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Cyril Widdershoven

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently, he holds several advisory positions with international think tanks in the Middle…

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Saudi Corruption Crackdown Topples Oil Kingpins

Riyadh

Saudi Crown Prince Mohammad bin Salman’s unexpected crackdown has shattered the tranquility of the kingdom.

After Saturday’s news emerged that a long list of high-profile Saudi royals, military leaders and multi-billionaires were arrested or confined to their quarters, all seemed to be only an implementation of the crown prince’s open threat that “no-one is above the law, whether it is a prince or a minister.”

The current list of arrests include names like Saudi billionaire Prince Al-Waleed bin Talal, one of the most media-loved Saudi businessmen, and Prince Miteb bin Abdullah, former head of the Saudi National Guard. At the end of the weekend, the impact was clear: The new Saudi power broker isn’t cutting anyone slack.

Just after that, in an effort to clean house in one fell swoop, Mohammad bin Salman (MBS) announced—by royal decree—a new anti-corruption committee.

At the moment, most eyes are on the anti-corruption narrative, which is being pushed by the Saudi government and media. The announcement of the arrests, made over Al Arabiya, the Saudi-owned satellite (whose broadcasts are controlled by the state), showed MBS’s willingness to address corruption. Clearly, corruption and a lack of transparency is still a significant issue in Saudi Arabia, and MBS is taking a risk in challenging it.

It seems the crown prince is far from finished, as news has emerged that one of the Arab world’s leading broadcasters, MBC, has been put under government control. Part of its management was removed and the owner detained. News is also emerging that even the former Saudi Minister of Oil Ali Al Naimi, Saudi Arabia’s media face for decades, has been forcibly confined to his quarters. Related: Does The U.S. Lead The World In Carbon Emissions Reduction?

Other sources state that a travel ban has been imposed for Saudi officials, including some figures within Saudi Aramco. The latter have been informed that travel requests are currently on hold. More interesting is that the Saudi Monetary Agency (SAMA) has ordered a freezing of accounts of individuals linked to corruption. SAMA reiterated the respective accounts of companies have currently not been frozen.

Regarding the Saudi royals, most princes and princesses are currently prohibited to travel, except with the permission of King Salman. Foreign money transfer also has currently been limited to $50,000 per month, with a two-month limit.  Security sources indicate that Saudi princes in Tabuk, Eastern Province and Mecca have been put under house arrest. At the same time, Saudi special forces have moved to surround the residencies of Prince Mishal bin AbdulAziz, Prince AbdulAziz bin Fahd and Prince Khalid bin Sultan.

These developments are going further than the original anti-corruption crackdown. The already long-foreseen power struggle to take the Saudi throne seems to be entering its second phase. Crown Prince bin Salman seems—supported by signs of support coming from Washington, Moscow and even Arab neighbors—to take the chance to overwhelm his local opponents by shockwave tactics. Some indicate that they expect a possible change of guard at the top in the next couple of days.

Each day’s developments grow more significant. MBS was able to increase his own position dramatically this weekend, and continues to remove remaining opposition by the dozen.

Although short-term volatility could occur, overall stability and change inside of the kingdom is to be expected, as MBS and his supporters are holding not only the military and security forces in their hands, but have also gained the trust and support of the majority of the Saudis.

MBS has the same charisma as John F. Kennedy had when took the U.S. presidential office.  The crown prince has gained an almost movie-star popularity under the young Saudis, who form the majority of the population.

These current developments didn’t come out of nowhere. The basis for the anti-corruption crackdown was supported by the success of the Future Investment Initiative 2017. Dubbed “Davos in the Desert”, this high-profile gathering of the world’s leading financial power brokers happened in Riyadh last week.

At the event, MBS received the green light to pursue his Saudi Vision 2030 dream to wean the kingdom from its hydrocarbon addiction. In the same week, U.S. president Trump and his administration increased their support for the Saudi hardline position to Iran, IRGC and Hezbollah. Washington also increased its pressure on Qatar to soon move away from Tehran.

These regional and geopolitical developments have bolstered the views of the MBS to pursue his strategy of confronting Iran and its proxies. It’s no coincidence that the start of the crackdown popped up at the same time that Lebanese prime minister Hariri took refuge in the kingdom. Thus, the link with Hezbollah-Iran and Lebanon isn’t difficult. 

Without trying to assess the present situation as dire and threatening, all signs show that the region, under influence of Saudi’s new de-facto ruler, is heading toward a full confrontation with Iran. The internal Game of Thrones of Saudi royals is now being slowly but obviously transformed to a full-scale showdown with Iran and its proxies.

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Saudi Arabia—supported by the UAE, Bahrain and likely Egypt—was openly given the green light by Trump’s secretary of treasury and secretary of state. The silence on the Russian front indicates a possible change of heart in Putin’s coterie, as well. Saudi Arabia and others openly stated that Iran has committed several acts of war against the kingdom. The ballistic missile attack by Houthi rebels on the airport of Riyadh is directly linked to an act of war by Iran, perceived to be the provider of these systems.

The coming days are crucial for the region’s stability and future. The ongoing power struggle in the kingdom, which is currently openly on the streets, not only targets corruption, but is a move to consolidate power by Crown Prince bin Salman. His movement is clear, and should perhaps be supported in full, as it could lead the change that young Saudis want. The outcome will decide the further steps needed by all parties involved.

Considering the signs, the most positive outcome would be a consolidation of the position of MBS as the main power broker, leading to a full implementation of Saudi Vision 2030. In the short term, this won’t prohibit the Saudis and their allies to react and act with full military power against the Iranian power projections and its proxies in Yemen, Lebanon and Iraq.

Stability and security in Saudi Arabia is seen as a leading factor in MBS’s power strategies. Confrontations inside and outside the kingdom aren’t seen as a no-go area. After decades of listening to U.S., European or Russian advice, MBS is creating his own future. Short-term financial or economic instability and geopolitical risks have increased substantially in the last 24 hours.  

By Cyril Widdershoven for Oilprice.com

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