Saudi crown prince con­ducts purge. Trump tours Asia as tax bill hits. Bri­tish sex scan­dal.

The Saturday Paper - - Contents|The Week - Hamish McDon­ald

It’s full house at the Ritz-Carl­ton ho­tel in Riyadh, where the Saudi crown prince, Mohammed bin Sal­man, has con­fined at least 17 of his fel­low roy­als and other no­ta­bles in a sur­prise purge of al­leged cor­rup­tion last Satur­day. The ho­tel doesn’t have rooms avail­able un­til next month.

Pun­dits around the Mid­dle East are try­ing to work out what it all means. At one level it’s just a con­sol­i­da­tion of power around the crown prince, known as MBS, who is im­pa­tiently try­ing to mod­ernise the king­dom a bit. He re­cently al­lowed women to drive cars, for ex­am­ple, and started moves to rein in the pro­mo­tion of Wah­habi fun­da­men­tal­ism.

Those ar­rested in­clude a po­ten­tial ri­val for the throne, Prince Mu­taib bin Ab­dul­lah, a favoured son of the late King Ab­dul­lah and head of the Na­tional Guard, which pro­tects the royal fam­ily and key oil in­stal­la­tions. With new United States train­ing and equip­ment, in­clud­ing Apache at­tack he­li­copters, the guard was start­ing to ri­val the armed forces, which MBS com­mands as de­fence min­is­ter. An­other sleep­ing rough at the Ritz-Carl­ton is Saudi Ara­bia’s rich­est in­vestor, Prince Al­waleed bin Talal, at least un­til re­cently a friendly share­holder help­ing Ru­pert Mur­doch con­trol his em­pire from a mi­nor­ity stake.

But there were other de­vel­op­ments along­side the purge. Le­banon’s prime min­is­ter, Saad Hariri, had flown to

Riyadh the day be­fore, straight from a meet­ing in Beirut with a se­nior ad­viser to Iran’s supreme leader. Last Satur­day he an­nounced from Riyadh his res­ig­na­tion, blam­ing death threats against him on

Iran and its lo­cal Shi­ite proxy, Hezbol­lah. The Saudi gov­ern­ment said this was a “dec­la­ra­tion of war” by Hezbol­lah.

Then a bal­lis­tic mis­sile fired from Ye­men by the Iran-backed Houthi mili­tia was in­ter­cepted by one of Saudi Ara­bia’s US-sup­plied Pa­triot mis­sile de­fence bat­ter­ies be­fore it hit Riyadh’s air­port. Con­jec­ture is that it had been smug­gled in com­po­nents into Ye­men through the Saudi and Emi­rates block­ade. The Saudis and Emi­ratis an­nounced the clo­sure of all Ye­meni ports on Mon­day. The United Na­tions said this would worsen the famine and epi­demics caused by the twoyear con­flict. The Houthis threat­ened strikes at Saudi and Gulf air­ports.

It seems to add up to the Saudis urg­ing war to slap down Hezbol­lah, be­fore it con­sol­i­dates its gains in equip­ment and train­ing from the fight in Syria, and to pre­vent Iran gain­ing a se­cure Shi­ite cor­ri­dor to the Mediter­ranean through Syria and Le­banon.

They are vol­un­teer­ing Is­rael for the job. In Septem­ber, the Is­raeli De­fence Forces car­ried out a large-scale ex­er­cise to prac­tise war with Hezbol­lah, with mock ter­ror­ist in­fil­tra­tions, evac­u­a­tion of Is­raeli bor­der towns, and a push into Le­banon.

When it comes to tak­ing on Iran, there’s long been more urg­ers than ac­tion­tak­ers. On Mon­day, for­mer US sec­re­tary of state John Kerry told Lon­don’s Chatham House that Is­raeli, Saudi and Egyp­tian lead­ers had all pressed Barack Obama early in his term to bomb Iran, but none were step­ping up them­selves.

Trump in Asia

Don­ald Trump’s Asian tour got off to a sabre-rat­tling start in Ja­pan and South Korea this week, fea­tur­ing ap­pear­ances at US mil­i­tary bases at­tended by masses of Amer­i­can and lo­cal troops, be­fore mov­ing on to China and then Viet­nam this week­end.

Back home, the US se­nate was ad­vanc­ing a new bill de­signed to put the fright­en­ers on Chi­nese leader Xi Jin­ping. Named af­ter the Amer­i­can stu­dent who died shortly af­ter his re­lease from a North Korean prison, the Otto Warm­bier Bank­ing Re­stric­tions In­volv­ing North Korea Act, or BRINK Act, would pe­nalise Chi­nese en­ti­ties, in­clud­ing its big banks, that helped North Korea dodge trade and fi­nan­cial sanc­tions.

Xi will be hop­ing a lav­ish wel­come, and some con­ces­sions to Amer­i­can in­vestors such as Mi­crosoft, will keep Trump on side. The big con­test comes in Viet­nam, where Trump will push a new US vi­sion of “Indo-Pa­cific” se­cu­rity to counter Xi’s mes­sage of eco­nomic pros­per­ity ra­di­at­ing from China. There is move­ment, too, on the Trans-Pa­cific Part­ner­ship, with the 11 other mem­bers led by Ja­pan and Aus­tralia try­ing to get Trump to re­con­sider it.

Trump in par­adise

Be­fore he left, Trump threw a de­layed-ac­tion bomb into the busi­ness world, which had been wor­ried about him start­ing a trade war. In­stead, he has launched an in­ter­na­tional tax war.

In the draft tax bill pre­sented by Repub­li­cans this week, Trump pro­posed his long-mooted cut in the cor­po­rate tax rate from 35 per cent to 20 per cent, loos­ened in­her­i­tance taxes and in­come tax cuts favour­ing the rich – all to great ap­plause from Wall Street. It took a while to wake up to what ac­coun­tants called an “atom bomb” and the “go­rilla in the room”: a 20 per cent “ex­cise” on pay­ments by US cor­po­ra­tions to re­lated par­ties over­seas.

It up­sets a whole raft of ar­range­ments to shift prof­its to sub­sidiaries in low-tax ju­ris­dic­tions and costs to home base.

Many would say this is long over­due. The “Par­adise Pa­pers” cache re­leased this week by the In­ter­na­tional Con­sor­tium of In­ves­tiga­tive Jour­nal­ists re­veals the thriv­ing state of tax-haven ac­tiv­ity by play­ers in­clud­ing Ap­ple and Nike, the Bri­tish roy­als and nu­mer­ous en­ter­tain­ers.

Adding to Trump’s em­bar­rass­ment on the Rus­sian front, it shows his com­merce sec­re­tary, Wil­bur Ross, has hid­den own­er­ship of a ship­ping firm whose top client is a Rus­sian en­ergy com­pany owned by Vladimir Putin’s son-in-law, Kir­ill Shamalov, and oli­garch Gen­nady Tim­chenko, who is un­der US sanc­tions.

How­ever the 20 per cent ex­cise in­vites other coun­tries to fol­low suit. In Canberra, the Trea­sury says it is on the case.

Sex scan­dal to re­verse Brexit?

The waves from the Har­vey We­in­stein sex­ual abuse scan­dal have trav­elled far, even up the Thames into West­min­ster where the Bri­tish de­fence sec­re­tary has re­signed and at least one other se­nior min­is­ter’s job is at risk, while in the Labour op­po­si­tion one MP is sus­pended from the party and sadly a min­is­ter in the Welsh par­lia­ment has taken his own life.

In the shak­ily rul­ing Con­ser­va­tive Party, the “spread­sheet of shame” about sex­ual mis­con­duct is widen­ing a rift be­tween younger mem­bers elected along with for­mer prime min­is­ter David Cameron, who gen­er­ally sup­ported stay­ing in the Euro­pean Union, and older and young-fo­gey types who held Cameron to the fa­tal ref­er­en­dum on Brexit. It would be an in­ter­est­ing so­ci­o­log­i­cal study to see if un­wel­come sex­ual ad­vances cor­re­late to ed­u­ca­tion in the top boys’ pub­lic schools. Con­ceiv­ably, the sex scan­dal could lead to an in­ter­nal re­volt that sees a re­treat from the “hard” Brexit the Tory nos­tal­gists yearn for, and even ef­fec­tive aban­don­ment of an exit.

An­other ini­tia­tive par­al­lel­ing US events could aid the re­treat. The Bri­tish elec­toral com­mis­sion is looking into do­na­tions and loans to the pro-Brexit cam­paign to­talling $US11 mil­lion by in­sur­ance in­dus­try fig­ure Ar­ron Banks. An in­de­pen­dent web­site, OpenDemoc­racy, had re­ported Banks is not as rich as he makes out, sug­gest­ing he was chan­nelling the funds for some­one else. Banks said ru­mours he was work­ing for the Rus­sians

• were “com­plete bol­locks”.

Saudi Ara­bia’s Crown Prince Mohammed bin Sal­man.

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