Iran Relations: One of Saudi Arabia's Many Problems
Bloomberg Businessweek|January 11 - January 17, 2016

The setback in relations with Iran is just one of Saudi Arabia’s many problems.

Matthew Philips, with Vivian Nereim

“They’re surprised when people have a negative reaction”

The collapse in Saudi relations with Iran after the execution of a prominent Shiite cleric marks a grim start to the new year for Saudi Arabia’s King Salman. Since succeeding his half-brother, Abdullah, who died in January 2015, the 80-year-old Salman has gone to war in Yemen, faced Islamic State-backed suicide bomb attacks inside his borders, and watched rival Iran sign an historic nuclear accord brokered by the U.S., the kingdom’s strongest ally for the past 50 years. Crude oil, the lifeblood of the Saudi economy, has remained cheap, depriving the country of billions in revenue.

On Dec. 28 the Saudi finance ministry announced big spending cuts for 2016. According to Luay al-Kahtteeb,a visiting fellow at the Brookings Institution’s Doha Center in Qatar, one item that did increase was military spending, rising to 25 percent of the budget (vs. 18 percent in the U.S.). A week later, the kingdom executed 47 prisoners it labeled terrorists, including the Saudi Shiite cleric Nimr al-Nimr. Days later, Saudi Arabia’s already strained relations with predominantly Shiite Iran were in tatters. After protesters set fire to the Saudi embassy in Tehran, the kingdom cut relations with the Islamic Republic.

Some analysts say al-Nimr’s execution was a way to bait Iran into overreacting. That would help the Saudis isolate the rival nation, as well as give them an excuse to slow down peace talks on Syria, which the United Nations has tentatively scheduled for Jan. 25 in Geneva. Now that Russia is at the table, the Saudis are concerned that any deal will leave the Iran - and Russia-backed Syrian President Bashar al-Assad in power, as forces coalesce around the goal of defeating Islamic State. The Saudis see Assad as a puppet of Shia Iran who rules over a Sunni-majority country. Since the embassy was attacked, Saudi Arabia has expressed continued support for the peace talks.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM BLOOMBERG BUSINESSWEEKView All

Bottom-Fishing Can Be Scary

In a rough year for stocks, it’s tempting to try to grab bargains now. Just be careful

6 mins read
Bloomberg Businessweek
May 09, 2022

RETHINKING FAIR PAY

Companies are overhauling compensation amid an uptick in relocations

4 mins read
Bloomberg Businessweek
May 23, 2022

MAKING CONTACT

Getting close enough to touch an animal usually isn't a great idea. But in a quiet lagoon on Mexico's Baja Peninsula, the whales are happy to oblige

6 mins read
Bloomberg Businessweek
May 23, 2022

BUILD BACKS BETTER

In a scoliosis market where treatments have changed little since the 1970s, even new brace technology shows how far we still have to go

10+ mins read
Bloomberg Businessweek
May 23, 2022

ASTRONOMICAL HARASSMENT

A long-term survey of women in astronomy reveals a sordid culture of discrimination and inequality in academia

4 mins read
Bloomberg Businessweek
May 23, 2022

The Teen Who Defied DeFi

How a young math whiz nabbed $16 million by exploiting decentralized finance | Index Finance was one of the great hopes of decentralized finance, the blockchain-based movement challenging Wall Street's gatekeepers. With one swift set of transactions, an 18-year-old math prodigy liquidated $16 million of its assets and opened a new legal frontier

10+ mins read
Bloomberg Businessweek
May 23, 2022

Nigerian Projects Stall as Chinese Loans Dry Up

President Buhari's legacy could be marred by Beijing's waning appetite for costly public works abroad

4 mins read
Bloomberg Businessweek
May 23, 2022

The Twitter Deal's Big Debt Bill

If the acquisition goes through, the company will face mounting interest expenses as it tries to grow

3 mins read
Bloomberg Businessweek
May 23, 2022

The Very Last of Lehman Brothers

The bank whose collapse marked the beginning of the 2008 financial crisis is only mostly dead. Meet the people attending to its final remains

10+ mins read
Bloomberg Businessweek
May 23, 2022

This Time Is Different

The slump that startups thought would never happen has arrived

6 mins read
Bloomberg Businessweek
May 23, 2022