Saudi Arabia looks forward with trepidation to life in a brave new world fashioned by MBS

Published in GSN, 14 December 2017

The year ends with Saudi Arabia in a state of flux – its politics, society and economics all in the process of being radically remoulded by Crown Prince Mohammed Bin Salman (MBS), the 32-year-ol son of King Salman Bin Abdelaziz who has emerged as a visionary and apparently all-powerful moderniser and autocrat. With regional relations, dynastic politics, culture, religion and economic structures in play, it may not be overly dramatic to talk of a revolutionary situation – in which, so far, the body politic has held together, with few outward signs of sustained popular opposition to the heady programme of change.

The mass arrests of senior princes and members of the business elite in November may have shocked opinion abroad (GSN 1,048/1), but many among Saudi Arabia’s predominantly youthful population welcomed a move which – for those disaffected by decades of elite enrichment – burnished MBS’s credentials for cleansing the Saudi swamp (from which he, of course, emerged). GSN correspondents in the kingdom report that domestic support for the anti-graft drive is still very strong, even if many Saudis recognise an ulterior motive of MBS wanting to neutralise political opposition as he imposes his rule.

Maintaining momentum and popular support is the great challenge facing the ambitious crown prince, amid pressures that are likely to increase inside the kingdom and beyond its borders.

The political system has been convulsed by the arrests since early November. Attorney general Sheikh Saud Al-Mujib said on 5 December that 320 people had been picked up to date and the bank accounts of 376 individuals frozen (GSN 1,049/3). Most detainees are said to have agreed to a settlement and the arrangements to finalise the transfer of their assets to the state are due to be concluded within a few weeks. Some 159 remain in detention by the specially created Supreme Anti-Corruption Committee (GSN Special Report, 7 November 2017/4). An unknown number who have refused to make a settlement have been transferred to the Public Prosecution office.

A few had retained lawyers to fight the charges, such as billionaire investor Prince Alwaleed Bin Talal, who is widely believed to have attempted suicide. The signs are now that Alwaleed will do a deal, while the value of his Kingdom Holding Company has plummeted. Few expect 62-year-old Alwaleed to return to his former prominence.

There have been other disturbing reports of the treatment of the detainees emanating from The Ritz-Carlton, Riyadh, where many are detained. Prince Turki Bin Abdullah has been moved from the hotel to hospital after suffering a stroke. He has refused to sign a settlement which entails him handing over $2bn; sources tell GSN his assets are being ring-fenced in an attempt to protect the wider family’s wealth.

Analysts abroad are questioning the extent to which the purge will damage the international investor confidence that is necessary to fund MBS’s economic diversification programme and underpin a poorly performing domestic economy. Consultancy Oxford Economics suggests that Saudi Arabia, like most of the other GCC states, is facing higher credit risk than is indicated by its sovereign ratings and other conventional metrics. It points out that government debt levels continue to rise and political tensions are ramping up. Another UK consultancy, Capital Economics, sees political stability as a key risk factor now, as MBS moves away from the consensus-building that underpinned policy-making for many decades.

Such doubts further cloud the outlook for Saudi Arabian Oil Company (Aramco)’s proposed initial public offering (IPO) in 2018 (GSN 1,046/14). While government coffers look set for a windfall from the settlements being ‘negotiated’ with those held in the purge – at least $100bn is one figure mentioned, equivalent to the national debt – but the Aramco IPO would provide much more still (if probably not the $2trn MBS originally expected).

Social media has its own interpretations

Saudis have turned to social media in large numbers as they seek to interpret events. One apparently insightful commentator (at least sometimes) @Ahdjadid has written that balconies at The Ritz-Carlton Hotel, where many of the princely detainees are held, have been secured with steel plates to prevent suicide attempts.1 He tweeted on 8 December that a former Shura Council member had fled the kingdom in the “continuation of the flight of ability and energy”. This man, the blogger claimed, “was a reformist, close to Prince [Mohammed Bin] Nayef and between him and the ‘Emiratis’ [a faction around MBS] there were big problems.” GSN has heard of senior Mohammed Bin Nayef associates seeking refuge abroad and their families coming under pressure.

Pointing to more long-term problems, @Ahdjadid claims there is a widespread feeling among Saudi princes – “all their groupings, wings and councils” – of the need to remove MBS from power “in the shortest time before he eliminates them altogether”. He has also reported on tensions in an unnamed Saudi Arabian National Guard (SANG) camp, between its tribal militia and the army loyal to the Ministry of Defence (headed by MBS). The SANG has been a significant arm of the security establishment loyal to the late King Abdullah and, until MBS’s purge, led by Prince Miteb Bin Abdullah (GSN 1,048/6).

Among Saudis canvassed by GSN there is a perception that the kingdom is facing serious domestic threats and challenges that are their central preoccupation, on which MBS must be seento deliver. Although Saudis joined the rest of the Arab-Islamic world in opposing key MBS ally Donald Trump’s 6 December recognition of Jerusalem as the capital of Israel, several observed that Palestine was no longer a defining issue for ‘the street’. The US president’s strident tone against Iranian influence in the region, robustly supported by MBS and his allies, is more widely shared.

Inside the kingdom, the questions about where MBS is taking the country and region are far from being resolved. The November crackdown may have been welcomed by those keen to see an end to corruption but, as the intrigue over the $450m purchase of a Leonardo da Vinci painting attests, it has not prevented some well-connected princes spending lavishly. GSN has reported during the year that not everyone is happy with the sale of a slice of Saudi Aramco or the social reform programme – there is cynicism even some young Saudis who are often said to be the crown prince’s most ardent backers (GSN 1,042/6, 1,048/5).

MBS has the air of a man who feels he must move quickly, as measured by the scale of changes he is making and the short space of time he has until the government’s economic room for manoeuvre becomes more heavily constrained. But by forcing the pace, Saudi Arabia’s autocratic moderniser becomes at greater risk of making dangerous mistakes; he is certainly making enemies along the way.