The coronavirus pandemic coupled with a dramatic fall in oil prices is taking its toll on the leadership of Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS), a new analysis shows.
The analysis from the US-based think tank The Soufan Center indicates that the implications of the current circumstances are “dire” for stability in Saudi Arabia as a recession appears certain there.
However, the young crown, who emerged as the likely heir to the Saudi throne in 2017 with pledges of economic and social reforms, seems to be suffering most from the crises.
Son of the ailing King Salman, Mohammed bin Salman has had a close relationship with US President Donald Trump and benefited from the ties, leveraging his position to replace rivals within the extended royal family.
“He’s been able to outmaneuver people in the Kingdom. That’s one thing when you’re flush with cash,” says Colin Clarke, a senior researcher at Soufan and the author of the analysis.
The situation has, however, changed recently after figures released by Saudi financial officials last week indicated a $9 billion deficit in the first quarter of the year as it responded to the pandemic, and Moody’s downgraded its credit rating to negative.
Saudi Finance Minister Mohammed Al-Jadaan has also said in an interview with Al-Arabiya government spending would need to be “cut deeply,” according to Bloomberg.
“The kingdom hasn’t witnessed a crisis of this severity over the past decades,” the finance minister said
The current status quo means that the government might have to reconsider the generous social welfare programs and significant subsidies for loyal tribal leaders who have sustained the ruling family ever since it was established decades ago.
The tribal communities have been enjoying financial support and government legitimacy provided by the dynasty as part of a longstanding agreement in line with its own tribal identity and as a way to retain control practically over the sprawling and sparsely populated parts of the country.
However, the agreement presently appears to be in danger with the government and the crown prince, as the chief official responsible for its implementation, having less money to contribute.
“The erosion of the social contract between the rulers and the ruled will lead to serious problems, especially in a tribal society,” Clarke wrote in his analysis. “That paradigm is now being called into question by the actions of the crown prince. The implications are dire – an unstable Saudi Arabia will have reverberations beyond the country and the region itself.”
The global oil crisis is also ravaging the Saudi economy due to its almost exclusive reliance on oil with the country deriving 87 percent of its budget revenues from the petroleum sector which accounts for over 40 percent of its gross domestic product.
According to the International Monetary Fund, oil must sell at $76 a barrel in order for Saudi Arabia to be able to balance its budget this year, but the benchmark Brent crude price remained just under $30 per barrel on Wednesday morning.