Saudi “Game of Thrones” could be more than mere palace intrigue
But let’s return to Saudi Arabia and Mohammad bin Salman, known to many as “MBS.” The official explanation for the detainments—which involve at least 11 princes, including well-known billionaire investor Prince Alwaleed bin Talal, four ministers and “dozens” of ex-ministers—is that they are part of an ongoing crackdown on corruption. According to the BBC, this is only “phase one,” meaning we can probably expect to see more to this process.
MBS’s fight brings to mind Chinese President Xi Jinping’s anti-corruption efforts, which have been ongoing since Xi assumed power five years ago and have led to the detainment or punishment of an astonishing 1.4 million party members, according to multiple sources.
The implications of Saudi Arabia’s own sweeping crackdown, unprecedented in the kingdom’s 85-year history, understandably have many investors spooked. Dennis Gartman, editor of the widely-read Gartman Letter, told CNBC this week that he thought MBS’s actions were “terribly detrimental to crude oil prices” in the long run.
MBS has a supporter in President Donald Trump, though, who tweeted on Monday that he has “great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing… Some of those they are harshly treating have been ‘milking’ their country for years!”
But there’s more to the story than mere palace intrigue. The richest country in the Middle East is undergoing radical changes as outlined in its “Vision 2030” plan, unveiled in April 2016. Among its goals, headlined by the young MBS, is a push to reform the government’s role in everyday life. Today it’s estimated that around 80% of Saudi household income depends on government subsidies, supported by vast oil revenues. The hope is to shrink this dependency, especially now that the price of Brent has fallen significantly since its all-time high of $140 a barrel in 2008. Many state-run industries could be privatized in the coming years, including its behemoth oil industry.
Saudi Arabia is a youthful country—about 70% of its citizens are under the age of 30—and so the kingdom is also seeking to modernize its society and relax several restrictions that are believed to have held back economic growth. This past September, the country finally permitted women to drive, and there are targets in place to grow the number of women in the workplace.