The executions of 47 accused terrorists in Saudi Arabia Jan. 2 and subsequent severing of relations with Iran underscore the Saudi royal family's deep concerns about stability in the kingdom. The mass executions are a warning that dissent will not be tolerated, especially by Iranian-supported dissidents.
The kingdom faces a potentially perfect storm of low oil income, open-ended war in Yemen, terrorist threats from multiple directions and an intensifying regional rivalry with its nemesis Iran. The most dangerous threat is economic. The Saudi welfare state — which provides subsidies for health and housing, cheap gasoline and free education — is already being cut back because of the large deficit between oil revenues and government spending. Last years' deficit totaled $98 billion and foreign reserves dropped from $728 billion to less than $640 billion. With Iranian oil returning to the market, Saudi revenues could be depleted even faster than anticipated in the 2016 budget.