Can Saudi Arabia’s Crown Prince Fix His Mistakes?

(Bloomberg Opinion) -- His hand over his heart — a gesture as common to the Middle East’s princes as to its paupers — Crown Prince Mohammed bin Salman might admit that he bears at least as much responsibility as the coronavirus pandemic for the state of Saudi Arabia’s economy. It is, after all, the combination of his ill-timed oil war against Russia with the Covid-19 crisis that has left the kingdom facing the steepest contraction in a generation..Although relatively few Saudis have contracted the virus, the substantial economic damage will likely force the crown prince to make deep cuts to his “Vision 2030” plan..The centerpiece for an ambitious agenda of economic and social reforms, that plan was conceived in the throes of the last oil slump. Its goal was to wean Saudi Arabia from its dependence on hydrocarbons and create more opportunity for private enterprise. But four years on, more than 60% of government revenue still comes from oil, and low prices have halved the take..MBS, as the crown prince is commonly known, has ordered austerity measures — most prominently, the tripling of the value-added tax and cuts to bureaucrats’ allowances. But these will sharpen the economic downturn by reducing consumption and inhibiting private-sector investment. In turn, this will compound the frustrations of unemployed Saudis, the majority of them women, who had been promised a shot at prosperity in the prince’s vision of the country’s economic future..The harsh realities facing Saudi Arabia’s de facto ruler come on top of problems that have bedeviled him since he emerged from relative obscurity five years ago, when his father’s coronation gave him his first taste of real power. They will compound the challenges of ruling a petrostate with a growing population and diminishing wealth. As he prepares to guide his country through the post-pandemic period, his chances of a prosperous and peaceful reign depend on his ability to undo some of the damage he has himself wrought, and to avoid repeating his mistakes..The portents allow for little optimism: As headstrong as he is young, MBS has demonstrated little interest in, much less capacity for, changing his ways. But the past few months have served up important lessons he’d do well to heed..Perhaps the most sobering of these is that he can no longer take for granted the Saudi-American relationship. A bullying April phone call from President Donald Trump forced him to end the oil war. It also revealed the limitations of MBS’s strategy of courting America’s First Family while disregarding growing hostility in Congress. If that wasn’t the mug of cold water in the face he needed, the removal of two Patriot missile batteries one month later should have been a bucket: Only seven months had passed since a missile and drone attack, most likely by Iranian proxies in Yemen, cut the kingdom’s oil output by half..Scarier still, the withdrawal of American defenses comes just as Iran hopes to buy more sophisticated weapons, with other world powers eager to sell. MBS might reflect that this was hardly an opportune moment to pick a fight with Russia, which is determined to block U.S. efforts to extend an arms embargo on the Islamic Republic..Nor can he hold out much hope of a change of heart in Washington with a change of occupant in the White House. Democratic candidate Joseph Biden seems inclined to mend fences with Iran..The corollary to the loss of unstinting American support is the need for friends closer to home. Of the eight countries with which Saudi Arabia has land borders, relations with two — Yemen and Qatar — are hostile; with two others, Oman and Iraq, they are cool to frosty. If much of this is MBS’s doing, much is also within his power to fix..The embargo on Qatar, possibly the crown prince’s most egregious foreign-policy misstep, is easily lifted. MBS should be able to overcome any resistance from the other prime mover in that feud, Crown Prince Mohamed bin Zayed of Abu Dhabi. After all, their close friendship didn’t stop the latter from extricating himself from the war in Yemen. In Oman, the crowning of a new sultan offers the prospect of warmer ties, if MBS is willing..Relations with Yemen and Iraq are fraught, not least because of Iran’s malevolent pot-stirring. But the pandemic has allowed for a ceasefire in Yemen, and the new prime minister in Baghdad is no Tehran puppet..Beyond the Arabian Peninsula, Saudi Arabia’s relations with developing countries hinge on its ability to hand out loans or largesse, which its reduced economic circumstances will now constrain. Chancy investments by the Saudi wealth fund don’t buy much goodwill — or economic soft power, come to that..In much of the developed world, MBS will struggle to shake off the ghost of Jamal Khashoggi, the murdered Washington Post columnist. Even in the middle of a pandemic, a fresh European chorus of condemnation greeted efforts by the Saudi wealth fund to buy an English soccer club, and again when Khashoggi’s family in Riyadh announced that it was forgiving his killers. The lesson for the crown prince is that, in the social-media age, efforts to move on from a controversy — by, say, a Saudi court’s exoneration of MBS’s close associate — can often have the opposite effect..Such backfires may not matter much within Saudi Arabia, where the media is tame and criticism easily cowed. But even there MBS faces a new challenge: How to preserve his popularity with ordinary Saudis while imposing the harshest austerity measures they have ever endured..Citizens asked to moderate their lifestyles might look askance at the extravagance of their leaders — especially those who keep a $450 million Leonardo da Vinci painting in their $320 million superyacht. Businessmen struggling with high taxes and lower consumption might ask why the state wealth fund is trying to buy Newcastle United, instead of pumping life-saving investments into the Saudi private sector..Nor can MBS count on civil-society organizations to serve as a salve — or a pressure valve — for the public. He has jailed many of the country’s best-known social activists, and allows few outlets for free discourse. In addition to the traditional means of stifling dissent, new methods like social-media harassment have been brought to bear against critics. .Public dissatisfaction with economic conditions can also feed dissent in high places, and embolden foreign critics. European lawmakers, for instance, are pressuring the Saudi government to release one of MBS’s cousins, Prince Salman bin Abdulaziz; along with his father, he has been held without charge for two years. A lobbying firm in Washington has started a campaign for the prince’s release..There’s also a quieter effort on behalf of Saad Aljabri, a former top intelligence official in self-imposed exile since 2017. Saudi security forces have reportedly arrested two of his children and one of his brothers, hoping to coerce him to return home. Aljabri is highly regarded in Western intelligence circles, and especially in Washington..Under MBS, Riyadh has responded disproportionally to such pressure. Two summers ago, when Canadian Foreign Minister Chrystia Freeland expressed concern over the arrests of Saudi activists, MBS suspended diplomatic ties and new trade deals with Canada. Under the current economic circumstances, he is unlikely to impose trade restrictions on Europe..Domestic resentments won’t yet lead to anything like a revolution. MBS’s control over the state’s security apparatus makes his position virtually impregnable. But as the austerity regime drags on, his image as a popular prince at home will be hard to sustain. The same goes for any lingering hope he may have of being seen as a great reformer abroad..That this should happen in 2020 must be especially galling: This was to be a year of international triumph for MBS, culminating with the leaders’ gathering of the Group of 20 nations in Riyadh for their annual summit in November. Although King Salman is nominally the host, it was expected to be the crown prince’s show..At the G-20 summit in Osaka last summer, President Donald Trump spared Mohammed bin Salman’s blushes by praising his “spectacular” leadership, and ignoring calls to hold Saudi Arabia’s de facto ruler accountable for Khashoggi’s murder.Relations between the president and the prince may have turned sour since then, but MBS likely hopes that Trump will again save him from embarrassment as he did in Osaka. In Riyadh, the assist will be indirect: The result of the U.S. presidential election will dominate all discussions at the margins of the gathering, saving the prince from unwelcome attention..But as the Arab world’s most important leader, the crown prince can’t evade the spotlight for long. Saudis adjusting to post-pandemic realities will be looking to MBS to guide them through the most difficult period in their country’s recent history, and the wider world will be watching to see if he can redeem himself..This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners..Bobby Ghosh is a Bloomberg Opinion columnist. He writes on foreign affairs, with a special focus on the Middle East and the wider Islamic world..©2020 Bloomberg L.P.

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Can Saudi Arabia’s Crown Prince Fix His Mistakes?

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