The Fourth Saudi State Remains a Distant Vision

Fundamental political and economic changes are astir in Saudi Arabia. Domestic developments and challenges are altering intra-elite relations, especially among members of the royal family, and casting doubt on the resilience of old and traditional norms of behavior that enhance stability and assure legitimacy. Additionally, regional and international conditions are presenting the kingdom with unwarranted––indeed, unwelcome––choices it is hard-pressed to make because of their uncertain outcomes. To be sure, birth pangs of the fourth Saudi state are reverberating inside and outside the kingdom, but it remains far off in the future.

Sitting at the helm of the mechanism of political, economic, and social change today in Saudi Arabia is Crown Prince Mohammed bin Salman (MbS) who either relishes the instability his decisions and actions are creating or is oblivious to it. MbS’s arrest of prominent Saudi princes on sedition charges and his upending of oil production and prices are only two examples of defiance of the rules of stability set forth by his distant grandfather and founder of the third Saudi state, King Abdulaziz bin Abdulrahman Al Saud.

This defiance is not in the long-term interest of Saudi Arabia. In the apparent absence of decisive leadership by his father, King Salman bin Abdulaziz, MbS’s chaotic and authoritarian stewardship at this pivotal moment in Saudi history may well impede the establishment of the fourth Saudi state the crown prince would very much like to lead.

Consolidating Power

On direct orders from the crown prince––no one else, save the monarch, can be assumed to countenance such action––security forces arrested some 20 princes of the Al Saud royal family, most prominently King Salman’s brother Ahmed bin Abdulaziz and former Minister of the Interior and Crown Prince Mohammed bin Nayef. While the initial suspicion was that the two were accused of organizing a coup against MbS, another interpretation was that members of the Allegiance Council––a body established by the late King Abdullah bin Abdulaziz in 2007 to help choose future crown princes and, effectively, kings––wanted Prince Ahmed to be the council’s leader. They probably reasoned that such a move could block MbS from assuming the throne upon his father’s death. It is noteworthy that Prince Ahmed and two others on the council objected to the choice of MbS as crown prince in 2017, a sure sign of opposition to him—thus providing a good reason for arresting them.

That Princes Ahmed and Mohammed bin Nayef––belonging to King Salman’s Sudairi branch of the royal family––were arrested speaks volumes about MbS’s wish to be the undisputed leader of the family and the kingdom.

That Princes Ahmed and Mohammed bin Nayef––belonging to King Salman’s Sudairi branch of the royal family––were arrested speaks volumes about MbS’s wish to be the undisputed leader of the family and the kingdom. Completely sidelining them and erasing whatever institutional influence they may wield arguably eliminates any level of opposition in the proverbial deep state. In fact, their arrest and demotion close the circle on the many shake-ups in ministries and agencies and reassignments of military, intelligence, and security services leaders since King Salman’s accession to the thrown in January 2015. Accompanying—perhaps concluding—these changes has been King Salman’s September 2019 replacement of Minister of Energy Khalid al-Falih with his son (and MbS’s half-brother and supporter) Abdulaziz bin Salman, thus placing the economic fate of the kingdom fully in the crown prince’s hands.

Consolidating this royal, political, and economic change has been the arrest in mid-March of some 300 civilian and military government officials accused of corruption. This follows a campaign in 2017 against business and government leaders, including prominent princes, that according to the Saudi government netted $106 billion in assets and real estate. The latest such action gives the crown prince the aura as a fighter against corruption, one who is determined to end the endemic graft that has beset Saudi public and private life. But it also sends clear signals that no matter how powerful, government and business elites are under the watchful eye of the man in charge and risk being publicly excoriated if they dare oppose him. Such a populist message cannot but be grasped by Saudi citizens, but it nonetheless helps to consolidate the position of the person sending it.

Playing with the Oil Fire

As MbS looks to further consolidate his political power, he gambles with the most resilient status Saudi Arabia has had since its early years: as the indispensable oil state. In early March, negotiations to further limit oil production between the Saudi-led Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries failed, in effect ending what came to be known as the OPEC+ agreement reached in 2016. Russia, a party to the OPEC+ deal, was the main protagonist rejecting the added limits because Moscow refused to give American shale oil producers a free ride as they were not part of the deal and did not have to limit their output. The collapse of the agreement immediately resulted in a steep decline in the price of oil, a situation that was exacerbated by the general slowdown in the international economy because of the coronavirus pandemic.

The folly of this shortsighted outcome was worsened when Saudi Arabia decided to increase its production and flood the market with crude in order to keep and widen its market share. On March 11, Riyadh announced that it would increase its output to 13 million barrels per day (bpd)—from 9.8 million bpd prior to the collapse of the OPEC+ deal—so that it could make up for the drop in price. On March 16, the CEO of Saudi ARAMCO, Amin Nasser, declared that the kingdom would maintain that production quota until May and that his company would accept a price of $30 per barrel. With the general slowdown in the international economy, such decisions may result not only in the collapse of the 60-year-old OPEC but arguably in the demise of the trust in Saudi Arabia’s credibility as a partner. Additionally, and as the London School of Economics’ Steffen Hertog reasons, Saudi Arabia’s dependence on oil revenues may not be able to sustain a competition with Russia, since the latter can rely on other sectors of the economy to blunt its loss of revenue.

Economies in East Asia (China, South Korea, Japan, and India, to name a few), Europe, and the United States have been hit hard by the coronavirus pandemic, which has forced social lockdowns and economic shutdowns.

While the collapse in the price of oil––trending around $20 per barrel on April 2––is normally good news to consumers and the international economy, it could not have come at a worse time. Economies in East Asia (China, South Korea, Japan, and India, to name a few), Europe, and the United States have been hit hard by the coronavirus pandemic, which has forced social lockdowns and economic shutdowns. The natural tendency to exploit low oil prices for expansion and growth is simply absent despite the current glut of available crude, made even more abundant by Saudi Arabia’s increased production. In fact, the kingdom’s decision to flood the market may not even help it secure more market share since the added supply will quickly fill the current storage capacity of the consuming industrialized economies.

The more urgent implication of Saudi Arabia’s gamble with the oil war is domestic. Almost immediately after the announcement of increased production, the Saudi Ministry of Finance asked all government agencies to submit proposals for 20 to 30 percent cuts in their 2020 budgets, an action that would practically halt projects and development plans but not salaries and benefits. It is clearly meant to limit the deficit spending that has become a fact of life in the oil-rich country over the last few years. For a balanced budget in 2020, Saudi Arabia needs a benchmark price of $84 per barrel; without it, the country would run a deficit of 15 percent as its sovereign wealth fund gets depleted year after year. Moreover, financial turmoil threatens the fate of MbS’s hallmark “Vision 2030” plan for economic development and diversification. Such a vision depends also on ARAMCO’s valuation, but the company’s share has seen a 13 percent decline between January 2 (35.15 rials/share) and April 1 (30.60 rials/share), following the collapse in the price of crude. This decreasing share price came on top of a 20.6 percent decline in net profits for the company in 2019, a fact that may make it less attractive to foreign investors in 2020 and beyond.

Uncertain Relations with the United States

Following the many internal and foreign missteps Mohammed bin Salman has taken since his ascension to the position of crown prince in June 2017, his path to power may not be as smooth as he assumed it would be in the early days of the Trump Administration. As MbS probably calculated in 2017, President Donald Trump is enamored of world leaders who sing his praises and offer him services he can use domestically, such as acquiring American weapons systems. Indeed, Saudi Arabia was Trump’s first foreign destination. He succeeded in building an ironclad relationship with King Salman and his son, one that has so far resulted in large arms deals. It has also meant that the United States looks the other way when there are transgressions against Saudi critics of MbS’s policies––from the arrests and silencing of women activists to the assassination of Washington Post columnist Jamal Khashoggi––as well as dangerous Saudi entanglements such as the war in Yemen.

Mohammed bin Salman may have missed the equally important Trumpian desire to be spared the negative complications of imprudent decisions such as the ongoing oil price war.

But Mohammed bin Salman may have missed the equally important Trumpian desire to be spared the negative complications of imprudent decisions such as the ongoing oil price war. Seeing that neither Saudi Arabia nor Russia appears to want to negotiate a compromise, Trump warned that this war is “bad for them, bad for everybody,” adding that “both went crazy.” At a time when the United States under Trump’s leadership is still losing the battle against the coronavirus outbreak, the American president does not want to be distracted from devising a plan that can help secure his reelection.

Before his latest comments on the oil war, the president dispatched former national security aide and Department of Energy official Victoria Coates to Saudi Arabia to act as a special energy representative in the kingdom. It is hard to see this except as a move to try to influence Riyadh’s decision-making about such a vital issue. It remains to be seen if Coates will be able to behave as if she were a high commissioner to override, or at least influence, Saudi wishes; but the move sends a clear message to MbS that he may be stepping too far away from American expectations. Two days later, Secretary of State Mike Pompeo had a conversation with MbS that must have revolved around the inadvisability of the current oil impasse; its non-resolution indicates that American entreaties may not be working to soften MbS’s stance.

The administration is undoubtedly trying to mollify domestic worries about the current global oil glut. A group of Republican senators from oil-producing US states have recently introduced legislation that would force the Trump Administration to withdraw troops from Saudi Arabia because of the kingdom’s role in the price and production war. Such a move will always put the White House on edge and remind President Trump that he may not have much freedom of action when it comes to the financial interests of his specific constituencies. The same can be said about the negative impact of low oil prices on the American stock market, which is currently experiencing the worst first quarter since its establishment.

To be sure, MbS’s policies toward other princes of the royal family and his latest oil fiasco could very much erode Trump’s appreciation of the Saudi prince’s leadership and friendship.

To be sure, MbS’s policies toward other princes of the royal family and his latest oil fiasco could very much erode Trump’s appreciation of the Saudi prince’s leadership and friendship. Sidelining the royal family creates internal instability and naturally increases the crown prince’s enemies and paranoia, which in turn prompt him to continue his crackdowns––practically an endless and vicious cycle. Neither can Mohammed bin Salman continue to “cry wolf” about plots against him for he soon will find that not many believe his stories. Such volatility in domestic politics only adds to Trump’s confusion about the crown prince because of the president’s loathing of and ignorance about the nuances of other countries’ internal affairs. As for the oil price and production crisis, it is likely to wear Trump down as he tries to deal with the deleterious effects of the coronavirus pandemic on his reelection campaign, and thus may prompt him to withdraw his support from the mercurial bin Salman.

The Fourth Saudi State Remains a Distant Vision

Saudi media is careful to show that King Salman is still in charge of the kingdom and its affairs, notwithstanding his advanced age and frailty. Meanwhile, Crown Prince Mohammed bin Salman has already helped reshape Saudi Arabia in an image to his liking, one that he thinks may be a good basis for a fourth Saudi state under his control. But what has transpired over less than three years of his stewardship indicates that the winds may not be blowing his way, and all because of his own impulsiveness and ill-advised decisions.

Bin Salman’s detention of royal family princes robs them of dignity and deprives him of their loyalty while his gambling with economic policy costs Saudi Arabia dearly. MbS’s Yemen impasse (now beginning its sixth year), his stubborn refusal to resolve the divisive Gulf crisis with Qatar, his leadership of the Arab authoritarian order, and his challenge of the American principles for regional stability are some reasons that portend a possible collapse of the dream of building a new Saudi state on the ruins of another.

Imad K. Harb is the Director of Research and Analysis at Arab Center Washington DC. To learn more about Imad and read his previous publications click here