The Saudi monarchy may well fall, but will we welcome the regime that replaces it?

Saudi Arabia is in trouble. Even before the latest terrorist outrages, friends returning from visits to the kingdom were saying that the security position was much worse than being reported. Everyone was tense; at moments, the authorities seemed close to panic. This is hardly surprising. On any objective analysis, Saudi is in a classic pre-revolutionary situation. The House of Saud is trapped between the pincers of rising expectations and crumbling support.

There are a range of explanations for this. In the first place, Saudi Arabia has undergone a much more rapid transformation than any other major region in history. The kingdom was only founded in 1932, and at that time, its people were among the poorest on earth. The dramatic changes that oil wealth thrust upon them were bound to lead to instability. The old order bred moral strengths out of scarcity and harshness. Once primaeval poverty was replaced by unimaginable abundance, some of those strengths were bound to be eroded.

This helps to explain both the power of religion and the authorities' ambivalent attitude towards it. It is too easy to caricature the current system as a cynical compromise between hypocritical princely voluptuaries and the fanatics whom they encourage to hold down the rest of the population. The reality is far more complex.

Sixty years ago Saudi was one of the most religious societies on earth. To those who scratched subsistence on its surface, the desert landscape was god-haunted. Daily life was bound up with the laws, rituals, and prayers of Islam; atheism was unthinkable. Affluence rarely sits easily with the strictures of faith, yet it would be facile to assume that every rich Saudi who has enjoyed the pleasures of the West has also found it easy to slough off his faith. The psychology of the individual is more subtle than that. Guilt is not the sole prerogative of lapsed Catholics or the non-observant children of Orthodox Jews. Many errant Saudis also feel guilt. That is one reason why the authorities allowed Wahabis and the religious police to become so powerful ; not merely to maintain order, but to appease their own consciences.

Yet the power of religion has made it hard for the Saudi economy to modernise. Much of education is controlled by the fundamentalists, which is why many Saudi children leave school knowing the Koran and little else. That makes them almost unemployable. It is also difficult to turn a windfall economy into an advanced economy. Almost everything in Saudi depends on oil, so if the oil price rises to US$40 per barrel or falls to $12, the consequences far outweigh any other economic developments. Everyone in a position of responsibility talks about the need to plan for a long-term, post-oil future. They then quickly turn to the computer screen to find out the latest price of Brent crude.

A windfall economy on the Saudi scale does not encourage the work ethic. Instead, it gives everyone the impression that there is an infinite amount of fruit on the tree, to be harvested with minimum effort. By the early Eighties, Saudi Arabia had established a lavish welfare state. Ordinary Saudis were rapidly forming the impression that they would be looked after, whether they worked or not. Even at current oil production rates, that is not sustainable, especially as the population is growing rapidly. There is unemployment, which leads to discontent, further inflamed by the behaviour of the vastly extended royal family. Well before e-mail, Saudi Arabia was one of the most gossipy societies on earth. The princes might try to conceal their extravagance. They would not succeed.

There is a Saudi middle class, impatient with repression, irritated at the way in which princely corruption interferes with their attempts to run businesses and exasperated by the slow pace of reform. Fundamentalist anger; working-class and middle-class discontent; a loss of confidence by the ruling élite in the face of terrorist threats - by rights, the patient ought to be dead already.

Many years ago, the British and the Americans gave considerable thought to internal security structures in Saudi. We had lost Libya because Colonel Gadaffi and a few other junior officers who knew how to use short-wave radio were able to mount a coup. We were not going to repeat that mistake. Well and good, but even the best security structures depend on boots and bullets. If 100,000 protesters took to the streets of Riyadh today, would the army open fire? (The same could be asked of Tehran; it would be an irony if Iran and Saudi went in opposite directions in the same week.)

Not that a revolt in Saudi would cause distress in all Western circles. The Saudis are used to abuse from Western leftists. Of late, however, they have been most upset by the glee with which some American neo-conservative commentators have welcomed their plight. They would expect Ken Livingstone to want to see the Saudi royal family hanged from the nearest lamp-post. They would have hoped for more understanding from Daniel Pipes, Bill Safire and Mark Steyn.

The neo-cons have grounds for grievance. The Saudis were far too ready to pay Danegeld to al-Qa'ida (they had not read their Kipling, so they did not realise that you never get rid of the Dane). It will be a moot point for historians as to which was more responsible for the rise of al-Qa'ida in the 1990s: the House of Saud's appeasement, or Bill Clinton's weakness. But if we were to punish the Saudi royal family now for their past failures, we would merely be punishing ourselves by inflicting chaos on the region.

There might be an alternative. In recent months, I have had a number of conversations with Saudi business men, all eager to bring about reform without anarchy. They were all impressed by the de Tocqueville dictum: that the most dangerous moment for a previously repressive regime is when it begins to reform.

It was easy to arrive at a broad consensus. The impetus for change must come from within the House of Saud. If it were overthrown, the vacuum would be filled by the extremists; there would, as it were, be nothing between the Shah and Khomeini. We need a King Ataturk; someone in his fifties who could implement a programme for radical change and political modernisation - including a restriction on the size of the royal family - without losing his nerve.

That is the theory, but time is desperately short. Discontent is growing, authority eroding. King Fahd, now an invalid, is due to be succeeded by Crown Prince Abdullah; able but nearly 80. His likely successor is Prince Sultan, also almost 80. It is reminiscent of Brezhnev, Andropov, Chernenko; a reshuffle of gerontocrats while the regime crumbles. But if Saudi royal family disintegrates, it won't be replaced by Gorbachev, Yeltsin and Putin.

All rational analysis leads to the conclusion that Saudi cannot survive. Yet that is so much against our interest - not to mention those of the Saudi people, who deserve better than a repressive theocracy - that western governments ought to make every possible effort to save Saudi Arabia.