The recent shooting in the southern Philippines of a prominent Saudi Wahhabi cleric, whose popularity is evident in his following of 12 million on Twitter, suggests that it is not just the government but also the ulema who are becoming targets, and not just ulema who are totally subservient to the Saudi government. Sheikh Aaidh al-Qarni is a product of the fusion between Wahhabism and the Muslim Brotherhood that produced the Sahwa, a Saudi Salafist political reform movement. While Philippine investigators are operating on the assumption that ISIS was responsible for the shooting, Saudi media was quick to report that Saudi authorities had warned the Philippines days earlier that Iran's Revolutionary Guards were planning an attack.

SOFT POWER

Let's take a step back to paint a framework in which the Saudi funding campaign should be viewed. For starters, one has to realise that while it all may be one pot of money, the goal of the campaign differs for different parties. For the Wahhabi ulema it is about proselytisation, about the spreading of the faith. For the government it's about soft power. At times the interests of the government and the ulema coincide, and at times they diverge. By the same token, the campaign on some levels has been an unparalleled success, on others success is questionable and one could go even a step further to argue that it risks becoming a liability for the government.

It may be hard to conceive of Wahhabism as soft power but Salafism was a movement that had sprouted only minuscule communities in the centuries preceding the rise of Mohammed Ibn Abdul Wahhab, and started to make real inroads into Muslim communities beyond the Arabian Peninsula only 175 years after his death. By the 1980s, the Saudi campaign had established Salafism as an integral part of the global community of Muslims and sparked greater religiosity in various Arab countries as well as the emergence of Islamist movements and organisations. The soft power aspect of it, certainly in relation to the power struggle between Saudi Arabia and Iran, has paid off - particularly in countries like Malaysia, Indonesia, Bangladesh and Pakistan where sectarian attitudes and attitudes towards minorities and Iran are hardening.

Let me illustrate this with an anecdote. The man who was until recently deputy head of Indonesian intelligence and deputy head of Nahdlatul Ulema, one of the world's largest Islamic movements that professes to be anti-Wahhabi, is a fluent Arabic speaker. He spent 12 years in the Middle East representing the Indonesian intelligence service, eight of those in Saudi Arabia. This man will profess in the same breath his dislike of the Wahhabis and at the same time warn that Shi'ites, who constitute 1.2 per cent of the Indonesian population and that includes the estimated two million Sunni converts over the last 40 years, are one of the foremost domestic threats to Indonesian national security. This man is not instinctively anti-Shi'ite, but sees Shi'ites as an Iranian fifth wheel. The impact of Saudi funding, Wahhabism and Salafism is such that even Nahdlatul Ulema or NU is forced to adopt Wahhabi language and concepts when it comes to perceptions of the threat posed by Iran and Shi'ites in the Islamic republic's wake.

Wahhabism's proselytising character served the Al Sauds' purpose as they first sought to stymie Arab nationalism's appeal and later that of Iran's Islamic revolution, tectonic developments that promised to redraw the political map of the Middle East and North Africa in ways that potentially threatened Saudi Arabia's rulers. Both developments were revolutionary and involved the toppling of Western-backed monarchs. Arab nationalism was secular and socialist in nature. The Islamic revolution in Iran was the first toppling of a US icon in the region and, moreover, involved a monarch. The Islamic republic represented a form of revolutionary Islam that recognised a degree of popular sovereignty. Each in their own way posed a threat to the Al Sauds, who cloaked their legitimacy in a religious puritanism that demanded on theological grounds absolute obedience of the ruler.

MONEY TRAIL

Ultimately, the Saudi campaign benefited from Arab socialism's failure to deliver jobs, public goods and services, and the death knell to notions of Arab unity delivered by Israel's overwhelming victory in the 1967 Middle East War during which it conquered East Jerusalem, the West Bank and the Gaza Strip, the Golan Heights and the Sinai Peninsula. Moreover, Egyptian leader Gamal Abdel Nasser's early rupture with the non-Salafist Muslim Brotherhood led many Brothers to join the stream of migrant workers that headed for the Gulf. They brought their activism with them and took up positions in education that few Saudis were able to fill. They also helped create and staff organisations like the Muslim World League, initially founded to counter Nasser's pan-Arab appeal. The campaign further exploited opportunities created by Nasser's successor, Anwar al-Sadat, who defined himself as "the believing president". Sadat, in contrast to Nasser, allowed Muslim groups like the Brotherhood and Salafis to re-emerge and create social organisations, build mosques and found universities.

The rise of the Brotherhood in the kingdom sparked a fusion of the group's political thinking with segments of the Wahhabi and Salafi community, but also accentuated stark differences between the two. Saudi establishment clergy as well as militants took the Brotherhood to task for its willingness to accept the state and operate within the framework of its constrictions. They also accused it of creating division or fitna among Muslims by endorsing the formation of political groups and parties and demanding loyalty to the group rather than to God, Muslims and Islam.

The Saudi campaign was bolstered by the creation of various institutions, including the Muslim World League and its multiple subsidiaries; Al Haramain, a charity; and the likes of the Islamic University of Medina. In virtually all of these instances, the Saudis were the funders. The executors were others often with agendas of their own, such as the Brotherhood, or in the case of Al Haramain, more militant Islamists, if not jihadists. Saudi oversight was non-existent and the laissez faire attitude started at the top.

Let me give you an example. The National Commercial Bank when it was Saudi Arabia's largest financial institution had a department of numbered accounts. These were all accounts belonging to members of the ruling family. Only three people had access to those accounts; one of them was the majority owner of the bank, Khaled Bin Mahfouz. Khaled would get a phone call from a senior member of the family who would instruct him to transfer money to a specific country, leaving it up to Khaled where precisely that money would go. In one instance, Khaled was instructed by Prince Sultan, the then Defence Minister, to wire US$5 million to Bosnia. Sultan did not indicate the beneficiary. Khaled sent the money to a charity in Sarajevo that in the wake of 9/11 was raided by US law enforcement and Bosnian security agents. The hard disks of the foundation revealed the degree to which the institution was controlled by jihadists. In one instance, the Saudis suspected one of the foundation's operatives of being a member of Egypt's Islamic Jihad. They sent someone to Sarajevo to investigate. The investigator confronted the man saying: "We hear that you have these connections and if that is true we need to part ways." The man put his hand on his heart and denied the allegation. As far as the Saudis were concerned, the issue was settled, until the man later in court testimony described how easy it was to fool the Saudis.

It took the Al-Qaeda bombings of 2003/2004 rather than 9/11 to persuade the Saudis to really take control by banning charity donations in mosques, putting the various charities under a central organisation, controlling the transfer of funds abroad and working with the United States and others to clean up some of the charities or, as in the case of Al Haramain, close them down.

SAUDI-IRANIAN RIVALRY

I want to dwell for a little bit on the Saudi-Iranian relationship because it is a key driver of Saudi Arabia's soft power strategy. Underlying the Saudi-Iranian rivalry is what is from the Saudi perspective an existential battle that is sharpened by uncertainty about the kingdom's relationship with the United States. US officials for much of their country's relationship with Saudi Arabia have insisted that the two countries do not share common values, that their relationship is based on common interests. Underlying the now cooler relations between Washington and Riyadh is the fact that those interests are diverging. The divergence became evident with the eruption of popular revolts in 2011 and particularly US criticism of the Saudi military intervention in Bahrain to quash a rebellion, and hesitant American support for the toppling of Egyptian president Hosni Mubarak. It is also obvious in the US persistence in reaching a nuclear agreement with Iran that is returning the Islamic republic to the international fold despite deep-felt Saudi objections.

The result of all of this has been, with the rise of the Salmans - King Salman and his powerful son, Deputy Crown Prince Mohammed bin Salman - a far more assertive foreign and military policy. Make no mistake, Saudi Arabia's new assertiveness is not a declaration of independence from the United States. On the contrary, Mohammed Bin Salman made that very clear in a recent Economist interview that it is designed to force the US to re-engage in the Middle East in the belief that it will constitute a return to the status ante quo: US support for the kingdom as the best guarantor of regional stability. The Saudis appear to be operating on the basis that things have to get worse to get better. That is the part of the backdrop of the stalled military intervention in Yemen, Saudi moves in Syria and ongoing multi-nation military exercises in the kingdom which credible sources have suggested are a stepping stone for Saudi intervention in Iraq to counter Iran-backed Shi'ite militias.

To be clear, Saudi government leaders - in contrast to Wahhabis - do not necessarily hate Shi'ites so much as that they see them as an Iranian fifth wheel, and a tool for countering Iran by motivating Sunnis to fear and resist Iranian influence. Anti-Shi'ite sectarianism helps Saudi Arabia mobilise Muslims to take up arms as part of the kingdom's struggle with Iran for regional hegemony. Saudi Arabia has repeatedly accused Iran of fuelling sectarianism by backing Shi'ite militias who have targeted Sunnis in Iraq, Yemen, Lebanon and Syria.

The fact of the matter is that Saudi Arabia had real concerns in the immediate wake of the Iranian revolution. The fall of the autocratic pro-US regime of the Shah made place for a regime that was revolutionary and keen on exporting its revolution to the Gulf. The Saudi determination to counter the Iranian revolutionary threat by defeating rather than containing it has ever since shaped Saudi policy towards the Islamic republic and towards Shi'ites. To be sure, Iran repeatedly took the bait with the creation of Hizbollah, political protests during the haj in Mecca, and the 1996 bombing of the Khobar Towers in Saudi Arabia, to name just a few of the incidents.

Nonetheless, much like the Al Sauds' Faustian pact with Wahhabism, the kingdom's handling of relations with revolutionary Iran was certain to ultimately backfire and position the Islamic republic as an existential threat. Rather than embrace its Shi'ite minority by ensuring that its members had equal opportunity and a stake in society, the kingdom grew even more suspicious of Shi'ites who populate the country's oil-rich Eastern Province. In doing so, it provided Iran with a golden opportunity to forge closer ties with disgruntled Shi'ite communities in the Gulf.

Middle East expert Suzanne Maloney predicted that "the most important variable in the stability of states with significant (Shi'ite) minorities - such as Bahrain, Saudi Arabia, Kuwait and Pakistan - will be the overall tenor of these states' domestic politics, particularly on minority rights issues".

A Kuwaiti Shi'ite businessman who visited Teheran shortly after the 1979 toppling of the Shah saw the revolution as opening the door to a new era. "We are citizens of Kuwait, Bahrain Saudi Arabia. We are Shi'ites, not Iranians. What happened in Iran is good for everyone. It will persuade our governments to treat us as equals," the businessman said at the time. It was an attitude that was manifested in the fact that up to a million Shi'ites died in the Iran-Iraq war defending Iraq against Iran.

The businessman's words went unheeded. Instead of acknowledging legitimate grievances, the kingdom accused Iran of interference in its internal affairs and those of its allies. It relied on autocratic minority Sunni leaders to keep a grip on majority Shi'ite populations in Iraq and Bahrain. The US effectively thwarted Saudi policy with its 2003 invasion of Iraq, which brought majority Shi'ites to power.

In Bahrain, the Sunni minority rulers retain power through harsh repression.

Saudi decisions in February and March this year to cancel US$4 billion in aid to the Lebanese, ban Saudis from visiting Lebanon and outlaw Hizbollah as a terrorist organisation are an attempt to deny Lebanese Shi'ites opportunities that come with their being a majority of the country's multi-ethnic, multi-cultural society. Saudi leaders failed to recognise that Teheran's perception of itself as Shi'ite Central was no less legitimate than Riyadh's insistence on being Sunni Central or Israel's claim that it is the centre of the Jewish world.

As a result, the 2003 US invasion of Iraq that brought the Shi'ite majority for the first time to power left the Saudis incredulous. "To us, it seems out of this world that you do this. We fought a war together to keep Iran from occupying Iraq after Iraq was driven out of Kuwait (in 1991). Now we are handing the whole country over to Iran without reason," Saudi Foreign Minister Prince Saud al Faisal told an American audience in 2005.

The Saudi approach created the seeds for intermittent domestic unrest and set the stage for a global effort to ensure that Muslim communities across the globe empathised with Saudi Wahhabism rather than revolutionary Iranian ideals.

The Saudis' execution of Shi'ite cleric Nimr al-Nimr in January was not simply designed, as many analysts maintain, to send a message to domestic opposition. The execution was part of a deliberate strategy to delay, if not derail, implementation of the nuclear agreement with Iran and its return to the international fold. Iranian hardliners played into Saudi hands with the storming of the Saudi embassy. It is the hardliners that Saudi Arabia failed to strengthen in last week's elections in Iran for Parliament and the Assembly of Experts, the council that eventually will elect Iran's next spiritual leader.

The strategy makes perfect sense. Saudi regional leadership amounts to exploitation of a window of opportunity and to extend it for as long as possible. That window of opportunity exists as long as the obvious regional powers - Iran, Turkey and Egypt - are in various degrees of disrepair. Punitive international sanctions and international isolation long took care of Iran.

But that is what is changing. Iran may not be Arab and maintains a sense of Persian superiority, but it has the assets Saudi Arabia lacks: a large population base, an industrial base, resources, a battle-hardened military, a deep-rooted culture, a history of empire and a geography that makes it a crossroads. Mecca and money will not be able to compete, and certainly not with Wahhabism in control.

And that may prove to be the Al Sauds' second existential challenge. Increasingly, the reputational cost of the Al Sauds' marriage to Wahhabism is changing the cost benefit analysis. Visitors to the kingdom in the 1990s would see the slogan of "progress without change" plastered all over the place. And yet, today more than ever, change is the key to progress.

Tumbling commodity and energy prices are forcing the Saudi government to reform, diversify, streamline and rationalise the kingdom's economy. Degrees of change are already obvious with the cutting of subsidies, the raising of prices for services, the search for alternative sources of revenue and moves towards a greater role for the private sector and for women. Cost cutting is occurring at a time when Saudi Arabia is spending effusively on efforts to counter winds of political change in the region, not only with regard to its new military assertiveness but also with massive financial injections into regimes like that of Egypt that have yet to perform.

Reduced income, cost cutting and reform will ultimately change the country's social contract that promised cradle-to-grave welfare in exchange for a surrender of political rights and acceptance of the pact with Wahhabism and repression. Reform that enables the kingdom to become a competitive, 21st century knowledge economy is difficult if not impossible as long as it is held back by the strictures of a religious doctrine that looks backwards rather than forwards, and whose ideal is the emulation of life as it was at the time of the Prophet and his companions.

Saudi Arabia was shell-shocked on Sept 11, 2001, when it became evident that the majority of the perpetrators were Saudi nationals. Saudi society was put under the kind of scrutiny the kingdom had never experienced before. The same is in some ways happening again today in the wake of the execution of Sheikh Nimr. The Saudis expected human rights criticism. The criticism goes in one ear and out the other. What they didn't expect, fuelled by the emergence of ISIS, was that the focus would be on Wahhabism and Salafism itself.

As a result, the cost is beginning to become perhaps too high as Saudi Arabia finds itself being increasingly compared to ISIS. Mohammed Bin Salman summed up the Al Sauds' dilemma when he told The New York Times last November: "The terrorists are telling me that I am not a Muslim. And the world is telling me I am a terrorist."

IDENTIFICATION WITH ISLAMIC STATE IN IRAQ AND SYRIA

One can question the effectiveness of the Saudi soft power effort on multiple levels. True, the Islamic Conference Organisation recently backed Saudi Arabia in its conflict with the Islamic republic. But only four countries broke off diplomatic relations with Iran following the storming of the Saudi embassy in Teheran. All four - Bahrain, Djibouti, Sudan and Somalia - were dependent on the kingdom. None of the other Gulf states did so although some lowered the level of their diplomatic representation.

Only the move by Sudan had more than symbolic value. It threatened to disrupt Iranian logistics in the region. Sudan was rewarded with a pledge of US$5 billion in military aid, funds that included money originally earmarked for Lebanon. Similarly, the Gulf states followed Saudi Arabia in advising their nationals not to travel to Lebanon because of Hizbollah, the Shi'ite militia.

Nonetheless, the potential risk of Wahhabism and Salafism's identification with ISIS or at the least as a breeding ground for more militant, more violent strands of Islam is increasing.

Two major political parties in the Dutch Parliament recently asked the government whether there was a legal basis for outlawing Wahhabi and Salafi institutions, schools, academies and social services that are funded by Saudi and Kuwaiti institutions. The question arose as a result of graduates of those institutions increasingly refusing to interact with Dutch society and allegations that a minority had joined ISIS in Syria. The government has yet to respond to the questions.

Nonetheless, imagine a scenario in which the government did move to a ban that would likely be challenged in the courts, and imagine that the ban would be upheld in the courts. The next step would be the banning of Saudi funding and ultimately the expulsion of the Saudi embassy's religious attache. It's not a development that the Saudi state can afford.

The Al Sauds' risk was also evident late last year when German Vice-Chancellor Sigmar Gabriel, in a rare attack on Saudi Arabia by a senior Western government official while in office, accused the kingdom of financing extremist mosques and communities in the West that constitute a security risk and warned that it must stop. "We have to make clear to the Saudis that the time of looking away is over. Wahhabi mosques all over the world are financed by Saudi Arabia. Many Islamists who are a threat to public safety come from these communities in Germany," he said.

Changing international attitudes towards Saudi sectarianism and the fighting of proxy wars against Iran are evident in a quiet conclusion in Western intelligence and policy circles that the crisis in Syria is in part a product of the international community's indulgence of Saudi propagation of Wahhabism. Central Intelligence Agency director John Brennan unsuccessfully tried in 2011, as peaceful anti-regime protests in Syria descended into violence, to persuade Saudi Arabia at a meeting in Washington of Middle Eastern intelligence chiefs to stop supporting militant Sunni Muslim Islamist fighters in Syria. An adviser to the Joint Chiefs of Staff recounted that the Saudis ignored Mr Brennan's request. They "went back home and increased their efforts with the extremists and asked us for more technical support. And we say OK, and so it turns out that we end up reinforcing the extremists," the adviser said.

In sum, the complex relationship between the Al-Sauds and Wahhabism creates policy dilemmas for the Saudi government on multiple levels, complicates its relationship with the United States and its approach towards the multiple crises in the Middle East and North Africa, including Syria, ISIS and Yemen.

Historian Richard Bulliet argues that Saudi "King Salman faces a difficult choice. Does he do what President (Barack) Obama, Hillary Clinton, and many Republican presidential hopefuls want him to do, namely, lead a Sunni alliance against ISIS? Or does he continue to ignore Syria, attack Shi'ites in Yemen, and allow his subjects to volunteer money and lives to the ISIS caliph's war against Shi'ism? The former option risks intensifying unrest, possibly fatal unrest, in the Saudi kingdom. The latter contributes to a growing sense in the West that Saudi Arabia is insensitive to the crimes being carried out around the world in the name of Sunni Islam. Prediction: In five years' time, Saudi Arabia will either help defeat ISIS, or become it."

The Al Sauds' problems are multiplied by the fact that Saudi Arabia's clergy is tying itself into knots as a result of its sell-out to the regime and its close ideological affinity to more militant strands of Islam. Saudi scholar Madawi Al-Rasheed argues that the sectarianism that underwrites the anti-Iran campaign strengthens regime stability in the immediate term because it ensures "a divided society that is incapable of developing broad, grassroots solidarities to demand political reform… The divisions are enhanced by the regime's promotion of an all-encompassing religious nationalism, anchored in Wahhabi teachings, which tend to be intolerant of religious diversity… Dissidence, therefore, centres on narrow regional, tribal and sectarian issues".

The knots are also evident in approaches towards Syria. A Saudi royal decree banning Saudis from granting moral or material aid to groups including ISIS and Al-Qaeda's official offshoot in Syria, the Al Nusra Front, was countered more than a year later by a statement by more than 50 clerics that called on Sunni Muslims to unite against Russia, Iran and the regime of President Bashar al-Assad. The statement described groups fighting the Assad regime as "holy warriors" in what was widely seen as an endorsement of extremist groups.

By the same token, Saudi Arabia's intervention in Yemen in a bid to defeat Houthi rebels, the only group to have challenged Al-Qaeda advances in the country but that also threatened to undermine the kingdom's dominant role in Yemeni politics, has effectively turned the Saudi air force into the extremists' air wing as Al-Qaeda expands its reach in the country.

Whether historian Bulliet is right or not in his prediction, Wahhabism is not what's going to win Saudi Arabia lasting regional hegemony in the Middle East and North Africa. In fact, as long as Wahhabism is a dominant player in the kingdom, Saudi Arabia is even less likely to win its battle for hegemony. At the end of the day, it is a perfect storm. The stakes for Saudi Arabia are existential and the kingdom may well be caught in a Catch-22.

Iran poses an existential threat, not because it still projects itself as a revolutionary state but simply by what it is, the assets it can bring to bear and the intrinsic challenge it poses. But equally existential is the fact that Wahhabism is likely to increasingly become a domestic and external liability for the Al Sauds. Their future is clouded in uncertainty, no more so if and when they lose Wahhabism as the basis for the legitimacy of their absolute rule.

• The writer is a senior fellow at the S. Rajaratnam School of International Studies where his focus is the Middle East and North Africa.
• This is an edited excerpt of his lecture at the Institute of South Asian Studies on March 2.