(Reuters) The Kingdom of Saudi Arabia (KSA) is going through the most difficult and sensitive period in its 250-years long history, which was brought about by the drop of oil prices on the global stock markets, the Covid -19 pandemic that has crippled the entire country and the war in Yemen that has been going on for five years already and there are no signs that the killing in this poor country could come to an end. Ground breaking changes in the political, oil, economic and military doctrine of the Kingdom were incepted when on 23 January 2015 the King’s 35-year old son, Prince Mohammed bin Salman (MBS) was inaugurated as the Defense Minister and deputy of Crown Prince Muhammad bin Nayef. Prince Ben Nayef was deposed on 29 April 2017, whereas MBS automatically became the Crown Prince and the trusted son of the 84-year old King Salman. This marked the beginning of profound changes in policies at all levels (within the dynasty, religious hierarchy, economy, oil industry, military strategy, etc.) within the Kingdom. 

First and second Saudi state

The history of the Saudi state dates back to 1744, when Muhammad bin Abd al-Wahhab, an Islamic religious reformer, joined forces with the Diriyah ruler in Central Arabia, Muhammad ibn Saud, whose supporters, backed by wide elements of the society elated with the new religious leader, conquered a majority of the Arabian Peninsula. The connections of the Al-Saud dynasty with Wahhabi interpretation of Islam remained one of the key characteristics of the Saudi state. The new Arab monarchy prompted a response by the Ottoman Empire, which factually ruled the area and in 1818 destroyed the first Saudi state. Although a revival of the monarchy followed, in 1891 the second Saudi state succumbed to internal conflicts and wars against neighbors. 

Third (current) Saudi state 

The current Saudi Arabia or the third Saudi state was founded by Abdul Aziz Al-Saud, also known as Ibn Saud, who went on to unify the tribes in the Najd province in central Arabia (the capital is Riyadh) and then embarked on conquests to unify other tribes as well.  

Ibn Saud won the support of the tribal army called Ikhwan, which was founded in 1912 by Faisal Al- Dawish and was inspired by Wahhabism. With the support of Ikhwan army, Ibn Saud defeated the Ottoman forces. Then, in 1921, with the backing of Great Britain, he became the Sultan of the Najd province. In collaboration with the Ikhwan militia he attacked the western province of Hejaz in which the Islamic holy city of Mecca is located. The Hashemite King of Hejaz Hussein bin Ali was exiled. In return for their contribution to the fight against the Ottoman Empire, in 1921 the Hashemites were rewarded by the British with kingdoms in Jordan and Iraq, which were under British protectorate.

Simultaneously, the Ikhwan army became unsatisfied with the internal policy of Ibn Saud, who strived to modernize the kingdom with assistance of non-Muslim foreigners. As a result, they turned against Ibn Saud. After two years of conflicts, the Ikhwan army was defeated in 1929, in the Battle of Sabilla, where their leaders were executed. 

On 23 September 1932, the two kingdoms of the Hejaz and Najd were united as the Kingdom of Saudi Arabia, and the day is now celebrated as a national holiday – the Saudi National Day. 

The newly established kingdom was reliant on limited revenues from agriculture and pilgrimage by Muslims from all over the world to Mecca and Medina. In the eastern province of Al-Ahsa, on the coast of the Persian Gulf vast reserves of oil were discovered in 1938. Development of the oil fields under the US-controlled Aramco (Arabian American Oil Company) begun in 1941. Oil provided Saudi Arabia with economic prosperity and significant political influence at the international level.  

With a land area of approximately 2,150,000 km2, Saudi Arabia is geographically the second-largest state in the Arab world (after Algeria), the fifth-largest state in Asia, and the 12th-largest state in the world. The population of Saudi Arabia is in the area of 34 million. 

Since the establishment of the state, the Saudi policy has been rather stable and mainly aligned with the US policy regarding most important issues of the Islamic world, international relations and the post-war division to the West and the East. It is evident that the Saudi Arabia had marked presence in Afghanistan after the Soviet invasion on the country in 1979. With the financial support of his country and the CIA, the Saudi Arabia national Osama bin Laden established the Al Qaida organization for the fight against the Soviets, which later became a synonym for international terrorism around the world. 

Two branches/pillars of the Saudi government

The internal policy of the Saudi state was developed on two main pillars, which are also the two branches of the government. The political pillar of the state, that is the Al-Saud dynasty, has been rather internally aligned, apart from the two events. The first is the event from November 1964, when King Saud bin Abdul Aziz was forced to abdicate in favor of his brother Faisal, who became the second king after the death of his father, the founder of the Kingdom, and the other event is the showdown in the dynast from 1975 when King Faisal was assassinated. The religious pillar of the monarchy had the exclusive right to regulate religious issues and was tasked to spread teachings of a minor and insignificant Wahhabi movement around the world. The religious hierarchy had absolute control over the judiciary, education and religious police, which supervises enforcement of Sharia law in the society. 

The Advisory Council (parliament-Shura) with its 150 members, appointed by the king (not elected at elections), represents the third branch of government and has no major powers. 

Rules of succession within dynasty 

The system functioned fairly well underpinned by the sensitive balance between all branches of the dynasty government and respect of the rules of succession set among the sons of King Ibn Saud, which were not based on vertical succession from father to son. 

With the appointment of his son MBS as the crown prince, the current King Salman violated the rules in place, because the King has two more living brothers. Specifically, Prince Muqrin, who was born in 1945 and was also briefly a crown prince in the period from January to April 2015, and Prince Ahmed bin Abdul Aziz, who was born in 1942 and served as a deputy interior minister from 1975 to 2012 and briefly even as the interior minister from June to November 2012, but was very quickly relieved of duty within the preparations for the rise of MBS. Prince Ahmed and his nephew, former Crown Prince Mohammed bin Nayef, were arrested on 7 March 2020. 

Future Saudi King MBS can become Atatürk, Deng Xiaoping or new Stalin?

Ever since the appointment of MBS, Saudi Arabia has experienced many rises and falls. His five-year rule as the crown prince was marked with grave violations of human rights of both citizens and dynasty members. 

● On 10 September 2017 the Saudi authorities arrested at least 73 activists, majority of whom were reform-oriented clergymen, intellectuals, academicians, writers, judges and social activists. 

● On 4 November 2017, only several weeks after the establishment of the Anti-Corruption Commission, headed by the Crown Prince MBS personally, the MBS ordered arrest of 381 members of the ruling dynasty and businessmen in the luxurious Ritz Carlton hotel in Riyadh. His uncle’s son and globally-renowned investor Prince Waleed bin Talal Al-Saud and ministers (his uncle’s son Mutaib Al-Saud, Adel Fakieh, former minister of economy and planning, Ibrahim Al Assaf, minister of finance of 20 years, specifically from 1996 to 2016) and numerous prominent businessmen with international reputation were among the arrested. Later, he forced 87 of them to agree to pay around 110 billion dollars to the state, while 56 did not admit their guilt and the office of the prosecutor pressed charges against them. 

In the opinion of western analysts this was the easiest way for the MBS to get rid of his rivals among the princes. He detained them under the cloak of fight against corruption, so that he could smear them in the eyes of the national and international public as sheer criminals. This reminded of conspiracies made by the inner circles of the communist party in the Soviet Union during the time of Joseph Vissarionovich Stalin.

● On the same day, 4 November 2017, during his visit to Riyadh, Lebanese Prime Minister Saad Hariri was detained and forced to read out his resignation on the Saudi national television.  Lebanese President Michel Aoun did not want to accept Hariri’s resignation. He said that the Prime Minister had been kidnapped. On 10 November 2017, French President Emmanuel Macron came for a surprise visit to Saudi Arabia and negotiated the return of the Prime Minister who had been invited to come for an official visit to Paris with his family.  Prime Minister Hariri arrived to Paris on 18 November 2017.  

● On 2 October 2018, the assassination of Jamal Khashoggi, a Saudi dissident and a columnist for The Washington Post, in the Saudi Consulate in Turkey shocked the entire world. The crime was committed by 15 Saudi agents, close to MBS. Khashoggi was strangled immediately after he entered the building of the Consulate, his body was then dismembered with a chainsaw and removed. Saudi Arabia initially insisted that Khashoggi had left the consulate. Under the pressure of the United States, Turkey and the media around the world, on 20 October Saudi Arabia admitted the assassination and promised to sanction the responsible.

In a documentary that was broadcasted on the US Public Broadcasting Service (PBS) on 1 October 2019, in the eve of the first anniversary of the assassination of Khashoggi, in an interview with Martin Smith MBS took the responsibility for the assassination, because the assassination took place during his rule. He said “I get all the responsibility, because this happened under my watch.” 

Khashoggi’s assassination overshadowed all his reforms in the Kingdom, at least temporarily. 

Social reforms 

● April 2016: Saudi Arabia restricted the influence of the religious police, which has patrolled public areas in order to monitor observance of strict rules related to dress code for women, ban of alcohol and music, closing of shops during prayer times and gender segregation in public spaces. 

● December 2017: The Government lifted the 35-year long ban on public cinemas, and plans to open more than 300 various theaters and various entertainment facilities. 

● June 2018: Saudi Arabia lifted the driving ban for women. Before and after the abolition of the ban, the authorities arrested a number of women’s rights activists, as well as dozens of critics of the government. 

● January 2019: Royal decree was issued allowing music to be played in restaurants and organization of entertainment activities. The rules of gender segregation in public spaces are no longer as strict as they used to be. 

● August 2019: Saudi Arabia women are allowed to travel independently, that is without a male guardian’s permission (father, husband, brother, son). While this relaxed the male guardianship system, some of its parts still remain in place. 

● October 2019:  A new tourist visa system was put in place with the aim of attracting more tourists. The dress code rules for local and foreign visitors were eased, and foreign female tourists no longer have to wear clothes that entirely cover their body. Furthermore, foreign man and women are now allowed to share hotel rooms without proving they are related. 

Economic reforms

● In April 2016, the Saudi Arabia’s economic vision named Saudi Vision 2030 was publicized. It is a strategic framework aimed to reduce Saudi Arabia’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation, and tourism. After the assassination of Jamal Khashoggi, there has been a general reluctance among the international community to invest in Saudi Arabia. In fact, the Gulf countries, in general, became economically unattractive for international businessmen. 

● In October 2017, the NEOM project of a cross-border virtual and robotized town in the Tarbuk province of northwestern Saudi Arabia was launched. It is planned to incorporate smart city technologies and also function as a tourist destination. The site is near the Red Sea and the borders that Saudi Arabia shares with Egypt and Jordan (However, Saudi Arabia has no land border with Egypt). It will cover a total area of 26,500 km2 and will extend 460 km along the coast of the Red Sea. On 29 January 2019, Saudi Arabia has announced setting up a closed joint-stock company named NEOM with $500 billion. The German Klaus Kleinfeld, former chairman and CEO of Alcoa Inc., and former president and CEO of Siemens AG, has been appointed to head the project. 

● In 2018, Saudi Arabia removed the 49% cap on ownership of publicly traded companies for foreign strategic investors. Modification of regulation on financial markets provided for establishment of other stock exchanges, in addition to the Saudi Arabia one. Saudi Arabia also begun to accept requests for issuing of licenses for defense industry companies, in line with the concept of diversification of economy, aimed at reducing country’s oil-dependency. 

● In December 2019, Saudi Arabia pushed ahead partial privatization of the world’s largest oil-company, Aramco. The company’s worth was estimated at almost 2,000 billion dollars. 

Faced with the Covid-19 pandemic, the world silently watches the war of oil prices between Saudi Arabia and Russia. In mid-March, at the OPEC Plus meeting in Vienna, Saudi Arabia started an economic war against Russia, in order to increase its share on the oil market. Saudi Arabia is faced with several existential threats at the time when the low oil prices endanger not just the state budget and the project of diversification of economy, but also the fragile position of the Crown Prince MBS, whose image is built on the earlier listed megalomaniac projects. Currently, the price of oil is under 20$ per barrel, which means that the Kingdom could spend its strategic financial reserves within a period of 3 years. The Saudi budget is based on export of 10 million barrels per day at a price of 80$ per barrel.

The Saudi Arabia policy to increase the production to 12.5 million barrels a day, which was aimed to impose its policy in OPEC Plus to the detriment of Russia, proved itself wrong and myopic. Export of oil amounts to 90% of revenues to the Saudi budget, while only 16% of the Russian budget. Namely, the Russian economy is more developed and diversified. 

A new showdown in the royal family followed in early March 2020. Prince Muhamed bin Nayef, former crown prince, and Prince Ahmed bin Abdul Aziz, youngest brother of King Salman, were arrested amid accusations of a coup plot within the dynasty, which is an indication of the resistance that still exists to enthronement of MBS. Analysts believe that the current repression is taking place in a critical phase for the Saudi economy. The kingdom is accelerating the process of diversification of economy in order to present its results at the G20 summit in Riyadh. Saudi Arabia presides over the G20 forum until the end of this year.

MBS is concerned by the drops in value of Aramco shares, which will be further aggravated if the price of oil does not go up. The effect of the drop in Aramco shares on the financial market will be disastrous for the economy and investments. The increase of the stock market risk, which followed after the value of Aramco company shares dropped by 10% in a single day (almost 200 million $ of nominal value), is rather evident. The drop in value constitutes a major risk, because Saudi citizens had invested their financial savings, and even borrowed money from banks, to buy Aramco shares.  

Truth to be told, MBS has been successful in opening the strict religious kingdom to the outer world and removing conservatives from the centers of power. However, that is not sufficient reassurance for foreign investors. The stability of Saudi Arabia and the future of MBS depend on investment projects and diversification of the economy, which are to create new jobs for six million unemployed young people, as had been promised by MBS personally. 

The future will determine how MBS will go down in history. Will he be successful in modernizing Saudi Arabia as Mustafa Kemal Atatürk was in building a democratic and modern Republic of Turkey from the ruins of the Ottoman Empire? In other words, will he go down in history like the Chinese Deng Xiaoping, the architect of Chinese economic reforms from 1981 to 1989, or like an Arab- world Joseph Vissarionovich Stalin? In the Arab world there has never been a shortage of dictators and destroyers of their own states, starting from Saddam Hussein of Iraq to Bashar Al-Assad of Syria, Omar Al-Bashir of Sudan and others that could be added to the list. 

Footnote:
[1] IFIMES – International Institute for Middle East and Balkan Studies, based in Ljubljana, Slovenia, has Special Consultative status at ECOSOC/UN since 2018.