Royal reshuffle to have profound consequences
Date first published: 27/06/2017
Key sectors: banking; finance; consumer retail; industry; energy
Key risks: frustration of process; contract frustration; delayed payments
Saudi royals apparently keep very late hours: the most important royal decrees always come in the middle of the night. The announcement on 21 June by the state news agency was no different. But this time it sanctioned a change which will have profound consequences for the kingdom. By royal decree, Muhammad bin Nayif, interior minister and next in line to the thrown was removed from his positions, and replaced as crown prince by his cousin, deputy crown prince Muhammad bin Salman.
Muhammad bin Salman, former deputy crown prince and defence minister, has been the most important person in Saudi Arabia since his father’s accession to the throne in January 2015. However, Salman had long been preparing his favourite son for leadership. Between March 2013 and January 2015 Muhammad was his father’s gatekeeper at the crown prince’s court. Muhammad’s very domestic upbringing during the leaner years of the 1990’s and early 2000’s, and a Saudi-only education unlike so many of his cousins, gives him an important perspective of the changes ordinary Saudis wish to see.
Muhammad’s forthright foreign policy positions have already proven unexpected. The close relationship between Muhammad and the crown prince of Abu Dhabi, Muhammad bin Zayid, will come to define the post-Arab Spring Persian Gulf. Their close alignment on regional security issues, including the threat from Iran and combating Islamic State, has started one war (Yemen) and threatens the cohesion of the Gulf Co-operation Council, the closest thing to a regional alliance. A distinct absence of US policy in the Middle East at large, and in the Persian Gulf in particular, has led the two assertive crown princes to fill the vacuum.
As de-facto ruler of one the Middle East’s most important, and most promising economies, Muhammad bin Salman is spear-heading an ambitious but necessary programme, Vision 2030. Muhammad’s aim is not misguided – Saudis have long desired the more varied entertainment options available to their Gulf cousins. His turbo-charged manner has already come under criticism from those who will lose out in this new age such as clerics and social conservatives. However, there are some who quietly voice concern that imposing such a change at speed may lead to more problems, not fewer.
The success of Vision 2030 is key to Muhammad’s plan to recast Saudi society for the modern age. The plan’s targets include subsidy reform beyond anything attempted previously and what will amount to a transformation of Saudi social mores and conservative family values. However, King Salman has already reversed civil service salary cuts and reinstituted bonuses in late May and June, directly contradicting the plan. Government officials cite the reversals as a reward for a lower-than-expected deficit in the second quarter, although this is barely half the story. While numerous observers have claimed Muhammad is fully committed to the reforms laid out in Vision 2030, that is not abundantly clear following the significant policy about-turns. What Muhammad is certainly committed to is pursuing change without undermining his own position. Therefore, although Vision 2030 will come to fruition, the timetable will expand to accommodate discontent among Saudis.
Back-stopped by his role and duties, in a matter of time the prince will find himself penned in by the rock of public opinion, fickle and ever-changing.