Saudi Arabia - 6 Factors for MbS's Changes and 5 Against Them
Saudi Arabia is witnessing dramatic changes – from a gradual break-up of the royal family’s 200-years old alliance with the austere Sunni discipline, Wahhabism, to major developments within the royal family. These changes are seen as measures by the 32-year old crown prince, Mohamed bin Salman, or MbS, to avert any opposition to his ascent to the throne. They are more than that.
MbS wants to transform the kingdom that his grandfather, King Abdelaziz al-Saud founded some eighty years ago. He wants his family’s political legitimacy to evolve towards a modern social contract with the Saudi population. He sees the urgent need for the Saudi economy to move beyond dependence on oil. And he wants to secure for his country a major influence in the Arabian Peninsula and the eastern Mediterranean, two regions the Saudis have, for almost four decades now, considered their sphere of privilege.
Six factors help him.
First, MbS’s actions – surprising to many outside the kingdom – are not unprecedented. Abdelaziz al-Saud united the largest sections of the Arabian Peninsula, primarily, through partnering with armed followers of the Wahhabi discipline and using them in military campaigns against various tribes and clans that used to rule different parts of the Peninsula. MbS’s uncle, King Faisal, one of the most respected Saudi kings in and outside the kingdom, came to the throne after orchestrating the removal of his elder brother, King Saud. And so, irrespective of the media’s focus on sensationalist details, MbS’s assertive measures are not unheard of in Saudi history.
Second, MbS commands major resources. Observers of Saudi Arabia focus on the kingdom’s reserves of foreign currency, which seem to have lost a quarter of their value (now reportedly standing at circa UD680bn) in the last four years. At this rate of depletion, and given the trajectory of oil prices, many observers worry, the reserves will not last long. This view misses two factors. The first is that Saudi’s financial reserves are significantly larger than the reported numbers. Saudi Arabia has built, over the past half century, a vast portfolio of real estate investments in some of the most prized locations in the world. The second is that the Saudis have always adopted a highly conservative and detached strategy in managing that extensive portfolio. We are likely to see changes in how the Saudi leadership leverages that portfolio to significantly increase its financial yield. This will not substitute for the declining oil revenues. But it will provide the Saudi leadership with significant liquidity that many economic observers do not take into account.
Third, MbS represents change in a system that, despite some reforms during the reign of the previous monarch, King Abdullah, has effectively remained the same for many decades. And that system has been found lacking. A significant percentage of Saudis live in poverty. And for the half of the population that is under 30-years old, finding jobs is a struggle. Plus, for over two decades now, there has been muted anger within large segments of the Saudi society of the rampant corruption that ills large parts of the economy. And so, representing change gives MbS wide support within the large constituency of young Saudis.
The fourth positive factor for MbS is his close cooperation with the United Arab Emirates, the most successful socio-economic developmental story the Arab world has witnessed in the last three decades. He benefits from being in close touch with leaders who designed and managed major socio-economic changes in their country. And here, good counsel can mitigate against many pitfalls.
Fifth, despite his assertive measures, the Saudi family does not seem to have other leaders towards whom large sections of the 3000-plus princes would gravitate. This gives MbS the incumbency advantage: being the Crown Prince and the man effectively controlling all of the state’s military, economic, and financial powers.
The sixth factor is that he is bold. And fortune favours the bold.
But MbS faces five monumental challenges.
The first is the combined impact of grand scale, scope, and speed. MbS’s changes are transformative, and touch almost all aspects of Saudi political and social life. The speed with which these changes are introduced is dramatically rapid. This could lead to unintended consequences, many of which could stir trouble.
Second, the foundations MbS is building upon are far from solid. Saudi has always had a poor educational system. It is reliant on the presence of high and low end expatriates in many sectors. The majority of women have, for decades, been excluded from most economic domains. Competitiveness relative to international peers is low. The country’s political economy landscape has, since the founding of the kingdom, been anchored on a divide of spoils between two dozens of major merchant families. And so, the socio-economic infrastructure, the standards of good governance, rule of law, and the operational state of public institutions leave much to be desired.
The third challenge is the traditional role of Islam in Saudi society. MbS is seen as an opponent to the Wahhabi school of thought. Saudi Arabia has, since the eruption of the Arab uprisings six years ago, been an acute adversary of almost all forms of political Islam. And despite its success in tackling the problem of militancy inside the kingdom, Saudi Arabia continues to have sections of its young citizens who hold highly assertive, and often radical, views concerning the role of religion in society. These factors, combined with MbS’s modernising drive, will certainly antagonise some of those radicalised young Saudis. Some might see the changes as an assault on Islam (as they understand it). This could result in serious tensions in the society.
The fourth is geo-politics. Given Iran’s strategic gains, in the last decade, in expanding its sphere of influence to large sections of the eastern Mediterranean, MbS’s apparent calculus is that Iran has become a direct threat to Saudi Arabia. Here his thinking resonates with that of many Gulf strategists for whom Iran’s expansionism tantamount to an existential risk for their countries. And herein lies the challenge. Iran, and its allies in the region, have significantly more experience than that of MbS and his advisors. And in strategic confrontations, grounding and experience matter. Also, relative to Saudi Arabia, Iran has a very sophisticated strategic decision making mechanism that has been repeatedly tested, to good results. And though Iran’s state institutions are plagued by many governance ills, they are diversified and draw on the heritage of a rich civilisation. This means that as the Saudi-Iranian confrontation enters new phases, more pressures will mount on the Saudi nerve centres, which, these days, are highly concentrated in the hands of one man, MbS.
Fifth, Saudi’s preeminence in the Arab world was always based on its financial power and role as the underwriter of the region. It was the Saudi ability and willingness to provide fiscal support and be the lender of last resort that gave it political influence. In an age of economic transformation, cutting largesse, and focusing on internal development, Saudi Arabia is likely to significantly curtail these forms of assistance. And it is not clear what else Saudi Arabia can use to perpetuate its political leadership in the Arab world.
Some observers of the Middle East have argued, since the eruption of the Arab uprisings in 2011, that the region’s major geo-strategic story is the future of Saudi Arabia. This story is now unfolding. Saudi Arabia has always stirred in observers of the Middle East strong feelings. Many have long admired its affluence, confidence, and the dignified assertiveness anchored on the traditional nobleness of Arab tribes. And many have long seen the kingdom as an example of the form of tribalism that the great 14th century Arab historiographer Ibn Khaldun argued would erode the foundations of the Arab civilisation. But the importance of Saudi’s future merits more than sentimental assessments. If Saudi manages to transcend its challenges and emerges with a new sustainable political and socio-economic model, the country will become a major force for stability and progress in the Arab world. But if chaos reaches Saudi Arabia, the entire Middle East will witness a new wave of havoc.