Saudi corruption crackdown is more than a princely power play
Late on Saturday, the King of Saudi Arabia conferred yet another title on his already powerful son, Crown Prince Mohammed bin Salman – head of a new anti-corruption committee. Hours later, MBS, as he is known in the West, drove a battering ram through the ranks of Saudi royalty, arresting princes major and minor, one of them the country's richest businessmen.
The arrests, along with the sackings of several prominent government officials, were unprecedented in Saudi Arabia. For as long as anyone can remember, the vast royal family – they number 15,000, by some estimates – has always operated in its own protected world. The royals were free to spend lavishly, even obscenely, live abroad and collect trophy investment assets as long as they didn't challenge the King and his inner circle. They were rarely accused of corruption. To a great degree, they were the untouchables.
For many of them, the party has come to a crashing end. The Saudi government arrested at least 11 princes. The most prominent among them was Prince Alwaleed bin Talal of Kingdom Holding Co., whose net worth was put at $17.2-billion (U.S.) by Forbes Magazine. Among his investments are Apple, Citibank, Twitter and the Canadian-born Four Seasons Hotels and Resorts (he sold the Four Seasons Hotel Toronto last year).
Prince Mohammed's clean-out job did not stop with the princes. He also picked apart the cabinet, removing the head of the national guard and the economy minister as well as two other ministers. According to the al-Arabiya news channel, "tens" of former ministers were arrested too. The extraordinary purge appears to consolidate utterly the power of Prince Mohammed, who is only 32 and rules on behalf of his father, the 81-year-old King Salman.
Only five months ago, Prince Mohammed was second in line to the throne, after his elder cousin. He is now, effectively, the boss of the desert kingdom, the world's biggest oil producer and the nemesis of Iran. As defence minister, he is also directing Saudi Arabia's attacks on Yemen and the blockade of Qatar. As president of the Council for Economic and Development Affairs, he is in charge of the sweeping overhaul of the sclerotic Saudi economy, which is dangerously overdependent on oil revenue and unproductive state jobs.
The crackdown on the princes and the purge of government officials was quickly written up in the Western media as a power grab, and there is little doubt the analysis holds plenty of truth. In a note published Sunday, James Dorsey, senior fellow at Singapore's S. Rajaratnam School of International Studies, said "the dismissals and detentions suggest that Prince Mohammed rather than forging alliances is extending his iron grip to the ruling family, the military and the national guard to counter what appears to be more widespread opposition within the family as well as the military to his reforms and the Yemen war."
But the power grab, and the arrests of the princes, may have an ulterior motive: Populism.
Think of the princes as oligarchs. They are not popular with average Saudis, and their lavish lifestyles will become less popular as Prince Mohammed pushes through his economic reforms. All ambitious economic reforms are nasty for a while. Some come with harsh austerity measures that raise unemployment, as they did in Southern Europe after the 2008 financial crisis, or eradicate entire industries, such as Britain's coal mines during the Margaret Thatcher years.
Under Prince Mohammed, Saudi Arabia's reforms – known as Vision 2030 – are likely to be painful and enduring, all the more so since low oil prices have already triggered spending cut-backs. Weaning the economy off oil and creating an entrepreneurial class, that is, creating private-sector jobs at the expense of public-sector jobs, will cause widespread resentment among millions of Saudis.
If one segment of society – the princes in Saudi Arabia's case – are immune to the pain, the reform effort might be harder to achieve, at least in Prince Mohammed's view. A senior diplomat in the United Arab Emirates thinks arresting the princes was a politically savvy move. "It doesn't hurt to show the masses that if they have to reform and suffer through some economic and governance changes that the elite will also be held into account," he said. "It is rarely politically damaging to go after 'corrupt' officials. Massive reform, on the scale that Saudi Arabia is planning, requires that anti-corruption drives are viewed as sincere and the royal and business elites are not immune."
The question is whether the arrested princes were truly corrupt, in the sense that they were ripping off the state when the state could no longer afford it, or merely victims of Prince Mohammed's political manoeuvrings as he lunges for power.
Exactly why the princes and businessmen were arrested was not known, as it appeared no formal charges had yet been laid. "The committee has the right to take any precautionary measures it sees fit, until they are referred to the investigating authorities or judicial bodies," said the royal decree setting up the anti-corruption committee. In the meantime, the arrested have the luxury of being detained in the Ritz-Carlton hotel in Riyadh, the Saudi capital.
Prince Alwaleed's arrest was surprising. Recently, he had been outwardly supportive of the ruling family and its military campaign in Yemen. Perhaps he is being investigated for serious corruption. Or perhaps he was too much of his own man. A self-styled philanthropist and philosopher in the George Soros mould, he was the global public face of the Saudi entrepreneurial class and pretty much did what he wanted where he wanted. His free-wheeling style, which included the occasional jab at Saudi oil policy, may not have suited the autocratic senior royals.
It's far too early to say whether Prince Mohammed's clean-out will truly help him implement his economic, political and cultural agenda – he recently lifted the ban on women drivers – or ultimately hurt it. If consolidating power was aimed at crushing any dissent and any critical views, the Crown Prince's revolution could build resentment and bog down, even backfire. The weekend's drama in Riyadh showed that princes of any stature can be disposable items. Prince Mohammed too? He's not the king yet.
