits for Saudis, including a 15-percent pay rise for state employees and an increase in cash available for housing loans.

The package, worth an estimated $36 billion (26 billion euros), is mostly aimed at the youth, civil servants and the unemployed and comes as uprisings against ruling regimes spread across the Arab world.

Even as mainly Shiite Muslim protesters camp out in Pearl Square demanding major reforms, the deciding factor in the outcome for Bahrain could be neighboring Saudi Arabia.

Behind the scenes and away from the streets, Saudi Arabia, a key U.S. ally and top oil supplier, is seeking to return to the status quo in Bahrain - or at least to slow down calls for change. That Bahrain’s Shiite majority could gain more rights and powers from the ruling Sunni Muslims, Saudis think, could lead to unrest among their own Shiites, who live in Saudi Arabia’s oil-rich Eastern Province. In that case, reforms and economic incentives might not be enough to stop a movement from spreading there.

Bahrain is the first Persian Gulf country to be hit by the unrest that’s sweeping the Middle East, and Saudi Arabia is one of the last U.S. allies in the region since the regimes in Egypt and Tunisia fell. Although Bahrain is a tiny island of less than a million, what happens here could unleash calls for change in the much larger and powerful Saudi Arabia. It’s a case of Goliath fearing David’s wrath.

At stake are oil prices, which are now at their highest since October 2008, and even relations with the United States, which is walking a fine line between promoting the will of the people and supporting a longstanding ally.

In Saudi Arabia, officials already have quashed several small attempts to launch protests against some government decisions. Three days after the revolt began in Egypt, for example, roughly 50 residents protested the government response to deadly floods in Jeddah. They were promptly arrested.

Protesters in Manama are calling for Bahrain to become a constitutional monarchy, rather than an absolute one. Such a shift probably would give the Shiite majority more power. As the Saudis see it, that represents instability for them; Saudi Arabia’s Shiite minority could then rise up and ask for more freedoms its own.

Protesters in Manama threatened Wednesday to lash out at the Saudi regime if it thwarted their efforts, though they refused to give their names.

“If they stop us, we will go there,” one protester yelled.

For Saudi Arabia, the best outcome in Bahrain is enough change to pacify protesters but not so much that it risks government structure, said James Denselow, a Middle East writer and former researcher for Chatham House, a policy research center in London.

“Instability could not get more on Saudi’s doorstep than Bahrain,” Denselow said. “The outcome that Saudi Arabia wants is … for everybody to leave the streets and that small changes be managed by the elite. They want a slow process.”

As with much of what happens in Bahrain, Saudi influence occurs under a veil of secrecy. But there have been some telling signs of the scale of Saudi impact. Bahraini King Hamad bin Isa al Khalifa left the country Wednesday for the first time since the unrest began to meet his Saudi counterpart, King Abdullah, who had just returned home hours earlier after three months of medical treatment in the U.S. and recovery in Morocco. Observers said they think that the Bahraini king consulted with the Saudis over what to do next.

Earlier in the week, the Saudi Council of Ministers said in a statement: “The kingdom will stand by the sisterly state of Bahrain with all its capabilities,” which some Shiites in Bahrain interpreted as a threat to send military aid.

Many think that Saudi influence - coupled with a sizable minority here that has benefited from a Bahrain guided by Saudi Arabia - will thwart efforts for major reform, even as crowds remain camped out at Pearl Square, the main demonstration site. Bahrain’s crown prince has called for national dialogue, but neither the government nor the Shiite opposition groups have codified their positions, and discussions have yet to get under way.

Instead, the Bahraini monarchy said it had released 308 political prisoners since Tuesday; opponents said 12-year-olds were among them, and many of them joined protesters at Pearl Square.

On Wednesday, before King Abdullah landed back in Saudi Arabia, the Saudis announced that they will spend billions of dollars on economic aid to help their more impoverished citizens buy homes and start businesses in an attempt to keep protests from rising in the kingdom. Two weeks ago, the Saudis gave nearly $3,000 to every family in the country.

The Bahraini economy, which generates roughly $25 billion of gross domestic product annually, depends equally on tourism, the government, industry and financial services. Three of those four sectors account for around three-fourths of the GDP, and they’re directly or indirectly tied to Saudi Arabia. Saudis invest in Bahraini banks to conduct finances outside the watchful eye of the regime; Saudi Arabian oil revenues fund the Bahraini government; and three-day jaunts of escapism are key to Bahraini tourism.

“Saudi Arabia is not just a big neighbor to the west; it is safe to say that they have had a major influence on the economic development of Bahrain. The operating budget of the government is mostly oil related, 75 percent of which is of Saudi origin,” said a Western official here, speaking only on the condition of anonymity in order to be more candid. “That buys them a certain amount of influence.”

There are important social impacts as well. Many call Bahrain Saudi Arabia’s Las Vegas.

As soon as some Saudi women, who are banned from driving in their home country, enter Bahrain on the King Fahd Causeway, they jump into the driver’s seat. They take themselves to places such as the Arabic disco on the top floor of the Riviera hotel and pay hundreds of dollars to sit freely in Islamic garb and enjoy cold beers. Scantily clad women greet Saudi men at another bar downstairs.

Three days later, the Saudis whisk themselves over the bridge again and back into one of the most conservative societies in the world.

But Bahrain, the Saudis’ much-needed release valve, now has closed off. Traffic along the causeway between the countries has dropped dramatically, Bahraini officials who work on the border said, and businesses that cater to Saudis said their dealings had come virtually to a standstill. Indeed, supporters of the regime said the economic impact was a big reason to stop the protests.

Riviera hotel manager Mohammed al Shihab said that usually 50 percent of his patrons were Saudis. But only a handful of his 65 rooms are occupied these days. There are no reservations at the Arabic disco, just four fully stocked refrigerators of beer and refreshments. At the Sweetheart bar downstairs, four women in strapless dresses smoked hookahs and waited for the men who never arrived.

These days, Shihab said, he’s closed the Arabic disco altogether: “I can’t keep a disco open for four people.”

He said he wished the protests would stop; Bahrain can’t afford it.

“Now there is no life here,” he said. “Everybody is losing.”

By NANCY A. YOUSSEF

Saudi King Abdullah has enough oil money to avoid the kind of social upheaval seen among the poor in Egypt and Tunisia, but the ageing monarch must reform if he is to keep a lid on dissent, analysts and diplomats say.

Although the top oil exporter has more than $400 billion in petrodollars stashed away to address social grievances, Saudi Arabia must address issues such jobs and housing, and the desire of an internet-savvy generation to have its voices heard.

While his countrymen were glued to their television screens watching the fall of Egypt’s Hosni Mubarak and Tunisia’s Zine al-Abidine Ben Ali, Abdullah has spent the last three months convalescing abroad, leaving reform plans stalled.

In a tightly controlled country with 19 million people and no tradition of political opposition, Saudis have slowly begun griping on Twitter about corruption. Last week Islamists launched an opposition political party, a taboo in the kingdom.

In the second-largest city Jeddah, anger built up after floods killed at least 10 people, triggering rare protests and dozens of newspaper editorials questioning why authorities were not better prepared and the state of infrastructure.

“I think people expect (the leadership) now to deal seriously with their problems,” said political analyst Khaled al-Dakhil, citing unemployment, housing, dependency on foreign labour and corruption as issues that need to be addressed.

ABSENT KING, ELECTIONS ON HOLD

Since taking power in 2005, Abdullah has done almost nothing to alter a political system of absolute monarchy, and little to change a social code that imposes some of the world’s most severe restrictions on personal behaviour.

Even narrowly-focused reforms, such as opening technical universities and launching training programmes for teachers and judges, have met with doubt from some parts of a powerful conservative clerical establishment.

The health-related absences of the king, who is around 87, and his brother and designated successor Crown Prince Sultan — out of the country for most of the past two years for unspecified treatment — have left reforms in limbo.

“Progress on policymaking of all kinds seems to be very slow at the moment,” said the Economist Intelligence Unit’s Jane Kinninmont. “In a system where decision-making is usually very top-down, the absence of these leaders really slows down policy activity.”

Saudi Arabia held municipal elections in 2005 before Abdullah took office, then seen as a step on the road to overhauling its political structure. But a fresh round of elections in which women hoped to participate was shelved in 2009 due to conservative opposition, according to diplomats.

Elections for a parliament have yet to be announced.

Riyadh has been trying to reassure allies the government is working normally while Abdullah is recuperating in Morocco after undergoing surgery over a slipped spinal disk in New York.

“Several government projects have been held up. Reforms which require the authority of the king seem to be put on hold,” said a Saudi-based analyst who declined to be named. “I think Abdullah should come back as soon as possible.”

Analysts had expected Abdullah to reshuffle his cabinet to inject fresh blood, but the cabinet’s term expired more than a week ago and no new cabinet was announced, suggesting ministers — some in office for 30 years or longer — will stay for now.

Many Saudis are waiting for King Abdullah to approve a much-delayed mortgage bill to provide affordable housing. The bill requires the king’s authority as the housing shortage touches the sensitive issue that most land is owned by royals.

“A mortgage law is one area that would give hope to one million households who need assistance to get their own homes,” said Daniel Broby, Chief Investment Officer at British fund manager Silk Invest which is invested in the Saudi bourse.

Education is one of the areas where some reform has begun, but the system still struggles to produce the scientists, engineers, economists and lawyers the country needs.

Overshadowing any long-term reform plans is the unanswered question of succession in a country that has been ruled for nearly 60 years by a single generation of kings, all sons of the founder of the state, King Abdul-Aziz.

When Abdullah went abroad, Sultan who is only slightly younger returned to run the country in his absence. If both are incapacitated, another brother, Interior Minister Prince Nayef, is expected to take the throne. Nayef is viewed as a conservative and suspicious of reforms.

Eventually the throne must pass to a younger generation. The king has set up a family council to regulate succession but has not made clear how and when it will begin work. Meanwhile, younger Saudis are growing impatient for change.

“Nobody will call for (regime) change but there will be people calling for political reforms,” said prominent Saudi journalist Jamal Khashoggi.

“People have demands, people have frustrations.”

Saudi Arabia, which had supported President Hosni Mubarak throughout the mass protests that finally brought him down, said Saturday that it welcomed the peaceful transition of power in Egypt.

The kingdom’s state news agency said the government of the biggest Arab economy and the world’s top oil exporter expressed hope the Egyptian armed forces would ensure stability.

It made no mention of the pro-democracy demonstrators.

“The government of the Kingdom of Saudi Arabia welcomes the peaceful transition of power in the Arab Republic of Egypt, and expresses hope in the efforts of the Egyptian armed forces to restore peace, stability and tranquility,” the SPA agency said.

Mubarak’s 30-year rule over the most populous Arab state was brought to a tumultuous end Friday after weeks of protests across Egypt. His departure followed the flight of Tunisia’s long-time leader Zine al-Abidine Ben Ali to Saudi Arabia.

Both events have fueled speculation that popular discontent with economic hardships and a lack of political freedoms could spread to other Arab states, although the distribution of oil wealth among the wider population remains a key factor for the U.S.-allied Saudi royal family in muting dissent.

King Abdullah had expressed support for Mubarak during the protests against his 30 years of one-man rule.

As recently as Thursday, Saudi Arabia had denounced what it saw as “blatant interference” by foreign countries in Egypt, where the United States had called for a political transition and the lifting of emergency law.

Earlier the same day, British newspaper The Times said King Abdullah had told U.S. President Barack Obama that he would help prop up Mubarak’s government if the United States withdrew aid to Cairo. In a January 29 conversation, Abdullah had urged Obama not to humiliate Mubarak, the paper said.

Saudi Arabia controls more than a fifth of the world’s crude oil reserves. As home to Islam’s holiest sites, as well as the birthplace of al Qaeda leader Osama bin Laden, Saudi Arabia is also central to global efforts to fight Islamic militancy.