Domestic Reform in Saudi Arabia: A New Order?

Saudi Arabia’s Crown Prince Mohammed bin Salman has rapidly accrued political power since supplanting his 57-year-old cousin as heir to the throne. The 32-year-old Prince Salman appears to be trying to reshape the political landscape of Saudi Arabia, whilst reasserting Saudi leadership within the region. The recent anti-corruption campaign against royals in positions of authority, and pronouncement that women will be allowed to drive in the Kingdom from June 2018, exemplify the Crown Prince’s attempts to appeal to a younger generation over which he may rule as King for half a century. In the context of rising republicanism in the region, an increasingly isolationist United States and reduced demand for oil, the Crown Prince has launched an ambitious roadmap for economic reform through the landmark Vision 2030 plan.

The scope of reform

The blueprint for reform comprises the Public Investment Fund Program, Fiscal Balance Program and National Transformation Program 2020 (NTP). The goal is to develop and expand the Saudi defence, retail, renewable energy and private sectors in order to reduce dependence on oil and gas, which currently account for 50% of GDP. State subsidies will be targeted for reduction in an effort to reduce the budget strain, with the social welfare system instead targeting ‘the neediest and supporting them more effectively’. National investments will be funded by the Saudi Sovereign Wealth Fund, which aims to double the value of assets it manages to $400 billion by 2020. A major injection of funds is expected from Aramco, the state-run oil company. It is hoped that the reforms will boost and diversify the Saudi economy, turn the nation into a ‘global investment powerhouse’ and raise living standards progressively over the next ten to fifteen years.

Realities and implications

A significant extension of the private sector will be required to break a long tradition of guaranteed welfare through government employment and subsidies. With youth unemployment at almost 30%, and a plan to increase women’s participation in the workforce from 22% to 30%, it remains to be seen whether Vision 2030 will be able to create enough new jobs to cater to a rapidly expanding working age population. Saudis will have to adjust to the loss of government subsidies. With high unemployment levels, a youth well connected on social media and changing social demographics, the risk of organised revolt is real. In the interim shift to a diversified economy, planned initiatives may be stymied by reduced demand for oil on global markets. Competition for influence and national ambition is contributing to the rejection of collaborative regional deliberation and a worsening security environment. The Saudi-led intervention against Houthi rebels in Yemen is not playing well on the international stage and may have fiscal and political implications both abroad and at home. There has been no due process for the detention of royals accused of corruption by the state, and the Crown Prince’s Supreme Anti-Corruption Committee has virtually unfettered powers of investigation and punishment. Ultimately, the Crown Prince’s attempts to coerce the wealthy into signing over tens of billions of dollars in assets to escape prosecution are more reflective of the actions of an autocratic leader than of a modern rule-of-law head of state.

Conclusion

Each of these realities suggest that change will not come easily. While the Saudi Crown Prince has a bold new vision for a thriving and robust economy and a social agenda that is more inclusive of women, political reforms are yet to be mapped out. Vision 2030’s success may have implications of its own for the Saudi elite, as an expanded, independent middle class may increase demands for political reform – yet this can only be a good thing. The Crown Prince’s confrontationist foreign policy and incursions into Yemen may affect his international standing, escalate regional tensions and have budgetary and security implications at home. The success or failure of Prince Salman’s domestic reforms will depend on a multiplicity of factors that must include political reform and international cooperation.

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Katrina Hall is a Juris Doctor candidate at the Australian National University and holds a Bachelor in Political Science (IR).