Tensions between the leading Shiite and Sunni powers, Iran and Saudi Arabia, have dramatically escalated following the execution of a prominent Shiite cleric, but whatever goals Riyadh is pursuing, it is hardly capable of countering Iran, a US think tank asserted.
"By itself, Saudi Arabia is no match for the much larger, more populous Iran — and the end of Western sanctions is only boosting Iran's might," Stratfor noted. For instance, "Saudi Arabia's hydrocarbon industry accounts for the vast majority of its economy; its population is smaller and less educated than Iran's, which means Riyadh has struggled to reduce its dependence on the petroleum sector."
In addition, the oil kingdom's military is nearly 230,000-strong, while Iran has more than 520,000 troops on active du
Riyadh has tried to offset these disadvantages by creating a network of allies through military and economic cooperation with other Sunni countries in the region.
"Militarily, Saudi Arabia has launched a 34-country regional 'anti-terrorism' coalition that pointedly excludes Iran and its allies Iraq and Syria," the Texas-based think tank observed. "The coalition bolsters Sunni interests in all the major theaters of the Sunni-Shiite conflict, namely Syria, Iraq, Yemen and Lebanon."
"Though Saudi Arabia will continue to develop a Sunni Arab alliance in the Middle East to combat Iranian influence, it will struggle to mollify Shiite communities within its own borders. This failure will only make sectarian tensions worse," the think tank noted.
Asian markets closed mixed on the last day of 2016's first trading week, after a wild ride that saw the Chinese market shut down prematurely twice to stem rapid selloffs, oil prices falling to 12-year lows and the persistent volatility across the region
On Friday, the Shanghai Composite closed up 1.98 percent after trading down as much as 1.89 percent and up as much as 3.32 percent shortly after the market open. The Shenzhen Composite finished 1 percent higher, while CSI 300 index ticked up 2.04 percent. All three indexes see-sawed wildly from positive to negative in the first 30 minutes after trade started. Hong Kong's Hang Seng Index closed 0.59 percent higher.
Mizuho said on a Friday note that it had expected the market was due a reflexive rebound as stretched positions were reversed. But it added that Chinese markets are not yet out of the woods.
"The greater uncertainty is how this week's episode has damaged investor sentiment, and thus capital outflow pressures might linger on," Mizuho said.
The weakening of the yuan has also weighed on the market. Before trading began, the People's Bank of China (PBOC) set its yuan mid-point at 6.5636 against the dollar, indicating the Chinese currency would trade slightly stronger, after Thursday's fixing guided the yuan lower at its fastest pace since August's devaluation. On Thursday, the dollar was fetching 6.5926 yuan at the close of trade.
Major indexes in the U.S. shed over 2 percent each overnight. The Dow Jones Industrial Average was down 392.41 points, or 2.32 percent, at 16,514.10. The S&P 500 closed down 47.17 points, or 2.37 percent, at 1,943.09, while the Nasdaq Composite saw losses of 146.34 points, or 3.03 percent, at 4,689.43.
An annual report of militias released this week by the Southern Poverty Law Center identified 276 militia groups in the U.S. — a 37 percent increase over the 202 groups identified in 2014. The Star reported on the rise of militias as part of a series on domestic terrorism last year.