SAUDI ARABIA may be heading into a perfect storm of economic problems, social challenges and foreign policy crises. Tumbling commodity and energy prices are forcing the Saudi government to reform, diversify, streamline and rationalise the kingdom’s economy. The government is cutting subsidies, raising prices for services, searching for alternative sources of revenue, and moving towards a greater role for the private sector and women.

Cost cutting occurs at a time that Saudi Arabia is spending effusively on efforts to counter winds of political change in the region with its stalled military intervention in Yemen, its support for anti-Bashar al Assad rebels in Syria, and massive financial injections into an increasingly troubled regime in Egypt that has yet to perform. Traditional autocratic rule in the Middle East and North Africa is being challenged like never before.

Reform bumps into Wahhabism

Despite renewed doomsday prediction about the viability of the Saudi regime, its future however depends less on how it solves any one of these issues individually. Instead, it will be determined by how the kingdom’s rulers restructure their Faustian bargain with Wahhabism, the puritan interpretation of Islam in which the Al Saud cloak themselves but which increasingly looms as a prime obstacle to resolving their problems.

Founded on an alliance between the Al Saud family and descendants of 18th century preacher Mohammed ibn Abdul Wahhab, modern Saudi Arabia adopted an interpretation of Islam that is in many respects not dissimilar from that of the self-styled Islamic State (IS), the jihadist group that controls a chunk of Syria and Iraq. The Wahhabis’ jihadist and expansionist instincts have since dulled and its strict ulama or religious scholars class, has progressively compromised to accommodate the needs of the state and its rulers.

The question arises whether clerical accommodation of Saudi Arabia’s rulers will give the government sufficient leeway to tackle the multiple challenges it confronts or whether the Faustian bargain needs to be restructured to a degree that the very legitimacy of the Al Saud is called into question.

The Saudi rulers repeatedly bump into Wahhabism as they move to reform the economy, seek to differentiate Saud Arabia from IS, repair a tarnished international image, and ensure that the kingdom is not penalised for its four-decade old global funding of intolerant, anti-pluralistic Muslim communities in a bid to counter the revolutionary appeal of Iran. Moreover, the more the Saudi establishment ulama accommodates the state, the more it sparks militant critics who accuse it of deviating from the true path of Islam.

An Unaffordable Risk

In its attempt to differentiate itself from IS, Saudi Arabia has positioned itself as a victim of jihadist violence, taking a tough stance in confronting jihadists at home and abroad with its commitment to introduce ground troops in Syria, and painting Iran as the source of violence and instability in the Middle East. The Saudi effort has been only partially successful.

The risk the kingdom runs is becoming evident in ever greater scrutiny of Wahhabi and Salafi communities across the globe as a result of jihadist attacks like the ones in Paris in November. For example two major Dutch political parties have asked the government whether there was a legal basis for the banning of Wahhabi and Salafi groups.

If enacted, such a ban would lead to the prohibition of funding such groups and could prompt the Dutch government to ask the kingdom to remove its attaché for religious affairs from the Saudi embassy in The Hague. Over the years, other countries, including the United States, have moved to curtail inroads made by Saudi-funded religious groups. Ultimately, Saudi Arabia cannot afford to be penalised for the communities it funds and that lend the Al Saud their legitimacy. “Saudi Arabia’s strategic vision is, to put it bluntly, whatever is best for the ruling House of Saud,” said Saudi Arabia watcher Simon Henderson.

No Immediate Alternative

Similarly, the government will have to free itself from the social restrictions imposed by Wahhabism to rationalise the Saudi economy, bring women fully into the workforce, shift the economy’s emphasis from the public to the private sector, and diversify away from a 90 percent reliance on oil revenues.

Restructuring the economy inevitably will involve renegotiation of the Al Saud’s bargain with the Wahhabis and the kingdom’s social contract in which the population surrendered political rights for cradle-to-grave economic benefits.

With an unemployment rate of 29 percent among Saudis aged 16 to 29 who account for two thirds of the population, the government faces daunting challenges at home and abroad at a time of imposed financial austerity. Indulging puritan Islam is a luxury it increasingly cannot afford. Perhaps, the greatest challenge the Al Saud face is what alternative there is to Wahhabism that will legitimise their continued absolute rule. No immediate alternative presents itself.

James M. Dorsey is a Senior Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore and co-director of the Institute of Fan Culture of the University of Wurzburg, Germany.

Click HERE to read this commentary on the RSIS website.