The fact is that MBS is trying to deal with a harsh truth about Saudi Arabia: The kingdom is economically and politically unsustainable, and is headed toward a disaster.
The crown prince inherited a sclerotic state with limited administrative capacity and an economy that is largely reliant on declining oil revenues. The country is burdened by a venal elite comprised of thousands of royals and hangers-on who operate with impunity and are a huge drain on the economy. It is saddled with a bloated public sector which employs 70 percent of working Saudis, and its military is incapable of defending the homeland despite billions spent on armaments. The nation’s religious elite prevents social change to maintain its dominance and privileges. And on the international front, Iran seeks to destroy the kingdom’s system of rule.
Additionally, there is almost no taxation in Saudi Arabia, and the government provides a generous system of entitlements that can only be maintained at ever higher oil prices. To top that off, women — the better educated and more motivated portion of the population — are largely left out of the workforce.
The system of rule up until MBS’s rise to power depended on an unwieldy process of consensus building between various royal factions that has proven incapable of reforming the system. For change to happen — and for the dynasty to survive — it became necessary for a leader to emerge who would disenfranchise large sections of the royal family, force the religious establishment to relinquish its monopoly on public morality and space, as well as lead a reform of the economy and the military.
But what has MBS accomplished so far? On the domestic front, he has emasculated the royal family and is in the process of ending their culture of immunity from legal and financial responsibility. The arrest of 11 Saudi royals on January 6th and several others in November during the anti-corruption drive should be understood in this vein.
In addition, the country is socially transforming, as the religious establishment and the Islamist opposition have been tamed through a combination of threats and imprisonments. Women will be driving soon in Saudi Arabia, cinemas will be opening, and weekend musical concerts are now held, attracting large throngs of young people who can be seen singing and dancing. MBS is trying to appeal to young Saudis, who form the majority of the population. His message is one of authoritarian nationalism, mixed with populism that seeks to displace a traditional Islamic hyper-conservatism — which the crown prince believes has choked the country and sapped its people of all dynamism and creativity.
Internationally, MBS can claim two important successes. First, he has resumed the strategic relationship with the United States (and the Trump administration, specifically) after relations between the two countries reached its nadir under President Barack Obama. Secondly, he has developed a strong relationship with President Vladimir Putin of Russia, evidenced by successive oil production agreements and the beginning of coordination between the two countries on the matter of Syria.
But the economy represents MBS’s Achilles’ heel. On one hand, the crown prince is keen to balance the fiscal budget, and to do so by ending the regime of subsidies and entitlements that represent a massive drain on the government’s finances. On the other hand, he also wants a bullish economy and for the private sector to become more dynamic and the principal generator of employment.
The difficulty lies in that the private sector’s performance has historically correlated with the scope of government spending. The government has pursued inconsistent economic reform policies, such as cutting energy subsidies, imposing a value-added tax on goods and services, and increasing allowances and salaries to government employees. The state’s administrative capacity must improve, along with better signaling of policies: Economic malaise has the potential of generating widespread displeasure among the population, especially because Saudis have placed very high expectations of MBS’s ability to improve their lives.
Ultimately, MBS wants to base his family’s legitimacy on the economic transformation of the country and its prosperity. He is not a political liberal. Rather, he is an authoritarian, and one who sees his consolidation of power as a necessary condition for the changes he wants to make in Saudi Arabia.