MBS spreads his wings

Summary: MBS announces jumbo development in Egypt: UK and USA next in line. More miscellaneous social and economic reforms, but oppressive measures an own goal.

During a visit to Egypt, his first public trip abroad since he became Crown Prince last year, MBS reportedly signed a $10 billion agreement for the construction of a 1,000 km² mega city in south Sinai. This is intended to link up with Neom, the planned 26,000 km² city and economic zone to be constructed in Saudi Arabia on the other side of the Gulf of Aqaba, via a causeway/bridge passing across the islands of Tiran and Sanafir (our posting of 13 April 2016).

MBS goes on to visit Britain tomorrow 6 March, and after that the USA. In advance of his visit Boris Johnson has praised social reform in Saudi Arabia, according to Reuters “seeking to neutralise any potential criticism over human rights and the war in Yemen”, both in London and in a long and characteristically colourful article in the Saudi Arab News ranging from Winston Churchill to “exactly the kind of reforms that we have always advocated.”

Since our posting of 14 February in which we listed a number of reports of reforms there have been further reports of varying reliability and importance: a regulation to give domestic workers and private drivers control of their salaries, women to be allowed to apply to join the army, a new bankruptcy law, a woman appointed deputy labour minister, tourist visas to be issued including to unaccompanied women over 25, the first national cardplaying competition, a sports training programme including female teachers run by the British Council, the first marathon for women (so described, but almost certainly not the full distance).

We circulate below an article by Hugh Miles, one of the editors of Arab Digest, published on the Middle East Monitor website on Friday.

Guest Writer: The Saudi purge looks like an own goal by Mohammad Bin Salman

The weekend of 4-5 November 2017 was an eventful one in Saudi Arabia; a missile from Yemen exploded at Riyadh Airport and the Deputy Governor of Asir died in a helicopter crash. Important incidents, no doubt, but not enough on their own to keep that weekend in the collective memory. Instead, it will go down in Saudi history as the moment that the royal family started to eat itself in public.

The first sign of the purge came on 3 November when the Saudi authorities handed Interpol a “wanted” list. Within hours, Saudi media reported arrests inside the country although no names were published. At midnight, the area of Riyadh Airport reserved for private jets was closed and planes were stopped from leaving. The next day, King Salman issued a series of orders establishing a “supreme committee chaired by the Crown Prince” with draconian powers to identify and sanction anyone suspected of involvement in public corruption. Then the news broke: 11 princes – including several grandsons of Ibn Saud, the inner core of the Royal family – four sitting ministers and dozens of ex-ministers and military chiefs had been detained and taken to the Ritz-Carlton Hotel in Riyadh. The guests were asked to leave and the hotel became a makeshift prison.

Since the Saudi regime has a long history of repressing its opponents the move was not entirely surprising, although it was not foreseen either. In the preceding months, many intellectuals and religious leaders who had dared to speak out or simply remained silent on highly-charged issues like the Yemen war and the Qatar blockade had already been arrested and shamed publicly. Former Crown Prince Muhammad Bin Nayef has been under house arrest since being overthrown in a palace coup last June; he was replaced by the King’s son, Mohammad Bin Salman. In the past three years, at least three dissident princes have been kidnapped from Europe and taken back to Saudi Arabia. Their associates were also detained in the Ritz. Others, like the leading Saudi journalist Jamal Khashoggi, managed to flee into exile.

For the first few weeks after the initial swoop the regime managed to control the information flow. Saudi security officers – who could not be trusted not to be intimidated or bribed by the detainees – were kept away and mercenaries were brought in to handle the interrogations instead. At the end of November, news started to leak about detainees beingtortured and hung upside down. One person was reported to have died while being electrocuted; Ali Bin Abdullah Al-Qahtani, former private secretary to Prince Turki Bin Abdullah, was killed on 23 December. Prince Turki, a former Riyadh Governor, was a leading protagonist in the 1MDB scandal.

Throughout December, some of the moguls were released, while others were being detained. Stories abounded of vast sums paid for freedom: former Saudi Telecoms CEO Eng. Sheikh Saud Al-Daweesh reportedly paid $800 million and gave up company shares; Ethiopian-born businessman Mohammed Al-Amoudi SAR 4 billion; and former head of the Royal Court Mohammed Al-Tobaishi SAR 4 billion.

The first senior royal family member to be released was Prince Mutaib Bin Abdullah, son of the late King Abdullah. Until his arrest he had headed the National Guard, the last power centre in the country that the new Crown Prince did not control. The regime claimed that Prince Mutaib was released as he agreed to pay $1 billion to settle corruption allegations. Sources close to the prince, however, deny that he paid anything and claim that he was tortured and had his nose broken with a shoe. It seems that Mutaib may have been released first not because he paid but because of his continuing influence in the royal family, help from his brother Abdulaziz who escaped the purge and is now hiding out in Paris, and because the regime feared that if Mutaib died in custody it would start a blood feud.

The highest profile of the inmates, Prince Walid Bin Talal, was also reportedly tortured. To try and break him the Saudis flew in his estranged wife, as well as some of his former business adversaries, to participate in the interrogation process. Sources who saw him in detention said that Bin Talal had been so badly treated that he had to have emergency medical treatment three times. To pile on the pressure the Saudis showed him pictures of his daughter Princess Reem in handcuffs. She was also detained in the Ritz and released reportedly only after she agreed to sign an affidavit and swear allegiance to Mohammad Bin Salman.

When the Arab Digest blog published details of events in the Ritz, followed by a live TV interview on BBC Newsnight with Canadian businessman Alan Bender, who was one of the people the Saudis had flown in to confront him in detention, Prince Walid was promptly released, but not before giving a curious video interview to Reuters. In the video, a skeletal, bearded, twitching Prince Walid denounced the BBC report as lies and insisted that he had been well treated, while walking around a suite in the Ritz drinking from an open can of Pepsi and holding up sachets of mustard and tomato ketchup as evidence.

Since Prince Walid Bin Talal is a health fanatic and a vegetarian who would never normally eat condiments nor touch soft drinks or food left standing, it seems that he was using these props to send a signal to people who know him well that he was speaking under duress. It’s a possibility acknowledged by Reuters in the report.

His subsequent release a few hours later underlines the acute sensitivity of the regime to western media coverage and its existential fear of losing western political and economic support.

On 11 February, the Ritz-Carlton Hotel in Riyadh reopened for business and the remaining detainees were moved to new locations. Those still holding out on the Crown Prince’s demands — foreign asset transfers and videotaped confessions begging forgiveness and swearing allegiance — were sent to Al-Ha’ir high security prison in the Saudi capital. Others, the more compliant or influential, such as Prince Turki Bin Abdullah, were transferred to more luxurious residences in Al-Nasriya neighbourhood in Riyadh.

Though some moguls have been reappointed to their old jobs, it is certainly not business as usual. Many are still wearing electronic tags, are under house arrest or must have a 24-hour police escort, something once unthinkable for such senior members of the regime. Nearly all are banned from travel; Prince Walid Bin Talal, for example, will likely never be allowed in a plane or out of the country again, except to sign over his foreign assets and then only if Mohammad Bin Salman is confident that he holds enough kompromat to make sure he comes back.

Other detainees saw their reputations traduced after they were released. As Prince Muhammad Bin Nayef was denounced as a drug addict shortly after being removed from detention, so Egyptian media published leaks about the aforementioned Saud Al-Daweesh after he was released, showing him at a sex party in Canada. According to the leaks, he allegedly raped a Bulgarian prostitute in a Canadian hotel and later attempted to bribe unnamed Canadian officials to get his son Majed, who is shown enjoying the company of a Lebanese drag queen, out of trouble after he was caught contacting an Al-Qaeda media outlet.

The impact of the crackdown on the wider royal family has been shattering and it has turned many of the Crown Prince’s would-be allies into lifelong enemies. Since Saudi Arabia has a revenge culture — King Faisal was killed in 1975 by a cousin in a revenge killing — there is a danger that someone from within the family might now try to kill Mohammad Bin Salman. Unprepared for such an event, the royal family were caught off-guard and their reaction so far has been ill-planned. Numerous princes escaped abroad, however, and so it is probably only a question of time before they embark on a more carefully orchestrated attempt to strike back.

Saudi billionaire Prince Al-Waleed detained in corruption inquiry
The impact of the purge on the Saudi street is hard to assess — Saudi public opinion always is — but social media gives us some inkling. Few doubt that ordinary Saudis support a vigorous approach to corruption, but at the same time they have little faith that the Crown Prince is acting with genuine intentions. In part, this is due to how the purge has been handled; the regime promised a full, transparent judicial process and criminal prosecutions when, in fact, nothing of the sort transpired and the whole operation has been shrouded in deep secrecy. No charges were brought, no detainee list was published and there has been no sign of anything that could be described as a normal legal process. Although the Saudi Attorney General spoke of “a great deal of evidence” nothing has ever been produced. Nor has it ever been made clear why a new anti-corruption committee was needed in the first place, since another one had already been set up under the late King Abdullah.

Besides, Bin Salman himself and his close associates are well known to be at least as corrupt as the moguls in the Ritz. He is said to have offered Kim Kardashian millions to spend the night with him and — with remarkable hubris — made extravagant purchases, including a chateau in France and a Leonardo Da Vinci painting even while the purge was still ongoing. A letter written in 2015 by an anonymous Saudi prince called Bin Salman the “thief, corrupt, destroyer of the nation” and accused him and his brothers of embezzling hundreds of billions of riyals.

MBS purchased Da Vinci painting and Netanyahu gets Jerusalem
What is clear is that the purge has inflicted considerable damage on the royal family’s reputation. For years, Saudi propaganda, the media and educational establishments dictated that the whole royal family should be regarded as a sacred, righteous leadership. Seeing princes on TV being treated like common criminals has undermined this narrative and, combined with the raised public expectations from the purge and the Crown Prince’s other social changes, has increased the chance of popular unrest. As austerity measures continue to bite, the Saudi public will want to know what has become of the fortunes seized in the Ritz and why they still cannot see any improvement in their own situation.

The purge has also triggered considerable uncertainty for investors in Saudi Arabia, a major problem because foreign investment is needed urgently both for Vision 2030 and the launch of Aramco on the stock exchange. Vision 2030 aims to make the non-oil private sector the new motor of the economy but the purge has weakened prospects for foreign and domestic private sector participation, which will in turn spell a bigger bill for the government and so increase the chance that the country will go bankrupt.

Capital flight from Saudi Arabia, the UAE and Bahrain will have speeded up, possibly even into Qatari banks, and the cash and assets seized in the Ritz will not be enough to compensate. Back in November, Saudi officials said that they expected to make $100 billion from the purge, but this figure has since been talked down repeatedly to around $13.3 billion, equivalent, as Ambrose Carey observed recently, to a small movement in the oil price.

There is also another problem: Mohammad Bin Salman’s ruthless consolidation of power is ill-suited for the sweeping changes to the Kingdom that he has planned. One man simply cannot have the bandwidth to navigate all the issues that Saudi Arabia faces: social reforms, the Aramco IPO, establishing new cities, the Yemen war, the blockade of Qatar, oil market strategy and so on. It is simply too much, raising the questions for foreign investors and the Saudi people alike of how and when will he fail, and what will come afterwards.

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