By George Hay and Rob Cox
DUBAI (Reuters Breakingviews) - If Saudi Arabia was a corporation, its executive chairman would now consider replacing its chief executive, whose underlings have officially been accused of murdering an unarmed civilian in an overseas branch – the consulate in Istanbul. Saudi is not a company. It is an absolute monarchy, with a king and a crown prince rather than a chairman and CEO.
But the corporate analogy is apt. Saudi is a rich nation today that has embarked on an ambitious turnaround to confront a day when it can no longer rely on demand for oil to fund the welfare of its citizens, or the lavish lifestyles of its royals. The question before 82-year-old King Salman bin Abdulaziz is whether the architect of that existential strategy, his son Mohammed bin Salman, the 33-year-old crown prince, can still execute on his plan.
Critical to MbS’s Vision 2030 idea to transform Saudi Arabia’s economy is the need to attract foreign capital. The killing of journalist Jamal Khashoggi, which the kingdom on Saturday acknowledged with the arrest of 18 people and censure of two senior officials, has damaged his ability to meet that important objective.
That’s not to say American and European companies won’t continue to do business with the House of Saud, selling armaments, buying oil and the like. But investing in an enterprise whose leader is perceived to have been complicit in a high-profile murder is a taller order. Already, Saudi was struggling: annual foreign direct investment inflows of $1.4 billion in 2017 were the lowest in over a decade.
Absent this money and sustained high oil prices, Saudi will find it harder to diversify away from fossil fuels, cut unemployment and grow its private sector. The exciting potential of futuristic projects like the $500 billion Red Sea mega-city NEOM, powered by renewable energy and reinforced with global talent, may wither on the vine.
The prospect of Salman managing his CEO out remains remote, though. Partly that’s a reflection of the extent of MbS’s control and popularity among younger ordinary Saudis. A bigger issue is that MbS, despite his authoritarian streak, personifies a more outward-facing and forward-thinking kingdom. Without him, the vision bit of Vision 2030 would be clouded. But with him, the investment needed to make it happen may not materialise at all.
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