Saudi gambler in charge

By the end of 2015 the BND, the German foreign intelligence service, had grown so concerned that it warned the government about Saudi Arabia’s new Deputy Crown Prince and defence minister, 30-year-old Muhammad bin Salman.

“The previous cautious diplomatic stance of older leading members of the royal family is being replaced by an impulsive policy of intervention,” it wrote.

At that point Prince bin Salman had been defence minister for only one year, but he had already launched a major military intervention in the civil war in Yemen and committed Saudi Arabia to open support for the rebels in the Syrian civil war.

He also decided to let oil production rip and the oil price crash. No wonder the BND characterised Prince bin Salman as “a political gambler who is destabilising the Arab world through proxy wars in Yemen and Syria”. And he’s betting on the wrong horses.

The first bet to fail was his intervention in the Yemeni civil war, with an aerial bombing campaign that killed at least 10 000 Yemenis and cost Saudi Arabia tens of billions of dollars.

Prince bin Salman sold the war as a short, sharp intervention that would defeat the Houthi rebels in Yemen and put Saudi Arabia’s own choice for the presidency, Abd Rabbuh Mansur Hadi, back in power. It has turned into a long, exhausting war of attrition: the Houthis still control the capital, Sana’a, and Hadi will not be going home soon.

Then the Deputy Crown Prince’s second big bet, an open commitment to support the Syrian rebels, failed when the Syrian army, with Monday 12 13 February 2017 Russian and Iranian help, reconquered eastern Aleppo last December. Not one of Syria’s big cities is now under rebel control.
The prince’s biggest gamble was his plan to restore Saudi dominance in global oil markets by driving the new competition, the American producers who get oil out of shale rock by fracking, into bankruptcy.

He reckoned the frackers were high-cost producers who would go broke if the price of oil stayed low enough for long enough. So Saudi Arabia kept its own oil production high and persuaded its partners in the Organisation of Petroleum-Exporting Countries (Opec) to do the same.

The US frackers shut down less profitable operations temporarily and some smaller players went bankrupt, but the survivors are ready to ramp production up again as soon as the oil price improves.

Meanwhile, Saudi Arabia has been burning through $100 billion a year in cash reserves to keep government services and subsidies going. Last November the prince admitted defeat. Saudi Arabia and its Opec partners cut production by 1.2 million barrels per day.

The oil price is up to $55 per barrel and Saudi Arabia’s cash flow has improved. The prince is not a fool but he is in a hurry to produce some positive results.

His father, King Salman, who ascended to the throne just two years ago, is 81 and in poor health and his son is not his obvious successor. So to have any hope of succeeding to the throne, Prince Muhammad bin Salman must prove his worth quickly.

That’s why he was open to such high-stakes, long-odds gambles: one big success could do the trick for him. He is probably still up for another roll of the dice.

Gwynne Dyer