Consider the economy. Saudi Arabia is a commodity-based, feudal-welfare state. The economy is narrowly based on oil, which is capital intensive and generates little employment. In the past, Saudi princes simply created make-work government jobs for their families and handed out royal largesse to everyone else. In effect, the masses were put on luxurious welfare. This system is collapsing under the weight of a demographic explosion. The population is increasing faster than oil revenue. The only solution is to transform Saudi feudalism into market-based capitalism and promote real growth, jobs, and income. But the House of Saud would have to open the Saudi Arabian economy and embrace globalization. Can it? (page 26).
Political change is critical as well. While Bahrain, Kuwait, and Yemen have opened their closed societies for parliamentary elections, Saudi Arabia remains very closed. There is little political freedom and few forums for dissent. Worse, the House of Saud has sought to deflect political dissent from itself by encouraging ultraconservative clerics to preach anti-Western, anti-American, and anti-Israeli extremism, often from their pulpits. It has financed thousands of religious schools in Saudi Arabia, Pakistan, and Afghanistan that do not teach science, math, or literature; they teach anti-Americanism, anti-Westernism, and anti-Semitism. Osama bin Laden, from a rich Saudi family, has tapped into this fury and pointed the finger back at the House of Saud as a corrupt partner of America. The policy of deflection has come home to threaten the ruling family. It can't continue.
Neither can the traditional alliance with the U.S. The American sense of betrayal by the Saudis is palpable. The fact that 15 of the 19 terrorists were Saudi was shocking. The revelation that Saudi money provided funding for bin Laden has left Washington deeply angered. The statements from the royal family implying that America brought the death of thousands on itself by not supporting the Palestinians were infuriating. The policies that the House of Saud used to stay in power have become a threat not only to the royal family but to its chief ally, the U.S.
It is now up to the House of Saud to save itself and its relationship with the U.S. Nothing less than a transformation of Saudi culture from medievalism to modernity is needed. Nothing less will save the House of Saud.