by George Friedman, Geopolitical Futures
For nearly a century, Saudi Arabia has been ruled by the elders of a royal family that now finds itself effectively controlled by a 32-year-old crown prince, Mohammad bin Salman. He helms the Defense Ministry, he has extravagant plans for economic development, and last week he arranged for the arrest of some of the most powerful ministers and princes in the country. A day before the arrests were announced, Houthi tribesmen in Yemen but allied with Iran, Saudi Arabia’s regional rival, fired a ballistic missile at Riyadh. The Saudis claim the missile came from Iran and that its firing might be considered “an act of war.”
Saudi Arabia was for a long time the unchanging, even rigid, center of the region. But things changed after 2008. Saudi Arabia, like Russia, had counted on oil revenue to maintain the stability of the regime. The financial crisis pushed the world into an extended stagnation where even 2 percent growth in gross domestic product was considered a boom. This of course put a cap on industrial production, which ultimately cut the ground out from under oil prices. The increased capacity developed while oil was nearly $100 per barrel – including the stunning transformation of the United States into an oil exporter – also forced prices down. OPEC, Saudi Arabia and Russia all tried (and continue to try) to boost prices using various schemes. The problem was that, whenever production was cut, some producer, desperate for oil revenue, rushed in to a fill the vacuum. This placed the Saudis in a terrible position.
Saudi Crown Prince Mohammed bin Salman (R), along with International Monetary Fund Managing Director
Christine Lagarde (L), attends the Future Investment Initiative conference in Riyadh, on Oct. 24, 2017.
FAYEZ NURELDINE/AFP/Getty Images
Cash Is King
Saudi Arabia was created between the two world wars under British guidance. In the 1920s, a tribe known as the Sauds defeated the Hashemites, effectively annexing the exterior parts of Saudi Arabia they did not yet control. The United Kingdom recognized the Sauds’ claim shortly thereafter. But since then, the Saudi tribe has been torn by ambition, resentment and intrigue. The Saudi royal family has more in common with the Corleones than with a Norman Rockwell painting.
The Saudis maintained their rule partly through financially supporting particular segments of Saudi society. For the House of Saud, cash was a strategic weapon. Spread around prudently, most of it to the royal family but a generous amount to other groups in the kingdom, it bought stability, hiding but never eliminating the malice that was always there. Among the most critical recipients of money were the Wahhabi clerics, the gatekeepers of Saudi Arabia’s ultraconservative brand of Islam. When the Sauds conquered Mecca and Medina, they became the protectors of the holy cities. This was an honor, a singular responsibility and a political burden. The Saudis had to fund the Wahhabis and became trapped by them. The royal family and others knew how to have a good time in London, Paris and other European cities. Some, though not all, clearly didn’t take conservative Islam seriously. But others in the kingdom did, and this became a fault line in Saudi Arabia, one that was buried under money.