Chronicle of the Middle East and North Africa

King Fahd: two decades of crisis in Saudi Arabia 1979-2001

In 1979, four historic events took place in the Middle East: the revolution in Iran, the Soviet invasion of Afghanistan, the Egyptian-Israeli peace treaty and, in Saudi Arabia itself, the seizure of the Great Mosque in Mecca.

Saudi King Fahd bin Abdul Aziz (R) meets with chairman of the Palestine Liberation Organisation (PLO) Yasser Arafat in Riyadh, October 1985. SPA / AFP

International events

Internationally, the Saudi government had to navigate a path when it came to its relations with the United States. Those were defined by economics (essentially the price of oil) and wars (the Palestinian-Israeli conflict, Afghanistan, the Iran-Iraq war and the Iraqi invasion of Kuwait).

The same issues defined Saudi domestic affairs.

Saudi oil wealth underpinned a massively expensive involvement in Afghanistan, but that encouraged Islamist factionalism undermining the state’s legitimacy and its leadership. The Iran-Iraq war and the subsequent Iraqi invasion of Kuwait led to the mobilisation of a huge coalition to expel Iraqi troops from Kuwait and a garrison of US troops on Saudi soil.

That excited further Islamist opposition inside Saudi Arabia and by Saudi nationals outside the Kingdom arguing against the presence of ‘unbelievers’ inside Saudi Arabia.

These events took place against the background of a global economic crisis. The oil price rises of the late 1970s led to widespread inflation in the developed countries, a worldwide recession, and a consequent drop in oil consumption.

This was exacerbated by increasing production outside OPEC (from the North Sea, Alaska and Canada in particular). In the 1980s, the price of oil decreased sharply. Saudi Arabia’s Gross Domestic Product (GDP) sank as a result, although with its small population it was still very rich indeed.

Oil price 1979-2001

Members of the Sudairi branch of the Al Saud, including King Fahd and his brothers, dominated Saudi policy on the production and price of oil, and the associated economic problems. Non-Sudairi members of the cabinet were largely ignored, as was Shaykh Yamani, Minister of Petroleum and Mineral Resources.

The king and his fellow Sudairis wanted to increase both production and the price of oil at the same time. But the market was already flooded with oil. Yamani opposed the policy as well as some complicated oil barter deals in which Sudairis were involved. He argued they would lead to the oil being dumped onto the world market, reducing the price even more and destroying Saudi Arabia’s reputation.

Yamani probably did not invent the famous saying that ‘The Stone Age did not end because the world ran out of stones, and the Oil Age will not end because we run out of oil’ but he certainly popularised it. The King sacked him, declaring Yamani was disobedient.

US Relations and Palestine

Saudi Arabia had rejected the 1978 Camp David Accords between Israel and Egypt. But seeking to preserve both the regime’s ideological legitimacy as an Arab and Muslim state, and its alliance with the US, it proposed a peace plan of its own in 1981: the Fahd Plan. It was a rival to the Sadat peace treaty that had served the interests of Egypt but ignored the Palestinians.

The Fahd Plan proposed withdrawal of Israel from all the territories it occupied in 1967, and an independent Palestinian state in Gaza and the West Bank, with East Jerusalem as its capital, as a basis for peace.

While the plan implicitly recognised the State of Israel, the Israeli government rejected it because it wanted explicit recognition. The Fahd Plan collapsed in the aftermath of the 1982 invasion of Lebanon and the start of the Iran-Iraq war.

Bolstering Iraq

The economic effects of the Iran-Iraq war, tied to the production rate and price of oil, underlaid the political and military evolution of the conflict. The war wrecked the Iraqi economy.

Iraqi production plummeted immediately and while it recovered slowly, it was into a falling market where production was still dominated by Saudi Arabia. Iraqi foreign debt exploded as its president, Saddam Hussein, borrowed to finance his military expenditure and to maintain the Iraqi infrastructure and welfare systems.

The Saudi government was deeply worried Iran would encourage Shia opposition in the eastern provinces, where the oil came from. Hence, it provided the Iraqi president with huge loans. By the end of the war, Saudi Arabia and Kuwait had provided $30 billion in financial support.

The Saudis also spent a huge amount of money on defence and building up its air force. The United States was the main supplier, although Washington had started to deny key arms requests in the late 1980s, under pressure from supporters of Israel in the US Congress.

The Gulf Cooperation Council

Gulf security became a pillar of Saudi policy and in 1981, Saudi Arabia was one of the founding members of the Gulf Cooperation Council (GCC). The GCC was primarily a vehicle for collective security considering the Iranian revolution and other regional developments.

Economic and political cooperation was also part of the plans. But the GCC was not a united organisation. There were strong rivalries within the GCC, particularly between Saudi Arabia and Qatar.


Resistance to the Soviet invasion of Afghanistan came from local forces as well as an international brigade of (foreign) Islamists enraged by the invading communists, whom they regarded as enemies of Islam.

The first call to jihad against the Soviet forces came in 1980. Over the next ten years, some 25,000 foreign Muslims went to Afghanistan, coming from Egypt, Algeria, Libya, Yemen, Jordan, Pakistan, Iraq, Libya, and central and East Asia. Many fighters were from Saudi Arabia.

These foreigners linked the invasion and occupation of Afghanistan to the situation in their home countries. When they eventually returned home, they helped spread the idea of jihad there. As they learned military skills, Afghanistan served as a training camp for those jihadi fighters.

To Saudi Arabia, Palestine was still important, but it was no longer the only issue. The Saudis regarded the war in Afghanistan as a conflict in which the Kingdom could be a leader without risking its alliance with the US.

Saudi Arabia provided the mujahidin (fighters) with a lot of money, as did some of its richer citizens. It sent billions of dollars in secret assistance both to the local mujahidin and to the Afghan Arabs. Often the Afghan mujahidin did not like these foreign fighters, but at the same time, they depended on Saudi money.

Saudi-born Osama bin Laden (R) sits with his son Mohammed (C), 19, and one of his top aides Mohammed Atef (L), also known as Abu Hafs al-Masri, during Mohammed’s wedding to the 14-year-old daughter of Atef’s, in Kandahar, Afghanistan, on 9 January 2001. Still taken from a video aired by the Qatar-based al-Jazeera satellite TV station. AFP PHOTO/HO/AL-JAZEERA

The jihadist movement also consisted of many Saudi citizens and residents and three of them went on to dominate it. Abdullah Azzam, a Palestinian, had studied Islamic jurisprudence in Damascus and Cairo, and then taught in Jeddah. Osama bin Laden came from one of the richest families in Saudi Arabia, very close to the royal family.

After a comfortable childhood, Bin Laden studied in Jeddah. There is an unconfirmed story that one of his teachers was Abdullah Azzam. Ayman al-Zawahiri was an Egyptian Islamist who went to Saudi Arabia following the assassination of President Sadat in 1981.

Azzam went to Afghanistan as director of the Muslim World League, a relief agency financed by Saudi and Pakistani money. Bin Laden joined him there in 1981 and the following year helped organise – and finance – the Maktab al-Khidmat, an agency that received and organised volunteers for the war in Afghanistan.

When Bin Laden joined the fighting himself in 1986, he earned a reputation for courage. Al-Zawahiri went to Peshawar in 1986. In August 1988, the three men went on to form a new organisation: al-Qaeda (the base) which they designed as the vanguard of a global Islamist revolution to create an international Islamic state.

In 1989, following the Soviet withdrawal, the new mujahidin government in Kabul sought to get rid of the Afghan Arabs. At the government level, though, Saudi Arabia continued to supply aid to Afghanistan while the US reduced its contribution. Bin Laden returned to Saudi Arabia in 1990, as a hero of the jihad that brought down the Soviet Union. But it was not long before he fell out with the Saudi regime.

The Invasion of Kuwait

In 1990, the Iraqi army invaded Kuwait. It was a surprise attack, without the support of Saddam’s own population or of the army, which he believed was gripped by disloyalty. Iraq would have been militarily stronger if Saddam had waited.

After the war, inspectors found Iraq was very close to making a working nuclear bomb. At the same time, dictatorships were falling in eastern Europe, and Saddam, bankrupt, was worried that support from the Soviet Union would end and his regime would be next.

Iraq owed a total of $80 billion worth of loans, half of it to the Gulf states, especially Kuwait and Saudi Arabia. Faced with inflation, unemployment and economic inequality, Saddam saw the Kuwaiti refusal to help renegotiate loans as destabilising.

For the first time since Saudi Arabia was formed, there was a powerful enemy on Saudi Arabia’s frontier. King Fahd allowed 500,000 foreign troops to defend the country, especially its oil fields in the Eastern Province, and to facilitate a US-led counteroffensive.

General Khalid bin Sultan Al Saud, commander of the joint Arab forces, and US General Norman Schwarzkopf discuss conditions for a cease-fire with Iraqi generals during Operation Desert Storm, 3 March 1991. Saudi Arabia not only provided the bases from which the US-led coalition attacked Iraq in 1991, but it was, in formal terms, a full military participant. Bin Sultan’s father, Prince Sultan, was a son of Ibn Saud and crown prince from 2005 to 2011. © DoD / Roger-Viollet / Roger-Viollet via AFP

The massive costs of war eroded the Saudi government’s ability to provide socioeconomic rewards to the population. Living standards dropped, unemployment increased and young men from the lower and lower-middle classes saw their aspirations stunted. Foreign and “atheist” armies, including women soldiers, were seen as undermining their manhood and dignity. It all angered the fundamentalists and called into question the Islamic legitimacy of the Saudi monarchy.

When senior Saudi religious scholars decreed that the entry of US troops was not against Islamic law, that undermined their legitimacy too, and some younger scholars attacked them openly in a Letter of Demands they sent to the King in May 1991.

It demanded a full Islamic state in Saudi Arabia with a judiciary independent of government control, a fully sharia legal system and an end to corruption in the administration and usury in the banking system. In May 1993, the Committee for the Defence of Legitimate Rights (CDLR) became Saudi Arabia’s first human rights organisation. As it was an Islamist response, “legitimate” meant legitimate under Islamic law.

The Saudi government responded with a mixture of repression and co-optation. Repression was directed at the minority Shia movement and its political wing, the Organization for the Islamic Revolution in the Arabian Peninsula. State-sanctioned Wahhabi scholars preached using anti-Shia sectarian rhetoric. Ashura processions and Shia calls to prayer were banned.

The government set up a consultative council (Majlis al-Shura) which was separated from the royal family and made up of technocrats, businessmen and bureaucrats. The government cut the flow of funds from Saudi Islamists to Islamists abroad, and in 1994 stripped Bin Laden of his Saudi citizenship. Bin Laden fled to Khartoum and eventually back to Afghanistan as a tolerated guest of the ruling Taliban.

In Afghanistan, in 1996, Bin Laden and some of his supporters issued a Declaration of War against the Americans occupying the ‘Land of the Two Holy Places’ (Saudi Arabia). It proposed both an Islamic war against a global enemy and a form of Arabian nationalism that emphasised the territorial purity of the peninsula and claimed its oil revenues as the right of its inhabitants.

Faced with rising unemployment, falling oil prices, and mounting debt, the government resorted to repression. Many Islamists were imprisoned, and their activities began to be monitored. Two major attacks in 1995 and 1996 indicated possible future threats.

The Saudi leadership was caught in the same trap as in the 1970s and 1980s: it described itself as Islamist, but it needed US assistance. After Iraq’s invasion of Kuwait in 1990, Saudi Arabia signed several major contracts to buy US weapons systems but Prince Nayef, minister of Interior, complained that “Ever since the Gulf War of 1991, we have been perceived in the Arab World as a pawn of the United States.”

The Saudi government still believed it needed large amounts of armaments, but by the mid-1990s the double burden of Persian Gulf War debt and falling oil prices limited what it could afford. The breakdown of the Israeli-Palestinian peace process in September 2000 made relations worse. The same sense of common purpose that both sides had shared during the Cold War was gone.

The terrorist attacks on the United States on September 11, 2001, would prove to be a pivotal moment for Saudi Arabia, with many consequences domestically and internationally. There were fifteen Saudis among the nineteen men involved in the attacks.

The US government did not blame the Saudi government for the attacks themselves, but there was much criticism of Saudi Arabia as a source of global terrorism, which critics said came from Saudi religious teachings and finance networks. In addition, the events were followed by demands for reforms and change inside the Kingdom.