Saudi Arabia is going through an extraordinary ‘consolidation of power’ as we speak. There are developments on an daily, if not hourly, basis and by the time this piece has been written and read, there would already be further actions by the Saudi Government driven by Crown Prince Mohammed bin Salman (MBS) and reactions stemming from the same. The current dynamics create a pressing need to observe and list the changes, understand the motivations of the key players and the potential fallout if we are not to be caught unprepared due the upheavals in our next door maritime neighborhood.
The current set of events were set into motion on Saturday, 4th of November with a series of coordinated moves. While the PM of Lebanon was summoned to Saudi Arabia, taken hostage, and forced to resign, similar fate befell a number of prominent Royals and Saudi businessmen. In Saudi Arabia, where members of ruling classes, governing political authorities, powerful businessmen and people in control of military essentially come from a single large entity, an extended family with multiple branches which are interrelated through marriages, this is a very significant step. For a country run like a mafia rather than based on institutions and rule of law, an internecine warfare within the familia is an extreme step, very debilitating to the circle of trust and mutual support which forms the basis of the control of the king and the elite on the country.
Given the culture of desert kingdom, the depth and width of the purge have been extensive, and there is no reason to believe that it has stopped yet. Since the crackdown started, over 200 people have been taken into custody. A number of senior ministers have been dismissed and nearly a dozen princes have been detained. The list of prominent names includes Waleed al-Ibrahim, chairman of the Middle East Broadcasting Center (MBC), one of the region’s largest media companies, construction magnate Bakr Bin Ladin of the Saudi Bin Ladin group and Prince Alwaleed bin Talal, one of the world’s wealthiest businessmen who owns investment firm Kingdom Holding.
Prince Mansour bin Muqrin who was the crown prince before removed by new King Salman in 2015 was killed in a mysterious helicopter crash shortly thereafter. The prince who succeeded him to the position for two years, before being replaced by the kings son MBS as the crown prince, Muhammad bin Nayef too has been missing since he was deposed earlier this year. There continues to be restriction on most royals from flying outside the country and travelling within, but that did not stop the eldest grandson of one of the most influential kings of SA, Fahd bin Abdulaziz from escaping to Iran. While his uncle and the youngest son of King Fahd, Prince Abdul Aziz bin Fahd has either been killed, or confined with injuries in the crackdown. In addition up to 1700 bank accounts of the people involved have been frozen, and there are threats that the Saudi government could take over and nationalize many of these financial assets going forward.
If we examine the background of the key figures targeted, two broad strands start to emerge from the very confused Game of Thrones being played out. The first is that Mohammed Bin Salaman is pointedly going after previous crown princes and their close associates. In addition members of the royal family who were seen as being favored by previous Kings are on the radar. Thus any of the potential challengers or even those who could form the nucleus or even advisors to a future counter claim are being targeted. The idea clearly is to reduce any those who have the potential moral authority to provide a counter narrative to MBS.
The second thrust is economic, while as mentioned before economic power is closely intertwined with royal bloodlines, the key aspect is that economic entities who have hitherto had only a marginal interference in palace politics have also been targeted. Targeting Bin Laden group in particular, stands out. Bin Laden has been as essentially to the House of Saud, as have been their arrangement with Ibn ʿAbd al-Wahhab, and the partnership had continued with the descendants irrespective of which branch of the family was in control. So as for Prince Al-Waleed bin Talal, again not known for political interests personally, and long suspected of being a secular front for financial management of house of Saud’s investments in western countries.
The third case of Hariri family’s Saudi Oger group, admittedly the PM of Lebanon’s company was close to King Fahd and thus his children and grandchildren including those discussed above, however their political heft in the current situation was limited and it was their wealth which was what stood out. Clearly, the wealthy elements of house of Saud are being squeezed because they are wealthy, and not because of their personal political views. At the very outset, it’s not obvious why economic figures would be targeted along with political ones. In any event, what is clear is the crown prince has broken the compact that existed in the kingdom: between the elements royal family, between the royal family and the clergy, and between the tribes. He has chosen to drill down and take apart, what was considered the foundation of not only his country’s power structure but also of Arab solidarity. Amongst the people he has targeted, there are sons and daughters and important marriage relations of nearly every influential Arab family, from Jordon to Lebanon to the Emirates.
[Saad Hariri’s resignation]http://www.independent.co.uk/…/lebanon-prime-minister-saad-…
[King Fahd’s grandson flees kingdom to Iran]http://indiatoday.intoday.in/…/saudiarabia-…/1/1084357.html
[Arrest of Osama Bin Laden’s Brother Shatters Royal Entente in SaudiArabia] http://www.news18.com/…/arrest-of-osama-bin-ladens-brother-…
In breaking the entente, Mohammed Bin Salman is therefore charting a very risky course not only for him personally, but also for his country, but most importantly, he is destabilizing the entire West Asian region by the steps that he is taking currently. In doing so, what his motivations are, are still quite unclear. Of course his stated agenda for the most recent crackdown has been to clothe it in an anti-corruption move. In addition he has been making noises about steering Saudi Arabia to a more moderate form of Islam in the recent past. At a superficial level, these aims would explain why he has chosen to go against the wealthiest of his country, who have been profiteering through their government contracts. It would also explain why he is acting against the older princes who are well aligned with the clergy and are stake holders in the status quo of close meshing of the political elements with the Islamic clergy.
Were these reasons to be true, it would indeed be an excellent development for the whole world, with the price of instability in short term, offset by bringing Saudi Arabia into a more modern era, and with it, ending the pernicious influence of the medieval mindset of that state across the world.
Sadly, these explanations cannot be hoped to hold water. There are reasons to be despondent. The obvious reason which would offer itself would be that this is nothing but a power grab by a particularly ambitious tribal prince in the continuing historical pattern of the Arab behavior since the advent of Islam. However it would not be right to assume that the simplest explanation is the correct one either, that is because, King Salman is already in a fairly powerful position, and through political maneuvering of removing previous crown prince’s MSB has the crown prince, has a very clear path to succession, from father to son. Neither is there any material to suggest that King Salman is in a weak position where he can be deposed, or his support of MSB for the position of crown prince is being threatened by the members of royal family who had prior claims before being sidelined. Of course politics is a developing story, and it is possible that MSB was fearful that any of claimants may rebound in the future, however given the past history of people concerned, there appeared to be no reason why such extreme steps would be warranted to safeguard the crown prince’s position, which could much more easily be achieved by the usual political machinations of buying favors, making deals and cutting out the few recalcitrant individuals who were not amenable to reason. A normal power grab is not accompanied by a very high risk gamble by someone who already is in a very favorable situation.
Do we then fall back to accepting that Prince Mohammed Bin Salman is indeed who he says he is ?
This is where there is greater cause for alarm. That is so because we know that the current set of events are neither simplistic emotional needs to climb to the top of the totem pole, and neither they are ad hoc responses to ill-defined charges of corruption in a country where the ruling classes are the law, as defined by Sharia and there is no concept of corruption.
We know this because the international intelligence community observing the Saudi ruling classes have seen that this was in coming and warned the world about it in the past. In a prescient note, the German intelligence agency BND had as far back as 2015 predicted the script for next few years and how the role of MSB would play out after King Salman had taken power, and its coming true to a T. BND had called out that King Salman and Prince Mohammed would try to place Saudi Arabia as undisputed leader of the Arab (read Islamic) world and in trying to do so, would replace the current cautious diplomatic stance with a more aggressive militaristic component and new regional alliances. This would result in an impulsive intervention policy by that country. It is interesting to note that the report was published when MSB was still the deputy crown prince and third in the line of succession and the German intelligence feared that in seeking to establish a clear line of succession to himself, he might overreach.
However as close as these predictions are, these are not the only publicly available read into the current top dogs. As MSB sought to impose his will on affairs and pulled Saudi Arabia deeper into the Yemen and Syrian conflicts, the Iranians whom he was battling with came to observe that the deputy crown prince is so “impatient” he may kill his own father to take the throne. This is not as extreme as it may appear, there have been regular assassination attempts on members of house of Saud, stemming primarily from ideological positions on members of the house of Saud not be sufficiently pure in their approach to the faith, and the more Islamist factions within the house and the country aiming to remedy that. The most famous example of the same of course has been the assassination of King Faisal in 1975, but following the crack down on Al Qaeda the number and intensity of the same have gone up. Clearly then, the current set of events are well orchestrated steps, being methodically executed by MBS since his father ascended the throne and he became a potential heir to it.
[Saudi Arabia ‘destabilizing Arab world’, German intelligence warns] http://www.telegraph.co.uk/…/SaudiArabia-destabilising-Ara…
[Iranian general says Saudi prince ‘impatient’ enough to be king he would kill his own father]http://www.independent.co.uk/…/saudiarabian-iran-tensions-…
There is one more part of the puzzle that we need to talk about before we can put the pieces together: the impact of falling oil prices on Saudi economy.
The falling oil prices have hit the kingdom quite hard, in 2016, their deficit was 87 billion dollars or 17.7% of their countries GDP, pushing MBS to initiate “austerity” programs which included cutting subsidies on fuel, water and electricity, application of taxes, cutting infrastructure projects and the almost unthinkable, selling parts of national oil company ARAMACO. These measures coupled with a mild increase in crude prices helped moderate the deficit to 7.7% of GDP at around 53 billion dollars. In addition the country has been selling long term bonds at attractive rates to tide over the deficit as well as drawing on its strategic reserves.
These are however, only the visible aspects of Saudi economy, with the country being opaque in every way including its economic data, the real impact is not fully known and is likely to be much larger.
There are reports that the Bin Laden group laid off 77,000 of the 200,000 expatriate workers it had as the government contracts dried up. The Saudi Oger group recently shut down this year after 40 years in business with 1,200 Saudi citizens directly left in limbo. The dire situation for these companies directly resulted from Saudi Government’s decision halt construction projects estimated to be worth more than $267 billion. In addition many of the contracts are being rescheduled or scaled down. If this wasn’t enough the government delayed payments to many of these builders, even as the private firms battled their own debts arising from the economic downturn.
According to various news agencies, the delayed payments are to the tune of “billions of dollars” (their finance minister can’t remember the exact amount) and debts to Oger itself runs to $9bn. The domestic debt ballooned from 44 billion SAR in 2014, to 142 billion in 2015 to 316.5 billion SAR in 2016 and is climbing rapidly. This year, the debt is expected to rise to around 16% of GDP compared to 13% last year. The fact that the Saudi GDP is actually shrinking, does not help matters either. While the government resumed some of its delayed payments this year, they have been limited to being just sufficient to pay off the dues to citizen workers and close the accounts and repatriate expat workers. This would then explain the economic side of the actions taken. After all, what better way for a government to help its debt, than by simply arresting the heads of those “private” companies that it is owed to and/or dissolving them ?
In an normal economy this would have had an disastrous domino effect, but given that the Oil economy of Saudi Arabia has very simple export earnings and domestic spend model lacking nearly no domestic economy of note and complexity, it makes it possible for them to take steps which would be unthinkable elsewhere. Even the domestic construction companies, were simply conduits for using oil income to provide physical infrastructure to locals. Nearly the entire workforce and economic activity was outsourced to expats with citizen employees’ salaries being nothing more than government doles by other names. Thus the only visible impact of these pull backs for the citizens at large would be no more massive mosques and celebratory architecture, a relatively small price to pay. Or at least that would be the expectation in King Salman and MSB’s mind. One would expect a structural reform given the economic mess, but asking the countries elite to return the money they made from the government back to it works just was well in certain contexts.
[Saudi Arabia is reeling from falling oil prices. And it could get much worse] https://www.washingtonpost.com/…/0dee71a6-d1e2-11e5-90d3-34…
[Saudi Binladin Group lays off 77,000 workers: report] http://www.dailymail.co.uk/…/SaudiBinladin-Group-lays-77-0…
[Saudi Arabia pledges to settle outstanding payments by year end] http://www.thearabweekly.com/…/SaudiArabia-pledges-to-sett…
The picture then that emerges with all the pieces coming together is an embattled Saudi Arabia, failing to assert itself against Iran in Lebanon, Yemen and Syria.
Unable to reconcile the Islamist legacy of its country with the need to depend on western economic and political structures while working at global stage. Unable to keep its own Wahhabi citizenry from attacking within as their external outlets are blocked and frustrated. Added to this cocktail is the falling oil prices and the shift of the global economy away from oil in general, and from West Asian oil in specific as other oil producing countries come on line; and the consequent diminishing of the Saudi economic strength. In this lessening of the desert Kingdom, whose citizens and especially elites had been for last sixty years, come to think of themselves as Allah’s special children, the conditions of great domestic instability are created.
Now comes to the scene a highly ambitious and completely ruthless prince, eager to establish the dominance of his country and make a mark for himself and we have a working hypothesis to understand and explain the drama playing out before us.
Mohamed bin Salman is not looking to merely “solve” his country’s economic problems, and to be honest, his stated aims of a moderate Saudi Arabia are an eyewash.
Were he to be truly approaching those goals, the first steps would be to withdraw from conflicts with Iran and lessen the military spending, instead of doing the exact opposite. Neither would the moderate Al-Waleed and similar economic magnates be targeted. Despite the economic stress Saudi Arabia has increased the country’s military spending, already at 13.5% of the country’s GDP. This gives it a second rank in a dubious list of countries which spend highest proportion of their GDP on the military. Instead of fixing the economic fundamentals through structural reforms, MSB has opted for the easier way of squeezing the wealthy to fund his wars.
The irony of the chief benefactor of Syrian rebels against Assad (which we know now is an euphemism for IS) talking about moderate Islam should not be lost on any one, but in case it was, it would be good to remind ourselves that the current purge was kicked off by having Hariri rail against Iran and Hezbollah, the two bulwarks against IS in Syria. Of course, these moves fitted in seamlessly with news on the same say that Iran backed Houthi’s had fired a missile on Riyadh’s airport and the consequent railing of SA against Iran. These are not actions of a moderate, economically oriented, future forward prince. These are actions of a potentate seeking to create conditions for a morally sanctioned war. A war which will push up oil prices solving income issues, a war which directs the restless religiously indoctrinated youths against the hated apostates, a war which would unite the fractional domestic forces behind the throne and provide carte blanche approval to internal consolidation of political powers. A just war which would transcend tribal loyalties, economic greed and developmental imperatives, while raising the king to new heights within the country and the country to new heights in the region.
The international forces are not particularly well suited to oppose such moves. Between the Democrats love of Saudi funds for their survival, to continuing anti Russia-Assad stance, to virulent anti Iranian position by Republicans, the Americans have painted themselves in a perfect corner where they can only sit and watch as Sunni forces are unleashed against an “extremist” Iran. After all, after railing for years against Iran, it would be hard to step back and claim that anti Iran forces are as Islamist if not more than those Iranian factions. The same Iranians whom they have made as chief villains of the West Asian terror factories while shielding their allies in SA. The carrot and stick of allowing investment into kingdom’s oil assets and the threat of using strategic financial reserves as a financial weapon has lured China in its ambit while keeping US in additional check. Russia in any case, with its clear alignment with Iran and Assad, is not in a position to influence MSB, other than perhaps raise a limited threat of cutting oil prices through increased production. Indeed, it is possible that US might even welcome a war from which it could profit from while serving its own geo-political interests.
This is the perfect storm that the region is headed into, and which we must watch carefully. The oil price shock would be the last thing our economy which is coming of age needs right now. Neither do we need a war involving Iran and cutting off our new roads into Afghanistan. To be seen as taking sides, even by accident, in the Shia-Sunni conflict will not be good for us either domestically or externally. Especially if the Sunni side becomes a “US allied” position. Though what we can do to stop such a scenario from developing is very limited, to prepare for the worst and start immediately to build an oil and economic buffer, is critically needed. In addition relationships of influence in West Asian region to continue to manage even under conditions of crises need to be rebuilt. A plan of our own where we can leverage the gaps created by this conflict in the region also needs to be quickly put together. While we can all hope that things don’t come to their worst and peter out before peaking, this is not a hope we can plan with, and this time, unlike previous Gulf Wars, me must not be caught napping.
[Saudi Arabia and Iran: Will they go to war?] http://www.bbc.com/…/saudiarabia-and-iran-will-they-go-to-…
[Saudi Arabia to raise military spending 6 pct -budget]https://www.reuters.com/…/saudiarabia-to-raise-military-sp…
[The Untold Story Behind Saudi Arabia’s 41-Year U.S. Debt Secret]https://www.bloomberg.com/…/the-untold-story-behind-saudia…
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