Under intense international pressure, Saudi Arabia has stated that journalist Jamal Khashoggi died in a fight in the Saudi consulate in Istanbul. The admission will likely ramp up calls for the removal of the country’s de facto king, Crown Prince Mohammed bin Salman, who many believe bears ultimate responsibility for the death.
The defenestration of MbS, as the Crown Prince is known, would probably mollify Saudi critics; and a putsch cannot now be ruled out as the resolve of his domestic opponents may be strengthened after he has been seen to bow to pressure.
The Saudi royal family has replaced kings before. But despite MbS making many enemies within the court and the country’s influential merchant community, it is hard to see quite how the heir to the throne could be deposed, as he controls all the levers of power in the kingdom.
Khashoggi’s death will heighten anger and revulsion over the scandal in Washington. However, while the Trump administration had threatened “very severe” consequences if the Saudis were found to have killed him, it would be very reluctant to press for a change of leadership as that may weaken the Saudi-US alliance at a time when cooperation is of critical importance to America.
Since his controversial anointment as Crown Prince by his ailing, and very frail, father King Salman, MbS has turned the court upside down. He has restructured its administration in an effort to consolidate power, alienating rival princes, some of whom have lost or seen a marked reduction in their authority and allowances, a principal source of income. To add insult to injury, MbS rounded up many royals and businessmen late last year in a barely disguised shakedown, presented as an anti-corruption drive. Several are banned from leaving the country.
A number of his foreign policy moves have also alarmed many within the court and the influential clerical establishment. An ill-advised blockade of neighbouring Qatar, a ruinous war in Yemen, the apparent detention of the Lebanese premier on a visit to Riyadh and a dispute with Canada have all raised serious doubts over MbS’s leadership credentials. Most of those who question or challenge him at home quickly find themselves behind bars — he countenances little or no dissent.
MbS has sought to neuter any potential threat from the kingdom’s elites, and has seemingly little to fear from his largely quiescent and cowed subjects. Until now, the latter have been broadly supportive of him, seeing his professed clampdown on corruption amongst the royals and business leaders as well overdue. The young, in particular, seem to be approving because of his, albeit modest, reforms of Saudi’s stifling social and religious restrictions. When there have been stirrings of public discontent, he has calmed them. Mild social media protests over austerity brought in as part of his ambitious economic plans prompted him to sweeten the pain.
The West has tended for the most part to see the Crown Prince as a moderniser, taking on trust his stated commitment to turn an energy-dependent economy into a regional industrial hub. More critically in relation to the Khashoggi case, Washington regards MbS as an invaluable ally in putting pressure on Iran, the kingdom’s arch rival. Trump has also repeatedly spoken of the importance of billions of dollars of US arms sales to the Saudis. And even Trump’s fervent domestic critics would concede that it is very definitely in America’s interest to keep Saudi oil flowing.
All of which suggests that, at least for now, Washington is unlikely to push for MbS’s removal, particularly as, predictably, he seems to be doing his utmost to deflect blame for Khashoggi’s death onto his subordinates, a number of whom have been sacked and arrested. Whether this washes with the Trump administration we will have to see, but it comes as no surprise because a botched interrogation story has been doing the rounds for some time. So far, the US president has said that the Saudi explanation for the journalist’s death is credible.
Saudi royals who oppose the Crown Prince, seething at the humiliation and privations that he has heaped upon them, will feel vindicated and emboldened now that Riyadh has been pressured to confirm Khashoggi’s demise. Yet they have few options to restore their fortunes and the country’s international reputation.
Hunkered down in London, Paris and Geneva talking to their financial advisers, their frustration is palpable. Many are desperately short of liquidity, offloading their assets either in fire sales or using them to raise urgent funds. There has been talk of rallying around a possible successor, the urbane Prince Ahmed, in self-imposed exile in London, and their plotting will now no doubt intensify. A full brother of King Salman, he would seem one of the only choices to replace MbS, but it is hard to see how such a move could be effected given the Crown Prince’s iron grip on the country and Ahmed’s apparent lack of a support base.
Still, with the new revelations, there is always the possibility of us all waking up tomorrow morning to find the Crown Prince gone. If he manages to survive this scandal, what is more likely to be his undoing down the line is the impact of his authoritarianism and calamitous decisions on the economy. Though currently experiencing a slight upturn in fortunes due to a partial oil price recovery, it remains in a dire condition. A hint of the country’s liquidity troubles comes with reports that a Leonardo da Vinci painting purchased by the Saudis for $450 million has yet to be shown in Abu Dhabi, amid rumours that the auction price has not been paid.
The ‘anti-corruption campaign’ has delivered some much-needed funds, but not as much as anticipated. Billions of dollars in private accounts have been frozen to prevent them being moved abroad. Those accounts that remain open are being closely monitored, and any attempt to make a large non-business related transfer is immediately questioned and usually blocked. Informal capital controls are believed to be in place.
The financial crackdown had raised concerns amongst foreign investors already nervous about the state of the economy and the credibility of the Crown Prince’s reform plans. They have not been flocking. And the waverers may now rule out engagement altogether.
Indeed, news of Khashoggi’s death could further undermine the Crown Prince’s showpiece fund-raising event, the so-called Davos in the Desert, scheduled for next week. There has already been a string of high profile cancellations. Notable among them is that of JP Morgan Chase CEO Jamie Dimon, which will be seen as a huge slight and may result in JPM being side-lined on lucrative privatisation deals, just months after announcing that it was planning to expand its business in the kingdom.
The Crown Prince has singlehandedly alienated the very people he has spent millions trying to woo. The biggest irony is that Khashoggi was employed by the Washington Post, owned by America’s richest man, Jeff Bezos. MbS is in danger of becoming toxic — if he is not already — and it is this that could ultimately put paid to his leadership.
He has sought to portray himself as an economic reformer able to prepare his country for a post-oil future. If those he is relying on to help bring about his vision desert him, then he will become vulnerable to challenge. It may not be now, but if the fallout from the Khashoggi scandal is long-lasting and deep the seemingly impenetrable edifice that he has built around him could begin to crack.
Ambrose Carey is a Director at Alaco, a London-based business intelligence consultancy.