Back from the Kingdom and the Gulf, where I’m delighted to find Senator John McCain (Republican, Arizona) who never fails to disappoint. Opening his remarks at the International Institute for Strategic Studies (IISS) Manama Dialogue in Bahrain, he quipped that he had come from the US where support for Congress had now reached a point where only paid staffers and blood relatives of Congressmen and Senators gave a favourable rating to their legislators. McCain said that he wanted to find someone who had given Congress a favourable rating, asking him or her just what they favoured.

Bahrain is the final destination in a journey through Saudi Arabia and the Gulf States which is a mixture of business and strategic interest. The Manama Dialogue was cancelled for 2011 due to internal unrest. It’s a positive step to revive the Conference for it permits not only an informed discussion of security challenges in the region, it also enables scrutiny of the ruling elites from Saudi Arabia and the Gulf States who are not routinely subject to question and answer.

Saudi Arabia faces a multiplicity of challenges, both external and domestic. The King, who is 88, and most of the senior figures in the Royal Family are in poor health. Thus, there was widespread public unease about King Abdullah’s most recent hospitalisation. It is suggested that the new Minister for the Interior, Prince Mohammad bin Nayef, a sprightly 53, is now the heir apparent. It may be that we are about to witness a generational change whenever the King departs the scene.

It is difficult to see how Saudi society can reach its potential in the 21st century when half the population is both marginalised and disenfranchised, as is the case with Saudi women. But there are signs, albeit tentative, of change. Our Australia Gulf Council business delegation, dealing with Saudi equivalents, found professional women actively engaged in the business of the Kingdom. The changes are far more noticeable in Jeddah, which is more orientated towards the international markets than in Riyadh, where a greater rigidity appears to prevail. It may also reflect the fact that the Ottoman Turks never effectively dominated Riyadh whereas Jeddah was always a functioning part of the Empire, with myriad links abroad.

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But perhaps the greatest challenge that the Saudis face is the extraordinary number of young people seeking access to the job market. Estimates vary but it is widely accepted that some 50 per cent of Saudi citizens (of a total population, including expatriates, of more than 28 million) is under 21 years of age. This has meant a recent series of government decisions to specify certain percentages of jobs for Saudis.

At the airport arrivals hall in Jeddah is a community service advertisement featuring a container of putrid water. It warns that the next war will be fought over clean water. It is a telling reminder of Saudi dependence upon desalination. But to be fair, the Saudis are moving incrementally towards the concept and reality of sustainability.

In any conversation in the Kingdom on national security matters, the subject of the Islamic Republic of Iran comes up early. It is not commonly appreciated, but America’s Arab allies, including the Kingdom and most of the Gulf States, are at least as concerned about an Iranian nuclear bomb as is Israel. A nuclear device in the hands of the mullahs in Tehran would trigger a regional arms race which would be profoundly destabilising and threatening.

Bahrain is the headquarters of the US Fifth fleet. Australia participates actively in the Coalition Taskforce (CTF) which polices the Gulf against potential security threats in the wake of the two Gulf wars. The Australian contribution is acknowledged widely. The overwhelming security challenge stems from Iranian threats to close the Strait of Hormuz, blocking the passage of much of the world’s oil. One mischievous question at the Manama Dialogue: ‘How much longer will American taxpayers be prepared to pay for the guaranteed delivery of Chinese oil?’

More than a few Saudi tourists cross the causeway into Bahrain on a regular basis to enjoy the more liberal social atmosphere, including the availability of alcohol. Jim Hacker, in a classic episode of Yes, Minister once visited the Middle East and had to resort to a diplomatic ‘communications room’, which served alcohol freely but surreptitiously.

In Riyadh, within the diplomatic community, there are those who boast of their skills as either wine-makers or brewers. Much of the product is undrinkable by Australian standards, or by the standards of anyone else for that matter, but it seems to serve a purpose. There are non-alcoholic beers available, including a Budweiser which reminded this traveller of the old Monty Python joke: ‘Drinking American beer is like making love in a canoe. F***ing close to water.’