Saudi princes, senior officials and businessmen – including Prince Alwaleed bin Talal, one of the world’s richest men and a significant investor in multinational companies – were arrested on November 4th in the anti-corruption drive led by Crown Prince Mohammed bin Salman, King Salman’s powerful son and heir to the throne (Prince Mohammed, 32, was named heir to the throne in June after replacing his cousin).
The arrests came at a time when the kingdom prepares ground for the sale of shares in Saudi Aramco, the world’s biggest oil company, and days after Crown Prince hosted a global investment conference in Riyadh dubbed Davos in the Desert. Prince Miteb bin Abdullah was removed as head of the powerful National Guard as part of a simultaneous reshuffle of the cabinet.
The graft probe has extended to more than 200 people, who face accusation of money laundering, bribery and channelling government contracts to companies linked to them. That is the largest corruption crackdown in Saudi history.
Saudi Arabia’s economy is in a recession battered by a three-year slump in oil prices. Unemployment is rising. To plug the fiscal deficit, the government has had to slash spending and borrowed on international capital markets. Austerity measures have raised the cost of living for ordinary people. The economic downturn and regional geopolitical tumult have sparked capital flight out of the country over the past years.
Prince Mohammed bin Salman wants to transform the oil-dependent kingdom into a more competitive economy. He has also launched social reforms such as granting women the right to drive, ending a ban that lasted decades.
His push for change has generated optimism among young people (70 per cent of the population is under 35), but his economic reform plans depend on outsiders’ confidence in the rule of law. The purge, meanwhile, has raised concerns over the arbitrary nature of arrests and questions over Saudi Arabia’s attitude towards business. That could paralyse business confidence.
It is unlikely there would be any change in oil policy ahead of the meeting of OPEC members and other producers outside the cartel this month. It is expected that an agreement to curb production by 1.8 million barrels a day would be extended throughout 2018 as producers seek to bolster oil prices.
Prince Mohammed bin Salman oversees Saudi Arabia’s war against Iran-allied Houthi rebels in Yemen (Houthis toppled the Saudi Arabia-backed government in 2015). The conflict has produced the world’s worst humanitarian crisis, with almost 7 million Yemenis on the brink of famine. On November 9th, the Saudi government warned its citizens to leave Lebanon, a few days after blaming Iran of responsibility for a ballistic missile launch from Yemen towards the Riyadh international airport. The missile was launched from territory controlled by Houthi rebels.
Saudi Arabia, whose ultimate aim is to curb Iran’s influence in the region, backed President Donald Trump’s decision to decertify the Iran nuclear deal signed by his predecessor Barack Obama. Mr Trump has accused Iran of fomenting terrorism, waging cyber attacks and supporting Bashar al-Assad, Syria’s President who is seeing off rebels funded by Saudi Arabia, after six years of civil war (Mr Trump has strongly backed Prince Mohammed bin Salman over the crackdown).
DoD photo by Senior Master Sgt. Adrian Cadiz
