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Saudi Arabia gets a new next king

Mohammed bin Salman will have a free hand as the next Saudi king but faces formidable domestic and regional hurdles. Oil policy is one

Speculation about the succession has for years been a juicy subject of Saudi gossip. Now Saudis need to find something else to talk about. They face the unprecedented prospect in the not-too-distant future of a man in his early thirties becoming king.

This means that when Mohammed bin Salman, who was elevated to the position of crown prince in June, ascends to the throne he could remain there for three or four decades. This is a giant move away from the tradition of old men stepping into the shoes of other old men.

Some analysts expected the news, announced on 21 June, to bring an oil-price rally. But markets were subdued. MbS, as he's widely known, is already in charge of oil policyhis elevation just consolidates that. Yet he's also behind much of the recent escalation in tensions with Iranhis elevation may deepen that.

The clinical dismissal of Mohammed bin Naif both from his role as crown prince and his position as interior minister represented the final move in what has been a one-sided contest between two contenders for the throne. It was one-sided because King Salman, who succeeded the late King Abdullah in January 2015 and brought in Mbs as deputy crown prince, was clearly happy to see his young son serve a rapid apprenticeship for the monarchy.

Occupying the top chairs in the defence, economy and energy sectors, MbS gradually targeted the interior ministry. He chipped away at MbN's authority over security matters, bringing many of its functions under the umbrella of the royal court.

With MbN out of the way, MbS has a clean slate on which to draft Saudi Arabia's domestic and regional policies. While he has a small team of advisers, the crown prince has dispensed with the kingdom's tradition of holding lengthy private consultations with senior princes to achieve consensus before publicly announcing decisions. MbS is too impatient to wait for the old creaking wheels of government to turn. He wants quick action. His supporters say he's energetic and decisive. His critics call him impulsive, bordering on reckless.

Whatever view Saudis take, MbS is determed to pursue his Vision 2030, despite the hiccup earlier this year when civil service salary cutspart of the grand reform packagewere reversed in the face of public grumblings. Achieving the ambitious range of goals, many of them publicly unpopular, that aim to end Saudi Arabia's dependence on oil, expand the private sector and create thousands of new jobs will be a major challenge for MbS and his advisers.

Escalating tensions

In the wider Middle East, MbS will take heart from the personal and public encouragement from President Donald Trump and pursue with increased vigour the kingdom's campaign to block Iranian/Shia expansionism. This means there's little prospect of a thawing in Riyadh-Tehran relations and a growing chance of a military clash involving Saudi Arabia and its allies on the one side and Iran and its proxies on the other.

A more resolute stand on Iran means that a compromise on Yemen to end the war there will become even harder to find. With Iran accused by the Saudis of supporting the Houthi rebel movement, MbS can't allow the Yemen conflict to be resolved in a way that might be construed as an Iranian victory.

The same goes for the blockade of Qatar. This was imposed jointly by Saudi Arabia and the UAE to bring the Doha leadership into linein large part because of its close ties with Tehran. If Saudi Arabia succeeds in drawing Qatar under its wing, it may be tempted to do the same with Kuwait or Oman, both of which believe in keeping lines open to Tehran. The Gulf region's reputation for stability is at risk.

Equally high on MbS's agenda will be issues relating to the Saudi economy in the context of oil prices that have bucked expectations by falling, rather than rising, in the aftermath of Opec and non-Opec agreements to limit production. Weak oil also has implications for Saudi Aramco's initial private offering. Recent valuations of the 5% stake to be offered in 2018 or 2019 look insufficient either to plug the fiscal deficit or provide core investment for growth in the non-oil economy, on which the success of Vision 2030 depends.

The main risk for oil policywhich was already under MbS's controlis that any major shift still depends on the whim of the crown prince, whose reputation is now unquestionably connected with the success of the economy and the reform agenda. Oil policy must serve his interests.

For the longer term, Saudi Arabia in the MbS eraas crown prince and then kingcan, on the face of it, expect several decades of political stability, even though some within the House of Saud question whether the young crown prince is right for the job. Three princes in the family's Allegiance Council declined to back him. But the majority will give him an opportunity to prove himself.

If eventually he fails to rise to challenges such as ending the Yemen war, tackling chronic youth unemployment, and reviving the flagging economy then listen out again for murmurs of gossip about the succession.

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