Deputy Crown Prince Mo­hammed bin Sal­man is pre­par­ing Saudi Ara­bia for the end of oil

The ex­tra­or­di­nary project to get Saudi Ara­bia’s econ­omy off oil

Bloomberg Businessweek (Europe) - - FRONT PAGE - By Peter Wald­man

Early last year, at a royal en­camp­ment in the oasis of Raw­dat Khu­raim, Prince Mo­hammed bin Sal­man of Saudi Ara­bia vis­ited his un­cle, King Ab­dul­lah, in the monarch’s fi­nal days be­fore en­ter­ing a hospi­tal. Un­be­known to any­one out­side the House of Saud, the two men, sep­a­rated in age by 59 years, had a rocky his­tory to­gether. King Ab­dul­lah once banned his brash nephew, all of 26 at the time, from set­ting foot in the Min­istry of De­fense af­ter ru­mors reached the royal court that the prince was dis­rup­tive and power-hun­gry. Later, the pair grew close, bound by a shared be­lief that Saudi Ara­bia must fun­da­men­tally change, or else face ruin in a world that is try­ing to leave oil be­hind.

For two years, en­cour­aged by the king, the prince had been qui­etly plan­ning a ma­jor re­struc­tur­ing of Saudi Ara­bia’s govern­ment and econ­omy, aim­ing to ful­fill what he calls his gen­er­a­tion’s “dif­fer­ent dreams” for a post­car­bon fu­ture. King Ab­dul­lah died shortly af­ter his visit, in Jan­uary 2015. Prince Mo­hammed’s fa­ther, Sal­man, as­sumed the throne, named his son the deputy crown prince—sec­ond in line—and gave him un­prece­dented con­trol over the state oil mo­nop­oly, the na­tional in­vest­ment fund, eco­nomic pol­icy, and the Min­istry of De­fense. That’s a larger port­fo­lio than that of the crown prince, the only man ahead of him on the suc­ces­sion chart. Ef­fec­tively, Prince Mo­hammed is to­day the power be­hind the world’s most pow­er­ful throne. Western diplo­mats in Riyadh call him Mr. Every­thing. He’s 31 years old.

“From the first 12 hours, de­ci­sions were is­sued,” says Prince Mo­hammed. “In the first 10 days, the en­tire govern­ment was re­struc­tured.” He spoke for eight hours over two in­ter­views in Riyadh that pro­vide a rare glimpse of the think­ing of a new kind of Mid­dle East po­ten­tate—one who tries to em­u­late Steve Jobs, cred­its video games with spark­ing in­ge­nu­ity, and works 16-hour days in a land with no short­age of sinecures.

Last year there was near-panic among the prince’s ad­vis­ers as they dis­cov­ered Saudi Ara­bia was burn­ing through its for­eign re­serves faster than any­one knew, with in­sol­vency only two years away. Plum­met­ing oil rev­enue had re­sulted in an al­most $200 bil­lion bud­get short­fall— a pre­view of a fu­ture in which the Saudis’ only vi­able ex­port can no longer pay the bills, whether be­cause of shale oil flood­ing the mar­ket or cli­mate change poli­cies. His­tor­i­cally, the king­dom has re­lied on the petroleum sec­tor for 90 per­cent of the state bud­get, al­most all its ex­port earn­ings, and more than half its gross do­mes­tic prod­uct.

On April 25 the prince is sched­uled to un­veil his “Vi­sion for the King­dom of Saudi Ara­bia,” an his­toric plan en­com­pass­ing broad eco­nomic and so­cial changes. It in­cludes the cre­ation of the world’s largest sov­er­eign wealth fund, which will even­tu­ally hold more than $2 tril­lion in as­sets—enough to buy all of Ap­ple, Google, Mi­crosoft, and Berk­shire Hath­away, the world’s four largest pub­lic com­pa­nies. The prince plans an IPO that could sell off “less than 5 per­cent” of Saudi Aramco, the na­tional oil pro­ducer, which will be turned into the world’s big­gest in­dus­trial con­glom­er­ate. The fund will di­ver­sify into non­petroleum as­sets, hedg­ing the king­dom’s nearly to­tal de­pen­dence on oil for rev­enue. The tec­tonic moves “will tech­ni­cally make in­vest­ments the source of Saudi govern­ment rev­enue, not oil,” the prince says. “So within 20 years, we will be an econ­omy or state that doesn’t de­pend mainly on oil.”

For 80 years oil has un­der­writ­ten the so­cial com­pact on which Saudi Ara­bia op­er­ates: ab­so­lute rule for the Al Saud fam­ily, in ex­change for gen­er­ous spend­ing on its 21 mil­lion sub­jects. Now, Prince Mo­hammed is dic­tat­ing a new bar­gain. He’s al­ready re­duced mas­sive sub­si­dies for gaso­line, elec­tric­ity, and wa­ter. He may im­pose a value-added tax and levies on lux­ury goods and sug­ary drinks. Th­ese and other mea­sures are in­tended to gen­er­ate $100 bil­lion a year in ad­di­tional nonoil rev­enue by 2020. That’s not to say the days of Saudi govern­ment hand­outs are over—there are no plans to in­sti­tute an in­come tax, and to cush­ion the blow for those with lower in­comes, the prince plans to pay out di­rect cash sub­si­dies. “We don’t want to ex­ert any pres­sure on them,” he says. “We want to ex­ert pres­sure on wealthy peo­ple.”

Saudi Ara­bia can’t thrive while curb­ing the rights of half its pop­u­la­tion, and the prince has sig­naled he would sup­port more free­dom for women, who can’t drive or travel with­out per­mis­sion from a male rel­a­tive. “We be­lieve women have rights in Is­lam that they’ve yet to ob­tain,” the prince says. One for­mer se­nior U.S. mil­i­tary of­fi­cer who re­cently met with the prince says the royal told him he’s ready to let women drive but is wait­ing for the right mo­ment to con­front the con­ser­va­tive re­li­gious es­tab­lish­ment, which dom­i­nates so­cial and re­li­gious life. “He said, ‘If women were al­lowed to ride camels [in the time of the Prophet Muham­mad], per­haps we should let them drive cars, the mod­ern­day camels,’ ” the for­mer of­fi­cer says. Separately, Saudi Ara­bia’s re­li­gious po­lice have been banned from mak­ing ran­dom ar­rests with­out as­sis­tance from other au­thor­i­ties. At­tempts to lib­er­al­ize could jeop­ar­dize the deal that the Al Saud fam­ily struck with Wah­habi fun­da­men­tal­ists two gen­er­a­tions ago, but the sort of in­dus­tries Prince Mo­hammed wants to lure to Saudi Ara­bia are un­likely to come to a country with ma­jor stric­tures on women.

“How close is Saudi Ara­bia to a fi­nan­cial cri­sis?” the prince asks. It’s bet­ter now, his aide replies. But “if you’d asked me ex­actly a year ago, I was prob­a­bly on the verge of hav­ing a ner­vous break­down”

To­day, no mat­ter how much money there is in Riyadh, bankers and their fam­i­lies would rather stay in Dubai.

Many Saudis, ac­cus­tomed to watch­ing the levers of power op­er­ated care­fully by the geri­atric de­scen­dants of the king­dom’s found­ing monarch, were stunned by Prince Mo­hammed’s light­ning con­sol­i­da­tion of power last year. The as­cen­dance of a third-gen­er­a­tion prince—he’s the founder’s grand­son—was of acute in­ter­est to the half of the pop­u­la­tion that’s un­der 25, par­tic­u­larly among the grow­ing num­ber of ur­bane, well-ed­u­cated Saudis who find the re­stric­tions on women an em­bar­rass­ment. Youth un­em­ploy­ment is about 30 per­cent.

But sup­port­ing re­form is one thing, and liv­ing it an­other. Pub­lic re­ac­tion to the eco­nomic re­boot has been wary, some­times an­gry. This win­ter, many Saudis took to Twit­ter, their fa­vored means of uncensored dis­course, to vent about a jump of as much as 1,000 per­cent in wa­ter bills and to com­plain about the prospect of Saudi Aramco, the na­tion’s pat­ri­mony, be­ing sold off to fi­nance the in­vest­ment fan­tasies of a royal neo­phyte.

“We’ve been scream­ing for al­ter­na­tives to oil for 46 years, but noth­ing hap­pened,” says Bar­jas Al­bar­jas, an eco­nomic com­men­ta­tor who’s crit­i­cal of sell­ing Aramco shares. “Why are we putting our main source of liveli­hood at risk? It’s as if we’re get­ting a loan from the buyer that we’ll have to pay back for the rest of our lives.”

Al­bar­jas and other Saudi skep­tics be­lieve pub­lic in­vestors, leery the state will al­ways have other pri­or­i­ties for Aramco be­sides max­i­miz­ing prof­its, will de­mand a steep dis­count to in­vest in its shares. They also won­der why Saudis should trust un­ac­count­able man­agers of the sov­er­eign wealth fund to bring in high re­turns any more than Aramco’s ex­ec­u­tives. The com­pany’s size is stag­ger­ing. It’s the world’s No.1 oil pro­ducer, with the ca­pac­ity to pump more than 12 mil­lion bar­rels a day, more than twice as much as any other com­pany, and it’s the world’s fourth-big­gest re­finer. Aramco con­trols the world’s sec­ond-largest oil re­serves, be­hind Venezuela; but in con­trast to that country’s ex­pen­siveto-tap Orinoco Belt, the oil in Saudi Ara­bia is cheap and easy to ob­tain. Aramco is also one of the most se­cre­tive com­pa­nies on earth—there are no of­fi­cial mea­sures of fi­nan­cial per­for­mance.

Saudi Ara­bia’s econ­omy will prob­a­bly ex­pand 1.5 per­cent in 2016, the slow­est pace since the global fi­nan­cial cri­sis, ac­cord­ing to a Bloomberg sur­vey, as govern­ment spend­ing—the en­gine that pow­ers the econ­omy—de­clines for the first time in more than a decade. The state still em­ploys two-thirds of Saudi work­ers, while for­eign­ers ac­count for nearly 80 per­cent of the pri­vate-sec­tor pay­roll. Some past di­ver­si­fi­ca­tion drives in Saudi Ara­bia have been con­spic­u­ous fail­ures. The $10 bil­lion King Ab­dul­lah Fi­nan­cial District, for ex­am­ple, be­gun in 2006, sits largely un­leased. A ghostly mono­rail track snakes through some 70 build­ings, in­clud­ing five brand-new glass-and-steel sky­scrapers. Some con­struc­tion work­ers aban­doned the project re­cently, claim­ing they hadn’t been paid.

“Ul­ti­mately, ev­ery­one knows what the de­mo­graph­ics im­ply for Saudi Ara­bia,” says Crispin Hawes, a man­ag­ing di­rec­tor at Te­neo In­tel­li­gence. “Those de­mo­graph­ics don’t look any nicer now than they did 10 years ago. With­out real fun­da­men­tal eco­nomic re­form, it is in­cred­i­bly dif­fi­cult to see how the Saudi econ­omy can gen­er­ate the em­ploy­ment lev­els it needs.”

Prince Mo­hammed won’t go into de­tails about any planned nonoil in­vest­ments, but he says the gar­gan­tuan sov­er­eign fund will team up with pri­vate equity firms to even­tu­ally in­vest half its hold­ings over­seas, ex­clud­ing the Aramco stake, in as­sets that will pro­duce a steady stream of div­i­dends un­moored from fos­sil fu­els. He knows that many peo­ple aren’t con­vinced. “This is why I’m sit­ting with you to­day,” he says in mid-April. “I want to con­vince our pub­lic of what we are do­ing, and I want to con­vince the world.”

Prince Mo­hammed says he’s used to re­sis­tance, hard­ened by bu­reau­cratic en­e­mies who once ac­cused him of power-grab­bing in front of his fa­ther and King Ab­dul­lah. He says he stud­ies Win­ston Churchill and Sun Tzu’s The Art of War and will turn ad­ver­sity to his ad­van­tage. It could all read as just an­other mil­len­nial’s dis­rup­tion talk if the prince didn’t have a clear path to power or speak so freely in ways that shock the petro-po­lit­i­cal world or­der.

The likely fu­ture king of Saudi Ara­bia says he doesn’t care if oil prices rise or fall. If they go up, that means more money for nonoil in­vest­ments, he says. If they go down, Saudi Ara­bia, as the world’s low­est-cost pro­ducer, can ex­pand in the grow­ing Asian mar­ket. The deputy crown prince is es­sen­tially dis­avow­ing decades of Saudi oil doc­trine as the leader of OPEC. He scut­tled a pro­posed freeze of oil pro­duc­tion on April 17 at a sup­pli­ers’ meet­ing in Qatar be­cause archri­val Iran wouldn’t par­tic­i­pate. Ob­servers saw it as ex­tremely rare in­ter­fer­ence by a mem­ber of the royal fam­ily, which has tra­di­tion­ally given the tech­nocrats at the Petroleum Min­istry am­ple room for ma­neu­ver on oil pol­icy. “We don’t care about oil prices—$30 or $70, they are all the same to us,” he says. “This bat­tle is not my bat­tle.”

To in­ter­view the deputy crown prince, you don’t check in with the

re­cep­tion­ist. The perime­ter be­gins at a down­town Riyadh ho­tel, await­ing the call from the of­fice of palace pro­to­col. The evening of March 30 is spent on standby; the word comes at 8:30 p.m. Three Mercedes-Ben­zes ar­rive. Even headed to an in­ter­view about thrift, there’s no es­cap­ing deca­dence:

The cars ap­pear brand-new, with seats wrapped in plas­tic and safety belts that have never been used.

The car­a­van heads to the royal com­pound in Irqah, a clus­ter of palaces sur­rounded by high white walls where the king and some of his rel­a­tives live, in­clud­ing Prince Mo­hammed. Armed guards, check­points, and metal de­tec­tors are all by­passed. No one even checks IDs. In his of­fice, Prince Mo­hammed wears a plain white gown and noth­ing on his head, re­veal­ing longish dark curls and a re­ced­ing hair­line—an in­for­mal­ity that many Saudis would find en­dear­ing when of­fi­cial photos were later pub­lished on­line. A marathon dis­cus­sion and in­ter­view be­gins, with him lis­ten­ing to ques­tions in English and re­spond­ing im­me­di­ately in de­tail in Ara­bic. He re­peat­edly cor­rects his in­ter­preter.

At 12:30 a.m., it’s din­ner­time. The re­porters are joined at the ta­ble by the prince’s eco­nomic team, in­clud­ing the chair­man of Aramco; the chief fi­nan­cial reg­u­la­tor; and the head of the sov­er­eign wealth fund. As con­ver­sa­tion loosens over the meal, Prince Mo­hammed asks Mo­hammed Al-Sheikh, his Har­vard-ed­u­cated fi­nan­cial ad­viser and a for­mer lawyer at Latham & Watkins and the World Bank, to give an up­date on Saudi Ara­bia’s fis­cal con­di­tion.

Dur­ing the oil boom from 2010 to 2014, Saudi spend­ing went berserk. Prior re­quire­ments that the king ap­prove all con­tracts over 100 mil­lion riyals ($26.7 mil­lion) got looser and looser—first to 200 mil­lion, then to 300 mil­lion, then to 500 mil­lion, and then, Al-Sheikh says, the govern­ment sus­pended the rule al­to­gether. A jour­nal­ist asks: How much was wasted? Al-Sheikh eyes a run­ning recorder on the ta­ble. “Can I turn this off?” he says. “No, you can say it on record,” Prince Mo­hammed says. “My best guess,” says Al-Sheikh, “is that there was roughly be­tween 80 to 100 bil­lion dol­lars of in­ef­fi­cient spend­ing” ev­ery year, about a quar­ter of the en­tire Saudi bud­get.

Prince Mo­hammed picks up the ques­tion­ing: “How close is Saudi Ara­bia to a fi­nan­cial cri­sis?”

To­day it’s much bet­ter, Al-Sheikh says. But “if you’d asked me ex­actly a year ago, I was prob­a­bly on the verge of hav­ing a ner­vous break­down.” Then he tells a story that no one out­side the king­dom’s in­ner sanc­tum has heard. Last spring, as the In­ter­na­tional Mon­e­tary Fund and oth­ers were pre­dict­ing Saudi Ara­bia’s re­serves could stake the country for at least five years of low oil prices, the prince’s team dis­cov­ered the king­dom was rapidly be­com­ing in­sol­vent. At last April’s spend­ing lev­els, Saudi Ara­bia would have gone “com­pletely broke” within just two years, by early 2017, Al-Sheikh says. To avert calamity, the prince cut the bud­get by 25 per­cent, re­in­stated strict spend­ing con­trols, tapped the debt mar­kets, and be­gan to de­velop the VAT and other levies. The burn rate on Saudi Ara­bia’s cash re­serves—$30 bil­lion a month through the first half of 2015—be­gan to fall.

Al-Sheikh fin­ishes his fis­cally mor­ti­fy­ing re­port. “Thank you,” the prince says.

A sec­ond in­ter­view, on April 14, takes place at King Sal­man’s

farm­house in Diriyah, on the out­skirts of Riyadh. When the Mercedes car­a­van gets snarled in free­way traf­fic, a call from the front seat pro­duces a po­lice es­cort out of thin air. The re­porters pull into a nar­row lane run­ning along a high wall that looks like the mud-brick bul­wark of a desert cas­tle. The prop­erty, where King Sal­man and his son have of­fices, sits atop a small hill in the heart of the Al Sauds’ an­ces­tral lands.

This time the prince talks about him­self. Grow­ing up, he says, he ben­e­fited from two in­flu­ences: tech­nol­ogy and the royal fam­ily. His gen­er­a­tion was the first on the In­ter­net, the first to play video games, and the first to get its in­for­ma­tion from screens, he says. “We think in a very dif­fer­ent way. Our dreams are dif­fer­ent.”

His fa­ther is an avid reader, and he liked to assign his chil­dren one book per week, and then quiz them to see who’d read it. His mother, through her staff, or­ga­nized daily ex­tracur­ric­u­lar cour­ses and field trips and brought in in­tel­lec­tu­als for three-hour dis­cus­sions. Both par­ents

taskmas­ters. Be­ing late to lunch with his fa­ther was “a dis­as­ter,” the prince says. His mother was so strict that “my broth­ers and I used to think, Why is our mother treat­ing us this way? She would never over­look any of the mis­takes

made,” he says. Now the prince thinks her pun­ish­ments made them stronger.

The prince had four older half-broth­ers he looked up to, he says. One was an as­tro­naut who flew on the space shut­tle Dis­cov­ery, the first Arab and Mus­lim to reach outer space. An­other is the re­spected deputy oil min­is­ter. A third be­came a univer­sity pro­fes­sor with a Ph.D. from Ox­ford in po­lit­i­cal sci­ence, and the fourth, who died in 2002, founded one of the largest me­dia groups in the Mid­dle East. All of them worked closely with King Fahd be­cause he was their fa­ther’s full brother, the prince ex­plains, “which al­lowed us to ob­serve and live” the heady at­mos­phere of the royal court. Prince Mo­hammed saw two pos­si­ble ver­sions of him­self: one who pur­sued a vi­sion of his own, and one who adapted to the court as it was. “There’s a big dif­fer­ence,” he says. “The first, he can cre­ate Ap­ple. The sec­ond can be­come a suc­cess­ful em­ployee. I had el­e­ments that were much more than what Steve Jobs or Mark Zucker­berg or Bill Gates had. If I work ac­cord­ing to their meth­ods, what will I cre­ate? All of this was in my head when I was young.”

In 2007, Prince Mo­hammed grad­u­ated fourth in his class from King Saud Univer­sity with a bach­e­lor’s de­gree in law. Then the king­dom came knock­ing. He re­sisted at first, telling the di­rec­tor of the Bureau of Ex­perts, which serves as the cabi­net’s le­gal ad­viser, that he was off to get mar­ried, earn a master’s de­gree over­seas, and make his for­tune. But his fa­ther urged him to give the govern­ment a chance, and Prince Mo­hammed did so for two years, fo­cus­ing on chang­ing cer­tain cor­po­rate laws and reg­u­la­tions that “I had al­ways strug­gled with.” His boss, Es­sam bin Saeed, says the prince showed a rest­less in­tel­lect and no pa­tience for bureau­cracy. “Pro­ce­dures that used to take two months, he’d ask for them in two days,” says Saeed, who now works as a min­is­ter of state. “To­day, it’s one day.”

In 2009, King Ab­dul­lah re­fused to ap­prove Prince Mo­hammed’s pro­mo­tion, in the­ory to avoid the ap­pear­ance of nepo­tism. A bit­ter Prince Mo­hammed left and went to work for his fa­ther, then gov­er­nor of Riyadh. He stepped into a viper’s nest. As Prince Mo­hammed tells it, he tried to stream­line pro­ce­dures to keep his fa­ther from drown­ing in a sea of pa­per­work, and the old guard re­belled. They ac­cused the young prince of usurp­ing power by cut­ting off their con­tact with his fa­ther and took their com­plaints to King Ab­dul­lah. In 2011, King Ab­dul­lah named Prince Sal­man de­fense min­is­ter but or­dered Prince Mo­hammed never to set foot in­side the min­istry.

The prince wor­ried his ca­reer was over. “I’m say­ing to my­self, ‘I’m in my 20s, I don’t know how I fell into more than one trap,’ ” he says. But given how things have turned out, he’s grate­ful. “It’s only by co­in­ci­dence I started work­ing with my fa­ther—all be­cause of King Ab­dul­lah’s de­ci­sion not to grant my pro­mo­tion. God bless his soul, he did me a fa­vor.”

The king de­liv­ered an as­sign­ment. But the last thing Prince Mo­hammed wanted was more pow­er­ful en­e­mies. “I told­were him, ‘Please, I don’t want this.’we He shouted at me and said, ‘You’re not to blame. I’m the one to blame—for talk­ing to you’ ”

The prince re­signed his govern­ment post and went to work re­or­ga­niz­ing his fa­ther’s foun­da­tion, which builds hous­ing, and started his own non­profit aimed at fos­ter­ing in­no­va­tion and lead­er­ship among Saudi youth. In 2012 his fa­ther be­came crown prince. Six months later, Prince Mo­hammed was named his chief of court. Grad­u­ally, he worked his way back into King Ab­dul­lah’s good graces, tak­ing on spe­cial as­sign­ments for the royal court that called for sharp el­bows.

As the prince pri­vately be­gan plan­ning for his fa­ther’s even­tual reign, the king came to him with a huge as­sign­ment: Clean up the Min­istry of De­fense. Its prob­lems had de­fied so­lu­tions for years, the prince says. “I told him, ‘Please, I don’t want this.’ He shouted at me and said, ‘You’re not to blame. I’m the one to blame—for talk­ing to you.’ ” The last thing Prince Mo­hammed wanted at the time was more pow­er­ful en­e­mies. The king is­sued a royal de­cree nam­ing the prince su­per­vi­sor of the of­fice of de­fense min­is­ter and mem­ber of the cabi­net.

He brought in Booz Allen Hamil­ton and Bos­ton Con­sult­ing Group and changed the pro­ce­dures for weapons pro­cure­ment, con­tract­ing, in­for­ma­tion tech­nol­ogy, and hu­man re­sources, says Fa­had Al-Eissa, di­rec­tor gen­eral of the de­fense min­is­ter’s of­fice. Pre­vi­ously, the le­gal de­part­ment had be­come “marginal­ized,” which re­sulted in bad con­tracts that be­came “a big source of cor­rup­tion,” Al-Eissa says. The prince strength­ened the law de­part­ment and sent back dozens of con­tracts for re­vi­sion. Many weapons pur­chases had been mis­con­ceived and in­ap­pro­pri­ately vet­ted, with no clear pur­pose. “We are the fourth-largest mil­i­tary spender in the world, yet when it comes to the qual­ity of our arms, we are barely in the top 20,” Al-Eissa says. So the prince cre­ated an of­fice to an­a­lyze arms deals.

He also started spend­ing a few days a week at King Ab­dul­lah’s palace. He tried to push through sev­eral new re­forms. “It was very dif­fi­cult to do with the pres­ence of a num­ber of peo­ple,” he says. “But I re­mem­ber to this day there’s noth­ing I dis­cussed with King Ab­dul­lah that he didn’t give the or­der and im­ple­ment.”

Less than a week af­ter King Ab­dul­lah died and King Sal­man took the throne, he is­sued a de­cree nam­ing Prince Mo­hammed de­fense min­is­ter, chief of the royal court, and pres­i­dent of a newly cre­ated coun­cil to over­see the econ­omy. Three months later, the king re­placed his half-brother as crown prince—a for­mer in­tel­li­gence chief who’d been ap­pointed deputy crown prince by King Ab­dul­lah just two years ear­lier—and placed his nephew and son in the line of suc­ces­sion. The king’s de­cree said the move had been ap­proved by a ma­jor­ity of the Al Saud fam­ily’s Al­le­giance Coun­cil. Prince Mo­hammed was given con­trol over Saudi Aramco by royal de­cree 48 hours later.

The prince di­vides his time be­tween his fa­ther’s palaces and the De­fense Min­istry, work­ing from morn­ing un­til af­ter mid­night most days. Courtiers claim his re­la­tion­ship with the crown prince, Mo­hammed bin Nayef, is good; they have neigh­bor­ing camps at the roy­als’ desert en­camp­ment. Prince Mo­hammed takes fre­quent meet­ings with the king and spends long ses­sions with con­sul­tants and aides por­ing over eco­nomic and oil data. He also greets for­eign dig­ni­taries and diplo­mats and is the main prose­cu­tor of Saudi Ara­bia’s con­tro­ver­sial war in Ye­men against Iran-backed Houthi rebels. For all the prince’s talk of thrift, the war has cost a for­tune. “We be­lieve that we are closer than ever to a po­lit­i­cal so­lu­tion,” he says about the con­flict. “But if things re­lapse, we are ready.”

He’s awak­ened most morn­ings by his kids, two boys and two girls, rang­ing in age from 1 to 6. That’s the last he sees of them. “Some­times my wife gets up­set with me be­cause I put so much pres­sure on her for the pro­grams that I want them to have,” he says. “I rely mainly on their mother for their up­bring­ing.” Prince Mo­hammed has only one wife and isn’t plan­ning on mar­ry­ing more, he says. His gen­er­a­tion isn’t so into polygamy, he ex­plains. Life is too busy, com­pared with past eras when farm­ers could work a few hours a day and war­riors could “take spoils once a week and had a lot of spare time.” Work­ing, sleep­ing, eat­ing, and drink­ing don’t leave a lot of time to open an­other house­hold, he says. “It’s tough [enough] liv­ing with one fam­ily.”

In Prince Mo­hammed, the U.S. may find a sym­pa­thetic longterm ally in a chaotic re­gion. Af­ter Pres­i­dent Obama met the prince at Camp David last May, he said he found him “ex­tremely knowl­edge­able, very smart, and wise be­yond his years.” The prince vis­ited Obama at the White House in Septem­ber to air his dis­ap­proval of the U.S.-bro­kered nu­clear deal with Iran, and the two men were likely to meet again on April 20 when Obama vis­its King Sal­man in Riyadh.

In March, Repub­li­can Senator Lind­sey Gra­ham of South Carolina met Prince Mo­hammed in Riyadh with a del­e­ga­tion from Congress. The prince emerged wear­ing his tra­di­tional gold­laced robe and red head­dress and con­fided to Gra­ham that he wished he’d worn some­thing else. “He said, ‘The robe does not make the man,’ ” Gra­ham says. “He ob­vi­ously un­der­stands our cul­ture.” The men spoke for an hour about the de facto al­liance of Is­rael and Saudi Ara­bia against Is­lamic State and Iran; in­no­va­tion and Is­lam; and, of course, the epic eco­nomic changes. “I was blown away; I couldn’t get over how com­fort­able meet­ing him was,” says Gra­ham. “What you have is a guy who sees the fi­nite na­ture of the rev­enue stream and, rather than pan­ick­ing, sees a strate­gic op­por­tu­nity. His view of Saudi so­ci­ety is that ba­si­cally it’s now time to have less for the few and more for the many. The top mem­bers of the royal fam­ily have been iden­ti­fied by their priv­i­lege. He wants them to be iden­ti­fied by their obli­ga­tions in­stead.”

Chang­ing the royal op­tics in a country where thou­sands of Al Sauds live op­u­lently off the na­tional cof­fers won’t be easy, but Prince Mo­hammed is will­ing to try. “The op­por­tu­ni­ties we have,” he says, “are much big­ger than the prob­lems.” <BW>

Pho­to­graphs by Luca Lo­catelli

The open-air liv­ing room at one of Prince Mo­hammed’s res­i­dences

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