Not too long ago, whenever people wishing for an Islamic utopia would argue with me, they would invariably cite Saudi Arabia as an example of the closest thing you could get to heaven on this earth.

A satisfied, crime-free society, they would say: you can leave your jewellery shop open there to say your prayers and nobody would rob you. All education and health care is paid for by the state. Petrol is almost free. And when I would ascribe the absence of crime to the high per capita income (in the early eighties it was around $20,000) and the harsh punishments of chopping off body parts in public, my interlocutors would hold Saudi oil wealth to be God's reward for being good Muslims, and also dwell on the efficacy of decapitation and lopping off of hands as effective deterrents to crime.

Welcome to the new millennium, I would say to these people if they were to repeat their arguments now: per capita wealth in Saudi Arabia has dropped to around $5,000 as a result of rapid population growth and falling oil prices. About 80 per cent of all Saudis live in Jeddah, Riyadh and Dammam, and the majority of them are in slums, with unemployment estimated at 25 per cent. Also, the presence of a vast tribe of some 6,000 princes whose extravagant lifestyle is supported from oil revenues adds to the kingdom's multiplying fiscal problems. When the ailing King Fahd spent a few months on a holiday in Spain last year, according to the Daily Telegraph, he was accompanied by 350 servants and courtiers, and 50 large Mercedes limousines were on duty. Flowers worth $2,000 were delivered every day.

Under these circumstances, the rash of bombings that culminated in the massive blasts in foreigners' housing colonies in Riyadh a fortnight ago surprised nobody except the Saudi authorities. Until now, the police had blamed western expatriates for the small explosions that had targeted foreigners: according to the Saudis, these were the result of turf wars being fought by Europeans over the distribution of illicit alcohol. Many of them had been jailed after they had confessed, allegedly under torture. But the recent massive terrorist attacks - termed 'our Twin Towers' by a Saudi minister - have cruelly exposed the real Saudi Arabia.

The discovery that 15 of the 19 suicide bombers involved in the 9/11 attacks were Saudis sent the royal family ducking for cover as well as searching for explanations. Despite the horrendous nature of the assault on the United States, Saudi officials were still in denial, refusing to accept that it was something intrinsic to the kingdom that had caused so much violence to multiply within its borders. The fact that Osama bin Laden, a wealthy and well-connected Saudi, was behind the operation was harder to sweep under the carpet, but he was treated as an aberration.

We in Pakistan have become accustomed to viewing the kingdom with admiration and more than a trace of envy. Many people here have considered it a model to emulate because of its outward piety. But as we can now see, the chickens are coming home to roost.

Extremism, bred as much by an educational system that teaches hatred and intolerance for foreigners as by the stark economic contrast between royalty and commoners, cannot be wished away any longer. The similarities between what is happening in the two countries are too striking to ignore despite their many differences.

Since the late seventies when Zia's self-serving Islamization began to polarize Pakistani society, we have been experiencing religious violence on a growing scale. Our school curricula teach intolerance and our madrassahs fuel the zealotry and the ethnic warfare that Pakistan has become so well known abroad for.

The passage of so-called Islamic laws in the NWFP will only exacerbate the tension in a volatile environment, increasing the insecurity of both the minorities and the country's marginalized liberals. So much for General Musharraf's pledge not to give in to the forces of extremism.

The keystone of Saudi policy has been to keep the Americans happy at all costs, thus ensuring their support for the status quo. To achieve this, the royal family went to extraordinary lengths by pumping huge volumes of oil to stabilize prices, and by buying billions of dollars of sophisticated American arms that their forces could often neither operate nor maintain. The idea behind these twin measures was to make Saudi Arabia crucial to the economic well-being of America.

However, first 9/11 and then the invasion of Iraq have greatly reduced Saudi usefulness to Washington. With control of 11 per cent of the world's proven oil reserves in Iraq, the Americans can regulate prices for the foreseeable future. And after the recent attacks on Americans in the kingdom, many voices in the United States are loudly questioning their country's support for the Saudi regime.

Pakistan, too, has long striven for American support without understanding that it will only be forthcoming when we have something to offer. In the fifties and sixties, it was our willingness to be a link in the chain Washington sought to throw around the Soviet Union; and in the eighties, our common border with Afghanistan brought much-needed American political and economic support.

But after the collapse of the USSR and the retreat of Soviet forces from our neighbour's soil, we were of little use to the Americans. Additionally, we had crossed the nuclear red line, thereby jeopardizing the anti-proliferation policies so carefully crafted in Washington.

Currently we are back in Washington's good books as we are partners in the 'war against terror', and are useful in helping mop up Al Qaeda radicals sheltering in Pakistan. But the other side of this coin is that we have also provided sanctuary to terrorists and are rapidly breeding more of them through our benighted, short-term and bankrupt Kashmir policy. The Americans are not blind to this duality, and allegations of our export of nuclear technology to states viewed as hostile to America have begun to raise hackles, not just eyebrows.

So in a sense, both Saudi Arabia and Pakistan are suffering from their fostering of religious extremism: both were under the illusion that radicals would only operate outside their borders. But as recent events in both countries have shown, terrorists have their own agenda and cannot be easily controlled. It will now require a smart U-turn and a major act of political will to put the genie back into the bottle.