Saudi Prince Mohammed bin-Salman Aims to Shake Up the Kingdom
To help project Saudi Arabian power abroad, Defense minister bin-Salman wants economic reforms that may include privatizing oil giant Aramco.
Young, bold and media-savvy are not adjectives usually attached to the Saudi Arabian monarchy. But desperate times and a new king have produced just such a figure in Prince Mohammed bin-Salman.
The 30-year-old royal jumped onto global investors’ radar earlier this month, when he hinted at plans to privatize gargantuan state monopoly Saudi Arabian Oil Co. in an interview with the Economist. But he’s been busy with much more than that since his father, Salman, ascended to the throne in January 2015. Son of Salman’s third, and reportedly favorite, wife, young Mohammed was quickly elevated to the position of deputy crown prince, second in line to succeed his 80-year-old dad, with a broad mandate to modernize the kingdom’s bureaucratic and paternalistic economy. He also took over as Defense minister, just in time to head a Saudi-led coalition of Sunni Muslim states against Shiite rebels in neighboring Yemen.
A year on, Saudi watchers discern an emerging bin-Salman doctrine for the world’s beleaguered top oil exporter: a more transparent and unfettered economy at home to back a more muscular policy abroad. “He wants to shake up the Saudi economy for sure,” says Sebastien Henin, who controls $85 million as head of asset management at Abu Dhabi, UAE–based investment bank The National Investor. “He is involved in everything.”
While his multitudinous half brothers and cousins gravitated toward degrees from the University of Oxford or Georgetown University, bin-Salman stayed home and studied law at King Saud University. That gave him a chance to network with reform-minded top technocrats like Saudi Aramco chair Khalid al-Falih. “Aramco management would like to be free of royal influence, and Falih is very close to the young prince,” says Jean-François Seznec, a Middle East scholar at the Paul H. Nitze School of Advanced International Studies, a branch of Johns Hopkins University in Washington.
The prince has also tapped Mohamed al-Mady, former CEO of petrochemical power Saudi Basic Industries Corp. (SABIC), to lead defense procurement and root out corruption there, Seznec says. The budget that bin-Salman unveiled in December slashes subsidies for fuel, electricity and water, pushing Saudi industry to stand on its own feet.
His dynamic vision has won plaudits in high places. President Barack Obama called him “extremely knowledgeable, very smart, wise beyond his years” after the prince stood in for Salman at a Camp David regional summit last spring. The conflict in Yemen that he oversees, with U.S. logistical assistance, gets less glowing reviews. The United Nations tallied 5,300 civilian casualties in the first nine months of fighting, amid reports that the Saudi air force was dropping cluster bombs in urban areas.
In a leaked memo late last year, the German intelligence agency Bundesnachrichtendienst fretted, “The current cautious diplomatic stance of senior members of the Saudi royal family will be replaced by an impulsive intervention policy” thanks to bin-Salman’s influence. (January’s mass execution of 47 accused terrorists, including a ranking Shiite cleric, is attributed to his cousin, crown prince and Interior minister Muhammad bin-Nayef.)
Bin-Salman will pick his biggest domestic fight if he pursues plans to sell off part of Aramco, where he already leads the supreme council, rough equivalent to an audit committee. Saudi Arabia doesn’t need privatization cash yet: Its $650 billion in reserves can last five more years of current oil prices, TNI’s Henin estimates. The prince’s real goal is for outside investors to push financial governance on the monopoly, Seznec says. That would dry up a honeypot that informally distributes $10 billion to $15 billion a year to thousands of far-flung royal relations, he reckons.
For what it’s worth, Seznec predicts, bin-Salman can count on support from the Saudi population, 70 percent of whom are younger than him: “He is responsible for representing the younger Saudis who resent the old folks and the old ways.” How far that gets him remains to be seen.
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