A week ago I heard a faint rumour of an intense quarrel within the Saudi royal family, which was presumed to be focused on an attempt to force King Salman to rein in his son, the 31-year-old deputy crown prince, Mohammed bin Salman, and to return the country to something closer to normality after three years of chaotic ambition and growing instability. I started to draft a piece discussing how such a coup could reshape the oil market and what action Saudi, under new leadership could take to halt the continuing fall in oil prices.
Now it seems the rumour was correct but the presumption was mistaken. The winner of the coup was not as expected the crown prince Mohammed bin Nayaf but MbS himself, who has deposed the crown prince and taken full authority over everything including the key role of internal security.
There is something Shakespearean about what is happening. Who better to chronicle the unravelling story of the House of Saud? An ailing king breaks the delicate balance of the ruling family to promote his son — a young man whose vanity can be exploited by every breed of consultant and banker — over the trusted heir apparent. All this against the background of falling revenues from the kingdom’s one source of wealth, hostility from neighbours and sometime friends, in the context of a region split by the revival of religious conflicts. We are somewhere between King Lear and Richard II.
The market reacted negatively to the news, marking the oil price down again with Brent crude slipping below $45 a barrel. MbS has said that the oil price does not matter and by 2020 the kingdom’s economy will be independent of oil revenues. No one believes that is really possible but if he does the prospect of Saudi allowing prices to fall further is serious. No other country has the power to cut production and exports to the degree necessary to rebalance an oversupplied market.
The sole consolation is that we are only at the end of Act 1. There is much more news to come from Saudi Arabia. The fault lines are visible and the transfer of total power to MbS will expose them in the months ahead.
The diversification of the kingdom’s economy has been a national priority since at least 1980. Next to nothing has been achieved. The brightest and the best have left — men and, of course, women tired of being treated as second-rate citizens. The grand plans for diversification and modernisation produced by McKinseys and endorsed by MbS are not grounded in anything firmer than sand. There is a grand “vision” for 2030 but no delivery mechanism.
Second, Saudi is isolated, except perhaps for a rather unreliable ally in Washington. Its actions in Yemen have heightened the tensions in the region to no great effect and have exposed the weakness of the kingdom’s own defence forces. The resentment against the Saudi decision to allow oil prices to fall is intense and spreads across Opec and beyond.
Third, and perhaps most dangerous for the House of Saud, is the internal break with the religious powers. Instead of the slow but deliberate process of reform and modernisation put in place by the late King Abdullah and Prince Nayef, there is now a crown prince whose grand vision leaves little space for religion.
The only question is where the next step in the destabilisation will come from — the alienated part of the royal family? Iran? Isis or other fundamentalist groups who see in Saudi a crumbling state?
Potential investors in the proposed partial privatisation of Saudi Aramco, which MbS believes is worth $2.6tn, will now see political risks added to all the obvious commercial problems involved. If Aramco is to be sold, a deep and humiliating discount will be necessary.
The stage is set for much more drama. The House of Saud is inherently weak with no democratic legitimacy and few genuine friends. Its key central purpose is its own survival and that implies above all the need for stability — something that until MbS came on the scene had been the hallmark of Saudi policy for the last century.
History suggests that a power grab is not a manoeuvre that produces long-term success; it generates instability. The absence of legitimacy creates a vacuum that challengers will seek to fill. In the end, the imperative of survival favours those who can bring stability and order. One of the common features of many of Shakespeare’s plays is that order finally emerges from chaos. But there are several acts to come before we reach that point.
For the moment, the newly appointed crown prince would do well to dwell on the meaning of Shakespeare’s comment in Henry IV part 2: “Uneasy lies the head that wears a crown”.