Saudi-Iran escalation will prolong regional conflicts

Significance The protests came in reaction to Saudi Arabia's surprise decision to execute prominent Shia cleric Nimr al-Nimr, who was imprisoned for his role in anti-government protests in eastern Saudi Arabia in 2011. The escalation between rival regional powers Saudi Arabia and Iran comes as efforts intensify to solve proxy conflicts in the region, most notably Syria and Yemen, and to fight the rising threat from the Islamic State group (ISG). Impacts Rising anti-Shia sentiment in Saudi Arabia and Bahrain will fuel ISG's rise. Iran's hardliners will play on anti-Saudi rhetoric in order to strengthen their position ahead of elections next month. Saudi Arabia may refuse to participate in international talks on Syria later this month.

Significance The Saudi-led campaign against the Huthi movement in Yemen looks set to continue well into 2016. At the end of 2015 there were signs that the length and scale of the coalition effort had weakened the Huthis, but not yet to a point where the group is ready for serious negotiations. Impacts The war will enable both al-Qaida and Islamic State group (ISG) to expand in Yemen and potentially threaten Saudi Arabia. The conflict will intensify anti-Shia rhetoric in Saudi Arabia, further straining the loyalty of the Saudi Shia minority. Fiscal pressures at home will increase Saudi Arabia's incentive to draw the conflict to a close. Progress in Yemen could boost the succession prospects of the war's key architect, Deputy Crown Prince Mohammed Bin Salman.


Significance Syria's beleaguered mainstream rebel movement suffered numerous territorial losses in 2014 at the hands of Islamic State group (ISG) and the regime. Partly in response to these losses, a wider realignment of rebel alliances is now underway. Rebel groups are shifting away from overambitious schemes to unify under one national umbrella or on an ideological basis, and are moving towards more pragmatic local coalitions that are creating a de facto geographical 'north-south' divide among the rebels. Impacts Any international fightback against ISG requires the overcoming of US and Saudi objections to LF and other Islamist rebels. A nationwide Syrian rebel army will only materialise in the event of a US-led ground campaign against ISG. Recruiting tribal militias will probably prove a cheaper and more practical option. Saudi Arabia will prioritise the rebel scene in the south and Euphrates valley, leaving Qatar and Turkey to dominate the north. Dire military conditions will reinforce the drive for pragmatic cooperation among Damascus rebels.


Subject Saudi policy in the Middle East. Significance King Salman's accession in January 2015 heralded a major change in foreign policy. The decision-making process was streamlined and placed in the hands of princes from the younger generation of royals, the new Crown Prince Mohammed bin Nayef and Deputy Crown Prince Mohammed bin Salman. These changes have created an unprecedented dynamism in Saudi leadership and led to direct interventions in regional crises. Impacts Antagonism towards Tehran will deter cooperation on oil price or production initiatives. It will also constrain the potential for Gulf Arab states to do business with post-sanctions Iran. Failure to show victory in Yemen will cloud Mohammed bin Salman's succession chances, and could see his removal after King Salman's death. Saudi state's sectarian, anti-Iranian rhetoric risks increasing popular support for Islamic State group (ISG). Instability could increase in Lebanon as Saudi Arabia draws back its support.


Significance His speech came a day after a series of suicide bombings, almost certainly carried out by Islamic State group (ISG)'s local affiliates. The attacks, intended to mark the end of the holy month of Ramadan, were largely unsuccessful, but were unusual due to their apparent nationwide coordination, and their targeting of one of Islam's holiest sites, the complex of the Prophet's Mosque in Medina. Impacts Continuing ISG attacks will reduce confidence in the economy, setting back the ambitious plan for economic transformation by 2030. However, the group's limited capabilities mean it is unlikely to pose a serious threat to business and the oil sector. The Medina attack is likely to damage ISG's standing among salafi-jihadists, and increase support for Saudi Arabia in the Muslim world.


Headline SAUDI ARABIA: Islamic State group attacks set to rise


Subject Ideological divisions between Islamic State group and al-Qaida. Significance Islamic State group (ISG) and al-Qaida are both rooted in the same ideology, namely jihadi-salafism, which draws heavily on the Islamic tradition native to Saudi Arabia known as Wahhabism. However, fundamental ideological differences exist between the two rival groups, contributing to their acrimonious split in February 2014. Ideology underlies their divergent strategies and priorities, and will play a key part in determining which one wins the battle for supremacy of the global jihadist movement. Impacts Reconciliation is highly unlikely, but tactical cooperation will still occur on the ground. Sectarian attacks will increase, raising perceptions of a regional Sunni-Shia war. Competition for leadership of the global jihad could see both groups attempt attacks on Western targets. Military setbacks could narrow ISG's current lead over al-Qaida in terms of popularity and profile. Al-Qaida's more conciliatory and accommodative approach to local groups may mean it has greater prospects of long-term survival than ISG.


Subject Russia's significant recent reinforcement of the Assad regime with the deployment of combat aircraft around Lattakia. Significance President Vladimir Putin appears determined to ensure that President Bashar al-Assad's regime is part of Syria's future and that Russia will retain significant influence in a post-conflict state. Impacts Russia has already made some diplomatic gains from its intervention, but soon the costs will become more apparent. Russia can increase its deployments in Syria, but will strive to avoid a ground war that could lead to many Russian casualties. Russia's relationship with Saudi Arabia and Turkey will be strained. By weakening mainstream rebels, Moscow's actions risk indirectly strengthening Islamic State group.


Significance However, events on the ground in recent days, including the intensification of air strikes by the Saudi-led coalition and the Huthis' defiant firing of a Scud missile into Saudi Arabia, signal that both sides are determined to continue the seven-month long war. Impacts Even if Sana'a falls, the Huthis may fight on in their heartland. The war is empowering local groups who are likely to complicate attempts to reimpose central authority. In Saudi Arabia the campaign's failure would be blamed on Defence Minister Mohammed bin Salman, reducing his prospects of becoming king. Southern separatists, al-Qaida and Islamic State group will be empowered by the conflict.


Significance The Russian air campaign has mostly targeted rebels fighting against the Syrian regime rather than Islamic State group (ISG), a significant setback for President Barack Obama's Syria policy. Impacts Washington may see geopolitical dividends should Russia's military intervention become bogged down into an embarrassing stalemate. US inaction will encourage Saudi Arabia and Iran to escalate their own intervention in Syria and elsewhere in the region. Saudi-Iranian relations will play a greater role in a political settlement on Syria than those between Washington and Moscow.


Subject Prospects of ISG's expansion into Saudi Arabia. Significance Islamic State group (ISG)'s Saudi affiliate claimed an attack on a mosque in Asir province on August 6. The attack on a mosque used by special forces resulted in 15 fatalities, and represents one of the deadliest terrorist attacks inside the kingdom since the al-Qaida insurgency in the 2000s. The attack signals ISG's emergence as a serious threat to the kingdom's internal security. Impacts Tight security at oil installations will ensure production is unaffected. Both Saudi government and foreign businesses will increase security spending. Failure to contain ISG would damage credibility of new leadership, particularly of the deputy crown prince.


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