Iranian-Saudi New World Deal - Iran/Turkey

Following his meeting with visiting Saudi Defense Minister Prince Sultan bin Abd al Aziz al Saud, Iranian President Mohammad Khatami stated on May 3 at a press conference in Teheran that there are no differences any longer between Iran and Saudi Arabia. Khatami said that the two countries now have a relationship based on friendship and cooperation. "The recent contacts between the two sides have resolved all problems and there is currently no hurdle for the two states to expanding their ties in all fields," said Khatami, who will travel to saudi Arabia later this month.

If they are anything more than diplomatic hyperbole, Khatami's comments could signal a major shift in the relationship between the two states, with possible economic, political, and military implications for the whole Middle East region. Since the Iranian revolution, Saudi Arabia and Iran have been anything but regional allies. While Saudi Arabia traditionally backed strategic interests of the United States in the Middle East, Iran experienced international isolation due to its extremist politics and anti-Western orientation. The two countries' relationship has been shaped over the past two decades mostly by their mutually antagonistic geopolitical alignments. In addition, the relationship between Saudi Arabia and Iran, both major oil- producing nations and members of OPEC, has often been defined by the two countries' rivalry over their respective shares of the world petroleum market.

If Khatami's declaration of rapprochement between Saudi Arabia and Iran is real, it would undoubtedly redefine the balance of power inside the 11-member OPEC. Iran, the second-largest OPEC producer, has criticized the production quota assigned to Saudi Arabia as excessive. The two countries have both battled for market share and struggled for revenues by quota-busting, which in turn has effectively eliminated OPEC's ability to implement any production control agreement to control oil prices. If Saudi Arabia and Iran are now able to eliminate their differences in their oil production strategies, then the situation inside OPEC would change dramatically. Together, the two countries produce 11,695,000 bpd of crude oil, 42.5 percent of the total OPEC production. The third-largest OPEC producer, Venezuela, currently accounts for about 10.8 percent of total OPEC oil production. Coordination between Saudi Arabia and Iran would help these two producers more easily influence OPEC production management, which could result in higher oil prices.

Even more importantly, a reconciliation between Iran and Saudi Arabia would have serious implications for the two countries' relations with the United States. Formerly a regime of religious extremists which was bent on toppling the monarchies of its neighbors through terrorism and military threats to Persian Gulf oil transit, Tehran is now an advocate for multilateral, non- aligned regional economic and security arrangements. With more than three times Saudi Arabia's population, competing security interests in the Persian Gulf, and a Shiite Persian population -- versus the Sunni Arabic population of Saudi Arabia -- Iran's underlying differences with Saudi Arabia remain. However, if Iran is willing to coordinate its policies with the Saudi monarchy over the short run, Saudi Arabia -- America's influential ally in the region -- may be able to provide a conduit for improved Iranian relations with other Arab states and with the U.S. In short, Saudi Arabia could become the mediator between the U.S. and Iran, helping Iran to gradually break out of its political and economic isolation. The benefits to Iran are clear -- it desperately needs foreign investment and it needs the West to counterbalance a resurgent Russia in Central Asia and the Caucasus.

Beyond the benefits Iran might hope to realize in oil production and pricing, and in reestablishing connections with the West, there are other geopolitical advantages to be realized. After the assassination of a senior Iranian general by Iraq-based Iranian opposition forces, tensions have once again risen along the Iran-Iraq border. Meanwhile, Saudi Arabia has reportedly captured a number of Iraqi infiltrators, and Iraq claims to be preparing for a major U.S. or U.S.-led attack or invasion. Iran has called in the past for an Arab-Persian "NATO" to police the region so the U.S. wouldn't have an excuse to intervene. Iran, which currently heads the OIC, has also been attempting to increase the activity and effectiveness of that group in solving international disputes. Perhaps this newfound cooperation with the Saudis could be the beginning or formalization of a coordinated Iraq policy.

The Saudis, however, have to handle this potential realignment gingerly. Kuwait, Qatar, the United Arab Emirates have traditionally taken a lead from the Saudi monarchy, and its not clear that the Saudis are willing to allow a resurgent Iran to influence them unduly. And, although the Saudis would dearly love to have the Iranians help contain the Iraqis, they have no desire seeing the Iranians eliminate Baghdad as a buffer. Nevertheless, the evolving Saudi Arabia-Iran understanding contains the seeds of a major realignment in the Middle East.

In a special one day session on July 3, the foreign ministers of the six Gulf Cooperation Council (GCC) states -- Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, and the United Arab Emirates -- wrapped up a meeting left hanging three weeks earlier when a dispute erupted between Saudi Arabia and the UAE. The 71st ministerial meeting of the GCC broke down on June 12, with the UAE blasting the rest of the GCC -- particularly Saudi Arabia -- for abandoning it in its dispute with Iran over three strategic islands in the Gulf. Mediation by Qatari Emir Sheikh Hamad bin Khalifa al Thani helped patch up relations between Saudi Arabia and the UAE and paved the way for the new GCC initiative. The deal agreed to on July 3 calls for the establishment of a three country committee comprised of representatives of Oman, Qatar, and Saudi Arabia, as well as the GCC secretary, who will arrange for direct talks between the UAE and Iran. The committee is to hold its first meeting in a week and present its recommendations to GCC heads of state by May of next year. Iran has rejected the committee, calling instead for unmediated bilateral talks with the UAE.

Though the GCC rift has been temporarily mended, the events surrounding its emergence raise interesting questions about the course of Saudi rapprochement with Iran. The UAE has been uncomfortable with the steady improvement in relations between Riyadh and Tehran, as Abu Dhabi has long argued that any GCC opening to Iran be predicated on a resolution of its dispute with Iran over the islands of Abu Musa, and Greater and Lesser Tunb. The islands have been occupied by Iran since 1971. When the UAE failed to win unequivocal support for its position at the June ministerial meeting, a war of words quickly erupted between Abu Dhabi and Riyadh, with the UAE going so far as to threaten to suspend its membership in the GCC.

When UAE Foreign Minister Rashid Abdullah al-Nuaimi went on independent Qatari television on June 5 to denounce Riyadh's behavior, Saudi Defense Minister Prince Sultan bin Abd al-Aziz called a press conference to lash back. Prince Sultan said it was strange to refer to rapprochement as "being at others' expense," and noted that the UAE had been a model for relations with Tehran, carrying out almost half its trade with Iran despite the territorial dispute. More precisely, Prince Sultan called the UAE essentially "fifty percent Iranian." He went on to say, "We are not going to embark on childish quarrels," and insisted that Saudi Arabia "is far above these questions."

More surprising than the fact that Riyadh would slap around Abu Dhabi in favor of improving relations with Iran is the person who delivered that slap Prince Sultan. Sultan -- by some accounts second in line for the throne behind Prince Abdullah -- and his son Prince Bandar, have previously been considered Washington's most reliable doors into the Saudi royal family. Prince Sultan was even blamed for instigating insults in a Saudi mosque against visiting Iranian envoy Ali Akbar Hashemi Rafsanjani, presumably in an effort to torpedo the then nascent rapprochement. Yet Prince Sultan was far more confrontational in dealing with the UAE than was Prince Abdullah, who has been at the forefront of improving relations with Iran.

One possibility is that Prince Sultan's rebuke of the UAE was indicative of a major shift in U.S. policy -- actively favoring the process of Iranian-Saudi reconciliation. However, U.S. Undersecretary of State Martin Indyk travelled to the Gulf to personally reassure the UAE of Washington's support for its island claims. Moreover, at a June 22 meeting in Abu Dhabi of GCC Deputy Foreign Ministers, Indyk warned of the continued threat posed by Iran to the Gulf states and reiterated Washington's offer of military assistance -- including a theater missile defense system -- to counter the Iranian threat. Still, the U.S. could be playing a little good-cop bad-cop, supporting the rapprochement but keeping the UAE in the wings as a check, lest the friendship progress too far, too fast. In that case, Prince Sultan's statements could have had the double mission of showing U.S. support for the Saudi initiative, while intentionally instigating a hostile response from the UAE.

There is, however, another option. A struggle is currently underway for succession to the Saudi throne, and Prince Sultan may have come out more aggressive than Prince Abdullah to bolster his bid for the throne. By being more pro-Iranian, or at least more anti-UAE, Sultan may have been hoping to demonstrate his independence from Washington. Whatever his motivation, Prince Sultan has apparently been chastised for his aggressiveness and dispatched on a tour of four Gulf states -- including the UAE, Qatar, Bahrain, and Kuwait -- to consolidate bilateral ties and consult on a variety of issues. Meanwhile, in a keynote speech at the opening of the Shura advisory council on July 5, Saudi King Fahd reiterated Riyadh's position that improvement in Saudi- Iranian relations is in the benefit of both sides, the entire region, and the Arab and Islamic community.

Whether or not the U.S. is on board, Saudi Arabia appears back on course toward reconciliation with Iran. It has blunted the UAE's opposition, in the very least postponing the issue until next May. And one way or the other, the pro-American faction of the royal family appears to support the rapprochement. With so much that should be standing between Saudi Arabia and Iran, their rapidly improving relations can only raise the question, who is guaranteeing the stability and security of this unlikely match?

On July 18, Iranian television broadcast a statement by the Iranian foreign ministry condemning a Turkish air raid on border outposts in the mainly Kurdish inhabited Piranshahr area in Iran's Western Azerbaijan province. The report claimed that positions of A Brigade of the Third Martyr's Division were hit during the raid, with one Revolutionary Guard soldier reportedly killed and two wounded. The governor of Western Azerbaijan province also claimed that five civilians were killed and ten were wounded. The next day, July 19, the Iranian Army command issued a statement emphasizing that it has the right of "proper response" to these provocations. It also said that Iran holds Turkey responsible for the "further development of events."

Turkish Defense Minister Sabahattin Cakmakoglu denied the Iranian charges, saying that he had no information on the claims, and added only that his office was still collecting information on the matter. On July 19 Turkish NTV Television, quoting sources at the foreign ministry, said that the Iranian claims were simply not true.

Diplomatic rows between Tehran and Ankara are nothing new. Turkey has repeatedly accused Iran of sheltering PKK rebels. Iran has denied these accusations and claims that there are no PKK bases on its territory. Iran has previously condemned Turkish intervention in Iraq, though it has also refrained at times from condemning such intervention depending on the surrounding circumstances. Iran has spoken out against Turkey's military cooperation with Israel. Tension increased between the two countries last week over student unrest in Tehran. Turkish Prime Minister Bulent Ecevit said that the students were justified to protest against an oppressive regime. Iran protested Ecevit's comments and charged that the unrest was caused by foreign interference. The Tehran Times went so far as to suggest that Turkey may have provoked the riots.

Still, despite their regular diplomatic sniping, Iran and Turkey have avoided serious confrontation, and both have good reason not to exacerbate this situation. Turkey does not need to provide Iran with a justification for supporting the Kurds, just as it is mopping up the remnants of the PKK. And Iran is attempting to cope with internal unrest and a power struggle between moderates and conservatives, and does not need an international crisis at this time. However, assuming for the moment that the Iranian allegations are true, there is one justification for Turkey risking -- even fomenting -- a temporary crisis with Iran.

Last week, Greek, Armenian, and Iranian officials met in Ankara to discuss expanding economic cooperation. That would have been relatively mundane, had not the Iranian and Greek defense ministers announced prior to the meeting that the three countries intended to sign a military cooperation pact. If one looks at a map, it is obvious that any such alignment would be meant to contain no other country but Turkey. While there were no reports that a pact was signed, and Armenian and Greek officials denied the potential for such a pact, the public statement of intent said enough to Ankara.

Armenia and Syria are currently re-equipping their militaries with some of the latest Russian technology, and Greece is facilitating the sale of Russian arms to Greek Cypriots. Greece has maintained constant pressure on Turkey over airspace violations as well. Turkey nearly went to war with Syria a few months ago over Syrian support for the PKK, and relations between the two countries have shown little sign of improvement. The Turkish Army continues to make occasional forays into northern Iraq, and Baghdad has been less complacent about Ankara arming the Kurdistan Democratic Party (KDP) -- Turkey's Kurdish allies in Iraq.

As potential threats to Turkey increase, support from its allies appears fade. Since the Kosovo crisis marked Turkey as a reliable NATO member and the Greeks as a thorn in the organization's side, Turkey has had to worry about NATO trying to improve relations with Greece at its expense. As it is, Turkey's peacekeeping troops were kept few in number and their arrival in Kosovo was delayed, though considering Turkey's relations with Albania and the threat they pose to Greece, concern over Turkey's deployment is understandable. Turkey also has to worry about the accelerated strategic positioning underway between Russia and the West in the Caucasus and Central Asia in the wake of the Kosovo crisis. Russia's relations with the West have become far more confrontational -- a sleeping bear awakened -- and the U.S. is rushing to solidify relations to Russia's south. This is apparently occurring in part at Turkey's expense, as the U.S. is easing its support for the expensive proposed Baku-Ceyhan pipeline to the Turkish coast in favor of a quicker, cheaper expansion of the Baku-Supsa route to Georgia and a new route from the Bulgarian coast through the Balkans.

Turkey's military cooperation with Israel seems less secure with the election of new Israeli Prime Minister Ehud Barak. Barak is pressing for a comprehensive peace settlement involving Syria, Lebanon, and the Palestinians -- a plan which could strengthen Syria and decrease Israel's commitment to Turkey. Additionally, Barak is certain to continue pursuing long-running Israeli back channel talks with Iran to contain Iraq. And while Iranian President Mohammad Khatami is unlikely to sign a formal peace treaty with the "Zionists," he could facilitate a substantial decrease in tension, reducing Israel's need for involvement in eastern Turkey.

Ankara is looking at a regional situation in which its foes are becoming stronger and more belligerent and its friends are being distracted from their commitments to Turkey. If there are grounds to Iran's allegations, this may explain the Turkish attack. Taking a page from Pakistan's foray across the Kashmir Line of Control, Ankara could have risked an air raid, then denied it, in hopes of sparking a little tension and winning greater attention from the U.S. and the West. A little instability can go a long way. Iran will have to reconsider Turkish-Israeli links. Syria will reconsider its position and its negotiations with Israel in light of Iranian-Turkish tension. The U.S. will have to pay more attention to Turkish adventures against the Kurds. Of course Pakistan's venture backfired. And if Turkey is playing the same gambit, it risks souring ties with both Israel and the U.S. while adding Iran to its list of foes.

On Nov. 11, a delegation of Iranian government and business representatives arrived in San Vicente del Caguan, a town deep in the jungles of southern Colombia that is held by the Revolutionary Armed Forces of Colombia (FARC). [ http://www.stratfor.com/meaf/countries/colombiairanmap.htm ] The delegation visited to assess a site on which the Iranians will build a meat-packing plant and slaughterhouse that would process beef bound for Iran. The visit was the latest step in a process that began Oct. 21, when Colombian and Iranian officials signed an agreement committing $3 million in Iranian investment.

There is, however, one major oddity: Colombia's major cattle production takes place on the other side of the Andes Mountains, more than 300 miles to the northwest. Near San Vicente del Caguan there is little but jungle. There are no major roads and precious little infrastructure. The town is, however, in the heart of drug- producing territory held by the FARC, the country's largest and most successful guerrilla movement after more than three decades of civil war.

Sizable implications will grow from this comparatively small investment in a little town. The government of President Andres Pastrana may push his stalled peace process forward by placating leftist guerrillas. But the government is equally likely to spark anger among Colombia's most violent right-wing elements. By opening the door to Iran, the government unwittingly risks increasing the influence of Iranian-backed terrorists in South America. From nearly any angle, this investment will likely damage relations with Washington.

With the apparent blessing of top Colombian officials, talks began in the spring, when a delegation of Iranian officials and businessmen visited the town of San Vicente del Caguan, which is in the municipality of Caqueta. On Oct. 21, Iran's ambassador to Colombia, Hossein Sheikh Zeineddin, and the office of San Vicente's mayor signed the deal. Significantly, the government's top peace negotiator with the guerrillas - peace commissioner Victor G. Ricardo - signed the agreement, acting as guarantor.

But not everyone in the Pastrana government appears pleased; indeed, the military seems distinctly displeased. On Nov. 27, Colombian Defense Minister Luis Fernando Ramirez accused the Iranians, who resisted an inspection of their baggage, of being military advisors to the FARC, reported Agence France-Presse. Iran has denied that it is using the investment as a cover. In Tehran, Foreign Ministry spokesman Hamid Reza Asefi dismissed the charge as astonishing, according to the BBC's monitoring of Iranian official radio.

The Pastrana government's motives are unclear. One possible explanation is that Colombia is in dire need of economic development. In recent testimony to Congress, Undersecretary of State Thomas Pickering described an economy in free fall. In the midst of a recession, its economy has contracted by 5.8 percent in the first quarter of 1999, and its Gross Domestic Product (GDP) is forecasted to fall 3 to 4 percent by year's end. Unemployment stands at nearly 20 percent. But the Iranian investment seems like a poor start, improperly located even to lend any immediate help to the country's cattle industry.

A more likely explanation is that the government is attempting to kick-start a badly stalled peace process. By steering investment into FARC-held territory, the government may be trying to get the guerrillas re-engaged in negotiations. The FARC has even intimated recently that it may not observe an upcoming Christmas cease-fire. Ricardo's role in securing the Iranian investment suggests that reviving the peace process is the true agenda. Another possibility - however remote - is that Ricardo was acting on his own. The president has remained largely silent on the entire investment deal.

Regardless of the government's motives, the deal will undermine the country's right-wing elements and its violent paramilitaries. The right, too, is deeply involved in drug trafficking. And the right's paramilitaries are increasingly believed to be behind most of the country's politically-motivated murders. The right is not likely to take Iranian investment very well in the territory of its sometime business partners and longtime arch-enemies - leftist guerrillas. The government in Bogota can expect a backlash.

The government is also cracking open the door to increased influence by both Tehran and the terrorist movements it has supported. South America is an important proxy battlefield for the Middle East's struggles. There appears to be a longstanding relationship between the FARC and the Iranian-backed Hezbollah [ http://www.stratfor.com/SERVICES/GIU/060399.ASP ]. Hezbollah has training camps in southern Brazil. Hezbollah has also been implicated in attacks on the Israeli embassy and a Jewish cultural center in Argentina.

In the current deal, any Hezbollah presence could result in an increased flow in arms to the FARC; in turn, the FARC may find a way to use the new Iranian connection to export cocaine. The United States - the chief market for Colombian cocaine - is saturated. Colombia produces 80 percent of the world's cocaine. Demand and prices, however, are rising in other regions of the world, most notably Russia. In exchange, Hezbollah may find a way to ship arms from the other side of the world to Colombia.

In a much larger sense, Iran stands to reap considerable benefits: It is now positioned to play an important role in the Western Hemisphere's most important civil war. The Iranian ambassador said his government hopes to aid the peace process because, after all, it does not need the additional beef, reported the Colombian weekly publication Semana on Nov. 10. Iran gains a toehold at the front line of the drug war. San Vicente is in the region where new, U.S.- trained counter-drug battalions will operate. Iran can also increase its influence on both the Colombian and Venezuelan oil industries.

The United States is not likely to take any of this in stride. Investment in guerrilla-held territory will strike many in Washington as capitulation to the drug trade. And the mere presence of Iran in the most sensitive place in the Western Hemisphere is likely to force policymakers to re-think ties to Colombia. Pastrana may be using the Iranian deal to pressure Washington into delivering $1.5 billion in aid, only half of what Pastrana wants. Recent developments may quash aid altogether.

A little over a year into his administration, the Colombian president has worked to bring peace to a country torn by decades of civil war. Pastrana is already weakened by his concession of land to the FARC. In a sticky position, attempting to satisfy the FARC, the right, everyday Colombians and the United States, Pastrana may see the Iranian investment as a chance to get the peace process back on track. Suffering from increasing criticism and declining popularity, the president is risking a renewed challenge from the right, upsetting the United States and regional turmoil. And those are the rewards only if the gambit succeeds.

Iran's Foreign Ministry announced Jan. 11 that Nigerian President Olusegun Obasanjo accepted an invitation to visit Iran soon. The invitation was extended to Obasanjo by Iran's ambassador to Nigeria, on behalf of Iranian President Mohammad Khatami. The Iranian Foreign Ministry's press statement added that a date for the visit had not yet been fixed. The proposed visit will most likely involve some discussion of the upcoming OPEC meeting in March, at which the 11 members will discuss extending the current production cuts.

Saudi Arabia and Venezuela first discussed the possibility of extending oil cuts during a Nov. 20-21 conference on foreign involvement in developing Kuwait's oil fields. Since then, Riyadh and Caracas have been strong advocates of extending OPEC quotas. Saudi Arabia's economy is vastly dependent on the price of oil, so naturally Riyadh wants prices to remain high throughout 2000. Venezuelan President Hugo Chavez wants oil prices to remain high because he needs to have reliable revenues to fund his populist social agenda.

Enacted in March 1999, the production cuts are officially set to expire at the end of March. Several other member nations have voiced support for extending the cuts past the March deadline. According to a report by Platt's Oilgram news, on Dec. 2 Algerian Oil Minister Youcef Yousfi said he saw no reason for OPEC to raise crude oil output in March. He added that he hoped OPEC would be able to formulate a mechanism to "control" the quota system in 2000 and achieve a "real" balance in the market. Also on Dec. 2, Kuwaiti oil minister Sheikh Saud Nasser al-Sabah said an extension of the cuts beyond March was a strong possibility.

On the other hand, Iran and Nigeria have pledged to maintain production cuts until the March 2000 deadline - but they have remained curiously silent on extending the cuts. Qatar's oil minister has indicated that OPEC is privately divided. He told OPEC's official news agency that, "most OPEC countries prefer to extend the current production cut agreement beyond March."

Except for Indonesia, Iran and Nigeria have the most to gain by breaking free of OPEC's limits and boosting production. Both Iran and Nigeria were brought grudgingly into production cuts, in a deal driven by Saudi Arabia and Venezuela. Both Iran and Nigeria have a history of cheating on OPEC quotas. The Paris-based International Energy Agency (IEA) reported that OPEC supply cuts fell from 91 percent to 87 percent in September, and that notable gains took place in Nigeria. In April 1999, Iran only made 79 percent of its promised cut, according to the energy newsletter Petroleum Argus.

Most importantly, both countries have discovered new oil reserves and need the revenues with which to develop infrastructure in these fields. Iran, which is breaking out of its international isolation [http://www.stratfor.com/MEAF/commentary/m9909222137.htm], is trying to attract foreign investment to develop new fields in the south. The current high oil prices - hovering around $24 per barrel - make this an ideal time to boost production and grab a quick windfall of cash. In Nigeria, ethnic unrest has hindered production and helped keep the country's production in line with OPEC's quotas. The strife can be resolved by the use of force, and Obasanjo has recently indicated he will do so if necessary [http://www.stratfor.com/MEAF/commentary/m9911222215.htm].

Considering Iran and Nigeria's current state of affairs, it is logical that Khatami's invitation to Obasanjo was actually extended so that the two can forge a joint front in the upcoming negotiations on OPEC quotas. This would pit Iran and Nigeria against Saudi Arabia and Venezuela. In March, if Iran and Nigeria decide to capitalize on high prices and flood the market despite an extension of OPEC quotas, the price of oil will fall significantly [http://www.stratfor.com/MEAF/commentary/99011162305.htm].

As significantly, such an event will have an impact on political relationships in the Persian Gulf. Relations have warmed recently between the Gulf's two most important regional powers, Iran and Saudi Arabia. But over-production by Iran and falling oil prices would strike a significant blow against Saudi Arabia's oil dependent economy. Riyadh might perceive this as an Iranian attempt to gain leverage in the relationship and ties would promptly cool.

Saudi Arabia's Interior Ministry announced April 24 that a security officer was killed and four others injured in unrest stemming from conflicts with religious minorities. The Interior Ministry reported that a member of the Ismaili Shia community was arrested for "practicing sorcery," which Saudi Arabian law bans. During the arrest in the southwestern border town Najran, 50 to 60 supporters gathered around the residence, set cars ablaze and opened fire, killing a member of the security services. In another incident, the Saudi Arabian religious police reportedly raided an Ismaili mosque, closed it down and confiscated its books.

Following this incident, hundreds of Ismailis protested in front of the residence of the Najran provincial governor, Prince Meshaal. According to Agence France Presse (AFP), security forces and religious police were deployed in force at Najran's main intersections overnight amid warnings by the Interior Ministry that suspected culprits would be "arrested, questioned and put on trial in keeping with Islamic law." The crackdown - which has international and domestic implications - was most likely in anticipation of an intensifying border conflict.

The Ismaili sect is an offshoot of Shia Islam, the split having occurred hundreds of years ago over recognition of the Seventh Imam. Today, the Ismaili sect is relatively small and is not supported by the larger Shiite community. Sunni Muslims are the majority in Saudi Arabia; Shiites make up only 7 percent to 10 percent. There is no official number of Ismailis in Saudi Arabia, but Saudi diplomats say there are tens of thousands of Ismailis, mostly living in the mountainous regions of the southwest, according to AFP.

International human rights organizations regularly accuse Saudi Arabia of politically and economically discriminating against religious minorities. However, the recent action against Ismailis is unusually excessive.

The Saudi security services may have cracked down on the Ismailis in anticipation of Yemen-backed infiltrators in the Saudi-Yemen border dispute. Saudi Arabian military forces in late January reportedly occupied the strategic Jahfan Mountain along the border with Yemen according to London-based paper Al-Quds al-Arabi. Saudi Arabia's occupation of this mountain has further soured relations between Riyadh and Sanaa. Yemen has a significant Shiite population, many of whom belong to the Ismaili sect, located across and along the border with Saudi Arabia. The incidents in Najran indicate that the border dispute between Saudi Arabia and Yemen is heating up.

If in fact the border dispute is growing more heated, Iran may have a key opportunity to accomplish one of its major goals - to play a greater role in the region. Iran and Yemen on April 19 signed cooperation agreements in several fields. Also, Iran and Saudi Arabia are moving closer to signing a security agreement. Saudi Arabia's interior minister has been authorized to sign such an agreement, and Iran's defense minister is in Saudi Arabia to meet with King Fahd. Iran could feasibly step in and take an important mediation role. This would greatly improve its standing not only in the immediate region, but also worldwide.

Domestically, the Ismaili crackdown indicates a potentially destabilizing aspect within Saudi Arabia. The regime is losing its ability to placate the masses. The more it loses the means to keep them happy, the more it has to resort to rule through force. Little domestic backlash will come from persecuting the Ismailis, an alienated sect of the minority Shiites.

However, at some point, the Saudi regime is likely to crack down on a group that will not capitulate quietly. When they lash out at a more prominent group, possibly in a larger city like Riyadh or Jeddah, a specific protest of the action could snowball into a more general protest against the regime. If protests begin in a larger city, for whatever reason, anyone with a beef against the regime could quickly join in - even without sympathizing with the initially wronged party.

If and when a low-level popular demonstration occurs, the potential snowball effect could be disastrous. Conflicting trends that breed instability are emerging in Saudi Arabia's economy and demographics. Saudi Arabia's two fastest growing masses are the royal family and the poor. As the royal family grows, more money is needed to feed their generous annual allowances. Those funds come directly out of the Saudi economy, rather than trickling down to the impoverished masses. Meanwhile, the Saudi government has been largely unsuccessful in its efforts to diversify and stabilize the enormously oil-dependent economy.

The rich get richer and the poor get poorer while the numbers and claims on the unstable revenues increase - creating a vastly divided population. As Saudi Arabia's royal family continues to discriminate and rule by strict Islamic law, while draining the economy, those who are poor and persecuted will become more rebellious.