On July 4th, three suicide attacks occurred across Saudi Arabia, including one in Medina near the Prophet’s Mohammad’s Mosque, one failed attack in the vicinity of the U.S. Consulate in Jeddah, and another failed attack at a Shiite mosque in Qatif in the Eastern Province.
No group has claimed responsibility for the attacks to date, but stated intentions, objectives, a history of recent attacks, and the tactics and procedures of the attacks point towards the Islamic State in Iraq and the Levant (ISIS).
How have markets reacted to the attacks?
The nearly coordinated suicide attacks in Saudi Arabia are unusual and should at least in theory have impacted the global financial markets. However, no significant impact was noticed on the global stock market index, and there was no change in global oil prices. A likely explanation is that the suicide attacks occurred the week of Eid al-Fitr or the celebration of the end of Ramadan. Most stock market trading in the Middle East was closed for days during this week.
Another explanation is that the three attacks in Saudi Arabia, two of which failed, were overshadowed by spectacular terrorist attacks in Istanbul, Turkey, Bagdad, Iraq, and Dhaka, Bangladesh that garnered more media attention. Previous terrorist attacks in Saudi Arabia did affect oil prices. Commerzbank notes in response to the three attacks that similar attacks only a few years ago would have resulted in oil prices rising sharply. The global oil markets now appear to have accepted that ISIS is attacking Saudi Arabia without it impacting oil prices.
How might the bombings impact Saudi’s tourism industry?
The impact of the recent suicide attacks on the tourism sector will likely be low to insignificant. One-off events such as the attack near the Medina mosque tend to fade from the public memory over time, and government incentives and advertisement for the tourist industry will help preserve Saudi tourism. The situation could be very different if ISIS sustains a campaign against foreigners and soft targets in the tourism sector such as hotels, shopping malls, airport terminals, and religious tourist destinations, including Medina and Mecca. A sustained terrorist campaign would taint the image of these locations, as it could significantly undermine Saudi efforts to expand the tourist sector if tourists opt for safer destinations.
The reality is that, over the past two years, ISIS has primarily targeted police and security forces across Saudi Arabia as well as Shiite civilians and religious targets in the Eastern Province. The Saudi Interior Ministry reported in June 2016 that 26 ISIS-related terrorist attacks have occurred since the beginning of 2015.
Nonetheless, the attack near the holy site in Medina is unprecedented in recent history in that Salafi Jihadists in Saudi Arabia have never attacked such a holy site. The attack can be seen as an attempt to undermine the religious legitimacy decreed by the royal family. Another possibility is that the attack signifies a target shift to religious tourist sites. From the ISIS perspective, such a target shift would make sense if the strategic objective is to undermine the Saudi economy and the House of Saud.
The Medina attack is timely in that it occurred approximately two months after Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman revealed a blueprint titled, “Saudi Vision 2030.” The blueprint aims to transform the Saudi oil-dependent economy to a more diversified economy, focused on increasing the number of religious tourists making the annual pilgrimage to Saudi Arabia. The blueprint also calls to open doors to tourism from all nationalities. An ISIS campaign against tourist sites and foreigners could deliver an economic setback for the kingdom, particularly at a time when oil revenues are dropping.
If the Medina attack is the beginning of a new ISIS campaign against religious tourist targets in Saudi Arabia, then terrorist attacks in Medina and Mecca during the time leading up to the annual pilgrimage in September with up to 2 million tourists, cannot be ruled out.
What challenges remain for Saudi’s security situation?
The latest strings of terrorist attacks are only one of many security concerns for Saudi Arabia. The kingdom is facing a potential outbreak of sectarian violence between the Saudi government and Shiite Muslims in its Eastern Province. The Eastern Province has a strategic economic significance, as it is a vital industrial hub and home to critical oil infrastructure and gas and oil fields. Economic activity in the Eastern Province accounts for roughly 60% of Saudi Arabia’s GDP. Any form of civil unrest and intrastate conflict would likely undermine the Saudi economy. It is, therefore, no coincidence that ISIS has focused many of its attacks on the Saudi Shiite community and mosques in Qatif and al-Hasa in the Eastern Province in an attempt to drive a wedge between Shiites and the government to fuel sectarian violence, which ISIS tried most recently in Qatif on July 4th.
The stability inside the kingdom is intertwined with the current security situation in Iraq and the future of ISIS. Saudi Arabia is bordered by Iraq to the north and is a member of the U.S. led coalition fighting ISIS. In June 2016, the U.S. State Department estimated that ISIS had lost 47 percent of the territory previously controlled in Iraq. If ISIS continues to lose territory and suffer losses in Iraq and Syria, it could morph itself from a terror state into a terrorist organization after which foreign fighters would return home to pursue ISIS’s objectives. For example, Saudi fighters could return to Saudi Arabia and target the Saudi royal family and the Shiite community, which is a stated objective of Abu Bakr al-Baghdadi, the leader of ISIS. The Soufan Group estimates that 2,500 Saudis have joined the conflict in Syria and Iraq. If Saudi fighters decide to return to Saudi Arabia, equipped with battlefield experience, leadership and bomb-making skills, the number of terrorist attacks could increase along with the level of sophistication of the attacks.
Saudi Arabia is also facing spillover violence from the civil war in Yemen, which lies along its southern border. On July 4th, Saudi air defense intercepted a ballistic missile fired over its southern border by Houthi Shiite rebels towards the southern city of Abha. The Houthi Shiite rebels, a Zyadi Shia movement, overthrew the former Yemeni government in September 2014. The Houthis control a large swath of territory in northern Yemen on the border with Saudi Arabia and receive international backing from Iran. In response to Iran’s backing of the Houthis and opposition against the U.S. and Saudi dominance on the Arabian Peninsula, Saudi Arabia staged an intervention in Yemen in March 2015 to reinstate the former Abd Rabbuh Mansur Hadi-led government. Data by the National Consortium for the Study of Terrorism and Responses to Terrorism indicates that Houthi Shiite rebels carried out close to 60 terrorist attacks inside Saudi Arabia during 2015 alone. In addition to indiscriminate Houthi attacks inside Saudi Arabia, the chaos and ungoverned swaths of territory inside Yemen have offered Al Qaeda in the Arabian Peninsula and ISIS a safe haven from where potential future attacks can be planned against Saudi Arabia.
