(Updates with mortar attack in fifth paragraph.)
July 7 (Bloomberg) -- Saudi Arabia is a target for both sides in Iraq’s deepening conflict, one reason it has ramped up security levels to confront a threat that’s more immediate than the Arab Spring revolts three years ago.
The world’s biggest oil exporter convened its national security council for a rare meeting under King Abdullah, and has bolstered defenses at the border with Iraq, where militants last month seized several cities and declared an Islamic state. The king vowed to protect the nation’s “resources and territory and prevent any act of terror.”
For the 90-year-old monarch, the threat is twofold. Sunni militant groups, like the Islamic State led by Abu Bakr Al- Baghdadi that now controls parts of Iraq as well as Syria, have historically posed a challenge to the Al Saud family’s rule. Another danger comes from Shiite militias, which struck across the Saudi border in the past and are now being called to arms to help fight the insurgents.
“An al-Qaeda offshoot armed with heavy weaponry and flush with cash wreaking havoc a mere 100 miles from their border is not a dream scenario,” said Fahad Nazer, a political analyst at JTG Inc., a consultancy based in Vienna, Virginia. “It also doesn’t help that at least two Shiite militias have vowed to bring the war to Saudi Arabia.”
Illustrating the risk, three mortars were fired at the border area today, landing close to a housing complex for border guards near the city of Arar, guards spokesman Mohammed al- Ghamdi said in a Twitter posting. There were no immediate reports of casualties or damage.
Ties between OPEC’s two largest oil producers have been strained since the U.S. invasion of Iraq in 2003.
As the region’s main Sunni power, Saudi Arabia has links with Iraq’s Sunni minority, who dominated the government before the fall of Saddam Hussein and now complain of discrimination under Prime Minister Nouri al-Maliki’s Shiite leadership. There’s no Saudi embassy in Baghdad, and little commercial contact.
The gap has grown wider with the recent violence.
Maliki last month accused Saudi Arabia of “siding with terrorism” by providing financial and moral support, and blamed the kingdom’s leaders for the Sunni insurgency in northern and western Iraq. Saudi Arabia replied that it’s at the “forefront of combating terrorism” and blamed Maliki’s “sectarian policies” for destabilizing Iraq.
The conflict has raised the risk of a civil war in Saudi Arabia’s neighbor. The Sunni militants have overrun Mosul, Iraq’s biggest northern city, as well as Saddam’s hometown of Tikrit. They’re also fighting for the nation’s biggest refinery in Baiji. The army said it foiled the latest attempt to seize the facility on July 4, killing all militants who took part.
As the Islamists advanced in Iraq, the benchmark Saudi stock index posted its first monthly drop since August. Oil prices jumped in the first days, with Brent crude reaching a nine-month high of $115.71 a barrel on June 19, before paring gains as the conflict spared Iraq’s main oil-producing region in the south. Saudi Arabia said it’s ready to respond to any supply shortage.
Official Saudi support for Iraq’s Sunnis doesn’t extend to extremists like the Islamic State, according to Gregory Gause, a professor of political science at the University of Vermont in Burlington and a specialist in Gulf politics. The group declared a caliphate on June 29 and said it was changing its name from the Islamic State in Iraq and the Levant, or ISIL.
Such organizations, including al-Qaeda, have attacked Saudi targets in the past, and accused the Al Sauds of collaborating with enemies of Islam through their alliance with the U.S. Saudi Foreign Minister Prince Saud al-Faisal has described the Islamic State as an “epidemic.”
While the Saudi leaders don’t like Maliki, they see the Islamic State as “very dangerous to them,” Gause said. The problem is that there are plenty of people in Saudi Arabia and other Gulf states ready to support the Sunni insurgents “financially, politically and even as volunteers to fight,” he said.
Transnational jihadists, not domestic clerics from the Wahhabi school of Islam, have posed the biggest threat to the Al Saud since the kingdom’s formation in 1932. It’s a target because it’s the birthplace of Islam, home to Mecca’s Grand Mosque, Islam’s holiest shrine, and Medina, where the Prophet Mohammed is buried.
Beyond its borders, Saudi Arabia used its armed forces and oil wealth to counter the political risks that emerged during the Arab Spring in 2011. It sent troops to neighboring Bahrain to help crush protests by the Shiite majority there against Sunni rulers.
In Syria, where the Islamic State is among the groups fighting against President Bashar al-Assad, Saudi Arabia has backed some of the more moderate rebels while seeking to stop Saudis from joining the war. Jihadi rehab centers have been set up for those who evade the ban.
Egypt received billions of dollars in Saudi aid after the army toppled President Mohamed Mursi, whose Muslim Brotherhood is viewed with hostility by Saudi Arabia because it seeks to bring political Islam to power via the ballot box.
“The Muslim Brotherhood is a medium to long-term threat for countries like Saudi Arabia,” said Hassan Hassan, an analyst at Delma Institute, an Abu Dhabi-based research center. “The Islamic State is an immediate threat. It is openly violent and, most importantly, is more capable of galvanizing jihadi- minded citizens.”
Since a wave of attacks a decade ago, including car bombs in 2006 that targeted the world’s biggest oil processing plant at Abqaiq, Saudi security forces have cracked down on al-Qaeda, pushing many members across the border into Yemen.
That hasn’t prevented militants from striking the kingdom. Four Saudi soldiers were killed near the Yemen border in two separate attacks by Islamists, Interior Ministry spokesman General Mansour al-Turki said on July 5. Two attackers were killed in a suicide bombing inside a Saudi intelligence building in the town of Sharourah, he said.
A newer generation of Islamist militants is already seeking to recruit young Saudi men, including through social media.
The Islamic State “has never hidden its ambitions about Saudi Arabia,” said Mustafa Alani, an analyst at the Geneva- based Gulf Research Center.
The Sunni insurgents command some support among Saudi Arabia’s dominant Sunni community, making their emergence a domestic political challenge as well as a security risk. The threat from Iraq’s Shiites is different.
In November, the Shiite group Jaysh Al-Mokhtar said it fired six shells into a desert area near the kingdom’s border with Iraq and Kuwait. Since then, with encouragement from Maliki and religious leaders, the Shiite militias who fought Sunnis in a bloody civil war after the U.S. invasion have regrouped to fight the Islamic State.
The elaborate name of one newly formed Shiite militia includes the phrase “Soldiers for the Liberation of Najd and Hejaz,” the Arabic names for the main regions of Saudi Arabia, according to Nazer, who has also worked as an analyst at the Saudi Embassy in Washington.
In the eyes of Saudi Arabia’s rulers, the Shiite threats ultimately emanate from Iran, their main regional rival.
Iran has supported Maliki and has close ties with some of the Shiite militias. It has shown in Syria that it’s ready to help defend its ally Assad. Saudi leaders will be concerned about a similar intervention in Iraq, which unlike Syria borders their own country, according to Alani.
“They can live with Syria, they can’t live with Iraq,” he said. If there are signs of Iranian involvement, “there will be public pressure for counter-intervention. They will have to take measures, and the measures may not only be on the border but inside Iraq as well.”
--With assistance from Mahmoud Habboush in Abu Dhabi.