Brian M Downing
Saudi Arabia has been accustomed to immense export revenue since at least the 1973 embargo. MBS, scion of the ruling House of Saud, was raised in limitless opulence and has ruled in the manner of a Bourbon or Romanov, though not an especially judicious one.
The young prince is driven by personal aggrandizement, imperial ambition, and sectarian passion. His end game is to modernize his kingdom, make it the region’s dominant economic and military power, and establish himself atop a league of beholden states stretching from the Maghreb to South Asia.
The effort is in trouble. Covid-19 and foreign production have driven oil prices down. Saudi crude is fetching $29/bbl, well off a recent low but still not enough to balance the budget. A return to prices above $60/bbl is not in the near future and seasoned analysts feel that global demand for oil will never be what was last year. The day of oil isn’t over but the long-feared – or hoped-for – desert twilight is nearing.
Last week MBS cut subsidies and tripled the VAT – hardly the sort of moves that will endear him to his subjects, many of whom disliked him and his family in the best of times. The crunch will continue, more cuts loom. What options does the prince have?
Foreign spending
Saudi rulers have long disbursed money to neighboring countries. Schools and mosques are built, which proclaim the superiority of the Wahhabi sect and the kingdom’s greatness. Food is handed out, especially around Ramadan and election day. The aim of course is to build a popular base in neighboring countries. It’s met with success. Some 20% of Egyptians, for example, support a political party aligned with Riyadh.
Money and subsidized oil go to regional governments. Egypt again is a case in point. The Saudis supported Mubarak, cut off the Muslim Brotherhood, and renewed support when the military ousted the MB from power and drove it underground. They also subsidize the armies of Lebanon, Pakistan, and other Islamic countries. Pakistan’s nuclear program was underwritten from Riyadh. Riyadh hopes that recipient politicians and generals will be obliging toward its concerns with preventing democracy and opposing Iran. The former is assured. However, both Egypt and Pakistan declined to send troops into the Yemen war.
Saudi Arabia supports proxy forces, including militias in Syria, Libya, Iraq, and Yemen. Money also goes to separatist and terrorist groups inside Iran such as the Arab Struggle Movement for the Liberation of Ahwaz, Mujahedin-e Khalq, and Baloch militants.
Cutting foreign spending will endanger or at least delay plans of coalescing regional popular and military support. However, foreign spending often angers domestic populations, who want more spending at home. Qaddafi’s subsidies to African countries figured in the turmoil that eventually ousted him. Similarly, Chavez and Maduro’s spending on regional allies has angered many Venezuelans.
Industrialization
The crown prince has proclaimed a bold plan to modernize his domain, freeing it from reliance on oil. He wants to build industrial centers that will produce goods for affiliated nations and entertainment centers that will be tourist draws. He’s even trying to lure hi-tech firms into setting up shop. His subjects will no longer rely on state coffers. They will have skilled jobs in a dynamic sector. He hopes to accomplish what the Soviet Union did in the 1930s and China in recent decades – turn his domain into a respected power on the world stage.
As in Russia and China, modernization will not include liberalization. Reforms that gave women the right to drive and built entertainment centers are highly limited and do not constitute movement toward democracy. Indeed, industrialization aims to preclude demands from below by displays of farsightedness, economic change, and rising power in the world.
Cutting back on modernization risks embarrassing the boastful prince and keeping his kingdom dependent on oil. It also puts off the hope of imperial greatness.
The prince has obtained some foreign funding by selling limited amounts of Aramco and of course more can be put on the block. However, foreign investors might not see it as a wise investment – not only because of oil’s uncertain future, but also out of concerns with political stability and the soundness of the prince’s judgment. Furthermore, selling off assets risks loss of prestige and sovereignty as foreigners come to control what Saudis feel a wondrous gift bestowed upon them by divine providence.
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The prince’s dilemma is clear. Slash spending on imperial and economic ambitions and spend more on placating his subjects; or continue the quest for greatness and make further cuts in domestic spending. MBS’s determination for personal and national glory is clear and it may well lead him to make more domestic cuts, save for his repressive capacity. Jospeh Stalin might
be a relevant and even inspiring example to him. He already has his Berias.
This brings dangers. The prince faces opposition from many quarters: members of the royal family angered by his repression, advocates of representative government, hardline traditionalists opposed to industrialization and cooperation with the US and Israel, midlevel military officers kept back by dilettantish but well-connected superiors, and a sizable Shia population in oil-rich regions and along the Yemen frontier. Perhaps the expectation of Washington’s help in internal repression is another of his expectations, but of course he knows Stalin’s power was in Moscow.
© 2020 Brian M Downing
Brian M Downing is a national security analyst who’s written for outlets across the political spectrum. He studied at Georgetown University and the University of Chicago, and did post-graduate work at Harvard’s Center for International Affairs. Thanks as ever to Susan Ganosellis.