Saudi Arabia’s young prince U-turns on reform
EVEN at the height of the Arab spring the Saudi regime had few domestic opponents. At their best they mustered a few hundred protesters to gather for a “day of rage” in March 2011 outside the interior ministry demanding a freely elected parliament and a constitutional monarchy. Many of its organisers were later jailed; but fear is only part of the reason for absence of protest. In a kingdom which acts like a (heavily armed) charity doling out cradle-to-coffin welfare, few see a reason to upset the felafel stand. Two-thirds of Saudi Arabia’s 21m citizens are employed by the government and expect annual pay rises whether working or not.
Confronted with vast deficits after the oil price collapsed in 2014, the king’s favoured son, Muhammad bin Salman (pictured centre), set out to change all that. The 31-year-old, who serves as deputy crown prince, defence minister and head of the committee that runs the economy, is widely considered to be Saudi Arabia’s de facto ruler, given the great age (81) of his father. His ministers called civil servants lazy and not only unveiled a transformation plan with austerity measures, but actually began implementing them. The slashing of housing, vacation and sickness allowances last September reduced some salaries by a third. Utility bills rose as subsidies fell.
This was not popular. If they had to tighten their belts, many muttered, why shouldn’t the prince himself, who reportedly paid half a billion dollars for a yacht in 2015? Activists on social media compared him to Gamal Mubarak, the ravenous son of the deposed Egyptian president. The prince’s primacy, already dented by the bloody mess that his intervention in next-door Yemen’s war has become, seemed in danger of being weakened.
On April 22nd the government performed a screeching U-turn, restoring most of the perks and bonuses enjoyed by all those government employees. By reducing the grumbling, Prince Muhammad may hope to regain the middle-class support he needs to bolster his position against opposition from senior princes who would rather that the king’s nephew and crown prince, Muhammad bin Nayaf, succeeds Salman when the time comes.
A wave of royal appointments, decreed the same day as the restoration of perks, further shifts the balance in the young prince’s favour. His younger full brother, Prince Khalid, becomes ambassador to America, the kingdom’s most important diplomatic post, helping cement Muhammad bin Salman’s ties to the Trump administration. Muhammad bin Nayef enjoys the confidence of America’s spooks, but under Mr Trump they have been losing influence to the Pentagon. Critics might bemoan Prince Khalid’s youth (28) and inexperience; but at least he is a fighter pilot.
Formally, the crown prince retains control of internal security, but by creating a new National Security Centre that answers directly to him, King Salman appears to be reducing his powers. So too does the promotion of Major-General Ahmed Asiri, the defence ministry spokesman, who becomes deputy head of intelligence. Some Saudi watchers speculate that King Salman might soon formally proclaim Muhammad bin Salman crown prince, and pension off Muhammad bin Nayef.
Might anyone stop him? In 1964 the Al Sauds deposed King Saud because of personal excesses and poor management. But the family took almost seven years to agree to do it, and is far larger and less wieldy now. Backbiting could grow, not least over the young prince’s readiness to cash in the family silver. Claims by analysts that he personally overvalued the Saudi oil company, Aramco, a fraction of which he intends to float next year, by at least $500bn, may be aimed at undermining confidence in his economic competence. But ultimately the family remains loth to do anything that might compromise the absolute monarchy, on which all their perks depend.
More concerning is the possibility that necessary reforms are being sacrificed for the prince’s personal ambition. A host of financiers, led by the IMF, had cheered his Vision 2030, announced last year and aimed at cutting the public sector and preparing the kingdom for an age after oil. “The Gulf can’t do austerity measures,” fumed a veteran investment banker, after the kingdom announced the reversal. Despite a rise in the oil price to above $50, the budget remains deeply in deficit. Restoring the allowances will add a further $13bn to a shortfall already projected at $86bn, 12% of GDP. The government insists its finances are improving, but bankers say that capital is leaving the kingdom. The search for second passports by those who are fed up and want to leave is increasing. Growth is less than 1%, the lowest for almost four years. Admirers who once praised the prince now wonder whether his vision is to change the kingdom, or just his title.
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