The closure of the Saudi embassy and consulates in Egypt, and the continued demonstrations in Cairo in front of the Ministry of Interior, point to a coming crisis in the Arab world between the revolutionary states and the conservative ones.
So far that potential conflict has not riven the Arab League, because there have not been clear lines dividing the two. Saudi Arabia was opposed to the fall of Hosni Mubarak in Egypt. But it supported the revolution against Muammar Qaddafi in Libya, and against the Baath Party in Syria. It played a role in easing Ali Abdullah Saleh out of office in Yemen. So the assumption that Saudi Arabia is always reactionary and is solidly a status-quo power is given the lie by any thorough consideration of their actual role in the Arab Spring. Of course, they have tried to bribe their own demonstrators to go home, and have largely succeeded, in Saudi Arabia itself.
But the norms of governance of the new Egypt, Tunisia, Libya and Yemen are diametrically opposed to those of the Saudi monarchy, especially in the realm of freedom of speech.
The crisis was kicked off by the Saudi arrest of outspoken attorney Ahmed El-Gizawi, an Egyptian national, in the kingdom. There is a large Egyptian guest-worker population in Saudi Arabia, whom Egyptians feel are not well treated.
Crowds gathered to demonstrate at the Saudi embassy and used insulting slogans, demanding the release of El Gizawi.
Given that the Israeli embassy was invaded, the Saudi authorities abruptly pulled out. They may have feared exposure of important secret records if the embassy were taken over (the diplomatic correspondence over their support for Mubarak is likely in there). The Saudis are saying they don’t mind some demonstrations but that the demonstrators should treat them with respect (i.e. they don’t get it).
The likelihood that the Egyptian government is going to prevent demonstrations in front of an embassy is low. It might be possible to up the level of Egyptian government guards for the facilities.
At the moment, the dispute is over how free people will be to demonstrate and name-call.
Saudi Arabia has offered some $4 billion in aid, which may or may not hang in the balance. Some leftist Egyptians are celebrating that it might be possible to dislodge Saudi influence from the journalism and politics of the new Egypt.