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"We are inefficient, we are corrupt, we must change"
Material posted: Pankratenko Igor N.Publication date: 31-05-2016
Predictions of the imminent and inevitable collapse of the Saudi Arabia - if not in the near future, to the year 2020 certainly extremely popular in the expert and journalist community. Time is running out and signs of decay are not observed, even in the face of falling oil prices, however the enthusiasm of the "forecasters", despite the obvious facts, has not abated.

The "big four", the people who actually control Saudi Arabia seems to have decided to put these conversations in the bullet – some time ago, Mohammed bin Salman, Deputy crown Prince, defense Minister, head of state investment Fund, curator of economic policy related to oil issues and other, other, other announced the beginning of implementation of the strategy "VISION-2030" program of radical modernization of the country. In fact – about the beginning of large-scale economic and socio-political experiment.

Why now and not, for example, in January 2015, when Salman bin Abdulaziz al Saud inherited the throne from his brother, king Abdullah? After all, the key purpose was then. And then at a closed meeting of key figures of the dynasty, it was decided to carry out fundamental reforms. The answer is not in oil prices, and the fact that almost half a year it took "the big four" and their supporters in the Kingdom, in order to determine the social base of the reforms involve the elaboration of its conceptual provisions leading businessmen and financiers. But the main thing is to show local "die-hards" that while maintaining the same course, without serious internal changes in the main mission in Riyadh, as it is understood in the Kingdom – keeping the top position in the Islamic world – can safely forget.

The year 2015 was the year of slaps to the Saudi "stubborn" in the international arena. The Obama administration despite the fierce resistance of the Pro-Saudi and Pro-Israel lobby managed to push through the Congress the agreement with Iran on its nuclear dossier. "Frozen" situation in Syria. Then came Yemen and Lebanon, where not only staged a military (Sana'a) and political (in Beirut) blitzkriegs, but suffered an outright failure of the "doctrine of king Salman," providing for the creation of some "Islamic coalition to combat terror." Of the widely publicized idea came from outright farce – supported by all, including Egypt and Pakistan, and real steps were limited to "threatening moves" Djibouti, the existence of which the world and remember-it is only after the rupture of the country's relations with Tehran and the introduction of anti-Iran sanctions.

However, lost in the image, the leadership of Saudi Arabia won in the other. "Stubborn" was convinced that the world really has changed, that the international authority of the Kingdom is shaken, which Washington hopes a little, and the main regional opponent of Tehran seeks to regain lost ground in the regional scenario, and in matters of geo-Economics. Convinced that the modernization of the Kingdom is not a whim personally of king Salman and his "upstart" - the youngest son of Mohammed, who became the youngest world's Minister of defense, and urgent need. It is better to donate to small, to allow women to drive, than to lose the title of "custodians of the Two Holy mosques", and possibly the head.


Less oil – more money!

The essence of the multi-page strategy "VISION 2030" can be reduced to one sentence – a situation where nine-tenths of their income to the Kingdom receives from the sale of "black gold", it is necessary to radically change, achieving by 2030 the cessation of oil dependence. However, in his presentation waiting for the Kingdom economic innovations of Prince Mohammed bin Salman went further, claiming that Riyadh is able to do it at all by 2020 – but this can be attributed to age optimism.

As for the strategy itself, the document is a serious and well crafted. A full upgrade will take approximately four trillion dollars in the past 15 years. Three of them will be the very means of the Kingdom, consolidated in the national welfare Fund, another trillion is planned to attract in the form of foreign investment. Moreover, funds from the state Fund will invest in promising projects which shares are then will be the procedure of IPO.

The first step will be the privatization of the largest oil company on the planet – Saudi Aramco extracting every tenth barrel of oil in the world. However, according to well informed sources, showing not only that the sale will be exhibited shares non-mining companies the Aramco and paper refineries in Saudi Arabia and abroad, while shares of parent company to participate in the IPO will not.

However, this does not detract from the scale of the operation, as the oil Empire Aramco is huge, according to Bloomberg, it recycles 5.3 million barrels per day, of which actually belongs to her more than 3 million. And even in this truncated version is selling between 30 and 49% owned by the Saudi crown jewel" of the refinery – Riyadh, may receive 100-150 billion dollars.


However, "VISION-2030" - is not only and not so much the sale of assets Aramco. As you claim to be close to Prince Mohammed bin Salman circles, "Saudi Arabia is a Klondike inefficient use of assets, ranging from 6% of world reserves of uranium and ending with four millions of free square meters of land in Mecca. Yes, it is in Mecca. And if we are talking about this, is it any wonder that according to the plans of the Saudi leadership in the near future, privatization will be exposed to the health facilities, some educational institutions and a number of enterprises of the military industry. As the same Prince Mohammed bin Salman has called "intolerable" situation, when the third in the world in military spending buys the country in their enterprises, only two percent of the weapons.

Equally ambitious projects in the energy sector and in other industries, but for partners of Saudi Arabia in the world and those who make up the social base of reforms in the country, is not so much the technical details of privatization, investments and changes in tax legislation, how many two obvious things.

For the first principle, in Riyadh at the highest level and admitted:"We are inefficient, we are corrupt, we need to change."

For the second, it is important that the announced modernization opens, albeit in the long term, social mobility for almost 70% of the population, those who are about 30 years or less. This is both a strength, and both the extreme vulnerability of the reforms.

The house of Saud: the intrigues and nuances

We have already mentioned "the big four", those who actually managed today by Saudi Arabia. It's time to call them by name. First of all, the king himself Salman bin Abdulaziz al Saud, who has blessed not only modernization, but also agreed on the role of "technical king", a transitional figure from the older generation of the dynasty, Frank gerontocracy "youth".

Second on the list – 56-year-old king's nephew, crown Prince Mohammed bin Naif, Deputy Premier, Minister of interior and supervisor of the Ministry of oil. The Ministry of internal Affairs and the whole "power block" of the Kingdom – for him the main problem for today. The Western press called the "Prince of anti-terror", because, in close cooperation with the US secret services he almost managed to kill al-Qaeda in the Arabian Peninsula" and to cut the channels of financing, not only domestically, but also in the neighboring monarchies. The problem is he has one, but by local standards, critical – lack of sons. What makes his candidacy for the post of head of the Dynasty and retrofit of the Kingdom in the future, some how put it mildly, flawed.


Third, the current foreign Minister, Adel bin Ahmed al-jubayr. 54, received an excellent education in the United States, eight years was the Ambassador of Riyadh in Washington. But a member of the Royal family he is not. The exact number of members of the ruling family finds it difficult to call even a special Royal Committee for determination of heirs in recent years, they referred to the figure of 25 thousand, but with the caveat that these are approximate data. A little easier with the legitimate children 45 21 sons and a daughter, who in turn, gave Saudi Arabia for about five to seven thousand princes. Al-jubayr may be a genius of intrigue, but against the masses, he does not endure, like not have survived as much more "weighed" in dynastic hands, the grandson of king Turki bin Faisal al Saud, who served as head of Saudi intelligence, figure in the United States, the most influential – and now residing in an undefined status of "unofficial envoy".


In the end, the main driver for reforms in the Kingdom today is another member of the Quartet, has repeatedly referred to the Deputy crown Prince, second Deputy Prime Minister and Minister of defense, head of Royal court, Chairman of the Council on economic Affairs and development, the Mohammad bin Salman al Saud, born in 1985, the son of the current king Salman and his third wife.

The idol of Saudi youth, one of the leaders of the Kingdom, openly, albeit with reservations recognized that "the woman too the person", with good economic trump cards – the country's external debt otnositelno to GDP is only 5%, foreign exchange reserves of more than 600 billion dollars and a huge confidence of foreign investors, including Boeing, Airbus, GM, Sony, Siemens and others. This is one side.

But there is another. For "stubborn" and old elite Saudi Prince – "upstart", the violator of tradition, educated in the West, but detached from the roots. Many of his moves and statements raise the unspoken condemnation and plans to reduce the number of foreign workers (the exact number of which is unknown, but referred to the figure of ten million) in the country and abroad raise serious concerns.

The program of modernization of the Kingdom does not provide for the suspension of Saudi expansion and promotion of leadership in the Muslim world. On the contrary, one of her ultimate goals is to make this the most attractive leadership, to ensure strong economic "hinterland". The Prince bin Salman recognizes that the implementation of the "VISION-2030" we had to start at a time when the oil price was around $65-70 per barrel, but had not yet got over the intrigue within the ruling house of Saud. And as "modernization of the king" will be developed – these contradictions will only grow. The current regime in Riyadh is a serious margin of safety, no matter who claimed otherwise. But will it be enough for wide-ranging reforms envisaged by the strategy? Or will it just be a "makeup" at the end of which Mohammed bin Salman will leave his post as "failed"?

Igor Pankratenko



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