STEVE INSKEEP, HOST:
The world looks different from the Arabian Peninsula. Saudi Arabia's King Abdullah was admitted to the hospital this week. He's in his 90s, older than Saudi Arabia itself. The country is a huge U.S. ally. The king's ailment raises the question of succession. Journalist and longtime Saudi watcher Thomas Lippman says that is just one of the kingdom's challenges.
THOMAS LIPPMAN: In general, when princes of that level or kings have something that's serious but not immediately threatening, where they go is the airport. And they go to the Cleveland Clinic, or they go at least to Geneva or something like that. In this case, they felt the need to hospitalize him right there in Riyadh. He's at the National Guard Hospital, which may indicate either that it's just tests, which is what the official announcement said, or that it's something that was immediately life-threatening.
INSKEEP: Has the king, in his 90s, actually been the person who's been running Saudi Arabia?
LIPPMAN: Well, yes, he has. The king is also the prime minister, and he just did a Cabinet shakeup. He appointed six or seven new Cabinet ministers just last month. I don't know how many hours a day he's able to focus on business, but he's the boss.
INSKEEP: And is there a transition plan in place in the event of his death?
LIPPMAN: There is, which he created. He put in place, maybe six years ago, a succession law generally referred to as the allegiance law, which created a committee of 35 senior princes whose job it is to manage the succession.
INSKEEP: Does it appear to you that this is a stable government that is in a situation where it can manage a transition to a new king?
LIPPMAN: Absolutely. Right now, the house of Saud is in good standing because when you go to Saudi Arabia and you see the people look around them in every direction, they see violence and chaos - Syria, Iraq, Iran, Yemen, Egypt, Bahrain - and they don't see trouble in Saudi Arabia, except among the Shia minority.
INSKEEP: It's a majority Sunni country, we should say.
LIPPMAN: Correct.
INSKEEP: So you see here a country with a stable plan for its immediate governing future, and yet you're the author of a book called "Saudi Arabia On The Edge: The Uncertain Future Of An American Ally."
LIPPMAN: Right.
INSKEEP: What's uncertain?
LIPPMAN: Well, inherently there's the question of how long any monarchical regime that rules entirely from the top down can survive. The future is also uncertain because of energy. They consume so much of their own oil that they're reducing their own capacity to export.
INSKEEP: Oh, it's one of those countries that produces a lot of oil, so they sell it to their own people very cheaply. So they don't use it very efficiently at all.
LIPPMAN: They do, and they burn extraordinary amounts of oil to generate electricity, of which Saudi Arabia is a voracious consumer, partly for air-conditioning, partly because everyone has every electronic device known to man and partly because the electricity is used to power the desalination plants, which is a source for drinking water for now almost 30 million people.
INSKEEP: The drop in oil prices this year has brought the Russian economy to the brink of collapse. What about the Saudi economy?
LIPPMAN: Well, funny you should ask. I brought with me the finance ministry statement issued on Christmas Day introducing the budget for the coming year.
INSKEEP: OK.
LIPPMAN: And it projects a deficit of $14.4 billion. What it says about each category of spending - education, health and social affairs, municipal services, infrastructure - is that spending will continue with the planned levels, and they'll just eat the deficit because they have such deep reserves that they don't need to worry about it.
INSKEEP: So I guess we get an explanation here about why the Saudis have been willing this year to keep their production high, which keep oil prices low. They can pursue their own strategic goals there and not worry about the near-term.
LIPPMAN: And if it happens to inflict damage on Iran and Russia, so much the better.
INSKEEP: OK, that raises another question. You said Iran. The Saudis and Iran have a kind of rivalry across the Persian Gulf. Is that a source of uncertainty for the Saudi kingdom?
LIPPMAN: You know, they moved troops up to the northwestern border to make sure that there would be no attack by the Islamic State militants coming out of Iraq. But what ordinary people - very educated people - are worried about is three things - Iran, Iran and Iran. It's partly the historic rivalry between Arabs and Persians. It's partly the historic rivalry between Sunni and Shia, and it's partly because of Iranian behavior, which the Saudis see all around them. They see Iranian troublemaking in Yemen in support for these Houthi rebels; in Bahrain in support for the majority Shia dissidents; in Lebanon with support for Hezbollah; and in Syria where Iran is the mainstay of the Assad government; and of course in Iraq, which they think we handed to the Iranians when we got rid of Saddam Hussein. That's a lot of encirclement by a country that they believe is historically, traditionally and religiously hostile.
INSKEEP: What are Saudis thinking as their vital ally, the United States, tries to make a nuclear deal with Iran?
LIPPMAN: From the Saudi perspective, they lose either way - success in the negotiations or failure in the negotiations. Success in the negotiations brings a really bad outcome - restoration of the Iranian-U.S. de facto alliance that existed in the time of the Shah and...
INSKEEP: In the '70s, sure.
LIPPMAN: ...Inevitably to the Saudi detriment. They see this as a zero-sum game. On the other hand, if the negotiations fail, what they see happening is the triumph in Iran of the hardliners and a truculent response from Iran and an acceleration of the campaign to get a nuclear weapon.
INSKEEP: In an interview broadcast this week on NPR, President Obama spoke about Iran in ways that were seen as very optimistic or generous, and he spoke of the possibility that if Iran just makes a nuclear deal, they could emerge as a very successful regional power - that's a quote. What do Saudis think of Iran as a very successful regional power?
LIPPMAN: Well, I don't know how they responded to that particular interview. I was struck by the word successful. But if your view is Iran is a de facto threat - and remember, the Saudis see themselves as locked in a worldwide struggle with Iran for supremacy in Islam.
INSKEEP: One predominantly Sunni country, one predominantly Shia country.
LIPPMAN: Right. And so what you and I might think of as a beneficial outcome to Saudi Arabia and the whole Arab side of the Gulf - i.e. an Iran fully engaged with the world, sort of a new Turkey - that might look very good. It doesn't look appealing to them.
INSKEEP: Thomas Lippman, journalist and consultant. His latest book is "Saudi Arabia On The Edge: The Uncertain Future Of An American Ally." Transcript provided by NPR, Copyright NPR.