Saudi Financial Crisis at Heart of Princely Rage
The severe financial crisis and foreign policy failures are making Prince Mohammed bin Salman increasingly belligerent, says Vijay Prashad
SHARMINI PERIES: It’s The Real News Network. I’m Sharmini Peries coming to you from Baltimore. Since the famous visit by President Trump to Saudi Arabia in May, the monarchy has taken a series of bold steps to internally consolidate his power and to affirm its desire to be the regional power, enabled by the United States.
In the last few weeks, Crown Prince Mohammad Bin Salman has invited Lebanon’s President Hariri to Saudi Arabia, where Hariri promptly resigned from the presidency. The prince arrested hundreds of top officials including members of the royal family and has taken steps to confiscate large parts of their wealth.
As the Saudi war machine continues onslaught in Yemen, Saudi officials made belligerent statements again Hezbollah in Lebanon, and Iran, and made overtures to cement an alliance with Israel. On to discuss these developments is Vijay Prashad. He is the Executive Director of the Tricontinental Institute for Social Research, and is the Chief Editor of LeftWord Books. He’s the author of many books, among them, “The Death of a Nation” and, “The Future of the Arab Revolution.” Thanks for joining us, Vijay.
VIJAY PRASHAD: Pleasure. Thanks.
SHARMINI PERIES: Vijay, you penned a piece in AlterNet titled, “An Upstart Saudi Prince Threw a Tantrum Felt Around the World.” Where do you Prince Bin Salman taking Saudi Arabia? What are his objectives here?
VIJAY PRASHAD: Well, there are two ways to look at the maneuvering my Mohammed Bin Salman, the Crown Prince of Saudi Arabia: one is the internal problems faced by Saudi Arabia. The other is the external environment. The internal problems are quite severe. As you know, Saudi Arabia for the last several years has been pumping an enormous amount of petroleum from under the sands, and as a consequence has deflated oil prices. This has met that Saudi Arabia’s exchequer has been running very large balance of payments deficits.
Despite the fact that Saudi Arabia is a very rich country, the low price of oil, its reliance on oil exports has meant it has had some serious problems. So, internally, there’s been a crackdown on so-called “corruption”. The Saudi Crown Prince has arrested people, essentially to shake them down for hundreds of billions of dollars to cover this balance of payments deficit, and to enable Saudi Arabia to increase investment for some of its projects, including a new city it wants to build in the North.
That’s the domestic question and related to this domestic question is Prince Mohammed Bin Salman’s game that he wants to go after extremists inside the kingdom. He believes that corruption and extremism are the two big problems. Now of course, he is on the same front, had the I guess audacity to start an international conflict, or in other words, to intensify an international conflict. Here as you know, Saudi Arabia has had a very forward policy in Syria, trying to overthrow the government there.
Saudi Arabia has been since 2015, at war in Yemen. Rather bloody war in Yemen. Saudi Arabia’s tried to isolate Qatar, largely because it feels that Qatar is too close to Iran, and now Saudi Arabia is interested in putting pressure on the Lebanese government so that the main partner in that government, which is Hezbollah, a group very close to Iran, will be overthrown. The government will be overthrown in Lebanon, there’ll be a constitutional crisis, and somehow I think quite bizarrely, Saudi Arabia hopes in this way, to marginalize Lebanon.
The Arab League met on Sunday. It’s a very truncated Arab League, doesn’t have many members, and it was essentially Saudi Arabia, the UAE, United Arab Emirates and Bahrain, that spoke very fiercely about Iran, about pushing Iran back to its borders, so the two things happening here: one is Saudi Arabia essentially struggling to maintain its balance of payments and secondly, Saudi Arabia are struggling to push Iran back into its borders.
SHARMINI PERIES: Vijay, you mentioned the trade balance, and the financial crises that the Saudis are experiencing. Related to this, we see that the Crown Prince Salman has decided to issue stocks for the oil company Aramco. Now, President Trump already tweeted that he hopes that the public offering will be done in the US Stock Market. Now, is this kind of behavior prompted by the United States to offer up more of Saudi Arabia, open up its markets and share the wealth? Or, do you think that this is an effort on the part of the Crown Prince to address his financial crises, as you put it?
VIJAY PRASHAD: Well, you know, for several years now, Saudi Arabia’s hinted that it would take Aramco, the Saudi oil company, for the public. In other words to bring it onto the stock market. This was made very clear during the McKinsey written report called “Vision 2030” where Saudi Arabia’s diversification of the economy was going to be financed by this public offering of Aramco. Now, the estimate is that this public offering will raise two trillion dollars.
This is, by many fold, four to five times larger than the Alibaba offering was able to raise. That’s the largest we have so far in world history, so it is now assumed that at least the Saudis have been saying they’ll raise two trillion dollars. Others are a little more skeptical, saying it’ll be in the range of hundreds of billions of dollars, and that there is some jockeying going on. I mean, Credit Suisse for instance, a bank very close to the Saudis, has been eager to run this public offering. Whether it takes place in New York or elsewhere is up in the air. I don’t think housing the offering in New York is going to be anything more than a propaganda victory for Donald Trump. After all, the offering would be done, dollars will be raised. We’ll see where Saudi Arabia parks that money, whether it parks it in Switzerland or the United States, or wherever.
These are the kind of complexities of the public offering that have not been made clear yet but certainly it appears that the United States, or at least Donald Trump, is eager for the Saudis to put Aramco on the block, raise capital and move that capital into the United States.
SHARMINI PERIES: Now, Vijay, Alastair Crooke from Consortiumnews claims that when Trump visited Saudi Arabia he sidestepped official channels in order to achieve three goals with the Sunni alliance: first was to roll back Iran and Hezbollah, two was normalizing relations between Israel and the Arab world and three, creating a Palestinian state or something resembling a state.
Now, Crooke argues, however, that all three goals depend on Israel’s cooperation, which is not forthcoming, and Trump’s entire plan is therefore falling apart. Do you agree with this analysis?
VIJAY PRASHAD: Well, I don’t actually believe that there’s a Sunni bloc and a Shia bloc. I think that’s a very narrow way of looking at this. After all, there are countries like Algeria, there is even Egypt which has a complicated relationship with Saudi Arabia. The current ruler in Egypt relies on Saudi Arabia. He’s essentially taken a large loan from Saudi Arabia but the Egyptian population is not keen, I think, to be seen as part of a Sunni bloc. I don’t think that the premise here is acceptable. I think that there is indeed a bloc set up by Saudi Arabia with UAE, Bahrain, and perhaps one or two of its other allies to push Iran back to its borders, that’s certainly part of Saudi Arabia’s ambition.
I think the link here is the conversations between Israel and Saudi Arabia that have been made public. In other words, they are not accepting or agreeing that they’re talking behind closed doors. They have things in common. One of them, of course, is rolling Iran back to its borders. That’s entirely a plausible, joint agenda item for Israel and Saudi Arabia. But I don’t think there’s a Sunni bloc that shares this agenda.
I think on the question of Palestine, this is rather a bleak position as far as the countries are concerned. We’ve seen now the UAE, Saudi Arabia and other countries, of course Egypt and Jordan long ago, making their peace with Israel. Prince Mohammed Bin Salman, when he called Mr. Hariri, Saad Hariri, to Saudi Arabia and where he resigned, also called Mahmoud Abbas, the head of the Palestinian Authority, to Saudi Arabia, and one wonders what their conversation was about.
I think there’s pressure going to be on the Palestinian Authority to exceed to some kind of Saudi line but I doubt very much that the Palestinian people are going to accept any such agenda.
SHARMINI PERIES: Right. Vijay, let’s get back to your AlterNet piece where you called the Crown Prince’s behavior a tantrum. Are you implying that the Crown Prince is not actually acting out of a planned initiative but reacting impulsively to events beyond his control? What is threatening the throne of Saudi Arabia these days?
VIJAY PRASHAD: Well, I mean, look, there’s all kinds of evidence that you can perhaps put together to suggest there’s a plan. For instance, Prince bin Talal who is the richest man in Saudi Arabia, and is partly an investor in Twitter, was in a Twitter war with Donald Trump. In fact, quite an abusive war with Donald Trump I think a year and a half ago, so perhaps this is payback against Prince bin Talal. It could be, who knows?
It could very well be that the United States wants to put pressure on Saudi Arabia to make a deal with Israel, to squeeze Iran. But I don’t actually think that this entirely makes sense. Some of these maneuvers are longstanding. They predate Donald Trump being in office. They predate the visit by Jared Kushner. For instance, the attempt by this Crown Prince to use the assets inside the kingdom to diversify the economy, this is a longstanding desire of sections of the ruling bloc in Saudi Arabia.
I think this desire to push Iran back to its borders predates Donald Trump. This goes back to when the Saudi Royal Family intervened, so delightfully in Syria, participating and wrecking that country. I think that there might very well have been conversations between Jared Kushner and the Crown Prince. They might have come up with some of these tactical maneuvers in the present, but I don’t think this is some sort of new plot, schemed around the orb, when Donald Trump, King Salman, Sisi and others put their hands on that shining round object at the Center for Counterterrorism that was created inside Saudi Arabia.
I think this is a longstanding policy to on the one side, somehow salvage a Saudi economy, despite low oil prices and to somehow reassert Saudi power against Iran in the region.
SHARMINI PERIES: Finally Vijay, I cannot leave this conversation without asking you where you think Israel is at in this entire configuration?
VIJAY PRASHAD: I think Israel is making some very serious errors. For instance, if Israel believes and if Saudi Arabia believes that Hezbollah can somehow politically be sidelined in Lebanon, this is a great mistake. I mean, Hezbollah, its political wing, its military wing are an essential part of both Lebanese political life and it’s security architecture. Hezbollah has been greatly strengthened by its experience in the war in Syria, and I think any attempt to break it politically or militarily is going to fail. I think this is a great error by the Israelis.
I think rather than come to the table and try to make peace with the Palestinians to produce a genuine path that would be beneficial to the occupied Palestinian people, I think rather than do that, these maneuvers are simply distracting and dangerous, even for Israel.
SHARMINI PERIES: All right, Vijay. I thank you so much for joining us.
VIJAY PRASHAD: Thanks a lot.
SHARMINI PERIES: And thank you for joining us here on The Real News Network.