2017: Saudi Arabia’s Annus Horribilis?

2016 was not a good year for Saudi Arabia. Sharply lower oil prices sparked a domestic financial crisis that is forcing the country to restructure its economy.

Saudi Arabia’s bitter struggle with Iran for regional hegemony has embroiled it in wars and political conflicts it has been unable to win, leaving it no alternative but to admit failure or compromise. If 2016 was bad, 2017 threatens to be worse.

A weaker Saudi hand

Saudi Arabia closed out 2016 with a ceasefire in Syria and prospects for peace talks orchestrated by Russia and Turkey that significantly weakened Saudi-backed rebel groups and strengthened Iran’s key Middle East ally, Syrian president Bashar al-Assad.

Saudi Arabia’s only hope of influencing events in Syria is if either the rebels, jihadists who are not part of the ceasefire, or Mr. Al-Assad sabotage it for their own reasons.

But even then, the fall of Aleppo, the rebel’s last major urban holdout, threatens to reduce the anti-Assad resistance to a largely rural insurgency.

Fighting over the 2017 haj

Sensitive to any challenge to its custodianship of Islam’s two holiest cities, Mecca and Medina, Saudi Arabia’s role is in the spotlight as it negotiates modalities with some 80 countries for the 2017 haj.

Saudi Arabia and Iran failed to reach an agreement for the 2016 pilgrimage, leaving the Islamic republic without a quote for pilgrims and the kingdom’s management of the haj challenged.

The Yemen quagmire

An almost two-year long military campaign in Yemen, an exercise that was supposed to be cakewalk, has turned into a quagmire for the kingdom. Saudi Arabia is looking for a face-saving exit strategy from a neighbour that its military has devastated.

However, the presumed military “successes” have not achieved the real goal — removing Saudi Arabia’s enemies, the Iranian-backed Houthis and former president Ali Abdullah Saleh, from power in much of the country, including the capital Sana’a. The campaign has sparked widespread anti-Saudi sentiment among significant numbers of Yemenis.

Incompetence on display

The Yemen campaign has moreover cast a shadow over the capabilities of a country that ranks as the world’s second-largest importer of military equipment.

One clear-cut indication of Saudi incompetence is that the United States, a most steadfast Saudi ally, late last year halted the sale of air-dropped and precision-guided munitions.

It wants to wait until it has better trained Saudi forces in their targeting and use of the weapons.

The Saudi air force’s repeated targeting by design or default of civilian targets in Yemen in which large numbers of innocent people were killed has opened the kingdom to assertions of war crimes.

A bad year for the Deputy Crown Prince

Saudi Arabia’s inability to claim either political or military benefit from the Yemen war threatens to put on the line the credibility of Deputy Crown Prince Mohammed bin Sultan, the powerful son of King Salman. He is also the man who is in charge of turning the kingdom’s economy around.

Many believe that King Salman is grooming Prince Mohammed as his successor despite objections from factions within the Al Saud family.

No better news from Egypt

Similarly, Saudi Arabia’s use of its political and financial muscle to bring Egyptian-general-turned president Abdel Fattah Al-Sisi to power in a military coup in 2013 has not yielded much.

The basic idea — to stabilize Egypt’s deteriorating economy — has failed to achieve a return. Instead, Saudi Arabia and the Arab world’s most populous nation are at loggerheads over Iran, Syria and various other issues.

Saudi Arabia suspended in October a $23 billion agreement to supply Egypt with 700,000 tons of petroleum products every month after Egypt supported a Russian resolution on Syria in the United Nations Security Council. The sanctions and cooling of relations have done little to make Mr. Al-Sisi more empathetic to Saudi concerns.

The Trump factor

Finally, on the foreign police and defence front, this month’s inauguration of Donald J. Trump could prove to be a mixed bag that may aggravate Saudi Arabia’s problems.

Mr. Trump has suggested that he may back away from U.S. support for anti-Assad rebels in Syria and focus in cooperation with Moscow on defeating the Islamic State.

That effectively would strengthen the free hand Iran, Russia and Mr. Al-Assad already have in Syria.

The President-elect has also hinted that he may scrap the international community’s nuclear agreement with Iran. Saudi Arabia has called on Mr. Trump not to cancel the agreement.

Instead, it wants to hold Iran to the fire over its support for proxies in Arab countries. A cancellation of the agreement could force Saudi Arabia into a nuclear arms race with Iran.

The Israel factor

As if all of that weren’t bad enough, Mr. Trump’s suggestions that he may be more sympathetic to Israeli settlements in the occupied West Bank threatens to put the kingdom on the spot at a time that it has found common ground with Israel in seeking to halt Iranian regional advances.

Mr. Trump’s pledge to move the U.S. embassy from Tel Aviv to Jerusalem and his nominee as ambassador to Israel, David Friedman, who describes Jerusalem as the “eternal capital of the Jewish state” could further strain already trouble relations with the United States.

Possible widespread protests against relocation of the embassy could move Arab states, including Saudi Arabia, to break off diplomatic relations with the United States and/or take other retaliatory steps.

Kinship with a dealmaker?

Saudi Arabia is betting that Mr. Trump, the president, will rely on the experience of Mr. Trump, the businessman, to cut deals.

The president-elect, however, has suggested that he could stop oil imports from the kingdom in his bid to make the United Sates energy independent. At one point, during the election campaign, he also blamed Saudi Arabia for the 9/11 attacks.

Uncertainty in its relationship with the United States could not come at a worse moment for the kingdom. The Saudi government, beyond its foreign policy and military setbacks, has begun to unilaterally rewrite the social contract that underwrites it.

A shaky deal at home

The rewriting constitutes the end of a bargain involving a cradle-to-grave welfare system in exchange for surrender of political rights and adherence to Wahhabi social mores.

Cutbacks on subsidies, increased utility prices, reduced spending on education and social services, and streamlining of the bureaucracy in a country in which the state employs two thirds of the citizenry is a tricky business.

It’s even trickier in an environment in which the country’s basic power structure, a power sharing agreement between the ruling Al Saud family and the country’s religious establishment, is being challenged by the demands of economic and social change and increasing international association of Wahhabism with Islamic militancy.

A full plate for 2017

King Salman and Prince Mohammed have a full plate for 2017. For them and the Al Sauds, the core issue is survival. With no credible alternative to the Al Sauds and the Middle East and North Africa’s recent experience of popular protest producing civil wars, jihadism and increased repression, Saudis are unlikely to revolt.

They will however demand a greater say and greater accountability, concepts the government has so far countered with increased suppression and authoritarianism.