The Al Saud have long faced three principal threats: foreign invasion, domestic unrest, and intra-family conflict.  Of these, family conflict has often been the most difficult to avoid.  They are a large family with thousands of members.  Different sections compete for limited resources and the cone of privilege narrows with each passing generation.  Like all dynasties, the Al Saud are most vulnerable to internal conflict at times of succession.  Fighting between the sons of Imam Faisal bin Turki Al Saud led to the collapse of the Second Saudi State in 1891.  From that failure, the Al Saud learned a strategic lesson:  above all else, do not use force against each other.  Keep family disputes peaceful and private.  Unite quickly and firmly against anyone who violates this rule.  That lesson served them well last week.

Many intelligent and well-intended analysts have predicted the collapse of the Al Saud dynasty.  As far back as 1936, the British Political Agent in Kuwait, H.R.P. Dickson wrote that “When Ibn Saud disappears, Arabia will probably collapse into chaos.”   Dickson like so many others since was wrong.  The Third Saudi State survived (1902 to the present) and under often difficult circumstances peacefully transferred power six times.  The Al Saud removed an incompetent king, dealt with the assassination of another and weathered the long debilitating illness of a third.  The two Kings who did not die of natural causes were removed by their relatives; King Saud by his brothers’ consensus and King Faisal by his nephew’s gun, but the dynasty has survived.

Nevertheless, the transition from the sons of Ibn Saud to the third generation “grandson princes” was understandably viewed by many as a potentially destabilizing event.   Largely due to the efforts of King Salman, this danger has not materialized.  Salman immediately appointed one of the most highly regarded of grandson princes, Mohammad bin Nayef   (Ibn Nayef) to be the Deputy Crown Prince.  Some observers believed Salman had thus made his most important contribution to Saudi history in his first week on the throne.   However, two months later, he removed Crown Prince Mugrin, appointing Ibn Nayef Crown Prince-  thereby effectively ending the chain of Ibn Saud’s sons that had ruled Saudi Arabia since 1953.  At the same time, Salman made his own son Mohammad bin Salman (Ibn Salman) Deputy Crown Prince.   Last week, he retired Ibn Nayef and made Ibn Salman the new Crown Prince.  In order to prevent formation of any opposition to Ibn Salman after his death, we expect the King will abdicate before his health seriously declines in order to assure that his son is firmly in place when he dies. 

The transition to third generation of princes has been orderly, but far from straightforward. It created uncertainty as Saudi Arabia went through five crown princes in the past seven years.  While it was well recognized that King Salman wanted to make his son king, it was equally apparent that many in the royal family opposed Ibn Salman and the quite radical agenda he was setting for Saudi Arabia.  Over the course of two years King Salman persuaded, co-opted and neutralized the opposition.

In 2015, the Private Office or Diwan of the Crown Prince was abolished and Ibn Nayef’s long time deputy Saad Al Jabri fired by the king.   The Defense and Security Council which Ibn Nayef chaired was marginalized by the creation of a National Security Council where he was not even a member.   At the Ministry of Interior new men loyal to Ibn Salman were installed to head the intelligence service and police.

King Salman was very careful to ensure broad family support for his succession plan.  There are 34 voting members of the Allegiance Council of senior princes which elect the new crown prince.  Salman made certain that 29 of them have sons or brothers who are provincial governors, deputy governors or Ambassadors to important countries.  Like any politician he bought the votes he needed by taking care of his constituents.

Thus in the two years it took him to gather support for his son, King Salman maintained the cohesion of the Ruling Family with patronage while at the same time slowly reducing the authority of Ibn Nayef and constantly increasing that of Ibn Salman. The retirement of Ibn Nayef was not a bloodless coup.  Significant power changed hands, but within a stable framework that was understood and accepted by all the players.   King Salman made and unmade Ibn Nayef.  In the final act of the transition, the retiring crown prince publicly swore allegiance to the new one.  The bottom line here is that unlike most governments in the Middle East, the Al Saud have proven remarkably stable.  They have ruled in Riyadh for all but 15 of the past 272 years.   That is not likely to change in the near or mid term.

What has changed is the sense of uncertainty that had hung over Riyadh.  This is now largely gone.  It is clear who the next king will be.  Like the execution of the Tzar, the retirement of Bin Nayef signals that there will be no going back.  Saudi Arabia’s economic and social reforms, as well as its more assertive foreign policy, will go forward and probably accelerate.

King Salman and Ibn Salman have adopted a more assertive foreign policy than Saudi Arabia traditionally pursued.  In dealings with Yemen, Syria and now Qatar they have exchanged subtle, quiet behind the scenes maneuvering for direct intervention.  Ibn Salman has been the architect of these policies.  His promotion to Crown Prince and the re-establishment of a strong relationship with the United States are likely to make Saudi foreign policy even more assertive.

Ibn Salman is also the author of Saudi Arabia’s economic reforms.   Known as Vision 2030, these reforms seek to reduce the importance of oil to both government revenues and economic growth.  The plan seeks to increase the private sector’s contribution to GDP and employment.  More than a few businessmen, technocrats and princes have objected to parts of Vision 2030.   With Ibn Salman now Crown Prince, it is clear that Vision 2030 is here to stay.  The privatization of government owned railroads, power plants, ports and grain silos will accelerate.

One important element of Vision 2030 is selling five percent of Saudi Aramco and investing the proceeds in a sovereign wealth fund designed to invest abroad and provide a new stream of government revenues.   This proposal has encountered significant opposition from Aramco technocrats and some members of the royal family.  Ibn Salman stunningly supports the IPO and has been working to eliminate the opposition.  The first to go was long time oil minister Al Niami who had scuppered the Crown Prince’s Gas Initiative in 2000 and was again trying to stop foreign involvement in the Saudi energy sector through the Aramco IPO.  Ali Niami’s departure was followed by that of Prince Abdulaziz bin Salman a long time oil ministry official who was seen as an obstacle to Ibn Salman’s takeover of oil policy.  He was promoted to the prestigious, but powerless, position of Minister of State for Energy where he will largely focus on energy conservation.

While internal opposition to the Aramco IPO has been reduced by the promotion of Ibn Salman, we believe the IPO continues to face many obstacles.  The audited accounts of Aramco have not been made public.  The firm’s relationships to the Ministry of Finance and royal family remain opaque.  Consultants have been hired to estimate Aramco reserves, but the volumes and grades of these reserves have not been disclosed.  Just what parts are the company are to be sold and where the stock will be listed are still being reviewed.  The sale is predicated on oil prices of between $50-55, but WTI today is selling for $47.  Even this oil price has been achieved only through Saudi-led production cuts and these cuts are costing the Saudis market share.  While Aramco has been willing to do what it takes to maintain prices before the IPO, we doubt it will be so aggressive afterward.

Ibn Salman has made it clear that he wants to open up a very conservative and insular society.   Sixty percent of Saudis are under thirty and this is just what most of them want to hear.  They are thrilled that they can now go to concerts, magic shows, car races and even operas instead of just Koran memorization contents.  Occupations that were closed to women are opening.  Saudi women are grabbing new opportunities in everything from law and engineering to retail and hospitality sectors.  Ibn Salman has stated clearly that the era of extreme religious conservatism in Saudi Arabia is over.   With Ibn Salman’s position confirmed, women driving, movie theaters and even the construction of churches in Saudi Arabia have all become much more likely.

The Al Saud remain legitimate in the eyes of most Saudis because they balance the needs of various stakeholders and provide competent government.  One stakeholder group is the religious establishment.  One element of competent government is internal security.  If there is a risk associated with the promotion of Ibn Salman, it is that the official religious establishment will feel marginalized and become less supportive of the government or that they will remain supportive of a less religious government and thus lose the respect of their congregations.  Either outcome could affect the internal security of the Kingdom where religion remains the chosen vehicle for those calling for political change and social justice. 

As with the reaction to Iran’s White Revolution, the Saudi clergy could become the focus of opposition for those who feel their interests are threatened by Vision 2030.  This has not happened yet.  It probably will not happen because the Al Saud have put in place mechanisms to rigorously protect the poor, such as the new Citizens Fund which is a means-tested system of rebates intended to compensate the poor for recent electricity, gasoline and water price increases.  Nevertheless, the accelerating pace of social change being championed by Ibn Salman is bound to lead to resentment in some quarters which bears watching.      

In summary, there is now much less uncertainty in Riyadh.  The family has united behind new leadership with 31 of the 34 Allegiance Council members voting for Ibn Salman to become the new Crown Prince.  The transition from Ibn Saud to his sons led to a destabilizing and disruptive conflict that raged between King Saud and Crown Prince Faisal for nearly a decade.  We will not have to witness similar disruption during the transition to Ibn Saud’s grandsons.

We expect current economic, social and foreign policies to be maintained and executed more vigorously.  There will be no devaluation of the riyal.  The Aramco IPO will move forward. There will be no reversal of Saudi policy towards Yemen or Qatar.  Our sole concern remains the religious conservatives.   We know that they are unhappy with the direction and pace of change.  We also know that they have remained quiet only because of their well-founded confidence that King Salman remains a strong defender of the partnership between the Al Saud and the Wahhabi movement.   The King recognizes and values their role in Saudi government and society.  They do not feel the same way about his son.  They may not remain quiet indefinitely.  

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