Analysis & Opinions - The Wall Street Journal

Saudi Reforms Get a Boost From Google

| Feb. 04, 2018

Alphabet’s interest in the kingdom is a signal that Crown Prince Mohammed is serious about change.

Riyadh, Saudi Arabia

Since Crown Prince Mohammed bin Salman announced his intention to transform this country nearly two years ago, Saudis and foreigners alike have questioned whether he is serious or merely enjoying power. The time for doubt is over. Last week’s news that Alphabet, Google’s parent company, is in talks to build a tech hub in the kingdom is only the latest sign. Look for more such initiatives when the crown prince visits the U.S. in early March.

Whatever one may think about Saudi Arabia or its new young strongman, there is no longer any dispute as to his resolve. Prince Mohammed is determined not just to reform the country but to wrench Saudis out of a 30-year torpor that he rightly sees as inexorably leading them toward poverty and instability. The radical change he is imposing isn’t a choice: It is the only choice.

He has inherited a nation of 22 million spoiled children, each of whom wants a cushy life in the national nursery that oil-rich Saudi Arabia used to be. But with crude oil crashing to $26 a barrel in 2016—and even now at almost $70 a barrel—Riyadh can no longer afford the pacifiers to tranquilize its population, not to mention the 10 million foreign workers who have tended to Saudi citizens’ every need.

Prince Mohammed’s Saudi Vision 2030 is a push away from dependence on government and toward self-reliance. To jump-start the transformation, he has instituted social changes no one could have imagined only a few years ago: Saudis are now free to attend concerts and cinemas, and in June women will be driving, all of which were previously forbidden by religious authorities backed by royal rulers.

More significantly, Prince Mohammed has rounded up prominent people accused of financial corruption—royal cousins, cabinet ministers, businessmen—and forced them to turn over what the government says will be $106 billion in exchange for their freedom.

These are shocking tactics in a country accustomed to royal rule through laborious consensus-building among the senior princes. But the truth is that most of these senior princes are now dead. More to the point, that unwieldy method of governance failed for 30 years to wean the country off oil dependence, despite repeated commitments to that end. Prince Mohammed knows the folly of doing the same thing over and over and expecting a different result.

Almost since the founding of modern Saudi Arabia in 1932, its stability has rested on three pillars: unity among the royals, their symbiotic cooperation with the Wahhabi religious establishment, and oil wealth. The new crown prince has upended each of these pillars—arresting and humiliating his royal relatives, insisting on moderate Islam and a more open society, and imposing high taxes on the cheap oil that Saudis regard as their birthright.

During my January visit, Saudis were in shock at the social, political and economic changes. In a single week last month, electricity prices tripled, gasoline prices doubled (to roughly $2 a gallon), and the first-ever value added tax, of 5%, was imposed. If asked Ronald Reagan’s famous 1980 debate question—“Are you better off than four years ago?”—almost all Saudis over 30 would say “no.”

The arrests of elite princes and businessmen, as well as conservative religious sheikhs, have chilled older Saudis. During my visit, more than one old acquaintance declined to meet me for “health” reasons and other polite excuses. But Prince Mohammed’s constituency is not the royal family or the religious sheikhs. It’s the 70% of Saudis who are under 30. He essentially is playing generational Robin Hood—taking from the elite who for decades helped themselves to the nation’s oil revenues, while freeing the young from the smothering hand of Wahhabi sheikhs who sapped Saudi initiative by controlling every aspect of daily life. The crown prince clearly hopes that if citizens are allowed to manage their lives, they will take responsibility for their livelihoods.

This is a brave gamble, but without significant change Saudi Arabia’s future looks dark. The economy is growing more slowly than the population. Domestic oil consumption is rising nearly 6% a year, a trend that would leave Saudis consuming all the Kingdom’s oil production—with none left for export—by 2030. The economy shrank 0.5% last year and is estimated to grow only 1.6% in 2018, according to the International Monetary Fund, though the Saudi government projects faster growth of 2.7%. The official unemployment figure is 12.7% nationally, but it’s nearly double that for men between 20 and 29 and 33% for young women in that age group.

Prince Mohammad’s economic transformation represents a huge task. If that isn’t enough, he also confronts a hegemonic and meddling Iran, a feud with Qatar, and a war in Yemen. Knowing the price Saudi Arabia has paid for decades of dithering, the crown prince has dared to impose rapid top-down change. Inevitably he will make some mistakes. Those he can repair. More troublesome is that some Westerners whose investment and support he seeks may insist on seeing Saudi Arabia as stuck like a fossil in its past Wahhabism and limited personal freedoms. While the Saudis are far from perfect on human rights, the West should acknowledge that the recent progress is real.

The biggest risk remains the economy: It is far from clear that Prince Mohammed can transform the country fast enough to meet the pent-up ambitions of young Saudis. The West has a stake in doing what it can to assure his success. A collapse that turns Saudi Arabia into another chaotic Iraq or theocratic Iran would be a disaster for the region and the world. Right now, the young prince with his agenda for radical change is Saudi Arabia’s best, and probably only, shot at moderate—and modernizing—reform.

For more information on this publication: Please contact the Belfer Communications Office
For Academic Citation: House, Karen.“Saudi Reforms Get a Boost From Google.” The Wall Street Journal, February 4, 2018.

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