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Sunday, 11 August, 2002, 20:19 GMT 21:19 UK
Difficult times for Saudi Arabia
Aramco oil refinery in Saudi Arabia
Saudi Arabia's oil revenues are shrinking

For Saudi Arabia, these are testing times.

King Fahd's health is failing, the economy faces massive problems, al-Qaeda is stirring inside the country, the Americans want a war with Iraq next door.

And now, Saudi Arabia has been described by a respected US think thank as "a sponsor of terror at all levels" - could things get any worse?

Saudi Arabian Foreign Minister Prince Saud al-Faisal
There are no coherent plots or threats to the Saudi royal family
Unfortunately for the Saudis, they probably will.

The country's biggest problem is the economy - there simply are not enough jobs to go around.

A huge portion of the national budget is swallowed up by civil service salaries, often for people who put in two hours work a day in token jobs that contribute little to the economy.

Meanwhile, oil revenues are shrinking in real terms, while the population is growing at nearly 4% a year.

Power struggle

Against this backdrop, there is a hidden power struggle going on between the senior ruling princes.

And the country as a whole is being pulled in opposite directions.

Liberal-minded professionals want to see it open up more to the rest of the world, but many religious conservatives would like it to shut its door to the West.

In recent weeks, the Islamists have grown bolder, openly voicing their hatred of America and its policies.

For the ruling al-Saud dynasty that must contend with all these problems, there is one consolation: they have no obvious rivals for power.

As much as people grumble about the extravagance and corruption of some of the thousands of princes, there does not appear to be any coherent plan to overthrow them.

But in the absence of any serious reform, that could change in the future.


Key stories

European probe

Background

IN DEPTH
See also:

07 Aug 02 | Americas
06 Aug 02 | Americas
19 Jun 02 | Middle East
31 May 02 | Middle East
27 Mar 02 | Country profiles
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