Although the Saudis have nearly $660 billion in cash reserves, the government has withdrawn roughly $70 billion to make up for shortages in the fiscal 2015 national budget. If the price of oil decreases further in the next few years, the Saudi economy could go bankrupt.
There is massive inequality between the various classes. Nearly one fifth of the population lives in poverty, especially in the predominantly Shiite south where, ironically, much of the oil reservoirs are located. In these areas, sewage runs in the streets, and only crumbs are spent to alleviate the plight of the poor.
While the poor are getting poorer, thousands of princes and princesses live lavishly (mostly in Europe), spending hundreds of millions of dollars and occupying opulent villas, which further drains economic resources.
Being that Saudi Arabia has and continues to be almost completely dependent for revenue on oil exports, which has more than covered its national budget, it had no compelling reason to develop diversified industries.
Moreover, the Saudis became increasingly dependent on millions of foreign laborers, who are subjected to abusive, slave-like conditions, to do the "dirty work" that Saudi citizens are unwilling to undertake.
The hostile rivalry with Iran
The relationship between Sunni Saudi Arabia and Shiite Iran has always been characterized by tension and mistrust. The quiet enmity came to the fore in the wake of the 2003 Iraq war and the growing influence of Tehran over the Shiite Iraqi government.
This was further aggravated with the eruption of the civil war in Syria, where Iran supported the Assad regime with money, military equipment, training, and subsequently foot soldiers, while the Saudis provided similar aid to the rebels opposed to Assad, short of dispatching ground troops.
The enmity between the two countries took another turn for the worse when it was suspected that Iran was pursuing a nuclear weapons program, which Riyadh viewed as a direct threat to its national security. Despite the Iran deal, the Saudis remain deeply skeptical about Tehran's ultimate intentions.
The Iraq war also ignited the dormant millennium-old religious conflict between Sunnis and Shiites, and Syria and Iraq became the battleground between the two sects, where the bloodshed continues unabated, claiming the lives of thousands each year.
The execution of the Saudi Shiite cleric Sheikh Nimr al Nimr -- an icon who called for addressing human rights violations in Saudi Arabia, was charged with incitement and treason, and sentenced to death along with 46 others -- further deepened the animosity between the two countries. This caused unrest among Shiites in the country, sparked protests in Tehran, and was condemned by the international community.
To be sure, although Tehran recently called for reconciliation with the Saudis, the latter rejected the Iranian gesture as the Saudis view the conflict with Iran as irreconcilable, mainly due to religious and geopolitical reasons, as both seek to exercise regional hegemony.
Due to the size of the population, its natural resources, and industrial advancement, the Saudis believe that Iran will inevitably become the regional powerhouse, with the ability and resources to intimidate the entire Gulf region (especially once it acquires nuclear weapons), which the Saudis consider their own domain.
The unsettling relations with the US
Although Saudi Arabia and the United States have enjoyed decades of close bilateral relations, the relationship has soured over the changing geostrategic interests of the US and its "pivot" to the East, and the manner in which it has tackled the Syrian civil war and the Iran deal.
While the US continues to support Saudi Arabia militarily and remains the de facto guarantor of its national security, the Saudis remain unconvinced of the US' commitment to that end.
Indeed, from the vantage point of regional security, the Obama administration chose to draw a balance between Saudi Arabia and Iran. In a recent interview with the Atlantic, President Obama said that they "need to find an effective way to share the neighborhood." Moreover, Obama believes that bringing Iran out of its isolation will lead to greater regional stability, from which the Saudis will also benefit.
Another point of contention between the two countries is Obama's failure to make good on his vow to punish Assad if he crossed the "red line" of using chemical weapons against civilians, which created serious doubts in the minds of the Saudis that the US won't come to their aid, even if their security is threatened.
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