Saudi Arabia: The gambler is in charge
King’s son betting on future shot at ascension to throne
By the end of 2015 the BND, the German foreign intelligence service, was so concerned it warned its leaders about Saudi Arabia’s new Deputy Crown Prince and defence minister, 30-year-old Muhammad bin Salman.
“The previous cautious diplomatic stance of older leading members of the Royal Family,” it wrote, “is being replaced by an impulsive policy of intervention.” At that point Prince bin Salman had been defence minister for just a year, but he had launched a major military intervention in the civil war in Yemen and committed Saudi Arabia to open support for the rebels in the Syrian civil war. He had also taken the bold decision to let oil production rip and the oil price crash.
No wonder the BND characterized Prince bin Salman as “a political gambler who is destabilizing the Arab world through proxy wars in Yemen and Syria.” Not just a gambler, but one betting on the wrong horses.
The first bet to fail was his intervention in the Yemeni civil war, with an aerial bombing campaign that has killed at least 10,000 Yemenis, half of them civilians, and cost Saudi Arabia tens of billions. Prince Muhammad bin Salman (or MBS, as he is known in diplomatic circles) sold the war as a short, sharp intervention to defeat Houthi rebels in Yemen and put Saudi Arabia’s choice for the presidency, Abd Rabbuh Mansur Hadi, back in power. The Houthis are still control of the capital, Sana’a, and Hadi will not be going home any time soon.
His second bet to support Syrian rebels failed when the Syrian army, with Russian and Iranian help, retook eastern Aleppo. Not one of Syria’s big cities is now under rebel control, and Saudi Arabia will have to live with a victorious, vengeful Assad regime.
His biggest gamble was to restore the Saudis’ global oil power by driving the new competition, American producers who get oil out of shale rock by fracking, into bankruptcy. The frackers doubled U.S. oil production in eight years, but the extra U.S. production was creating a market glut and depressing prices. MBS made matters worse. He reckoned the frackers were high-cost producers who would go broke if the price of oil stayed low for long enough. So Saudi Arabia kept its own oil production high and persuaded its partners in the Organization of Petroleum-Exporting Countries (the oil cartel) to do the same.
At several points in the past two years the oil price fell below $30 per barrel, compared to a peak of $114 in 2014, but the strategy didn’t work as MBS had planned. The U.S. frackers shut down their less profitable operations temporarily and some smaller players went bankrupt, but the survivors are ready to ramp production up again as soon as the oil price improves. Meanwhile, Saudi Arabia has been burning through $100 billion a year in cash reserves.
In November MBS admitted defeat. Saudi Arabia and it’s the oil cartel partners cut production 1.2 million barrels per day, and Russia and Kazakhstan chipped in with another half million. The oil price is up to $55 a barrel, Saudi Arabia’s cash flow has improved, and the political stresses at home due to wage and subsidy cuts have eased off. People are asking: “What’s it all about?” The problem is MBS is in a hurry to for results. His prominence so young owes everything to the support of his father, King Salman, who ascended to the throne two years ago. But the king is 81 and in poor health (suffering mild dementia, according to some), and his son is not his obvious successor. Normally the successor to the Saudi throne is not the current king’s son, but a senior prince chosen by his peers as best fitted to rule. The current Crown Prince is 57-yearold Prince Muhammad bin Nayef. Even the title of Deputy Crown Prince is new, and MBS owes it entirely to his father.
So to have any hope of succeeding to the throne when King Salman dies, Prince Muhammad bin Salman must prove his worth quickly. That’s why he was open to such high-stakes, long-odds gambles: one big success could do the trick for him. He is probably still up for another roll of the dice.