Friday, August 12, 2016

"What If Saudi Arabia Collapses?"

From LobeLog:
The Saudis are entering a period of immense uncertainty as the kingdom moves forward with the National Transformation Plan (NTP) and Vision 2030 announced by Deputy Crown Prince Mohammed bin Salman (MBS) in April. Vision 2030 aims to streamline the bloated state bureaucracy, increase private sector investment, and curb youth unemployment in order to end the kingdom’s dependency on oil.

The NTP and Vision 2030 could make Saudi society more vibrant and sustainable. Or they could undermine the kingdom’s relative stability and create devastating consequences for the greater Middle East region, as well as global energy and financial markets.

Although many Arab states faced mounting protests and calls for political liberalization during 2011’s Arab Spring, Saudi Arabia maintained relative peace and stability. However, changes to the kingdom’s socio-economic system could lay the groundwork for similar dissent by sparking demands for social and political reforms while undermining Saudi cohesion.

The Conditions for Collapse
To reduce Saudi Arabia’s budget deficit, Vision 2030 calls for a phased reduction of the subsidies offered to Saudi nationals and promises to increase private sector employment. If economic growth and job creation fail to meet expectations, discontent could catalyze demands for liberal political reforms that will require serious input from the kingdom’s clerics. Saudi Oger’s bankruptcy and expat layoffs may be a sign of labor shedding that is required system wide. According to Saudi economist Fadl al-Boainain, “declining corporate profitability has made the foreign workforce a target for managements seeking to cut fixed financial obligations.” In January, a Saudi businessman speculated that by the end of 2016 one million expats may leave the country given the financial squeeze stemming from plunging oil prices.

However, successful implementation could also trigger demands for greater reform from a rising capital class that is less economically dependent on the state.

Politically disenfranchised foreign nationals, the majority of Saudi Arabia’s working class, and marginalized Shi’ites in the Eastern Province would likely echo these demands. Shi’ites, who have historically faced a great deal of discrimination and extreme poverty, have a history of anti-Al Saud activism. Ultimately, calls for reform could ignite passionate anti-government protests, leading to uprisings that could at least create instability even if not triggering its collapse. To regain control, the regime would deploy the Saudi Arabia National Guard (SANG), comprised of tribal forces loyal to the monarchy. There is a key question that Gulf Cooperation Council (GCC) observers are asking: If the Al Saud rulers turn to SANG to maintain their ruler, where will other power ministries, like the Ministry of Interior and its army of police forces, fit in this scenario?

In addition, Vision 2030’s bureaucratic, social, and economic reforms could also alienate key elites. The kingdom has used bureaucratic appointments to ensure support from competing tribal and familial factions. Consolidating or replacing these elites with technocrats would remove their incentive to support the government in the event of a significant threat. Altering the line of succession to promote MBS, as has been suggested, could engender further resentment and open hostility within the royal family. The older generation of Al Saud leaders do not like bowing down before a young prince. The possibility of greater social reforms could also alienate the powerful religious establishment that dominates Saudi society.

Vision 2030’s plan to open Saudi Aramco, the nation’s state-owned oil conglomerate, to public investment would also necessitate more transparency within the secretive company, which could expose high-level corruption and elite manipulation, further undermining the public’s trust in critical state elites and institutions. “Assessment of Aramco’s value by public markets might require the disclosure of any relevant audits of Saudi oil fields, which rumors suggest may have been conducted quite recently in secret”, wrote Perry Camack, an associate in the Middle East Program at the Carnegie Endowment for International Peace. “An IPO would require the company to show a level of transparency unprecedented in its history, and frankly, just as unprecedented for the ruling family.”

In the event of contentious anti-government uprisings, the monarchy would feel pressured to offer change. The most likely scenario would be the promotion of MBS, a reformer with a great deal of youth support. This promotion is unlikely to quell elite resentment and could further inflame tensions among the monarchy, rival family members, and the religious establishment. If MBS offers liberal reforms, he would likely lose the support of the ultra-conservative Wahhabi clerics. Yet if he fails to provide reforms, resistance to the Saudi rulers could grow based on regionalism and tribalism in the Hijaz, Nejd, or the Eastern Province. Neither scenario bodes well for the monarchy. Though he has a loyal following in the military, MBS’s military excursion in Yemen has received substantial criticism, creating the conditions for a coup if destabilization escalates under his stewardship.

Hostile elites with competing clientele bases would see state collapse as an opening for greater power. Since the kingdom’s unification in 1932, an overarching Saudi identity has been elusive. Saudi nationalism is a new concept. The state has been united by the cooptation of elites and the promotion of Wahhabi ideology, which while popular in the Nejd heartland faces rejection from the country’s Shi’ite minority. Not all Saudi Sunnis, meanwhile, practice this branch of Sunni Islam.

With an embattled central state, many tribal elites would strive to carve out autonomous regions, restore their pre-unification authority, and potentially dissolve the modern Saudi state. To exert their power, these tribal leaders would draw defections from tribal kin in the armed forces. Disaffected royal family members with their own loyal bases of support could also openly challenge King Salman’s successor (whoever that will be) if instability persists....MORE
HT: naked capitalism