SPIEGEL:

Your Highness, Islamist terrorists are challenging the royal family. Do you feel threatened?

Prince Walid: Ever since the establishment of the House of Saud, the king has been able to move freely among the people. We will not allow a handful of terrorists to deprive us of our tradition. We will not allow ourselves to be subjugated. By the way, our security forces have achieved a number of remarkable successes in the past few weeks.

SPIEGEL: How do the Saudi people feel about the terrorists?

Prince Walid: No one knows exactly how many of them there are in Saudi Arabia, but we seem to be dealing with a small, isolated group. The majority of the Saudi Arabian population categorically rejects their actions. Islam forbids the killing of innocent people, whether they are Muslims, Jews or Christians.

SPIEGEL: How do you intend to deal with the terrorists? Do you plan to negotiate or wage war, like your cousin, Prince Bandar?

Prince Walid: These people must be dealt with decisively. After all, King Abd al-Aziz Ibn Saud did not spend a lot of time deliberating when he subdued the extremist factions within his own army in 1929, at the battle of Al-Sabla. The terrorists have now been given until July 23 to turn themselves in. If they refuse, we will treat them quite unpleasantly. We have been too soft on the issue of terrorism in the past. But now our survival depends on the destruction of these terrorists. Believe me, we are no longer prepared to compromise.

SPIEGEL: Not just the terrorists, but also the Saudi people are troubled by the close ties your family maintains with the United States.

Prince Walid: We are good friends of the United States. Personally, I admire a great deal about America. However, I also believe that the USA should fundamentally rethink its Middle East policies. The majority of Arabs and Saudis feel that America does too little in Palestine and is practically enthralled by Israel. America could force Israel to accept a peaceful solution, thereby eliminating a principal reason for terrorism in our country. There is a great deal of frustration in the Islamic world, and America is not being helpful.

SPIEGEL: Many Saudi Arabians are also critical of conditions in their own country. When will democracy come to your country?

Prince Walid: We have already set an election date for half of all community councils for this year - this is an enormous step for us. You should not judge us by German standards: We are an Islamic and highly conservative society. 1.3 billion Muslims pray in the direction of Mecca five times a day, and we feel obligated to uphold this tradition. This is why the West must accept that we operate at a different pace.

SPIEGEL: Young Saudi Arabians have been involved in many terrorist attacks throughout the world. Are your young people getting out of hand?

Prince Walid: Young people are full of energy everywhere in the world. It is tremendously important to keep them properly occupied. I face a great task: If we reform the economy we will create jobs and move our society ahead. If we are able to coordinate these things, we will ultimately gain political capital. That sort of coordination has been missing until now. There are many well-educated people here who have never worked...

SPIEGEL: ...and who turn away out of sheer frustration?

Prince Walid: Unemployment is a time bomb.

SPIEGEL: But if conflicts with extremists continue, what will the foreign workers do?

Prince Walid: If the situation were to spin completely out of control and foreign companies were to leave the country en masse, we would be severely affected. There is no question that we depend on our foreign workers. But it would not be the end of the kingdom.

SPIEGEL: And what happens with the oil?

Prince Walid: Let me clear up a myth. Our oil production is not dependent on foreigners. 97 percent of all jobs in the oil industry are held by Saudi Arabians. Don't worry, the oil will flow. That is the only thing that interests you people in the West - that this damned oil continues to flow.