Saudi arabia is the largest Arab state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab world (after Algeria). It is bordered by Jordan and Iraq on the north and northeast, Kuwait, Qatar, Bahrain and the United Arab Emirates on the east, Oman on the southeast, and Yemen on the south. The Kingdom of Saudi Arabia was founded by Abdul-Aziz bin Saud (known for most of his career as Ibn Saud) in 1932, although the conquests which eventually led to the creation of the Kingdom began in 1902 when he captured Riyadh, the ancestral home of his family, the House of Saud, referred to in Arabic as Al Saud. The Saudi Arabian government, which has been an absolute monarchy since its inception, refers to its system of government as Islamic. The kingdom is sometimes called "The Land of the Two Holy Mosques" in reference to Al-Masjid al-Haram (in Mecca), and Al-Masjid al-Nabawi (in Medina), the two holiest places in Islam. Saudi Arabia has the world's second largest oil reserves which are concentrated largely in the Eastern Province and oil accounts for more than 95% of exports and 70% of government revenue. This facilitates the creation of a welfare state although the share of the non-oil economy is growing recently. It has also the world's sixth largest natural gas reserves.
The new kingdom was one of the poorest countries in the world, reliant on limited agriculture and pilgrimage revenues.However, in 1938 vast reserves of oil were discovered in the Al-Hasa region along the coast of the Persian Gulf and full-scale development of the oil fields began in 1941. Oil provided Saudi Arabia with economic prosperity and substantial political leverage internationally. Cultural life rapidly developed, primarily in the Hejaz, which was the center for newspapers and radio. But the large influx of foreigners to work in the oil industry increased the pre-existing propensity for xenophobia. At the same time, the government became increasingly wasteful and extravagant. By the 1950s this had led to large governmental deficits and excessive foreign borrowing. Abdul Aziz bin Saud, first king of Saudi Arabia
King Saud succeeded to the throne on his father's death in 1953. However, an intense rivalry between the King and his half-brother, Prince Faisal emerged, fueled by doubts in the royal family over Saud's competence. As a consequence, Saud was deposed in favor of Faisal in 1964. The major event of King Faisal's reign was the 1973 oil crisis, when Saudi Arabia, and the other Arab oil producers, tried to put pressure on the US to withdraw support from Israel through an oil embargo. Faisal was assassinated in 1975 by his nephew, Prince Faisal bin Musaid.
Faisal was succeeded by his half-brother King Khalid during whose reign economic and social development progressed at an extremely rapid rate, transforming the infrastructure and educational system of the country; in foreign policy, close ties with the US were developed. In 1979, two events occurred which greatly concerned the Al Saud regime, and had a long-term influence on Saudi foreign and domestic policy. The first was the Iranian Islamic Revolution. It was feared that the country's Shi'ite minority in the Eastern Province (which is also the location of the oil fields) might rebel under the influence of their Iranian co-religionists. In fact, there were several anti-government uprisings in the region in 1979 and 1980. The second event, was the seizure of the Grand Mosque in Mecca by Islamist extremists. The militants involved were in part angered by what they considered to be the corruption and un-Islamic nature of the Saudi regime.Part of the response of the royal family was to enforce a much stricter observance of traditional religious and social norms in the country (for example, the closure of cinemas) and to give the Ulema a greater role in government.Neither entirely succeeded as Islamism continued to grow in strength. There
