Risky Business

Now normally it wouldn’t be significant that an 80 year old finance minister chose to resign, but Saudi Arabia is not a normal place and the replacement of Ali al-Naimi by Khalid al-Falih marks a take over of the Oil Ministry by militant Crown Prince Mohammed bin Salman (referenced in the article as MbS) and an expansion of the aggressive Economic/Political/Military policies the Sauds have recently pursued.

Rumors in the Kingdom: What Elites Are Whispering About the Increasingly Shaky Saudi Regime
By Vijay Prashad, AlterNet
May 11, 2016

Why did the Saudi regime fire al-Naimi? Is it because the veteran—now age eighty—needed to retire? The answer is in his replacement, Khalid al-Falih, formerly head of Saudi Aramco (the state’s oil company). Born in 1960, al-Falih is closely associated with the Deputy Crown Prince—Mohammed bin Salman (MbS)—who has not only taken charge of the Saudi economy but also of its wars in Yemen and Syria. The replacement of al-Naimi by al-Falih, says an old friend in the Saudi bureaucracy, should be entirely understood as part of the “power grab by the young Deputy Crown Prince.”

Why did MbS turn against al-Naimi, the venerable diplomat for Saudi oil? My friend tells me that MbS was not pleased with al-Naimi’s attempt at a ceasefire in the oil war. At Doha in February, as I had reported, al-Naimi had brought representatives from Qatar, Russia and Venezuela together to stabilize oil prices. Such a rational move imperiled the aggressive foreign policy ambitions of MbS. Saudi Arabia’s regional aims could not be met unless Qatar and Russia felt hampered by low commodity prices. My friend, who has watched al-Naimi work for many decades, worries that rational voices are being pushed aside in the Kingdom. The arrogance of youth—embodied by MbS—is now in charge.

To sidestep the trials of low oil prices, Prince Mohammed bin Salman has pledged to sell off part of Saudi Aramco. Undoubtedly his ally al-Falih backed him on that plan. Such a massive infusion of capital—over $2 trillion—would give Saudi Arabia the kind of buoyancy that it needs to both try and reshape its economy and continue its regional aspirations. Or so that it what is believed in the palace.

Prince Mohammed bin Salman hopes that this capital will finance his plan for the new Saudi Arabia, which he has called Saudi Vision 2030. Last week, I wrote about this plan for Alternet, considering it to be an illusion. The reaction toward this column from Saudi Arabia was curious—as many people wrote to say that they agreed with me as wrote to denounce my verdict. I asked Adam Hanieh, author of Capitalism and Class in the Gulf Arab States, about this reaction. “I can’t recall such high levels of internal dissent about a domestic issue,” Hanieh told me. “It’s also striking how often these criticisms point to the fact that the plan was largely drawn up by foreign consultants (such as McKinsey).”
…
It would be wrong to dismiss Saudi Vision 2030. After all, says Fatany, women and the youth are generally disposed to pledge their hope to any sign of reform. “They are eager for change,” she said. “They have a drive and are willing to give their best to make it succeed.” Seventy percent of the Saudi subjects are under thirty. Their expectations are unmet in the present system. A share of the oil money is not enough for them. They want to live fuller lives. A group of young Saudis tell me that they would like to see political reforms, but they are unsure what these reforms would look like. It is dangerous to talk of democracy. They do not publically hope for anything more than economic openings. Alexis de Tocqueville, who knew a great deal about the overthrow of a monarchy, wrote in 1865 that the most dangerous moment for a king is not when conditions are abysmal for the population; the most dangerous time “is generally that in which it sets about reform.” As the monarchy lightens the yoke from the shoulders of the population, more is demanded – including the end of the regime.
…
Madawi al-Rasheed, the most distinguished historian of Saudi Arabia, does not share al-Egla’s keenness. “Saudi Vision 2030 is a phantasmagoria,” she tells me. Months before the protests began in Tunisia in 2010, the International Monetary Fund (IMF) came to the country and praised its development path. Saudi Arabia’s reform project mimics the IMF agenda. The tonic of privatization and reliance upon financial flows will not produce the kind of healthy economic and polity that Arabia requires. Where corruption is endemic, “the vision is bound to benefit a section of society, the ones who purchase the state assets, the princes themselves and international investors close to the princes.” Hanieh agrees, saying the privatization scheme will “widen the already large gaps between the ultra-rich and the poor. The plan contains quite significant austerity measures. I suspect we’ll see further social unrest if it moves ahead.”
…
It is not a surprise that al-Falih took over as oil minister. It is a happy opportunity for the Deputy Crown Prince that this new minister is his ally. Much hope from Arabia’s youth and women rests on these men. Careful watchers of the Kingdom suggest that the path they have chosen will end in failure.