As oil prices drop, unprecedented challenges face House of Saud
The biggest and richest country in the Arabian peninsula is also one of its potentially unstable ones because of its aging Saudi monarchy that needs to change fast in order to face the threat of the Arab Spring.
The selection as heir apparent of Prince Salman bin Abdul Aziz, a 76-year old former defense minister who is half paralyzed and has suffered at least one stroke if not more, is a move analysts say was a decision made to shore-up immediate stability.
But it also pushed back a courageous and eventually necessary decision to reach down to a younger generation for a full-time leader that can help the House of Saud survive revolutionary turmoil, Shiite threats from within and from without (Iran) and economic woes.
King Abdullah, the 89-year-old monarch who has outlived two of his presumed successors, is sitting on a troubled throne where 60% of his kingdom’s population is below the age of 20. Unemployment among young men is close to 40% and 90% of private sector workers are foreigners.
“The aging conservative monarchy must change fast or die,” wrote The Economist. “The regime continues to rely on bribery and repression to keep the country’s 30 million people quiet.”
With OPEC nations pumping the highest levels of oil since 2008, the price of crude has dropped to below $80. This sort of news means that Saudi Arabia, the nation with the largest oil reserves in the world, will have to start running a deficit and could cut back on promised expenditures originally aimed at keeping any popular unrest at bay.
Saudi Arabia has worked hard to diversify its economy, but oil remains its lifeblood, paying for massive infrastructure projects, covering bloated civil service payrolls and ensuring free or low-cost healthcare and other benefits.
Saudi Arabia’s break-even price is around $70-$80, according to bankers and analysts surveyed by the Reuters news agency. When oil was high, above $115 a barrel last year, and Saudi Arabia’s coffers swelled, it allocated a series of subsidies and other measures worth as much as $133 billion to help ensure the bounty reached ordinary Saudis.
That appears to be in jeopardy.
“Those at the top of the Saudi royal pyramid are old, and the aging of the leadership could have geopolitical implications,” Yoel Guzansky, a senior researcher and expert on Saudi Arabia at the Institute for National Security Studies, told The Media Line.
“The Arab Spring challenges the legitimacy of the monarchs themselves. Iran does the same, but they use Iran as a scapegoat for many things and it has actually helped them. But the Arab Spring is a real threat,” Guzansky said. “They lose enemies — look at Syria — but also allies. I don’t know what will happen next in Jordan. I don’t know what the future holds for Bahrain.”
He said the failing health of King Abdullah and the questionable health of Crown Prince Salam raises concerns about the future stability of the oil giant. “If you have aging monarchs who rarely work, maybe two hours a day, it is hard to tackle those challenges,” Guzansky said.
“The challenges facing the kingdom require the transfer of the crown to a third generation prince who will keep the pace and direction of the necessary political and social reforms aimed at reconciling conservative Islamic traditions with the growing needs of a youthful population,” he added.
In 2006, King Abdullah established an “Allegiance Council” made up of 35 princes with the authority to appoint a king from the next generation. It’s a question of time, and maybe quite soon, that they will finally be called upon for the task.
Some of the more prominent grandsons include Mecca Governor Prince Khaled al-Faisal, a sun of the late king Faisal and brother to foreign minister. Others include Eastern Province Governor Prince Mohammed bin Fahd, National Guard chief Prince Miteb bin Abdullah and Deputy Interior Minister Prince Muhammed bin Nayef. Muhammad, a rising star, serving as the de facto Interior Minister and in charge of the war on
terrorism, has good working relations with his counterparts in the U.S.
“A relatively young pragmatist (probably well into his 50s or even older) could then set about real reform, giving more teeth to the king’s advisory shura council and providing for elected representation, perhaps at humbler local levels to begin with,” The Economist wrote.
“Everything is behind closed doors and this is what fuels speculation. I think it contributes to destabilizing of the Saudi monarchy. I think the challenges facing the House of Saud are unprecedented,” Guzansky said.