Saudi well-wishers greet the newly appointed Crown Prince Mohammed bin Nayef at a ceremony in Riyadh on April 29, 2015 (XINHUA) 

Saudi Arabia rolled out a series of changes in its domestic and foreign affairs in 2015 as it responded to a rather complex set of circumstances. In the face of challenges put forth by the so-called "Islamic State" (ISIS) militant group, the sharp decline in global oil prices, the continued war in Yemen, the ongoing conflict in Syria and the deterioration of Saudi-Iran relations, Saudi Arabia's somewhat new King Salman bin Abdul-Aziz Al Saud has taken rare steps in order to maintain political and economic control of these situations.

Though some international media outlets are pessimistic about Saudi Arabia's outlook, the current domestic political and economic situation is in fact—at least for now—relatively stable. However, the kingdom may face even more challenges in the months to come in foreign affairs, and the test will be how it responds.

Stability at home 

After King Salman was enthroned in January 2015, he ordered a reshuffle of high-level personnel in order to consolidate his power, including controlling critical departments such as the ministries of interior and defense as well as National Guard troops.

Notably, King Salman sacked his younger half-brother as the crown prince just three months after his enthronement, and promoted deputy crown prince Mohammed bin Nayef as successor. He then named his son, Mohammed bin Salman, as the new deputy crown prince. According to his supporters, these moves have helped to achieve internal unity of the royal family and develop future leadership for the country.

King Salman's policies have also gained support among the majority of the Saudi people, who are mostly Sunnis, especially in regards to the fight against the Houthis, a Shiite minority in the north of Yemen. Many Saudis agree that the Houthi rebellion forces, which are backed by Shiite Iran, are aggressive and threaten the security of their country. Thus they believe King Salman's decision to form a coalition to fight against the Houthis was wise.

Yet it is undeniable that Saudi Arabia still faces challenges both economically and in the security realm.

Indeed, the drastic decline of crude oil prices on the international market since June 2014 has delivered a heavy blow to the Saudi economy. In 2015, Saudi Arabia had a fiscal deficit of $98 billion, the highest in its history. On the other hand, the Saudi Government has largely increased its public spending since 2011, in order to maintain social stability at home. Fortunately, due to its huge foreign exchange reserves accumulated during the era of high oil prices, the country's strong economic base may help it avoid a potential economic crisis.

Mohammed bin Salman, the kingdom's Deputy Crown Prince, said in an interview with The Economist that the Saudi Government is mulling an initial public offering of state-owned Saudi Aramco, the world's largest crude oil producer. The move is still seen as one of the measures that the government could take to guarantee the nation's balance of state revenues and expenditures.

In the meantime, the Saudi Government has implemented some economic reforms to cut down expenses, including stricter regulations on fiscal matters as well as reducing wasteful governmental spending. Such measures may help Saudi Arabia sustain its current system. But if low oil prices persist, the high welfare norms of the Saudi people would eventually be affected, and the kingdom's social stability could be at risk.

In addition to the potential of economic calamity, the expansion of extremist groups like ISIS constitutes a significant threat to general stability and royal rule in Saudi Arabia. In the beginning of 2016, the Saudi Government executed 47 criminals who were charged with terrorist offenses, among which 34 were Sunnis, while only four were Shiite. Seen from the figures, the threat to Saudi Arabia's security brought by Sunni extremists is much higher than by Shiites, who only account for about 10 percent of the kingdom's population.

The suspected Sunni terrorists were charged for participating in terrorist attacks organized by Al-Qaeda in 2003-06. By executing alleged terrorists on a large scale, the Saudi Government aimed to deter potential extremists who are considering joining ISIS. The Saudi royal family is fully aware that an emboldened ISIS—or Al-Qaeda—could undermine its rule.

Hard-hitting diplomacy 

Along with the expanding influence of the Shia in some Arab countries, including Syria, Yemen, Iraq, Bahrain and Lebanon—much of which is supported by Iran—Saudi Arabia, as a bellwether for the Sunni world, is feeling more and more under threat. What's more, the policy adjustment of the United States toward the Middle East, and the lifting of nuclear-related sanctions on Iran after a decade-long international isolation in particular, have added to Saudi Arabia's dread of a rising Iran. As a result, it is more likely that the Saudis will adopt an aggressive foreign policy, especially regionally, even if it is from a defensive position.

In 2015, the Saudi Government internationalized the civil war in Yemen, creating a 34-country anti-terrorist military coalition. Saudi Arabia has always been keen to monitor developments in neighboring Yemen, and Riyadh has resolutely opposed Tehran's expanding influence in Saudi Arabia's "backyard." Thus the kingdom exerted all its efforts to create the coalition to support Yemeni President Abd Rabbuh Mansur Hadi and fight against Houthi rebels. According to Yemeni Government sources, pro-government troops have recently retaken 70 percent of the land. However, some major cities and towns in the north of the country including the capital Sanaa are still under the control of Houthis.

While Saudi Arabia does not share a border with Syria, the former has also taken a major role in the sectarian and geopolitical chess game going on in and on the sidelines of the civil conflict in Syria. If the Syrian regime led by President Bashar al-Assad, who belongs to the Alawite minority that is allied with Shiites, is overthrown by Sunni opposition groups, the Shia would suffer a great loss in the region. The Shiite group Hezbollah in Lebanon would also lose its anchor, and the political situation in Lebanon—a country that has long housed Sunnis, Shiites as well as Christians in roughly equal numbers—would in many ways be up for grabs.

Yet after several years of conflict, the Syrian opposition groups are losing advantage in the battlefield. Particularly after Russia's military intervention in the Syrian conflict, Riyadh has realized that they cannot rely on the Syrian opposition alone to topple the Assad regime. Therefore, in the beginning of 2016, Saudi Arabia, on the one hand, held a meeting with Syrian opposition leaders in an attempt to coordinate them to negotiate with the Syrian Government in one voice, and on the other hand, built a military coalition constituted by Sunni Arab countries to press the Assad regime to make concessions in the negotiations. On February 11, the Saudi Government even announced that it plans to send ground troops to "fight extremists" in Syria, which aroused significant concerns from other nations.

If much of the above can be seen as Riyadh's indirect wrestling with Tehran, its breaking of diplomatic ties with the latter in January—after Iranian protesters stormed the Saudi diplomat mission to protest the Saudi execution of a Shiite cleric—can be seen as a kind of direct affront between the two regional powers.

Smoke billows following an airstrike by the Saudi-led coalition on an army arms depot under Houthi rebel control east of the Yemeni capital Sanaa on June 7, 2015 (XINHUA/AFP) 

Diplomatic contest 

If Riyadh felt disappointed with the United States and European powers over the Iranian nuclear deal, it has retained its close relations with its important Western allies due to the kingdom's pragmatic needs.

Actually, Saudi Arabia may feel more disappointed with Russia. Riyadh had hoped to influence Moscow's regional policy by offering assistance as Russia is mired in economic hardship caused by Ukraine-related Western sanctions. Last June, Deputy Crown Prince Mohammed bin Salman paid a visit to Moscow and signed large-scale cooperation deals with Russia related to oil, defense, nuclear energy and space exploration.

Yet just after, Russia announced that it would send troops to Syria in the name of fighting ISIS. But Riyadh believes Moscow's real intention is to help its ally, President Assad, in his struggle to remain in office. Though the Saudi Government did not show its direct anger to Moscow, bilateral relations have been strained, even after Russian President Vladimir Putin announced the beginning of the withdrawal of Russian troops from Syria on March 15.

China's diplomats say that their Middle East policy has no hidden agenda, and thus it has gained the recognition of Saudi Arabia. Riyadh therefore has shown great interest in developing comprehensive, cooperative relations, and is supportive of China playing a bigger role in maintaining peace and fostering development in the region.

The author is a reporter with the Beijing-based Outlook Weekly magazine, where the article was originally published in Chinese

Copyedited by Mara Lee Durrell 

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