Bin Salman’s Crumbling Sand Castles

Editor

The walls have started to collapse around Saudi crown prince Muhammad bin Salman. His grandiose schemes are crumbling like sand castles. It started with the defeat of the takfiris in Syria. This will have blowback in Saudi Arabia even as Bin Salman tries to disown Wahhabism. The war on Yemen is a disaster, not just for the poor Yemenis but also for the Bani Saud. This is Bin Salman’s pet project and was meant to put a feather in the warrior prince’s cap but it has only spread egg on his face. The war has not only exposed the Saudis’ incompetence, it may also lead to war crime charges against Bin Salman in the not too distant future.

Domestically he has created far too many enemies: the religious establishment, human rights activists, and even members of the royal family. He did all this under the pretext of introducing reforms and diversifying the economy by reducing dependence on oil revenues. He gave this the grandiose title of “Vision 2030.”

The flagship of this fantasy scheme was the proposed public offering of shares in the Saudi oil company, Aramco. International stock exchanges in New York, London, and Hong Kong salivated at the prospect of being chosen to float the shares. But like every other policy of Bin Salman, he overestimated what floating 5% shares in Aramco would bring. He thought — or he was led to believe — that it would raise $2 trillion; it has simply not materialized. Last month the offering was withdrawn and the financial advisors — all Western — have been put on standby, according to Reuters (August 22). Even the local float on the Tadawul stock exchange has been shelved.

True, the Saudi energy minister denied the report and insisted the government remained committed to the initial public offering (IPO) “in accordance with appropriate circumstances and time,” but few believed him. Further evidence of things going awry emerged when no budgetary allocations were made for “financial advisors” whose financial year ended in June. They do not work for free.

These problems have been compounded by the massive flight of capital from Saudi Arabia. The Institute of International Finance reported that last year, $64 billion in core capital left the Kingdom. This was before Bin Salman’s shakedown of his royal cousins by locking them up in the Ritz Carlton Hotel in Riyadh. Displaying typical black Bedouin humor, the invitation to the cousins said, they were being invited to dinner with the crown prince. Presumably, they were expected to pay for it but they did not realize the tab would be so high. Since that bizarre episode in November 2017, another $70–80 billion have left the Kingdom.

Given such massive outflow of capital, the Saudi sovereign wealth fund, the Public Investment Fund, has been forced to seek from international banks an $11 billion loan. The Saudis have also had to draw down their reserves. Of the $750 billion, one-third have been withdrawn since 2014. In six years, all this money would be gone. Keeping in mind that Donald Trump expects Bin Salman to pay hundreds of billions of dollars in weapon purchases — Trump made no secret of it during Bin Salman’s visit to Washington last March — the Saudi crown prince finds himself in a tight spot.

One can hear the knives being sharpened in the backrooms of the palaces. Like their pet beast, the camel, the Bedouins also have a long memory and even longer grudges. They will exact their revenge at the first opportunity. That may not be too long in coming since Bin Salman himself is providing them ample reason to strike. The dark prince of Najd may have short-circuited his already short existence.