In the six weeks before Khashoggi’s disappearance, MBS not only managed to anger the U.S. military-industrial complex but the world’s most powerful bankers.
by Whitney Webb
Part 4 - Trouble in neoliberal paradise
While it is impossible to know MBS’ exact reason for getting cold feet in his once-ambitious plans to privatize the kingdom, we can guess. Indeed, there is a reason that MBS’ elders in the Saudi Royal family have long rejected neoliberal reforms and the mass privatization of their economy.
A 2016 report from Foreign Policy succinctly states why past Saudi Royals have avoided “free-market reforms” as the older generations of the House of Saud “understand the fragility of a monarchy whose brittle pillars rest on the quiescence of conservative clerics and a merchant class hostile to the free-market reforms that will undercut their privileges.” However, far more Saudis than just the “merchant class” have grown accustomed to the largesse of the Saudi state, as the majority of Saudi citizens benefit from Saudi state spending in the form of fuel subsidies, loans, free land, and public-sector jobs, among other boons. Indeed, half of the entire Saudi population is currently on welfare — welfare that depends on the wealth of the Saudi state and its oil revenue — while two-thirds of Saudis work in the public sector.
Of course, sharing oil profits with robber barons — as would have been the case in the partial privatization of Saudi Aramco — would reduce the amount of money the Saudi government dedicates annually to welfare programs and public-sector jobs to a significant degree. Notably, Vision 2030 also included “austerity programs” as part of its implementation, including tax increases and a significant reduction in the fuel subsidies given to ordinary Saudis.
However, less than a week after a handful of those austerity measures were implemented earlier this year, the Saudi government quickly eased them by increasing state-job salaries and launching a new economic stimulus program, after a “very negative” public response.
Despite the government’s efforts to assuage the anger that austerity had caused, it was not enough and the outcry continued, forcing the Saudi government to fire the country’s water minister to absorb some of the outrage. The fierce public response seems to have given MBS his first real inkling that his “ambitious reforms” to privatize Saudi Arabia would not be so easy to implement, no matter how hard he had worked to crush dissent.
Another indication of why MBS backed out of privatization plans can be seen in what happened to other countries when their young princes, championed as “ambitious reformers,” had drunk the “McKinsey Kool-Aid.” As Salem Saif wrote at Jacobin, many of the Arab countries that had previously followed McKinsey-drafted plans for neoliberalization subsequently “became epicenters of the Arab Spring. Bahrain, Egypt, Libya, Yemen — each was convulsed by demonstrations, often animated by economic grievances.”
In contrast, Saudi Arabia, with its state-owned and state-managed assets, had remained largely immune to these economically-spurred uprisings throughout the Middle East.
However, earlier this year, MBS learned the hard way from the hostile reception to his privatization rollout that being the West’s neoliberal darling comes at a high price, one that could imperil not just his position as Crown Prince but the entire Saudi government.