The arrests of 11 princes and numerous prominent political and business personalities in Saudi Arabia this week might best be described as a frontal attack on the existing order of business among Saudi elites. The princes, politicians, and merchants caught in the net have been accused of corruption. Of course, accusations of corruption are not news to most Saudis. It seems everyone in the kingdom knew that in certain important sectors, such as security and military affairs, it was normal business practice for contracts to go to companies directly or indirectly controlled by royal family members, who would reap very large profits from them. The famous consensus building among senior princes for which previous monarchs were well known and often admired was built on the basis that the spoils of oil could be shared between various royal clans as the price of their allegiance to the leader.
This system worked very well for years, creating stability at senior levels of leadership. However, a new, younger generation in Saudi Arabia has taken over the levers of power. Crown Prince Mohammed bin Salman (MbS), himself 32 years old, has the vast support of Saudi youth, a substantial bloc in a country where 70 percent of the population is under the age of 30. In light of the lack of meaningful jobs for the emerging generation of Saudis, and of the rapidly declining cash reserves of the kingdom, business as usual being conducted by a few privileged persons who see themselves above the law is no longer acceptable. Hence, MbS has de facto triggered a cultural revolution of sorts, using his vast support among the youth, as well as the backing of his father King Salman bin Abdulaziz, to centralize power in his hands. This seems to be a return to the days of King Abdulaziz al-Saud, when a single, undisputed leader controlled the country. Also at the time, the economy was booming due to the new large income from oil production, but there was no established merchant and bureaucratic structure. The economy was up for grabs by the gifted and educated, who could succeed, regardless of birth or title.
Since the death of King Abdulaziz, succession has been decided by consensus among the major royal clans. This consensus was built and maintained by give and take. In short, these clans were willing to accept their place in the succession as long as they could be in charge of one of three equally powerful military forces: the Border Guards, the Saudi Arabian National Guard, and the Ministry of Defense forces (army, air force, navy). The three main clans, respectively, the Nayef, Abdullah, and Sultan, which controlled these groups, have now been removed from command positions and more importantly from access to the cash flow these institutions represented. Other royal clans made a great deal of money from business deals locally and worldwide using capital, the source of which could not have come from their earnings as ministers or civil servants, but more likely from questionable real estate deals or inflated military contracts. These clans seem to have also been taken down, principally the Fahds, with the arrests of global investor Prince Alwaleed bin Talal, Abdulaziz bin Fahd, and Waleed al-Ibrahim. From the various reports coming out of the kingdom, it seems the moves against corruption have met with broad public support.
The attack on business as usual comes in the midst of a campaign by MbS and his entourage to completely remake Saudi society. Vision 2030, the National Transformation Program, and the newly started Future Investment Initiative are designed to wean the kingdom away from oil as the main source of income, and create a dynamic and diversified economy and society. This change implies that with less oil income the state coffers will have to get refilled by taxes, fees, or dividends from the new activities of the kingdom. In other words, instead of the people depending on the state for jobs and all manner of subsidies, now the state will depend on the people. Therefore, MbS must prove that he will not tolerate privileged insider groups benefitting while the majority of Saudis pay the bills. He must show that the entire royal family has its shoulder to the wheel, that no one is above the law, and that corruption, influence peddling, and sweetheart deals are no longer acceptable.
The old ways of business did lock younger entrepreneurs, who are numerous in the kingdom, out of money and opportunities. Thus, the current, massive attack on the existing socio-economic system may provide space for the younger generation.
This “cultural revolution” is only beginning; there will be many further changes. There could be many more arrests and efforts by the new corruption commission to get those arrested to give up some of their previous earnings. However, the changes may go much further, as part of an effort to make the socio-economic model of the kingdom more dynamic.
On the labor side, a major source of youth unemployment, and frustration in the kingdom, is the ability of the private sector to import very low cost, competent, and pliant labor. Indeed, why should young Saudis compete for jobs at salaries equal to one fifth of what it takes for them to raise a family? A major structural change in the economy will take place if and when many types of work visas are revoked in various sectors of the economy. In the absence of cheap labor, competition for Saudi men and women would result in salaries getting bid up to levels commensurate with living wages in the kingdom. Such a revision of traditional labor practice would change society. However, even though young people will see benefits, perhaps to include higher wages, not all will applaud the change, as less reliance on foreign workers would result in large increases in the costs of services and locally produced goods, as well as a decline in the present high quality of services until Saudis are fully trained and have gained experience.
On the military side, there will likely be a restructuring of the command structure of both internal and external security forces, whereby there will be only one commander of all the forces with a focus on efficiency rather than consensus. There already are some examples of this professionalization of the military: The chief of the Ministry of Defense forces is no longer a prince, but a nonroyal. Further, military delegations to the United States seem to have an overwhelming number of nonroyals among the general officers. Many princes may lose their positions or get passed over for promotion in order to promote higher performing nonroyals. It is possible that there could be a restructuring of the procurement policies to make contracts more competitive and transparent, and less subject to corruption.
On the royal and religious establishment side, MbS and the king, in spite of their crackdown on many royal clans, still derive their legitimacy from the royal family and its religious allies. The king could perhaps establish a Saudi equivalent of the British House of Lords, along with the existing Shura Council, to give voice and transparency to the interests of the family. Such a body could be used to disseminate the wisdom of the royal house and its allies on the affairs of the kingdom, but in an open and transparent manner.
The challenges faced by MbS and the emerging generation of leaders of the kingdom as they attempt to manage the aspirations of a large and ambitious youth population are enormous, especially in the context of growing tensions with regional rival Iran and its proxies. MbS does have a tough row to hoe, but should Saudi Arabia not confront the challenges now, they could lead to unmanageable instability in the not too distant future.