The fence – which will cost billions of dollars -- will take six years to complete.
Saudi Arabia's interior minister, Prince Nayaf bin Abdulaziz, says the project is part of a larger plan to also secure all the kingdom's other borders.
Iraq -- The New Afghanistan?
The BBC reports the cost of the project is some $12 billion and that the security efforts will include the latest technology, including remote sensors and thermal cameras.
Neil Partrick, a regional expert with the London-based Economist Intelligence Unit, says Saudi Arabia is particularly concerned that Saudi and other Arab militants now fighting in Iraq may ultimately endanger the kingdom.
The analyst notes that officials fear Iraq has become the same kind of training opportunity for jihadists as Afghanistan was previously. He says the Saudis worry that -- whether Iraq remains chaotic or ultimately stabilizes -- these fighters will eventually return home.
"There has been an understanding since the invasion [of Iraq] of a movement of Saudi Arabians, though the official figure is relatively modest in terms of the numbers of Saudi nationals going into Iraq," Partrick says. "But over the last year or so there has been some evidence of a movement back of at least some individuals from Iraq into Saudi Arabia across what is a very long border and a very difficult one to police. And, of course, one that is wholly ineffectively policed from the Iraqi side."
A Restless Minority Looks To Iran
Partrick says Saudi officials also view Iran as a regional danger. They hope the fence will help limit Tehran's contract -- via Iraq -- with the kingdom's own Shi'ite minority.
Saudi Shi'a, who feel disadvantaged in the officially Sunni kingdom, live mostly in an eastern province that is also home to the biggest-producing oil fields.
"There is a concern that with possible increasing tension between Iran and the U.S., primarily, that there may be as indeed there has been in the 1980s in the course of the war between Iraq and Iran, an attempt by Iran to push certain buttons in a number of [Gulf Cooperation Council] countries including Saudi Arabia," Partrick explains. "The situation in terms of the eastern province alongside the Persian Gulf area is one in which, though it is much improved in terms of internal Saudi relations, the Shi'a there have some residual connections with Iran and although they are not in any way as enamored as they used to be with Iran, it is a possible pressure point that the Saudis are concerned about."
Saudi Arabia is an ally of the United States and any serious unrest in the kingdom would directly affect Washington's oil interests there.
After the Iraq border, the second priority for Saudi officials is to secure their border with Yemen. Al-Qaeda is known to be active in Yemen, including the attack on the U.S. naval ship the "USS Cole" in Aden in 2000.
Partrick says the stepped-up security measures come as Saudi police have made progress in recent years in combating home-grown militant groups, including ones directly linked to Al-Qaeda.
"Overall, in terms of public events, whether it is interdicting militants or it is actual attacks being carried out by militants, overall the trend is down, unquestionably, compared to the early post-Iraq-invasion period and indeed there were definite improvements over 2005 carried on into 2006," Partrick says. "But then there are significant events that have occurred of late, most particularly in February 2006 at Abqaiq, which is the largest oil facility in the kingdom and where the great majority of its oil daily is processed."
In the Abqaiq attack, two explosive-laden cars tried to ram through the outer perimeter of the heavily guarded oil facility. The occupants of the cars and two guards were killed as one of the cars exploded.
That attack sent global oil prices leaping up by as much as 3.5 percent, once again pointing to the sensitivity of Saudi Arabia as a target for any jihadist groups or states opposing its monarchy or the West.
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SUNNI, SHI'A: Iraq is riven along sectarian lines, faults that frequently produce violent clashes and are a constant source of tension. Sectarian concerns drive much of Iraqi politics and are the main threat to the country's fragile security environment.