The Provision of Power and Policy in Early Saudi Arabia (1948 1979)

The Provision of Power and Policy in Early Saudi Arabia (1948-

1979)

Introduction

The close of the Second World War saw the commencement of oil exports in

commercial quantities from the Kingdom of Saudi Arabia, subsequent alliances formed

between the Kingdom and Western states to safeguard a resource critical to the postwar

landscape, and a massive transfer of wealth to oil-producers in the form of hard foreign

currency. These petrodollars, along with the waves of foreign actors engaged by the national

oil company and the ruling family to create a modern nation-state, brought the

mechanizations of the global economy to the Arabian Peninsula in full force. There is a

disconnect between the role the Kingdom plays in a highly integrated global economy and

the level of clarity around the decision-making process within the ruling family. In short,

while the level of transparency around global economic actors is largely high, the

mechanizations of the policymaking process within the Kingdom is not as readily

ascertainable. The many possible explanations for this (e.g., lack of free press, representative

government, etc.) share a common theme; they are all related to power.

This chapter will explore the roots of power in the modern Kingdom through the lens

of its early history. These early days were marked by an unwavering “conquest of nature” that

would come to define not only the course of the 20th-century on the Arabian Peninsula, but

also the fabric of the nation itself.

Study of this campaign yields prescient insights into

the aspects of Saudi society and the role of the religious authorities (i.e., ‘ulama) in

government. The ‘ulama will then be discussed alongside other political constituencies to

garner an understanding of the decision-making process that drove policy implementation

from the creation of the first government institutions tasked with managing the new oil rents

to the succession of development plans culminating in Vision 2030.

The mixed results yielding from the policymaking process will be discussed in terms

of macroeconomic development and other indicators. Additionally, while the various

development plans will be analyzed in detail in Chapter 2, the context of Faisal’s rise to

power will be reviewed and his impact on policymaking noted. This chapter will conclude by

briefly discussing how the events of 1979 impacted the balance of power and the

policymaking process in the Kingdom.

Conquest of Nature

The early days of oil export from the Dammam Dome in the Eastern Provence saw

government revenues increase four-fold as the first shipments sailed the Gulf to almost

tenfold a decade later.

This spurred the creation of governmental institutions tasked with

managing both the new money and the change it would bring. The Council of Ministers was

created in 1953 to oversee this effort.

Given that this new capital came both quickly and in

large quantities, the impact on the status quo among those in power cannot be understated.

While power provisioning will be explored in more detail in the proceeding section, this

vantage point offers a good view from which to study what arrived in tandem with the

petrodollars.

Building a modern nation-state took a global village of consultants, researchers, and

experts. These individuals, working on behalf of the royal family and the national oil

company represented a larger trend. The discovery of oil not only integrated Saudi Arabia

into global energy markets, but also the larger global economy. It is in this way, Toby Jones

argues, that “a set of relations among politics, big business, global capital, labor, and

scientific expertise [interacted] to forge the modern state of Saudi Arabia.”

As the majority of Saudi citizens at this time were involved in agriculture, initial

development efforts were centralized on projecting legitimacy by providing central services

benefiting this sector. What followed were large dam projects and desalination plants, as well

as innovations in agricultural loans. It is in this way that the ruling family began to insert

itself into the daily lives of the people.

As early as the 1950s, it became clear that the leaders in Saudi Arabia saw the key to

its legitimacy was not just its odd relationship with the clergy, but rather mastery over the

environment. Given the agrarian nature of the economy for much of the 20th-century, as well

as the perpetual reality of water scarcity on the Peninsula, large scale engineering projects

were marketed as benevolent acts from the state. It was here that “mutual prosperity”

discourse began to become commonplace, as the Saud fashioned a societal compact meant to

entrench their power.

Later, this compact would be marked by massive urbanization of Saudi

society and the creation of a comprehensive welfare state based on rent.

The innumerable engineers and other experts recruited from abroad to actualize these

goals may not have been integrated into Saudi society, but they certainly helped integrate the

Kingdom into the global economy. The impact of this early globalization cannot be

understated. Despite the agrarian nature of economic activity, a technostate was rising in the

background. This kind of strategic thinking would continue to expand as the century went on

and as the role of the state was expanded in the economy.

The more formal (and clearly marketed) development plans hatched after the 1958

fiscal crisis have their roots in the early conquest of nature. As will be shown later, this is

critical to understanding the roots of Saudi authoritarianism that still dominates the Kingdom

today.

Power Bases

The oft discussed alliance between the Wahhabi and the Saud is central to the

discourse surrounding the provisioning of power at inflection points in the Kingdom’s history

throughout the 20th-century. As noted above, power over politics and culture is often analyzed

as a triangulation between Islam, the ‘ulama, and the Saud. While Islam is often wielded by

both the ‘ulama and the Saud to bolster claims of legitimacy, there is a better way to view this

founding myth.

The ‘ulama have managed to exert considerable influence over Saudi society and

culture, as well as integrate themselves into the decision-making process, and are thus central

to understanding the Kingdom.

Their relationship with the House of Saud is often framed as

such; in exchange for conferring legitimacy on the ruling family as the rightful custodians of

Islam’s most sacred places and the resources of the Arabian Peninsula, they are afforded

prominent place in the public realm. While this is an accurate depiction, the symbiotic nature

of the relationship is perhaps its most important quality. In the early days of ‘Abd al-‘Aziz’s

power drive, the Wahhabi provided militant support to his army. Without it, ‘Abd al-‘Aziz

would likely have not prevailed. Naturally, without him and the resources that followed,

Wahhabism would have not achieved its current place within Islam.

In short, they both

needed each other.

Further, despite the insistence of the clergy and the royals, the Kingdom was actually

quite diverse. Besides the perception fueled largely by these claims, the country was not at its

founding religiously or culturally homogeneous.

However, this would change as the Saud

transformed the Kingdom and a considerable level of homogenization occurred on the

cultural front. This bolsters Jones conquest of nature thesis, where he argues that Saudi

authoritarianism had to fashion institutional legitimacy by offering clear benefits to citizens

and creating a marked relationship between ruled and ruler in the absence of shared national

myth or commonly held beliefs. This contextualized view of Saudi history is a helpful starting

point to understand the complex balance of power in the Kingdom.

Power is balanced between the royal family, religious leaders, the tribes, the merchant

class, the administrative elite, and outside forces.

Understanding the minutia of how these

various constituencies interact is difficult because of the secretive nature of the ruling family,

but also because the line between the state and private activity is blurred.

Firstly, this is

most likely a symptom of the early emphasis on cementing mutually beneficial working

relationships with wealthy and powerful members of the various aforementioned power

centers. When this patronage started, there were quite literally no modern government

institutions. This made it difficult to identify or define the line between public and private

actions, as these payments were deployed in atypical ways. Secondly, as Niblock points out,

the sheer size of the royal family compounds the disconnect. Approximately 7,000 princes

strong, the royals are key players in the military, the security apparatus, and other

administrative institutions.

They are also important business leaders and cultural figures.

Before oil, the King often collaborated with the senior princes, the ‘ulama, the tribes,

and important merchants to maintain his authority.

For example, as much of the early

Kingdom was still tribal, ‘Abd al-‘Aziz sent resources and recognition to tribal leaders in

exchange for their political support. Additionally, the ‘ulama were given major latitude over

society and culture in exchange for conferring Islamic legitimacy on the King and his

family.

This balance of power did not change greatly even in the early days of oil.

Policymaking

For the purposes here and because only two of these power bases had the ability to

make policy, the early policymaking process will be discussed in terms of the religious

authorities and the royal family. The ‘ulama, using religious edicts, were able to exert control

over society and culture.

On matters of state, the King stood at the center of the

decisionmaking process. In the royal court, senior princes used their influence to lobby the

King, who

balanced this with the aforementioned constituencies he had to contend with.

Both of these

centers of policymaking – the clergy and the royal court – will be taken in turn.

The Clergy

While the King fully wielded the power of the monarchy and was emboldened by

major resources, until the second half of the 20th-century his purview was largely limited to

governmental institutions and administration. The ‘ulama, on the other hand, enjoyed a wide

purview over what could best be described as fashioning the soul of the nation. Said

differently, the Kingdom was effectively an oligarchy, as the royal family and the clergy

together had control. However different their spheres of influence, both King and clergy were

embarking on centralization projects.

Seeking to create a common value system rooted in Wahhabism, the ‘ulama integrated

teachings and a worldview into the emerging education system. This basis was also codified

in the legal system. Additionally, they deputized a religious police force and gave officers

wide latitude in enforcing rules over individual behavior under the authority of the

Committee for Encouraging Virtue and Forbidding Evil.

It was in these ways that the ‘ulama became formidable influences in the creation of

the culture of the Kingdom. Just as the royal family was working to make themselves

essential partners to their largely agrarian subjects by way of environmental projects and

direct financial support, the ‘ulama carved an unmistakable (and substantial) role for

themselves in the lives of the general population. Influence over education, the legal system,

and the police force integrated the clergy and their belief system into the fabric of the nation.

This exceptional level of power and influence in the public realm also gave the

‘ulama a literal seat at the table. Senior members of the clergy met weekly with the King to

discuss the matters of the day.

There was no doubt a practical element to this, given the

overlap between the purview of the ‘ulama and other matters of state. More than this, though,

it was a way for them to use each other for their own political ends. The fatwa encapsulates

this relationship.

In terms of expediency, there is perhaps not a more effective political tool. A fatwa is

a religious edict issued by a recognized jurist concerning a question related to Islamic law.

While the influence of the ‘ulama over the aspects previously described was certainly on a

cultural level, it was done via the individual. Fatwas are directed at society writ large and

carry immense influence as they are functional interpretations of God’s will. As Islam was

enshrined in the Kingdom as a nation-state, essentially all questions could be answered via

fatwa.

For the King, this was both a major opportunity and obstacle. When their interests

were aligned on a matter of state, an affirming fatwa connected the veneration of Islam to

governmental policy. In the same way, a fatwa taking issue with something stemming from

the royal court could prove damning for whatever the court was proposing. This back and

forth persisted for much of the century.

The Royal Court

In the decade before oil exports began in 1948, annual state revenue totaled

approximately $15 million. By 1950 it stood at $100 million and surpassed $300 million in

1960.

‘Abd al-‘Aziz recognized the need for a modern bureaucracy to administer these new

resources and decreed the creation of the Council of Ministers in 1953.

The Council

functions as a parliamentary cabinet and is chaired by the King, who deputizes individuals to

run various aspects of government. At the onset, ‘Abd al-‘Aziz created ministries for

Agriculture and Water, Education, Communications, Commerce and Industry and Health

between 1953-54.

It is important to note that the Council did not supplant the decision-making process

that was already in place. The balance of power described above, with the King firmly at the

center, ultimately endured. While the King had ordered the creation of a modern nation-state,

policy and the partitioning of resources was directed from him. These decisions and

disbursements were based on the point-in-time needs of the royal family, the clergy, and the

tribes.

From here, it is most helpful to understand the nature of decision-making in the royal

court by reviewing the tumult of the financial crisis and the subsequent reforms.

Policy Failures

Shortly after creating the Council of Ministers, ‘Abd al-‘Aziz died in 1953 and his son

Su‘ud ibn ‘Abd al-‘Aziz ascended to the throne.

He inherited a fiscal disaster. That year, a

line item on the state’s annual budget labeled “Riyadh affairs” epitomized the problems. This

cost center comprised approximately 25% of total expenditures and was used at the discretion

of the King. ‘Abd al-‘Aziz used it to run the patronage structure discussed above, as well as

build lavish palaces and bankroll his entourage.

This was indicative of systemic issues in the policymaking process stemming from the

royal court. Spending decisions were made to ensure the short-term acquiescence of the

various stakeholders in the Kingdom. Given the political landscape of the day, for example,

funds would be directed to subsidize tribal agriculture. An influential prince may have

successfully lobbied the King for a new capital expenditure, such as a palace or a large

infrastructure project with limited practical use (i.e., a white elephant). The merchant class,

who gained considerable economic influence as the economy began to open up post-oil, also

won relief on import duties and other taxes.

This seemingly ad hoc use of resources draws two important conclusions. The first,

while the line between the state and private economic activity was blurry, there was very little

distinction between public funds and royal coffers.

Secondly, and crucially for the purposes

here, state spending tended to focus on short-term solutions to larger problems.

The

consequences of not accounting for the Kingdom’s long-term development would culminate

in a financial crisis in 1958 and a significant course correction.

Oil revenues remained stable in the first years of the reign of King Su‘ud. They

averaged approximately $300 million between 1953 and 1958, but despite increasing notably

from the early days of export they were not enough to sustain the Kingdom’s debt burden.

Su‘ud was estimated to have inherited a debt load of approximately $200 million, which

more than doubled by 1958.

What came next was a cascading effect of the spending

practices pervasive during his father’s reign. International credit markets were unwilling to

extend further credit. ARAMCO, very aware of the fiscal realities in Riyadh and weary of

further entanglement, also refused to loan the state more money. With other options

exhausted, the Kingdom was forced to request a bailout of $200 million from the

International Monetary Fund (IMF).

Despite some tepid changes in princely allowances,

Su‘ud kept constructing palaces.

Along with the financial crisis in Riyadh, the King had other domestic issues that

threatened his rule. Despite the initial development programs in the agriculture space in the

early 1950s, the vast majority of Saudis were very poor. There was a large gap between the

royal family, the Al-Shaikh family (i.e., the descendants of ‘Abd al-Wahhab), and the

emerging merchant class and the rest of society. For the vast majority of Saudis, those tasked

with working the fields or laboring for ARAMCO, the opportunities of the changing

economic landscape escaped them.

While this disconnect would manifest itself as Saudis took notice of the new

ideologies centered on a rhetorically dignifying Arab nationalism emanating from Cairo, it

also contributed to more immediate concerns within the Kingdom. Notably, a series of strikes

in the Eastern Province at ARAMCO threatened to halt oil production.

The first strike, in

1953, was led by migrant workers from other Arab nations demanding better working

conditions. The next walk out, a few years later in 1956, was more nuanced. ARAMCO

laborers hotly contested the continued presence of American forces at the nearby Dhahran Air

Base.

Despite its domestic complications, Su‘ud was initially supportive of Nasir’s Egypt,

most likely hoping to garner some of the political benefits nationalism tends to offer, and

gave Egypt financial support from 1954-57.

However, after his support for Egypt in the war

in Suez in 1956 cost him in his relationships with Western powers, he began to reconsider.

Further, the King began to see Nasir’s brand of nationalist militancy as an existential threat to

his family’s power and authority over the Arabian Peninsula.

His rethink led to his formal adoption of the Eisenhower Doctrine in Washington,

D.C., in 1957. In exchange for standing between East and West, holding the line against an

advancing communism, the Kingdom would benefit from U.S. military support (if necessary)

and deeper economic ties.

This course change, no doubt influenced by the calls from Cairo

for the end of Arab monarchies, unleashed a decade-long confrontation between Egypt and

the Kingdom.

The tightening of the royal purse strings, coupled with domestic political challenges

and the tide of Arab nationalism sweeping the region, made it difficult for Su‘ud to hold the

center of the decision-making process in the Kingdom. By the time an ensuing power struggle

was over, the crown would no longer be his.

Rise of Faisal

The conflict that would develop between Su‘ud and his brother Faisal is indicative of

the magnitude of challenges the Kingdom faced. Given the level of financial and economic

difficulties faced at home coupled with the external threat perception, some level of discord at

court is certainly not surprising. However, the sibling rivalry deserves further

contextualization.

As shown above, despite the various constituencies that ‘Abd al-‘Aziz had to account

for, there was little doubt of who drove the decision-making process. The King surrounded

himself with a group of loyal advisors and dispatched men of his own generation to important

posts throughout the Kingdom. The Council of Ministers he created shortly before his death

reflects this modus operandi. While the Council was meant to institutionalize government and

was granted latitude in issuing administrative decrees, final approval was required by the

monarch.

The death of ‘Abd al-‘Aziz left a power vacuum primarily because of his

unwillingness to delegate responsibility and partition purview for his sons. As the government

was expanding at a steady clip (i.e., the ministries of Agriculture and Water

Communication, Education, Information, Labor and Social Affairs, Petroleum and Mineral

Resources, and Pilgrimage and Islamic Endowments were created between 1953-1963), the

lack of clarity on succession led to a frenzy among princes who sought political power.

Su‘ud’s sidelining of his brothers and appointments of his sons to key positions only

emboldened his leadership challenger.

Historians depict Faisal as a pious, modern man who was concerned primarily with

limiting his brother’s wasteful spending and remedying the Kingdom’s financial crisis.

Su‘ud is remembered for his controversies and his tribal approach to government.

Accuracy

of the historiography aside, it is likely that without the intervention of Crown Prince Faisal,

the economic expansion of the proceeding two decades would not have been possible.

Historians generally agree, but Tim Niblock goes further, arguing that until Faisal assumed

control of government in its entirety in 1962, the modern state of Saudi Arabia did not really

exist.

Developmental Themes (1962-79)

Once he had wrested the crown from his brother, Faisal instituted administrative and

legal reforms that saw the role of the religious authorities decrease and the role of

government in society increase. On the back of strong oil revenues, he established the Central

Planning Organization in 1975 and spent heavily on economic initiatives and infrastructure.

Just as the conquest of nature in the early days of oil bound ruled to ruler, these measures

proved to link individual livelihood to the government.

This was transformational because it

represented a break from the patronage structure that considered the clergy and the tribes over

individual citizens and due its success. It aligned Saudi economic goals with those of the

larger global economy and tamped down the influence of the ‘ulama in the royal court.

In lockstep with this new social and political compact emerged a phenomenon critical

to contextualizing development efforts – the marketing of development. In contrast to the

opaque nature of policymaking in the royal court under his predecessors, Faisal marketed the

central government’s initiatives directly to the population. Shortly after becoming Prime

Minister in 1962, he announced a ten-point political and economic development plan aimed at

“raising the nation’s social level.”

Despite the high-minded language employed by the

Prime Minister, it was largely a repackage of previously identified goals.

The plan established new regulations designed to stimulate economic and social

development. Additionally, it abolished slavery and focused on leveraging the Kingdom’s

natural resources and growing commercial sector. Jones highlights not the novelty of these

goals (as they more or less aligned with the strategic goals under ‘Abd al-‘Aziz), but rather

the change in approach. The public proclamation, he argues, shows that Faisal felt at least

some level of accountability to the people under Saudi rule.

This shift in thinking represented a true break from the previous approach to

government and central planning. After 1962, beginning with Faisal, the Kingdom’s rulers

expanded the sociopolitical compact based almost solely on patronage and Islamic legitimacy

to include a consent component. While this consent is mostly just implicit, as it is not

required in an absolute monarchy, it speaks to the ruling family’s ability to accurately

perceive threats to their power.

For example, by the time he was King, Faisal better understood the antagonism the

general population held to various aspects of Wahhabi and Saudi rule.

Beyond actualizing

the economic aspects of the development efforts, a national narrative superseding the clergy

and the royal family became necessary. What came next was a development discourse

dominated by the integration of Islam and modernity. The argument advanced primarily by

Faisal was that rather than an obstacle or impediment to progress, Islam was a critical

component to the Kingdom’s success.

Typical of efforts by authoritarian regimes to construct national narratives, this

discourse implied the exceptionalism of Saudi Arabia as an economic success story with the

Qur’an as its constitution, as well as the special nature of its leaders. This spurred a cult of

personality around Faisal when he was Prime Minister that continued through his reign. The

manufactured connection between citizens and rulers was successful in expanding the wider

legitimacy of the royal family.

As such, this tactic would be repeated.

1979

The reformation that started under newly crowned King Faisal in 1962 was marked

chiefly by the centralization of government institutions concerned primarily with fostering

economic growth and development. This period also saw a shift in power from the ‘ulama to

the royal court and placed the monarch firmly in the center of the policymaking process in the

Kingdom.

However, the watershed year of 1979 and the fluctuation of oil prices in the

1980s seriously altered the Kingdom’s economic and political direction.

The three major events of that year had profound, durable effects on the Kingdom and

the larger region. The Soviet Union invaded Afghanistan and created a space for modern

jihad. The Iranian Revolution resulted in the rise of the Islamic Republic and the charismatic

Ayatollah Khomeini, who spoke high-mindedly about a new Muslim world that adhered in

totality to Islam. Finally, another charismatic man citing a litany of grievances about the

rulers of the Arabian Peninsula laid siege to the Grand Mosque in Mecca.

The latter two

events are most critical the scope of this argument and will be taken in turn.

Ayatollah Khomeini, the cleric who consolidated power swiftly and Islamized the new

republic, was nothing if not an inspirational and highly competent leader. He spoke grandly

about creating a new Muslim world that adhered in totality to Islam. Although this bold

language sometimes included calls for revolution abroad, the real power of the Islamic

Revolution in Iran laid in the political imagination. For neighboring leaders, of course, the

primary concern was the events in Iran serving as a catalyst for fundamentalists within their

own borders to rise up and demand similar tectonic change. For some Muslims, Khomeini’s

condemnation of monarchial rule and Western influence resonated. In short, Arab leaders in

the region saw the revolution’s potential as a contagion. The Saud were no exception.

It is in this climate that Juhaiman Ibn Saif al-Otaiba asked existential questions about

Muslim and Saudi life as the 14th Islamic century was drawing to a close. Citing the slander

about his tribe, the opportunists and bureaucrats serving the Saudi government, and the

importance of the Law he declared a mahdi had been found amongst his people and took over

the Grand Mosque in Mecca on November 20, 1979.

The siege lasted for nearly two weeks

as Al- Otaiba’s hundreds of fellows sparred with Saudi security forces. Eventually, he was

drug out from the mosque and dispensed with expediently by government forces. While this

event may have not been an existential threat to the state (and despite possible perception,

was not inspired by the Islamic Revolution), the Royal Court responded swiftly to protect

their interests.

These events led to an expansion of power of the religious authorities in a manner

unexpected and unwelcome by the ruling family.

The government responded by expanding

the role of Islam in public life and giving the ‘ulama greater influence over society and

culture, as well as began to focus on external matters. This was marked by a concerted effort

to strengthen its relationship with the United States.

Competing priorities both at home and abroad, coupled with the regional tumult in the

1980s and fluctuating oil prices, made the somewhat reactionary response to the events of

1979 durable. This made for an incoherent pattern of economic and social development that

will be analyzed in detail in the next chapter.

Conclusion

By the end of the 1970s, changes in the provision of power and policy in the Kingdom

of Saudi Arabia had transformed the country. Initial investments in agriculture and water

resource management were followed by a more centralized approach to economic planning.

The patronage scheme, a hallmark of the Kingdom’s early days, evolved from a political

weapon wielded by the King to appease his various constituencies to a legitimization tool

once payments reached more facets of society.

The events of this period yield some thematic conclusions crucial to keep in mind

when reviewing the various development plans in detail. One, the lack of durable institutions

in place at the discovery of oil led to major inefficiencies in government and set the stage for

internal power struggles. These struggles played out in the Saud’s larger authoritarian

discourse and mythmaking, creating a space and appetite for cults of personality around

leaders beginning with Faisal.

Second, while policymaking was fleshed out in the relative privacy of royal court

until the end of the 1950s, development began to be marketed to citizens directly by then

Prime Minister Faisal in 1962. It was incorporated into national discourse and used to bolster

the legitimacy of the ruling family.

Finally, the period between 1962 and 1979 represented a clear break from the

previous modus operandi. The business of government was focused on expanding the

legitimacy created and the bond made between ruler and ruled under the previous conquest of

nature to a larger, more tangible role for the government in the lives of individual citizens.

This was characterized by expanding services, the sidelining of religious authorities, and a

more equitable provision of oil rents. In short, the relative successes of this period were the

result of effective strategic planning by the government.

Chapter 2

Perpetual Planning

This is really our one resource. This is our chance to use it to build a country that has

something to do with these times. Unfortunately, over the last fifty years, all of this

money has been spent wrongly.

- Abdelrahman Munif, 1994

Introduction

The goal of this chapter is to review the details of each successive development plan

through the contextual and thematic lens established in Chapter 1. This understanding of the

balance of power in the Kingdom and its effect on policy, along with the historical reference

points necessary to draw conclusions, are important tools for further analysis of economic

planning and development.

This chapter will begin by connecting a paradox related to the Kingdom’s status as a

rentier economy identified by Niblock to Ulrichsen’s larger reflection on economic

integration in the Gulf. While the literature on nation-states who garner the vast majority of

their revenues from sales of sovereign natural resources tends to find high levels of state

autonomy, Saudi Arabia is somewhat of an exception. This autonomy (i.e., absolute power or

lack of accountability to citizens) typically results from the legitimacy created by providing

goods and services to the general population. In exchange for this patronage, the citizens of

rentier economies tend to cede political agency. As will be shown, the state has not always

been effective at unilaterally imposing its will on society.

This paradox led to another. The Kingdom’s vast oil revenues effectively shielded the

larger economy from the realities of globalization. While individuals received some of the

benefits of the global market forces advancing in the 1970s and 1980s, the buffer offered by

oil rents impeded full integration into the global economy. Despite the globalized nature of

the oil sector and domestic consumption, the large amount of unearned income (i.e., oil rents)

artificially protected the domestic market from the cyclical global economy. This uneven

development is reflected in the development plans.

Accepting Tim Niblock’s thematic organization of the eight development plans

hatched between 1970 and 2005, each cluster will be reviewed in turn. The First (1970-5),

Second (1975-80), and Third (1980-5) Development Plans sought to transform the Kingdom’s

largely agrarian economy into a modern economy on par with that of the developed world.

Despite varying oil prices and the regional tumult associated with the IranIraq War, these

efforts were indeed transformational. The next cluster (i.e., the Fourth (1985-

90), Fifth (1990-5), and Sixth (1995-2000) Development Plans) saw a continued

advancement of the larger goal of creating an economy level-set with that of developed

countries by fostering a well-skilled labor force. Efforts were somewhat constrained by the

slump in oil prices.

Finally, this chapter will conclude by discussing how the Seventh (2000-4), Eighth

(2005-9), and Ninth (2010-14) Development Plans (aiming to create a dynamic

knowledgebased economy able to compete in global markets) set the stage for Vision 2030.

Rent and State Autonomy

Biblawi and Luciani, in their edited collection on the rentier state that has become the

basis for economic analysis of Gulf oil-producing states, define the rentier economy as “an

economy substantially supported by the rent accruing from abroad.”

A rentier state is then

one that derives a considerable portion of its revenues from foreign sources. These states

typically have small native populations, considerable natural resources, and lack economic

diversification.63

This collection defines six key attributes of rentier states. The first is that the state

becomes the main driver of development, given that rents are paid directly to the

government.

Second, the state pursues policy that does not account for the needs or wants of

all societal stakeholders (i.e., high level of state autonomy).

Third, citizenship becomes a

source of economic benefit, as societal factions vie for a piece of the unearned income

cascading down from the government.

Fourth, rents allow for the import of basic goods at

the expense of the domestic market.

Fifth, little or no taxation undercuts individual agency

in the polis.

Finally, foreign labor becomes a major component of the economy.

Although the rentier dimension of Saudi Arabian political economy is not the only

factor influencing policymaking and driving outcomes, it is an important aspect of

understanding the Kingdom’s development. Many of these attributes apply to the Saudi state.

As discussed in the previous chapter and will be shown in more detail below, the Royal Court

dominates the policymaking process. Even as the private sector expanded, due to the blurred

line between what was public and what was private, this remained true throughout the 20th-

63 Niblock with Malik, 15.

century. Similarly, as economic benefits remained largely concentrated at the top, beginning

with the Royal Court and slowly expanding to include princes working in the private sector

and important merchant families, Saudi citizens oriented their economic activity to capturing

some of these gains. This came at great expense to building a robust, self-sustaining economy

as the primary driver of activity was the business of capturing a finite amount of unearned

income.

The roots of the fourth and sixth factors, reliance on imported goods and foreign labor,

respectively, can be traced to development efforts immediately following the initial flow of

oil. As the Kingdom began its conquest of nature, imported equipment and technology

alongside foreign experts was necessary given the low levels of development in the Kingdom.

As oil rents grew and the patronage scheme expanded to larger swaths of a society becoming

more and more globalized, domestic goods and labor were unable to catch up.

The second and fifth factors are closely related. High levels of state autonomy tend to

only be possible when the government needs little or no revenue (in the form of taxation)

from its citizens. While the latter is certainly true, as the tax burden of individual Saudi

citizens has remained persistently low, the former represents an exception to rentier theory. As

stated in Chapter 1, the royal family had to work with other power bases (primarily the

religious authorities and tribal leadership) to maintain the upper hand in the policymaking

process. Further, as the labor strikes at ARAMCO and the siege of the Grand Mosque

indicate, they have also had to contend with domestic challenges to their authority.

Niblock, in his general critique of rentier theory and study of the Kingdom’s political

economy, agrees. He argues that even as the oil boom of the 1970s placed an unprecedented

amount of resources in the Kingdom’s coffers, it would be inaccurate to conclude that this

translated to a high level of state autonomy.

Even as the role of the ‘ulama and the tribal

leaders became less prominent during this period, the Royal Court still engaged regularly

with them during the policymaking process. Regardless of whether this calculus was

forwardlooking or reactionary, the end result is the same. At best, the Saudi government can

be considered semi-autonomous from its society.

Throughout the second half of the century, despite some significant successes in

economic expansion on the back of strong oil revenues, the government struggled to impose

its will on society.

As will be shown in the proceeding sections, policy was largely driven by

reaction to domestic and international events. This shared agency, although limited given the

nature of an authoritarian regime, is perhaps the clearest signal of the moderate level of

autonomy enjoyed by the Saudi state.

Uneven Development

Regardless of how neatly the Kingdom fits the definition of a rentier state or how

much autonomy the state has from its citizens, oil revenues have invited as many challenges

as they have opportunities. While the inflow allowed for the making of a nation-state and

opened up its economy in the process, it also shielded the Kingdom from more typical

processes of development that produce more dynamic economies. A larger population that

relies heavily on unearned income is forced to only partially engage with global economic

realities and thus only exists on the periphery of international commerce.

The

typical economic development process begins with the transition from an agricultural-based

economy to one focused on industrial production. Then, as the knowledge

base grows, it transitions to services.

In underdeveloped countries, the introduction of

significant rents leads to disproportionate growth in the service sector. This is due to the

increase in demand for consumer goods and the cost disparity between domestic

manufacturing and imports. It is often considerably cheaper and faster, thus more profitable,

to import than produce.

This has big effects on society. Citizens that previously made their money in

agriculture or from making artisanal wares are forced to turn to the patronage offered by the

state for their basic livelihoods. On the other side, the merchant class must lobby the

government for the authority to transact in this new space. Beyond the distortions to

economic growth and development that these outcomes represent, they also create a stronger

bond between ruler and ruled. This often perpetuates the limited agency of individual citizens

in the business of government, as both of these groups would be far less inclined to challenge

the authority of their benefactors.

Connecting these economic externalities to the larger process of integration into the global

economy, the problems are compounded. Kristian Ulrichsen, writing on the political economy

of the Arab Gulf, found a compelling reason behind the region’s uneven record of integration

in the global economy. He argues that despite their critical role in the global industrial economy,

supplying the oil that rebuilt and retooled the post-World War II world, they “were to a high

degree untouched by the deeper processes of globalization as they accelerated in the 1970s and

1980s” due to the size and location of the oil sector in the economy.

Oil revenues dwarfed other economic activity, while the sector itself operated in

isolation from the rest of the economy. This effectively provided a shield to the rest of

domestic markets, allowing them to function outside the norms and realities of a typical

economy. This became even more pronounced when oil prices skyrocketed after the 1973

embargo, as oil rents proved to be a durable cushion from the upheaval in the larger global

economy.

John Fox observed that this led to an economic and cultural paradox where societies

received “the material benefits” of globalization in ways managed by the central government

that resulted in only partial integration into the global marketplace.

The roots of this uneven

development, as well as attempts to mitigate it, will be explored in the sections that follow.

First, Second, and Third Development Plans (1970-85)

Overview

After regaining the role of Prime Minister in 1962, Crown Prince Faisal (who was

crowned King two years later) began a transformation of the policymaking process in the

Kingdom. While he was still the primary decision-maker, he injected a strategic aspect into

the process necessary to guide the country out of the fiscal crisis he inherited from his

predecessor. What came next was the creation of the institutions (primarily, the Central

Planning Organization in 1965) capable of actualizing an ambitious strategy that would

require skillful administration and planning.

His consolidation of power gave him the latitude to lead a centralized, top-down

development process. Using growing revenues from oil, King Faisal was able to create the

structures between 1962 and 1970 that would set the stage for formalized development plans

beginning in 1970. Although this period was one of transition, marked by the lack of human

capital and infrastructure to effect great change, it laid the groundwork for the transformation

that followed.

Beginning in 1970, three successive five-year plans were made with the goal of

enacting social and economic change. The primary goals were to build a social and physical

infrastructure capable of supporting a modern nation-state, assume full control of the oil

industry and its revenues, and create a strong industrial sector. On the back of increased oil

production and rising prices, with the state at the center of the process, the ambitious plans

were largely successful in transforming the fabric of society.

Plan Objectives

Although the marketing of each plan and the financial allocations given to various

public investment categories changed with each iteration, a set of generalized concepts are at

the center of each plan. These emphasize the role of Islam in society, the importance of the

security and stability of the Kingdom, and economic growth benefiting all regions. They also

speak to diversifying the economy, investing in homegrown human capital, and creating the

infrastructure necessary to actualize these goals.

Each plan reflects these strategic goals, as well as the realities of the moment. For

example, the First Plan is certainly more of a tepid approach. This is most likely in response

to the lower rents received throughout the decade preceding it, as well as the diminished state

of Saudi finances following the financial crisis. The vast majority of plan expenditures,

approximately 75% of the total project, focused on physical infrastructure. The remaining

funds were allocated almost evenly to economic development (i.e., investments in agriculture,

water, and energy that dwarfed that of commercial manufacturing) and investments in human

capital (i.e., primarily in the form of building schools).

The Second Plan replaced the cautious approach of the first and started accounting for

a post-oil landscape. At this stage, that meant major investment in natural gas and mineral

resources, as well as agriculture and other industry.

Accordingly, infrastructure allocations

were reduced from 75% to approximately 40%. Human capital investment held steady and

economic resource development increased to over a third of total expenditure. Despite these

important changes, however, the most important aspect to note is the difference in scale

between the First and Second Plans. Total project allocations for the First Plan stood at

approximately SR 12 billion as part of a total governmental budget of SR 24 billion. Just five

years later, the Second Plan commanded a SR 239 billion allocation from a SR 318 billion

total budget.

The Third Plan garnered SR 516 billion from a total budget of SR 698 billion.

The

proportion of allocations remained similar, but the absolute increase in the economic resource

development category was directed at limiting the economy’s dependence on foreign labor, a

key aspect of the overall plan. Emphasis was given to developing productive sectors, such as

the petrochemicals industry, with domestic resources.

Outcomes

The period corresponding to the first three development plans benefited immensely

from the rise in oil prices related to the October 1973 war and the oil embargo, continuing

through the Iranian Revolution in 1979 and the early years of the Iran-Iraq War. When the

First Plan was announced in September 1969, oil revenues stood at $5.1 billion. By 1982,

annual rents totaled $328.6 billion.

However, revenues declined shortly and sharply after

this highwater mark. Budget allocations were reduced in the latter part of the Third Plan, in

1984 and 1985, to account for the change. Despite these setbacks and governmental deficits

in these two years, though, there was not a shift in the overall strategic plan.

In short, due to consistently rising oil revenues during the majority of this time period

and effective allocation of these resources, this period transformed the Kingdom. Total gross

domestic product (GDP) increased from SR 22 billion in 1970 to SR 372 billion by 1985.

Infrastructure across many sectors of the economy, from transportation to agriculture, was

dramatically improved.

The education system saw a massive increase in both the number of

schools and enrollment levels. Finally, in addition to a three-fold increase in the number of

hospital beds and an exponential increase in the number of medical personnel to staff them,

the Kingdom also greatly expanded its social safety net.

Additionally, the administrative capacity of the government itself expanded with oil

revenues and the scope of the plans. The number of public sector employees increased

fivefold between 1970 and 1985, with 469,000 people working directly for the state. These

personnel managed existing government processes, as well as worked within the expanding

Agricultural Bank. New entities were created to increase the productivity of private economic

actors (i.e., the Saudi Industrial Development Fund in 1974) and to provide services to the

general public (i.e., the Saudi Credit Bank in 1971 and the Real Estate Development Fund in

1974. The Ministry of Industry and Electricity was founded in 1975. The Saudi Ports

Authority was created in 1976, as well as the Saudi Arabian Basic Industries Corporation

(SABIC).

While the advent of this administration allowed for the growth of this period and the

relatively successful application of the first three development plans, the working of the

government was frequently bogged down by the bureaucracy. Some ministers ran their

ministries as fiefdoms, projects in one office often overlapped with ones being executed

elsewhere, and everyday decision-making was not delegated to civil servants themselves. As

Niblock opined, the coherence of the development plans and the marketing of them

emanating from the Royal Court did not translate to coherent policy execution.

These

inefficiencies became more pronounced as more Saudis joined the public sector, as wages

were considerably higher than available in the private sector.

As the size of the economy grew, the need for foreign labor in the private sector also

increased. Similar to the early days of oil, where the government relied on foreign experts and

consultants for their conquest of nature, foreign labor was becoming a necessity across the

various sectors of the economy.

It is important to note that although economic activity in the

private sector increased in this period, it was largely due to government expenditures in

constructing and maintaining infrastructure.

In other words, oil rents truly fueled growth

across the economic spectrum.

The final key takeaways from this era also relate to the private sector. In 1973, the

Kingdom began the process nationalizing ARAMCO, beginning with taking a 25% stake. By

1980, it had taken full control. Later that decade it would be renamed Saudi Aramco.

Although international oil conglomerates maintained their roles as managers of the

extraction, refinement, and marketing processes, this placed the Saudis in strategic control of

their largest sovereign asset. This was a crucial step in assuming the “swing producer” role

the Kingdom would later play, as it gave the government total control over pricing and

production levels.

Finally, the government sold a 30% stake of SABIC, the national petrochemical firm,

to the public in 1984. At the time, this was marketed as an indicator of eventual private

ownership of entire firm and indicated that other state assets may eventually be publicly

floated.

While this did not materialize until some two decades later, it serves as an important

precedence in the Kingdom’s overall development path.

Summary

By the end of 1985, the Kingdom had supplanted a state with limited reach and a

governing legitimacy based on narrow patronage schemes with a centralized, emerging

nation-state. Saudi Arabia used its windfall of oil rents to expand the role of the government

in the lives of citizens. Inroads in infrastructure, social services, and private sector investment

bound the fortunes of the ruled to the ruler like never before. The provision of power and

policy rested largely with the monarch and the Royal Court, remaining static throughout this

period. Eschewing the typical relationship between the public and private sector emerging in

a rapidly globalizing world, the government was the central force of economic power, leaving

the private sector almost the same from its pre-development form and dependent on

government contracts and largess. However, downward pressure on oil prices would force a

rethink.

Fourth, Fifth, and Sixth Development Plans (1985-2000)

Overview

Economic policy during the 1985-2000 period largely reflected a reactionary response

to oil price fluctuations. As time went on, it became increasingly clear that relying on oil

rents to drive domestic economic growth was becoming more and more unsustainable. At the

onset, the government responded by running deficits to avoid major allocation cuts before

eventually reducing spending and turning its focus to the private sector. However, despite

some notable advances this sector, the impediments to its further growth encapsulate the

problems of this period.

The failure of the policymaking process to transition to a state-sponsored capitalist

approach in line with developed economies proved endemic. The proceeding subsections will

review thematic objectives and outcomes across all three plans, rather than taking each in

turn, to better understand the decision-making process during this period.

Plan Objectives

The focus on building out the country’s physical infrastructure that dominated the

preceding period was replaced with emphasis on increasing economic productivity. To this

end, the Fifth Plan articulated the need for an environment conducive to fostering private

sector activity.

Later, the Sixth Plan laid the groundwork for privatization of state-owned

corporations. It also included language on creating a space for private corporations and actors

to take part in the end-to-end development of projects. For example, these entities would be

allowed to participate as financiers, builders, operators, and service providers.

Somewhat

paradoxically, given the level of foreign expertise involved in the transformation of the

Kingdom up to this point, all three plans sought to reduce dependence on foreign labor. As

Saudis were beginning to emerge from the newly minted education

apparatus and the public sector was unable to absorb them, the first Saudization drive began.

Each plan placed notable mention of the goal to “qualitatively” improve the Saudi workforce

so that they may limit the need for so much foreign labor.

The allocation of plan expenditures reflects the focus on these two issues, especially

as time went on. From a total budget of SR 500 billion, the Fourth Plan allocated SR 135

billion (i.e., 27%) to human resource development and SR 90 billion to social development

(i.e., 18%). The remaining amount was split about evenly between economic resource

development and physical infrastructure.

Later, although the total project budgets declined

to approximately SR 400 billion due to fluctuations in oil prices, funds were focused on

human capital. Human resource and social development constituted half of the Fifth Plan.

It made up approximately 70% of the Sixth Plan.

As stated, less investment in economic resource development and physical

infrastructure reflects the successes of the previous period. The state had made major strides

in the petrochemical industry, as well as completed major physical infrastructure projects

(i.e., roads, ports, communication networks, etc.). Additionally, it also underscores the

primary goals of this period of shifting the engine of growth to the private sector and

increasing the number of Saudis working in this space.

Outcomes

In 1986, at the beginning of this period, rents on oil stood at $42.5 billion. This

represented a nearly 90% drop from the highwater mark of $328.5 billion in 1981. They

remained low until the Gulf War spiked prices and pushed revenue up to $127 billion in 1992.

Price fluctuation ruled the proceeding decade, as revenues oscillated between a lower bound

of $80 billion and a higher bound of $160 billion.

Considerable fluctuations in state funds coupled with the costs associated with the

Gulf War placed immense pressure on the treasury and led to deficit spending throughout the

period. For example, the war-related costs were estimated to eclipse $55 billion in 1991,

slightly over half of the Kingdom’s GDP.

100

This context sheds light on the stark difference

between this period and the one preceding it. The Kingdom could no longer rely on a steady,

rising stream of unearned income.

This led to costly cuts that negatively impacted the economic productivity push at the

heart of the development plans. While it was no longer a primary focus, further development

of physical infrastructure was limited and what was built before was neglected. Further,

although it was a key component of this period, investments in human capital largely failed to

stem the tide of foreign labor in the private sector (due largely in part to the low quality of

public education, the efficiency and effectiveness of foreign labor, and the lack of Saudi

women in the workforce).

101

In short, expenditures associated with the development plans

were impacted enough to affect the outcome.

The general government budget, however, proved more difficult to curtail.

Throughout the period, the government bureaucracy kept operating as usual. The

administration presided over a vast and inefficient workforce that the leadership was

unwilling to cut. This is most likely because public sector employment was such a huge part

of the patronage scheme. Cuts to abstract, strategic development plans were no doubt less

controversial because they were not felt immediately.

102

This policy failure points to a larger issue that ultimately defined this period. Despite

wanting to foster increased productivity in the private sector and a transition to the state-aided

capitalist structure dominating the global economy, the Royal Court was still at the center of

the decision-making process.

103

This was problematic for two reasons. One, this type of

relationship between the government and the private sector is paradoxical to the economic

structure the Kingdom was seeking to fashion. Second, the Royal Court was rampant with

corruption.

The decision-making approach to development projects was often influenced by

senior royals with a stake in the outcome. These princes invested their personal resources in

related areas and funneled contracts to these entities for their own benefit. This proved very

costly, as the outcome rarely matched the proposal and the absence of a bidding process

greatly increased the cost to the state.

104

Despite the pointed, strategic nature of the

development plans, specific policy decisions were plagued with this kind of corruption.

Policy outcomes hinged on power sharing arrangements between influential princes instead

of sound strategy. The end result reflected the process. By the dawn of the millennium, the

Kingdom was in dire need of reform.

Summary

Although oil rents never reached the highs recorded in the previous period, they

proved to provide enough of a cushion to insulate the Kingdom from changing its restrictive

economic framework and fashioning a new social compact with its citizens. Persistent issues

were exacerbated, as society became more unequal and newly educated Saudis entered the

workforce with unmatched opportunities. In other words, the top-down approach to

development, with a more and more ineffective Royal Court at the center of the process, fell

short of the needs of the moment. At the close of this period, no major strides had been made

to privatize large swaths of the economy and spur durable economic growth. Further, due to

the interests of powerful princes presiding over protected sectors, a highly subsidized society

persisted.

Seventh, Eighth, and Ninth Development Plans (2000-2014)

Overview

The impasse in the decision-making process around the privatization of state assets

and promotion of the private sector that persisted in the previous period gave way as the

Kingdom entered the new millennium. Under the leadership Crown Prince Abdullah, the

Kingdom embarked on a substantial privatization program and enacted structural economic

reforms. The change in rhetoric and scope of the reforms sought to answer the key question

wrestled with during the previous period; will the private sector become the primary driver of

economic growth?

The context of this question is key. Development plans had to account for a global

economic downturn, as well as align with the Kingdom’s larger goal of World Trade

Organization (WTO) membership. Additionally, high unemployment among its increasing

educated population and a fall in living standards for some subsets of the population placed

additional pressure on Riyadh to offer a new vision for the future.

Plan Objectives

Similar to the reformation period of 1962-1979, structural changes were again at the

heart of economic planning. Emboldened by an increase in oil prices, the Kingdom was able

to actualize some of the plans rooted in the previous period. The rhetoric of Crown Prince

Abdullah, who had expanded his policy role in 1995 and achieved great consensus on his

plans by 2000, encapsulates the transformative nature of the new period. In several speeches

in 1999, he argued the days of the state as the main driver of economic growth were over and

that the private sector must step up to create more employment opportunities for Saudis. He

also warned that the levels of subsidies artificially deflating the costs of basic goods and

services for the general population were unsustainable.

105

The Seventh Plan (2000-2004) offered a comprehensive, strategic framework to

remedy the problems associated with unemployment and subsidies, as well as foster a

globally competitive private sector similar to developed countries. This long-term strategic

outline accounted for the socio-economic impact of the Kingdom’s explosive population

growth (i.e., resulting in a three-fold increase in the workforce between 1999 and 2020) and

acknowledged that structural changes were foundational to these efforts. Additionally, it tied

the plan of the moment to a 20-year horizon, offering a vision of the country in 2020 if the

Seventh Plan was successful.

106

This is a watershed event in the history of political economy in the Kingdom of Saudi

Arabia. After two decades of largely reactionary policymaking held hostage by external

events and rampant corruption, the Crown Prince was again able to fashion a coherent

strategy and story for development. This strategy came into clearer focus with the Eighth

Plan, which moved the 20-year plan out another four years to 2024 and included commentary

on the transformation of each sector of the economy.

107

The Eighth Plan included “Future Vision” sections which had specific targets for

growth. One predicted a decrease in male unemployment from 5.6% in 2005 to 2.4% in 2009

and a decrease from 15.9% to 4.4% for women during the same time period. Another targeted

a 4.6% GDP growth rate, driven primarily by private sector growth.

108

The plan also listed

women as a strategic base for the first time. Specifically, the plan sought to remove the

societal constraints placed on women’s economic activity. Other strategic bases included the

poor, the education system, and the privatization effort.

109

The Ninth Plan, spanning 2010-2014, continued the goals to get to 2024. However,

the global financial crisis that began in 2008 in the United States set the tone for short-term

goals. Namely, the plan was primarily concerned with maintaining growth in the private

sector during the downturn, combating inflation and stabilizing prices, and maintaining the

riyal’s dollar peg.

110

Outcomes

At the onset of this period, in 1999, the Supreme Economic Council (SEC) was

created. The SEC was focused on attracting foreign investment via creating a robust

economic marketplace. In many ways, the work of this council reflects the larger theme of the

period. It was at the center of the Kingdom’s WTO application and responsible for assessing

the effectiveness of current policy and overseeing the reforms being made across various

sectors.

111

The scope and number of new initiatives was staggering. In the early days of this

period, in quick succession, the Kingdom created a council focused on increasing tourism,

established the Saudi Arabian Investment Authority to serve as the administrative liaison

between the government and the private sector, and formalized the privatization process. The

latter plan touched virtually every part of the economy. Offerings were planned in the

telecommunications sector, transportation, public services, and water supply.

112

To facilitate these transactions and encourage domestic investment, the Saudi Arabian

Stock Exchange was created in 2003.

113

The first major offering since the privatization of

SABIC in the 1980s was the Saudi Telecommunications Company. The sale generated $4

billion from a 30% float. Later, the SEC approved sales of portions of the National Company

for Co-operative Insurance and the Saudi Arabian Mining Company.

114

Alongside this effort, considerable regulatory reforms were also enacted. New laws

allowed for the complete ownership of corporations by foreigners, taxes were reduced for

foreign investors, capital markets were formally regulated to promote efficiency and

transparency, and intellectual property rights protections were enshrined into law.

115

While

these reforms spurred growth in the private sector, unemployment remained a constant

throughout this period, increasing from 4.57% in 2000 to 5.72% in 2014.

116

The most important takeaway from this period is encapsulated in one of its marquee

projects. In 2009, King Abdullah inaugurated a research institution in his name. The King

Abdullah University of Science Technology (KAUST) had foreign experts and academics in

its ranks and was primarily focused on becoming a world-class research institution. The goal

was to organically create enough domestic expertise to make the Kingdom competitive in the

international marketplace. The King considered the university to be central to the strategic

development of the country.

It was not without controversy. At its founding, it was not subject to the laws

governing gender in the Kingdom. For example, men and women were able to mix on

campus. Even in the face of direct criticism from the clergy, King Abdullah continued to

publicly support the policy and condemned the clergy’s condemnation.

117

The line that can be drawn from Faisal’s rhetoric to Abdullah is highly informative.

Similar to Faisal, Abdullah spoke publicly about the need for the Kingdom to embrace

science and technology as a path to a prosperous post-oil future. Both men marketed

themselves as custodians of Islam and tradition, as well as conduits to the best offerings of

modernity.

Summary

This period saw a wholesale change of the status quo in the Kingdom. King Abdullah

simultaneously adopted the rhetorical and marketing strategy employed by King Faisal to

fuse his family and Islam to modernity alongside a decentralization in economic planning.

This expanded role for the private sector included space in newly privatized state-owned

entities and came in concert with a slew of regulatory reforms. Finally, the balance of power

shifted away from the clergy. The King remained at the center, preferring to delegate

economic power to the private sector, while simultaneously limiting the influence of the

clergy and managing through the change.

Conclusion

Despite endemic corruption and fluctuating oil rents, this period saw the creation of a

modern nation-state. With the Royal Court at the center of the policymaking process, the

Kingdom built a large network of physical infrastructure, built schools, and established a

healthcare system. A vast government bureaucracy presided over a series of development

plans and a wide-reaching social safety net that insulated much of the population from the

realities of 20th-century economic life.

A coherent strategy beginning in 1962 under the leadership of then Prime Minister

Faisal achieved success. External events, such as the Islamic Revolution in 1979, the Iran-

Iraq War, and the Iraqi invasion of Kuwait placed pressure on oil prices and thus the

Kingdom. Given that consistent rents could no longer be banked on, the Kingdom saw the

importance of creating a robust private sector capable of being the main driver of economic

growth. Initially, this strategy would be a dismal failure. In short, the emerging private sector

could not flourish in a top-down policymaking environment with opaque regulation and

costly corruption.

Around the millennium, as the ambitious Crown Prince Abdullah came to be the most

formidable decision-maker at court, the Kingdom experienced a seismic shift not seen since

1970. Like the leader of that moment, Abdullah marketed the development plans directly to

his citizens. He adopted a familiar discourse, connecting modernity to Islam and placing the

Royal Court in the middle as essential arbiters of this relationship capable of using it create

widespread prosperity. In function, this approach required the emboldening of the private

sector and thus a cessation of centralized policymaking to the private sector. In form, it also

included the sidelining of religious authorities for the first time since the seizure of the Grand

Mosque in 1979.

Following precedent, the Kingdom launched its Tenth Development Plan in 2015. It

carried the mantel of the period beginning in 2000, focusing on economic diversification and

job creation. However, it was supplanted in 2016 by an announcement from a rising royal

who sought to further transform what increasingly became his Kingdom.

Chapter 3

Vision Redux

The idea is not to restructure the economy as much as to seize the opportunities

available that we didn’t address before.

- Mohammad bin Salman

Introduction

The purpose of this chapter is to connect the story of Saudi development to Vision

2030. In the first chapter, this thesis accepted Toby Jones’ conquest of nature argument as

central to understanding the partitioning of power and policy in the early days of the modern

Kingdom. In the second, it placed Tim Niblock’s grouping of the various development plans

spanning the second half of the last century to the current moment in conversation with

Ulrichsen’s larger analysis of the political economy of the Arab Gulf. Now, it will turn to the

rise of Mohammad bin Salman and the advent of Vision 2030 and place these two matters in

proper context.

To this end, this chapter will begin by charting the meteoric rise to power of the

Crown Prince of Saudi Arabia. Arguing that his cult of personality is symbiotically tied to the

Kingdom’s latest modernization drive, it will then discuss the strategic objectives of Vision

2030. Various aspects of the plan will be compared and contrasted in both function and form

to previous development efforts. Functionally, as will be shown, the plan is similar to the

more recent development plans. In form, it is markedly different.

It will then look back in history for precedence of rising princes consolidating power

during inflection points in development. While there are parallels between the rise of Faisal

and Abdullah to the rise of MBS, the primary difference is that the former two were already

integrated in the policymaking process. MBS rose quickly from relative obscurity to making

himself central to the policymaking process.

After discussing the Crown Prince’s impact to the decision-making process in the

Kingdom, a section on the balance of power will highlight the biggest paradox of Vision

2030; the plan is calling for all of the benefits of a globalized economy, driven largely from

the private sector, while keeping aspects of policymaking in the Kingdom that made some of

the previous development plans falter. These characteristics will be discussed in detail and

then used as a lens to assess early outcomes the latest period of development.

The Rise to Power of Mohammad bin Salman

An observer of MBS, especially in the early days of his ascension, has the same

problem other observers have faced when studying his Kingdom. Namely, the opaque nature

of the process of governance places immense stress on the historian’s craft. Like most things,

time proves to be an elixir and makes things clearer. The same is true of MBS. Little was

known about him when he burst onto the international stage less than a decade ago. What is

known is based primarily off his interactions with journalists and investigative reporting and

research that has been done in the last five years. With time, more and more context will be

provided. The brief biography given below is the best of what is available at the time of

writing.

Shortly after King Abdullah died in 2015, his successor made sweeping changes to the

leadership structure. King Salman named his half-brother and head of the intelligence

services, Muqrin bin ‘Abd al-‘Aziz, crown prince. Mohamad bin Nayef (MBN), a respected

counterterrorism expert and head of the Interior Ministry, was appointed as Muqrin’s deputy.

With these two appointments garnering the most attention, the King placed immense

confidence in his young son.

118

MBS, who was just shy of his 30th birthday, was placed in charge of the defense

apparatus, as well as the Royal Court.

119

The gravity of these appointments cannot be

understated. As Minister of Defense, he was in control of the military. Further, his position at

court gave him virtually unfettered influence over every aspect of government. As discussed

throughout this thesis, despite strategic shifts in development, the provision of power and

policy cascaded down from the Royal Court. With the blessing of the King, MBS not only

had direct access to his ear during the decision-making process, but also influence over state

expenditures.

From here, MBS acted quickly and decisively. Working with a small inner circle of

advisers, he replaced several government agencies with the Council of Economic and

Development Affairs (CEDA) (naming himself as chairman) and the Council of Political and

Security Affairs. Related to the economy, citing inefficiencies, he curtailed the government

budget and attempted to control state expenditures. As Minister of Defense, he began a

bombing campaign in Yemen to displace the ascendent Houthi rebels who had taken over the

government there. His deluge of early actions served to further entrench his power. King

Salman named MBS deputy crown prince, elevating MBN to first in line to the throne. He

was also given oversight capacity of Saudi Aramco.

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All of these events happened within

the span of six months.

By the time MBS accompanied his father for an official visit to the United States in

September 2015, his power and influence was being noted by international journalists and

diplomats. Almost immediately, he began to use this new platform to market his vision of

development for the Kingdom. In an interview with Thomas Friedman, MBS spoke of

reducing state subsidies on many aspects of public life, privatizing valuable state assets, and

instituting a value added tax. Notably, while political reform was not on the agenda, MBS

highlighted the royal family’s connection between its subjects as sufficient to shepherd

through these changes.

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In short, the young prince was proposing a shift in policy, but not

the structural reforms such significant changes would imply.

In early 2016, attempting to stymie the fallout from a wave of executions in the

Kingdom, the Deputy Crown Prince sat down with The Economist to discuss his vision for

his country. Much of what he said about his proposed economic overhaul was thematically

similar to the development strategy adopted at the turn of the century, but it was met as if it

was completely unprecedented. One key proposal, beyond privatizing healthcare and

education or increasing tourism, was fundamentally different. He announced that Saudi

Aramco would be partially privatized, no doubt to fund the considerable state expenditures

required to actualize these goals, but also in “the interest of more transparency and to counter

corruption.”

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This was monumental for two primary reasons. First, Saudi Aramco is the Kingdom’s

largest and most important sovereign asset. While foreign experts have long walked the fields

and halls in Dhahran, the company had never been audited or formally valued. Further,

neither had the Kingdom’s oil reserves. A public offering would require disclosure of these

state secrets, exposing its most important asset to external analysis. Second, although talk of

corruption ran rampant, it was rare for a senior prince with sway in the decision-making

process to publicly discuss remediating it. This admission proved to be a double-edged

sword. Investors, although excited at the prospect of gaining exposure to future

Saudi oil revenues, were alarmed at the implication of corruption within Aramco itself. On

the other hand, it proved as fodder for the sensationalism surrounding his plans, elevating the

discourse of development because it appeared novel. It was in this context that MBS

announced Vision 2030 in April of 2016.

Vision 2030

In a report published shortly after the announcement of Vision 2030, the World Bank

concluded that the Kingdom’s “significant dependence on hydrocarbons” ties its overall

economic outlook to oil prices.

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Although this conclusion had been repeated for decades at

this point, there was a valid reason for heightened concern. While some aspects of the

domestic economy had indeed been diversified, the Kingdom failed to foster a

knowledgebased service sector. This made the country first and foremost an oil exporter.

After 10 successive, short-term development plans and hundreds of billions of dollars of state

expenditures aimed at diversifying the economy, the Kingdom faced familiar problems.

Some of these issues were structural. The population was increasing exponentially,

from approximately 20.6 million in 2000 to over 32 million in 2016. When Vision was

announced, the majority of citizens were under 30 years of age.

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This “youth bulge” creates

enormous pressures on societies, as the demands of swelling younger populations overwhelm

structures dominated by older generations. Coupling this with higher life expectancy across

the population as the Kingdom became wealthier, enormous pressure was placed on the state

to provide a sound social compact across all strata.

Other issues were market driven. In June 2014, oil touched $112 per barrel. By

mid2016, prices dropped (and held steady) at $45 per barrel. For a government that relied on

oil rents for 80% of its revenues, a 60% drop in prices in a two-year period was significant.

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In fact, the Kingdom’s GDP declined by about 15% between 2014 and 2016.

126

To prevent

widespread economic pain, the Kingdom tapped into its reserves. Between 2015 and 2016

alone, the Saudi Arabian Monetary Agency drew down over $100 billion to close the gap

between government revenue and expenditures.

127

These issues, if left unchecked, could

prove existentially threatening to the Kingdom. This created an opening for MBS, who

claimed that if nothing was done, the country would be effectively bankrupt in a matter of a

few short years.

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Plan Overview

The Deputy Crown Prince personally announced Vision 2030 in April 2016. MBS

spoke of the need to diversify the economy away from oil and create strong healthcare,

education, and recreation sectors. He highlighted the importance of creating a domestic

military industry, as well as rebranding the Kingdom as more secular and modern. Together

with the privatization drives announced earlier, namely of Saudi Aramco, MBS appeared to

be telling the world that Saudi Arabia was open for business.

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The Council of Ministers and the CEDA later launched a formalized framework for

achieving these goals. From three pillars (i.e., A Vibrant Society, A Thriving Economy, and

An Ambitious Nation), some 96 strategic objectives cascade down. These strategic objectives

are governed by six overarching objectives (i.e., Strengthen Islamic and National Identity,

Offer a Fulfilling and Healthy Life, Grow and Diversify the Economy, Increase Employment,

Enhance Government Effectiveness, and Enable Social Responsibility).

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Within this larger framework, 13 vision realization programs were created to address

a wide breadth of issues in line with the aforementioned pillars and objectives of Vision 2030.

Programs related to housing, quality of life, fiscal reform, and national character enrichment

were formed. Other programs focused on developing the financial sector and investing in

human capital.

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The most prominent is the National Transformation Program (NTP).

The NTP seeks to increase government efficiency, improve economic conditions, and

enhance living standards. While some programs (e.g., the National Character Enrichment

Program) have not formalized strategic plans, the NTP listed specific goals. For example,

regarding healthcare, the NTP plans to increase availability of care by 10% and decrease time

spent in the emergency room. Living standard goals are tied to reduction in commute time

and traffic fatalities. The plan sought to double the number of tourist attractions, raise the

rates of female participation in the workforce, and reduce the Kingdom’s place on both the

Corruption Perceptions Index and the Global Open Data Index.

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Additionally, Vision 2030 also coincided with important fiscal policy changes, driven

in large part by the deficits discussed above. The government began levying a 2.5 percent tax

on undeveloped land and reduced subsidies on consumer staples (i.e., water, natural gas, and

petrol). Taxes on sugary drinks and tobacco were announced and a 5 percent Value Added Tax

was also planned.

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Contextual Analysis

In some ways, Vision 2030 is a watershed moment in the history of development in

Saudi Arabia. It is by far the most comprehensive, forward-looking plan proposed since the

founding of the modern Kingdom in 1932. Further, it proposes several structural economic

and societal changes that if actualized, would fundamentally change the country.

However, some Vision 2030’s hallmark proposals, such as privatizing key sectors and

enhancing the role of women in the economy, are rooted in previous development plans.

Functionally, the previous development plans discussed in detail in Chapter 2 targeted (albeit

with varying degrees of success) many aspects of Vision 2030. Expenditures were allocated

to human capital development, building out modern infrastructure, and fostering a robust

private sector as an economic growth engine. Hilal Kashan agrees, arguing that in many ways

Vision 2030 reads like a reboot of the Ninth Development Plan (2010-14), with its emphasis

on creating a knowledge economy and sustainably diversify away from oil.

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To Kashan’s point, stepping back five years later, the Eighth Plan (which called itself

“the first link in strategic path for the national economy”) was the first plan to include a

horizon beyond its expiration. It charted a path to 2020, relying on “Future Vision” categories

related to private sector growth and employment, and listed women as a strategic base. This

period, formally beginning in 2000 with the announcement of the Seventh Plan, was the birth

of a new development methodology. Plans were formatted as steps in continuous marches and

categorized similarly to Vision 2030. Further, they were marketed to the public by a

charismatic leader. In short, functionally, Vision 2030 has much in common with its most

recent predecessors. In form, though, it is different.

These differences lie in the periphery of the Royal Court. In Faisal and Abdullah,

although separated in time by several decades, there is historical precedence for senior

princes rising to power during times of tectonic change in the Kingdom. The sensationalism

surrounding the rise of MBS has allowed an overlook of these important parallels to the past.

As described in Chapter 1, the Royal Court’s coalescence around Faisal coincided with major

change in the Kingdom. By the end of the 1950s, the treasury was effectively broke and

previous public expenditures did little to foster a robust economy that could fuel growth. To

turn the tide, Faisal embarked on a near total overhaul of the Kingdom’s economy and was

successful to boot.

Later, as discussed in Chapter 2, Abdullah rose to dominate the deliberation at court

during a period of sluggish growth, low oil prices, and endemic corruption. Using his ability

to succinctly describe his vision for the country, as well as by directly marketing his plans to

the Saudi people, he fashioned the first long-term development plans focused on holistically

integrating the Kingdom’s economy in the larger global scene. Much like Faisal, he sought a

complete overhaul, eschewing the piecemeal approach of previous efforts.

It is in this way that the rise of MBS takes on greater meaning and context. Despite

how novel the rise of a young prince promising sweeping change reads today, there is

precedence not only for power struggles in the Royal Court, but powerful crown princes. All

three of these men sought major reform across various sectors of the economy of society, as

well as were apprehensive about a strong ‘ulama. However, there is one key difference (for

the purposes here, at least) between MBS and his predecessors – they were already firmly

integrated in the policymaking process, as well as in the line of succession. Faisal had been

Prime Minister for a decade before he was crowned monarch and Abdullah had been Crown

Prince for over 20 years. Both men had the legitimacy and influence that often comes with

time. In contrast, before MBS was named Minister of Defense in 2015, he was not a factor in

the balance of power in the Kingdom. Only two years later, he would be second in line to the

throne.

This is an important distinction to note. The reigns of Faisal and Abdullah are largely

studied in terms of their policy initiatives and outcomes. Even now, at this early juncture, it

would be irresponsible to primarily analyze MBS in terms of his policy goals. Similar to the

line between what is royal family’s and what is the government’s, as well as what is private

and what is public, Vision 2030 is hard to separate from the Crown Prince’s quest to

consolidate power.

The Provision of Policymaking

Vision 2030 is an attempt to supplant the earlier formula of Islam, modernity, and the

House of Saud as the basis for development and societal cohesion with the realities of the

21st-century. While these factors are still prominent, the formula is being adjusted to garner

foreign direct investment and allow for the creation of a global economic hub. In other words,

MBS wants to open the doors to the Kingdom’s economy in what has now become a standard

approach for wealthy nations. However, all of this is happening alongside a power

consolidation drive. As will be shown, this has had a profound impact on policymaking.

Personalization and Centralization

At the turn of the century, Abdullah favored a sliding scale approach to economic

change. He was very much at the center of the policymaking process but seemed to embrace a

decrease in the Royal Court’s role in economic planning. This is very much in line with an

important goal of the day – admittance to the World Trade Organization. He pursued goals

like free markets, privatization, and the elimination of state subsidies to this end. In other

words, he was willing to cede some control over the economy in exchange for sustainable

growth. As previously mentioned, rhetorically, he fused his family’s leadership and Islam as a

guiding force to this latest iteration of modernity.

The type of economic change sought by Abdullah is certainly at the heart of Vision

2030. Both approaches acknowledge the realities (and relative imminence) of a post-oil

landscape. In many ways, MBS appears to seek a true post-rentier state economy. The

modernization drive carves out a huge role for newly privatized industries, knowledge

workers, and previously untapped societal factions (e.g., women). Despite these policy

characteristics, the mechanizations of policymaking are entirely centralized around MBS and

his cult of personality. While it is correct to say that he is pursuing a pure, free-market

economy built on the riches of the old rentier state, he is also demanding virtually unchecked

power and autonomy.

Although the Royal Court was never able to operate in a textbook autonomous way,

as the literature on rentier states would predict, it was given considerable latitude by its

citizens in exchange for a generous (and comprehensive) welfare state. Naturally, an informed

observer would expect the level of state autonomy to decrease significantly if Vision 2030 is

to be actualized. For the plan to come to fruition, state subsidies must be cut further, virtually

every economic sector must experience some level of privatization, and significant taxes must

be raised. Under this scenario, with the state no longer at the center of public and private life,

citizens would hold more sway over the policymaking process

(whether directly or indirectly). These things – a free market economy and continued efforts to

maintain an autonomous state – are in conflict with each other. To understand this paradox

better, there are two important examples to consider.

First, one key difference between Vision 2030 and the numerous key development

plans is the near total abandonment of the inclusion of key religious and social figures in

projecting regime legitimacy. Of course, the Royal Court and the ‘ulama have historically had

a tenuous relationship, but even through Abdullah’s sidelining of them at the turn of the

century, they were an important tool to garner legitimacy. In contrast to the previous status

quo, where the clergy were consulted on importing foreign goods and labor in the early days

of oil to their expanded cultural significance to stave off Islamic revolution after 1979, they

have been almost totally marginalized by MBS. For example, in April 2016, a royal decree

stripped the religious police of their powers in what was framed as a removing a major

obstacle to reform.

135

Prominent social figures, such as senior royals with visible business

interests or other cultural figures, have also been sidelined. This will be explored further later.

Now, legitimacy seems to rest on a cult of personality and the promise of transformation that

does not appear easy to be borne out.

Saudi Aramco IPO

In many ways, the second example – the Saudi Aramco IPO – encapsulates both MBS

and Vision 2030. In a typical IPO, a corporate entity trades high levels of disclosure and

ongoing profitability expectations for new capital generated in the whole or partial sale.

“Going public” gives companies access to fresh, low-cost capital. Companies generally use

the proceeds generated from the sale to reward early investors and key senior leadership, as

well as fund capital intensive projects that will increase revenue and profitability. However,

there was nothing typical about this transaction.

Leading up to the December 2019 offering, Aramco managed approximately 17% of

the world’s proven conventional oil reserves.

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By the end of that fiscal year, the company

would net north of USD 88 billion on a quarter-trillion dollars in revenue.

137

Given the

company’s cash flow, as well as high credit rating, a public float would typically not be

necessary. Prior to the sale, Saudi Aramco would have been able to undertake a variety of

expansionary and diversifying projects without the complications of a public offering.

The IPO is unique for many reasons. Had the value of Aramco not needed to be unlocked to

fund Vision 2030, it would have most certainly remained somewhat of a state secret. It is

one of the biggest cash generators in the world, as well as the primary economic engine of

an entire nation-state. Further, like many IPOs, its outcome is hard to assess.

The IPO happened too recently to make a sound conclusion on its effectiveness as a

facet of Vision 2030. However, the disparities between the intended and actual outcome may

offer early clues. Initially, the IPO was the darling of the global financial press. There was

speculation of listing in London or New York. American and European investment banks led

the book-building process. Marketing events were to be held in global financial centers.

However, what began as an effort to further globalize the Kingdom’s greatest strategic asset

largely became a local endeavor. The Saudi national stock exchange listed the stock, allowing

Aramco to eschew stricter disclosure requirements in London and New York. American and

European investment banks may have led the book-building effort, but they also contested the

lofty USD $2 trillion valuation from the beginning and lost interest in purchasing shares

almost entirely after the Aramco bombings.

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Global marketing events were cancelled. And

the capital generated from the offering, initially meant to be sourced from a wide array of

global investors, came largely from local sources and other GCC countries.

In the lead up to the IPO, The Economist lumped its analysis of the transaction with an

assessment on MBS in a telling manner. The magazine called the IPO plans “a mess” and

attributed this largely to his micromanagement of the process. MBS, when he boldly

predicted a listing in a global financial hub, both underestimated the exposure to 9/11-related

litigation in New York, as well as stringent transparency rules regulating commerce in both

the United States and the United Kingdom. This cast a shadow of confusion over the offering,

as well as several delays.

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Aramco is the crown jewel of the Kingdom. It is the single most important

governmental entity. Given its role in the economy, the direct involvement of MBS in the

oversight of the company and the IPO speaks to his level of control over the policymaking

process. His handling of the IPO, as well as other events that will be discussed in the

proceeding section, shows an unwillingness to cede the center of economic activity to private

economic actors. In other words, MBS appears to be embracing the free-market economy,

while trying to maintain high-levels of control over most aspects of society. This leads to a

great, albeit not novel paradox with the state refusing to relinquish its influence over the

economy and society while inviting market forces that by their very nature will challenge this

autonomy. Ehteshami says it differently and more eloquently, observing that “the religious

elites want to protect the cultural realm from globalization, while the political elite want to

ensure their grip on the levers of power is not loosened by globalization.”

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The Provision of Power

While this paradox may have some predictive power on Vision 2030’s likelihood of

success, it certainly offers insight into the motivation of its proponent. The current

development plan is calling for all of the benefits of a globalized economy driven by the

private sector, while keeping aspects of policymaking in the Kingdom that made some

previous development plans falter (i.e., arbitrariness, incoherence, short sidedness, etc.).

Given that Vision 2030 shares many tenets of previous 21st-century plans, as well as this

persistent paradox, the most intellectually honest contextualization of it belongs in MBS’

effort to consolidate power. This section will explore two key aspects of this effort and will

conclude by assessing the impact on Vision 2030.

Corruption and Anti-Corruption

Prior to launching Vision 2030, in an attempt to brand MBS as a conscientious

reformer, one of his economic advisors publicly estimated that approximately 25% of the

Saudi government’s budget was lost to “inefficient” spending. Much of these inefficiencies, it

was suggested, were actually corruption.

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Shortly after this commentary was circulated,

MBS oversaw an upgrade of the national airline’s fleet. Saudia was in talks to acquire fifty

new jets from Airbus. Typically, airlines receive considerable discounts from manufacturers

when buying in bulk. However, MBS funneled the deal to his brother, whose leasing

company purchased the jets at discounted prices and leased them back to Saudia. Once the

deal was done, MBS jetted to the Maldives, where he rented out an entire luxury resort for his

entourage.

142

In firm control of the purse strings, MBS made a successive series of conspicuous

purchases. Still in 2015, later that summer, he purchased a 440-foot superyacht called Serene

from a Russian vodka tycoon for EUR 420 million. The all-cash transaction was completed in

a matter of hours. At year’s end, he purchased Chateau Louis XIV for some USD 300 million

in a Paris suburb.

143

After spending nearly a billion dollars in a year on personal expenditures,

he made a record-shattering purchase marred in even more controversy. In 2017, Christie’s

New York held an auction for the Salvatore Mundi painting. The story of this painting,

originally purported to have been painted by none other than Leonardo da Vinci, quite

literally fills books. In short, after languishing in obscurity for centuries, upon discovery, it

was thought to be one of the few paintings completed by da Vinci’s own hand. Christie’s

called it one of the greatest discoveries of the last century. An anonymous bidder, later to be

confirmed as MBS, paid USD 450 million for the piece. The plot thickened further from here.

The painting disappeared. A year later, it was supposed to make its museum debut at the

newly opened Louvre Abu Dhabi. After many delays, the unveiling was canceled. Naturally,

rumors abounded. Art historians and experts concluded that the painting was likely a product

of da Vinci’s studio, but largely completed by an assistant. The painting now hangs onboard

the Serene.

144

Like many things associated with MBS, his level of personal grift from the Saudi

state is not unprecedented. There are parallels between his yacht and King Su‘ud’s palaces,

for instance. It is simply more widely reported on and sensationalized by the international

media. However, while Su‘ud addressed corruption concerns by curtailing royal allowances

and leaving the status quo otherwise untouched, MBS embarked on a major anti-corruption

campaign.

In the first few days of November 2017, hundreds of important men were received

phone calls from the Royal Court inviting them for audiences with either King Salman or the

Crown Prince. Prince Alwaleed bin Talal, a well-known international investor and the

chairman of Kingdom Holding, was summoned. Waleed al-Ibrahim, a media magnate, also

received a call. Prince Mutib bin Abdullah, the head of the National Guard, was told a missile

launched from Yemen had hit the outskirts of the capital. Like many others, when they

arrived in Riyadh, they were escorted to the famed Ritz-Carlton hotel and detained. Phones

were confiscated and security details were dismissed.

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Once the roundup was complete, King Salman announced a comprehensive

replacement to the Kingdom’s existing anti-corruption efforts. With MBS at the helm, the

new committee was given wide latitude to “combat corruption at all levels.” It was given the

authority to investigate virtually any Saudi citizen, freeze individual and corporate assets, and

ban travel.

146

Over the course of several weeks, this committee rendered charges against and

extracted settlements from the 350 men detained in at the Ritz. Later, speaking anonymously,

some would tell international journalists about torture they were subjected to in order for the

committee to extract a statement of guilt. Before it was even over – with princes, government

ministers, and important businessmen still in their gilded cages – it was being marketed to the

public as something serving the greater good.

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Problematic tactics aside, corruption is a major problem in the Kingdom of Saudi

Arabia. For decades, the treasury was looted by senior royals in a litany of ways. Examples

abound; royals taking loans from Saudi banks and never repaying them, sponsorships

schemes where princes sold visas in exchange for a commission and running up costs for

government contracted projects.

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Given the tremendous cost of this behavior to the

economy, rooting out corruption is certainly a noble cause. However, this event deserves

stricter scrutiny.

Earlier in 2017, MBS’ quick consolidation of power had essentially been completed.

He officially became Crown Prince, first in line to the throne, and his authority and purview

were nearly limitless. Coupling this context with his own personal brand of grift, the events at

the Ritz take on further meaning. The siphoning of billions from government coffers does not

147

Ibid, 193.

appear to be the main reason for such a bold move. Writing on power and politics in the

Middle East over a decade before this event, Fred Halliday observed that “in Saudi Arabia, to

take an extreme case, individual members of the elite pursue policies that are largely

independent of the rulers, yet in financial and status terms remain part of the Saudi state.”

149

This is what the whole thing was about.

Since the discovery of oil, it has been hard for even internal actors, let alone academic

observers, determine where private initiative begins and ends. It is perennially difficult to

understand the partition between the administration of government ministries and the

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