The architect of Saudi Arabia’s Vision 2030 plan is now next in line to the throne, the Saudi Press Agency announced on Wednesday, paving the way for the 31-year-old nobleman to forward an assertive regional foreign policy and a much-needed economic overhaul.
Prince Mohammed bin Salman, King Salman’s young son, replaced Prince Mohammed bin Nayef, the monarch’s 57-year-old nephew, as heir – signaling the rising tide of a new generation of the Saudi ruling class. The shift was approved by 31 of 34 members of the Allegiance Council, made up of the royal family’s most elite members.
The new crown prince has handled the KSA’s two biggest conundrums in recent years: the war against Shiite Houthis in Yemen and the overhaul of an oil-dependent economy.
“His ability to deliver on both fronts is still highly uncertain, as the country’s authorities are attempting to implement several generations’ worth of reforms in less than 15 years said,” risk management firm Verisk Maplecroft’s principal MENA analyst, Torbjorn Soltvedt, said. “All this while managing a host of challenges, including depressed oil prices and a resilient US tight oil sector; an ascendant Iran; a protracted military conflict in Yemen; and the threat of growing socioeconomic pressure as generous state welfare and subsidies need to be cut.”
The “Make Saudi Arabia Great Again” agenda antagonizes Iran, while leveraging existing oil assets to shape a service-based economy that hires Saudi citizens, instead of importing expat labor.
The Saudi Aramco initial public offering (IPO) will finance the economic restructuring plan outlined in Vision 2030. Bin Salman’s ties to President Donald Trump suggest New York may be a shoo-in to host Aramco’s mouthwatering foreign listing. London, Hong Kong, and other international bourses have all been competing for the giant offering—the largest in financial history. Recent reports had Bin Salman handing the Big Apple the Aramco deal, against the advice of the Kingdom’s other senior financial planners. His new promotion, and the authority that comes with it, improves the NYSE’s odds of winning the race for the IPO for a company that some value as high as $2 trillion.
Eighty-one-year-old King Salman’s poor health means that New York could be one royal decree away from a deeper economic connection to Riyadh and its oil wealth—a notion that runs against Trump’s mantra of American energy independence, but paradoxically melds well with his personal affinity towards strongmen leaders.
The Yemeni civil war, which has no conceivable end date, will continue as long as American weapons continue reaching the Saudi military. On June 13th, the U.S. Senate narrowly approved a $110 billion arms deal with Riyadh that Trump approved during his trip to the Middle East last month. Prominent Republican lawmakers, including Rand Paul, vehemently opposed the sale.
The proxy war against Shiite Iran for control of the Bab al-Mandab Strait, through which tankers are carrying 4 million barrels of oil daily, will be a serious drain on the royal treasury until the conflict begins affecting fossil fuel cargoes. At that point, third parties will be motivated to intervene monetarily in a way they have not been until now. An attack on a Marshall Islands vessel in early June indicates an intervention could be coming sooner, rather than later. Related: The Big Data Revolution In Oil Is Accelerating
Bin Salman’s staunch anti-Iran attitude is likely to exacerbate tensions with Qatar as a blockade against the small Gulf country continues. Bahrain and the KSA are wary of Doha’s friendly ties to Tehran – a bilateral relationship made necessary by the gargantuan South Pars field shared between Iran and Qatar.
On the domestic front, Bin Salman remains highly popular amongst the Kingdom’s large youth and middle-aged population. Over 65 percent of Saudi residents—30 percent of whom are expats—are between the ages 15-54, according to 2016 data. A more liberal social policy that would allow women greater freedom of mobility and civil rights, is on the crown prince’s to-do list, but the effort will face staunch opposition from the entrenched and conservative Islamic ministry.
Bin Salman’s rise demonstrates Saudi Arabia’s commitment to a new economy, equipped to succeed in a globalized economy. At the same time, Riyadh’s continuation of anti-Iran policies will breed conflict within the Arab world as Tehran gains allies—or at least, non-enemies—in Qatar, Algeria, and Iraq, amongst other Arab nations.
The heir’s young age means his worldview would reverberate in the Middle East and North Africa region for decades. But this fact also leaves the future monarch ample time to learn and adjust his diplomacy.
By Zainab Calcuttawala for Oilprice.com
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