While the surprise elevation of the King’s son as crown prince could help boost the economy, it may be bad news for regional stability.
King Salman’s decision to dispense with Saudi Arabia’s order of succession by appointing his young and increasingly powerful son, Prince Mohammed bin Salman, as heir to the throne is likely to have significant implications for the Kingdom’s economy and relations with regional rival Iran.
The unexpected promotion of Prince Mohammed bin Salman – often referred to as MBS – and relegation of the previous heir Mohammed bin Nayef, the monarch’s nephew, is an audacious move. The crown has tended to pass from one brother to another. It has not transferred from one generation to the next since 1952 when King Saud inherited the throne from his father Abdul-Aziz, the founding monarch of the modern state of Saudi Arabia. MBS’s elevation is the culmination of a rapid devolution of authority from King Salman to his favourite son, which has seen him take the lead in foreign, economic and social policy, marking a shift away from the passive gerontocracy that has held sway for generations to a more dynamic, assertive leadership. The process has been expedited by the apparent absence, or weakness, of rival factions within the Royal family who in the past might have resisted such an unorthodox transfer of power.
Since his father became king in 2015, Prince Mohammed bin Salman has emerged from relative obscurity, gradually assuming more and more responsibilities as the monarch’s health and that of the heir to the throne has deteriorated. His emergence, reflected in the newly-created title Deputy Crown Prince, has been broadly welcomed by Saudi Arabia’s youthful population, attracted by his vigour and plans to re-energise the conservative kingdom. MBS’s drive has also appealed to western statesmen and diplomats who have been impressed with his ambition to modernise the country through social and economic reforms.
To date, Prince Mohammed bin Salman has sought to soften the oppressive religious strictures governing public life, but has reserved most of his reforming zeal for the oil-dependent economy, which has stuttered with the downturn in energy prices. He has set his sights on big privatisations to try to boost foreign investment and expand the private sector. At the same time, he has attempted to address one of the biggest drains on state finances by reducing generous public subsidies. The moves are hugely controversial and risky in a traditionally protectionist kingdom that offers its citizens cradle-to-grave generosity as part of a social pact that maintains the status quo. There are already signs of dissension. The proposed part sell-off of Saudi Aramco, the massive state energy company, is seen as a strategic mistake by some Saudis, while the stripping away of the welfare system at a time of economic uncertainty has proved deeply unpopular, prompting a partial retreat. More generally, there are big concerns within Saudi Arabia about whether the education system is capable of providing Saudis with the skills required by the private sector.
But while some in the West believe MBS may struggle to deliver his economic plans, others are alarmed by his foreign policy, whose assertiveness is upsetting the balance of power in the Middle East. Essentially driven by an enmity towards Tehran, it has seen him fight a ruinous war against Iran-backed Houthi rebels in neighbouring Yemen; agitate in Syria against forces supporting Iran’s client President Bashar al-Assad; and, most recently, lead an alliance of Gulf states in an economic blockade of Qatar, in part because of its cooperative relations with Iran.
With his promotion, MBS appears to have been given free rein to forge ahead with his policies, as his power is now unrestrained. On the economic front, he may move ahead cautiously given the concerns that have been raised about the merit and feasibility of some his reforms, but western investors keen to gain a stake in the Middle East’s biggest economy should now be reassured that it will open up, albeit slowly. And while there may be hitches along the way a U-turn is very unlikely.
But the prospects for regional stability appear grim. US President Donald Trump’s increasing hostility towards Iran may serve to encourage Prince Mohammed bin Salman to up the ante in his conflict with Iran, especially since his promotion is likely to have quashed any dissenting voices within the leadership. It appears that he is already intent on bolstering Saudi military strength and with Iranian hardliners seemingly in no mood to back down despite the re-election of reformist President Hassan Rouhani, the scene is set for a dangerous escalation in tensions between Riyadh and Tehran which may further undermine Middle East stability for some time to come.
Austen Josephs and Yigal Chazan (who contributed to this report) are Associate Director and Associate at Alaco, respectively. Alaco is a London-based business intelligence consultancy.