Saudi Arabia breaks off ties with Iran after al-Nimr execution

[Guest]

Persians like fine poetry and fine wine
I doubt they are working the battle plans related to the KSA invasion as we speak.

Anyways,
Key point is the outcome of the coming Iranian barrels to the market
No doubt it will be extra revenues for Tehran at whatever price. Since we are looking at the marginal increase over whatever they have now. Whereas for KSA the coming Iranian barrels means lower price for longer. So more borrowing from financial markets and drawing out from foreign reserve to plug the budget deficit. This is compounded by the fact that KSA is highly related to O&G whereas Iran' is not.

Tie in the above with Saudi' recent agitation and it all make sense.

Edit: nothing to do with messianic overdue clash of Shia vs Sunni
Just economics ... like most other things

[snapper]

“A book of verses underneath the bough
A flask of wine, a loaf of bread and thou
Beside me singing in the wilderness
And wilderness is paradise now.”

Not sure the Revolutionary Guard or the Grand Ayatollahs agree with the old poet nowadays.

[zara]

Looks like major economic change is underway in Saudi.

Saudi economic reforms


If wonder if the population will be so complacent when they start having to pay tax for the first time and actually pay for all the free heathcare and education

[Parihaka]

Looks like they're taking to the tents to me. The most interesting thing that article had to tell me was 70% of the population was under 30. Who says the Saudis have been doing nothing for the last 50 years?

[Garry]

Agree that the 5th is playing stabilizing force v-a-v energy supplies coming out of the Gulf

But do you REALLY believe that Iran can take on KSA and their minions (invasion as you say)
sounds like it is other way around with all the weaponnery that KSA and UAE and others operate

Looking at how badly KSE is beaten in Yemen, we can state - they are not good operators of all that hardware.... iranians look like much more motivated soldiers.

I think that on suni side, Iraqi sunis (including IS) are most motivated to fight Iranians.

[zara]

Looks like they're taking to the tents to me. The most interesting thing that article had to tell me was 70% of the population was under 30. Who says the Saudis have been doing nothing for the last 50 years?

Hardly a surprise - What else is there to do when you live in an empty desert and all forms of fun are punishable by death or flogging?

[S2]

Zara,

Please stay away from gross distortion. We've established that fucking is fun and will likely not get you killed in KSA. Nobody has said camel racing will get you killed. That's at least two things "fun" which won't get you killed.

Now...I know you've got this agenda cranked up against the KSA. Got it. Understood. Am I to believe you're here to testify to the elevated status enjoyed by women living under the beneficent rule of the Shia mullahs? If not, you've a bias that's not yet been fully explained.

[Guest]

Looking at how badly KSE is beaten in Yemen, we can state - they are not good operators of all that hardware.... iranians look like much more motivated soldiers.

I think that on suni side, Iraqi sunis (including IS) are most motivated to fight Iranians.

Garry,
Yemen may yet turn into their Vietnam as they may not have it in their stomach. I believe (could be wrong) even the Egyptian army opted not join in the ground war.
It is not an emotional as Iraq is for the Sunni.

That said, I cannot help but look upon KSA in awe of the soft power they wield. They have Pakistan and their nuclear arsenal on one side and pretty much own Egypt. The two aircraft carriers that Egypt 'bought' from France is really bankrolled by KSA to do their deeds. The royal family maybe decadent and old but the technocrats that build its fortune and served the crown are highly competent. Daniel Yergen' Prize cover some of these characters and their accomplishment.

And most importantly, within the Sunni world, I believe KSA/UAE/Egypt 'block' has won the 'war' against the Turkey/Qatar/ex-Morsi' Egypt' political Islam 'block'. They are now leading.

[Garry]

Garry,
Yemen may yet turn into their Vietnam as they may not have it in their stomach. I believe (could be wrong) even the Egyptian army opted not join in the ground war.
It is not an emotional as Iraq is for the Sunni.

That said, I cannot help but look upon KSA in awe of the soft power they wield. They have Pakistan and their nuclear arsenal on one side and pretty much own Egypt. The two aircraft carriers that Egypt 'bought' from France is really bankrolled by KSA to do their deeds. The royal family maybe decadent and old but the technocrats that build its fortune and served the crown are highly competent. Daniel Yergen' Prize cover some of these characters and their accomplishment.

And most importantly, within the Sunni world, I believe KSA/UAE/Egypt 'block' has won the 'war' against the Turkey/Qatar/ex-Morsi' Egypt' political Islam 'block'. They are now leading.

Hi Xerxes, I agree about influence of Saudi in Sunni world fueld by their money and possesion of holly land. However I understand that kingdom of SA and the whole Middle East is on the verge of greatest desauster within the next 10 years. I am not sure KSA will survive the comming crisis.

My educated bet is that oil prices will surge to highs of over 100$ may be even 200$ for a year or two.... but then they would fall to less than today..... and for a very long period.... probably decades.... and this desauster for oil producers will materialize within the 10 years.... somewhen before 2025. This time the purpuse will be decline of demand of oil..... due to domination of hybrid drive in commercial vehicles and later in cars.... and no growth of fleet will be cabable to compensate for decline of consumption rate

This will burn the existing Middle East economic and social structure.... and unfortunatelly lead to turbulence which would resemble current Libya....

as for the current strength of KSA, it is passing by....... it is doomed to fail and become divided....

I hope to find more time to elaborate more on this topic

ps. This desauster will hit not only KSA, but also rest of Middle East, Iran, Central Asian petrostates, Russia, Venezuella, Norvegia,.... and so many many others

[Guest]

Garry,

I am no expert.
I just do not see a repeat of $100/bbl.
Perhaps the fair price (trading band) shall be in the 50s and 60s. One thing for sure, it is undershooting far below what i should be.

You need significant demand ramp-up OR significant supply destruction to get to $100/bbl.

Back in the 2000s, the story was the BRIC, however of the 4 only China got anywhere. Even then, China at that time (mid-90s) was far below its potential and started off a much lower base and had to consume a lot of raw materials to get where it is now. Now it has caught up. And it will still grow ,,, just not with the same % growth that it was back in the day.

I don't see a demand story like that these days. Perhaps, Modi' India; but even Modi' India will not match the might of China' command economy.
It was truly the last frontier.

Or perhaps Africa 15 years or so from now ... but it is so fragmented ,,,

Shale truly changed everything ... and we need to re-baseline our thinking as well as energy markets have been restructured

[Loke]

I am getting very concerned about Saudi Arabia.

So far the social contract between the royal family and the rest of the population worked OK, however I see several clouds on the horizon:

1. Tension between the Shia minority and Sunni majority within Saudi Arabia
2. Internal tension within the Sunni's -- extremists organizations including IS and Al Quada unfortunately have some support in a small part of the population
3. The relationship between Saudi Arabia and Iran

I think one of the main issues is actually the low oil price -- this will for the foreseeable future reduce Saudi income significantly.

So far people in SA have been quite satisfied; subsidized health care, education, housing, transport, etc. etc. made people accept the restrictions on freedom of expression and other freedoms.

I doubt the oil price will go above 50 USD in the near future; US shale oil and Iran back in the market will see to that. What will the royals do when they start to run out of money? In addition, the Saudi population is very young -- and we all know that young people are the first to become dissatisfied, and also the first to act if they are unhappy.

The royal Saudi family needs to be very careful --- SA may blow up sooner than anybody thinks. I would not be surprised if it happens within the next 2-5 years.

I hope I am wrong. Imagine all those F-15 and Typhoon in the hands of IS...

[SteveDaPirate]

I hope I am wrong. Imagine all those F-15 and Typhoon in the hands of IS...

As bad as the Saudis are at operating complex western hardware, IS would be far worse. Fighters don't last too long without extensive ground infrastructure to provide maintenance and operational support. Look at how much effort Iran has had to put into keeping their F-14s going once western support for them dried up.

[Loke]

As bad as the Saudis are at operating complex western hardware, IS would be far worse. Fighters don't last too long without extensive ground infrastructure to provide maintenance and operational support. Look at how much effort Iran has had to put into keeping their F-14s going once western support for them dried up.

The IS would operate in a completely different manner from Iran, they are not at all comparable. The stated goal of IS is to rebuild the caliphate. Thus they are looking at taking over the whole of the ME. If they were to get access to modern weapons (and people capable of operating them) they would start using them pretty quickly.

They would probably run out of bombs and missiles before running out of spare parts. Anyway, the US would probably intervene, so hopefully most of the fighters would not make it into the air but rather be destroyed on the ground by B-2s and F-22s (and F-35 if they become fully operational at that time).

Anyway two of the main issues for Saudi Arabia will be budget deficits and growing unemployment:

“Saudi Arabia is running large budget deficits of 15 to 20 percent of GDP (Gross Domestic Product), and is drawing down on its currency reserves. The IMF (International Monetary Fund) estimates that the Saudis will run of cash reserves in five years, and then will go deeply into debt,” James D. Savage told the Tasnim News Agency.

http://www.tasnimnews.com/en/news/20...ure-us-analyst

Saudi Arabia's plans for economic reform foresee winding down 'jobs for life' in an inefficient state bureaucracy and replacing them with new careers in a dynamic private sector.

That's the theory, at least. But in the short term, there is a problem: 2016 is set to be an abysmal year for job creation. Public spending is being slashed and growth forecasts for oil and non-oil portions of the private sector are gloomy.

Some economists, including al-Sheikh, expect to see increased pressure from the Ministry of Labor for "job substitution," in which companies are compelled to swap out cheaper foreign workers for Saudis.

But upheaval in the workforce would place additional pressure on an already wobbly private sector, risking an even sharper slowdown.

Even then, no feasible amount of substitution would accommodate the hundreds of thousands of young Saudis about to start the job hunt.

http://www.reuters.com/article/us-sa...-idUSKCN0WB0LN

This, together with a few other things can trigger unrest that can lead to a very dangerous situation.

[TopHatter]

As Steve pointed out, the maintenance requirements of modern Gen 4+ fighters would be far beyond the capability of ISIL. Hell, even the US military relies heavily on contractor support for many weapons systems.
Then there's the problem of finding pilots that successfully take off, employ the aircraft's ordnance and then land safely.

Which leads to yet another problem for ISIL:

Quite frankly the worst thing that any armed force could do would be to attempt to use modern conventional weapons platforms against the major powers.
You might as well put a big "KILL ME" sign on the side of your captured fighter or MBT. The arena of conventional arms is Disneyland for the US, UK, Russia, etc.
They would be bouncing up and down with joy at the prospect of facing a terrorist force that gets right out into the open with such an obvious target as a tank or an aircraft.

ISIL's best chance for success is what it's always been: Unconventional guerilla tactics, blending in with the populace, civilian vehicles, small arms and man-portable ordnance.

[SteveDaPirate]

ISIL's best chance for success is what it's always been: Unconventional guerilla tactics, blending in with the populace, civilian vehicles, small arms and man-portable ordnance.

The other side to this coin is that ISIS has no operational or organizational experience with a weapons system like modern fighters.

Let's say ISIS manages to snag some jets and even some pilots to fly them. How do the pilots know where to go? Does ISIS have radar coverage, navigation, and communications to direct their new aircraft towards planes they want to shoot down, or away from planes coming to return the favor?
Regarding airstrikes, without experienced FACs/JTACs and a means of communicating with them, ISIS jets are about as likely to bomb their own guys as their intended targets.

The best they could realistically hope for would be a cool looking propaganda tool they could fly around until something breaks or it gets shot down.

Modern military equipment isn't meant to be operated in a vacuum, and even the best group of fighters/tanks/ships will be screwed in short order if they try to go solo against an opponent who understands combined arms operations.