Saudi Arabia Restarts Radical State-building Reforms

By Zhang Weiting

I. The Origin of Saudi Incomplete State Building

Saudi Arabia is an Islamic theocratic monarchy and one of the earliest allies of the United States. The House of Saud, Wahhabis and the US are all involved and played key roles in building the superstructure of the Saudi state. The House of Saud is at the center of the system and exercises its rule by distributing power in a traditional, tribal approach. The Wahhabis run the society, regulate regime-society relations and guide personal life using the Sharia Law. And the United States sets the diplomatic compass for Saudi Arabia in the US-led global order. Such a hybrid political system with legacies of the past has been made possible by the incomplete state building when Saudi Arabia was founded. 

Allying with the Wahhabis and the US is the key for the House of Saud to build the state and the major reason for Saudi Arabia’s incomplete state building. In the 18th century when Western powers stepped up aggression, the Ottoman Empire relaxed its control on the Arabian Peninsula, where power struggles resulted in a new round of tribal wars and religious reforms. The House of Saud, with its humble origins, did not possess a huge amount of land or wealth. They only had under their control an oasis settlement in Najd, with fewer than 70 households. Muhammad ibn‘Abd al-Wahhab, who was sent on exile by his tribe, was received by the House of Saud and in return helped the family rise in Najd. Ideologies such as the obligation of Zakat, communal prayer, dichotomy, and Jihadprovided religious legitimacy and social governance tools for the House of Saud to make military conquests. The religious identity-based dichotomy transcends the tribal boundary of blood ties, which define people’s allegiance. As in an empire, region-specific features and diversity still remained in a religious society. 

In fact, the House of Saud made their conquests on a limited scale and weak foundation due to geographical barriers and the opposition from the Ottoman Empire. After the collapse of the Ottoman Empire, Ibn Saud completed the conquest of the peninsula through efforts on three fronts. 

First, he brought in Western transport and communications technologies to encourage nomads to settle down and thus foster physical connectivity between communities. 

Second, he eliminated Polytheism and promoted theocracy to shape a collective identity and consolidate institutional advantage. 

Third, he won understanding from the UK on the expansion to the Gulf region. Afterwards, regional order evolved at a faster pace. Saudi Arabia was coveted by its emerging Arab neighbors and Western colonial powers. The United States, a new power with no colonial history, became a natural partner that Saudi Arabia wanted to ally with. The two sides agreed to develop oil together and established diplomatic relations in 1933. Huge oil reserves were discovered in Saudi Arabia in 1941. To prevent Italy from attacking Saudi Arabia’s oil facilities in 1943, the United States opened its embassy in the country to provide military protection. This is how Saudi Arabia and the United States started their special relations based on oil and security interests.

It can therefore be seen that Saudi nation founding and state building were in one parallel process. State building was the tool through which Saudi Arabia exploited the resources of its allies to found the Saudi state. As such, state building lost momentum and stalled after the state was founded. Wahhabism is the state religion and provides legitimacy for the regime. Its conservative ideologies made the Saudi regime less inclined to reform the society. On the other hand, the United States provided for the fiscal and security needs of the regime so that it could operate independent from the society. It goes without saying that as the state building stalled, the inherent weakness of the House of Saud had been kept. Confronted with persistent volatility in the region since the Second World War, Saudi Arabia has been under security threats and increasingly depends on its two allies. 

II. Mechanism Conflicts and Oil Economy 

Relations with its two allies underpin Saudi Arabia’s superstructure. As the two allies co-exist yet exclude each other, they also limit the space for the political evolution of the Saudi state. The system of oil economy, as it develops, provides a buffer for the conflicting foundation of the regime and makes it less urgent to promote state building in Saudi Arabia. 

As the two alliances are the result of political compromise, ideological differences have been preserved. As the supporter of the legitimacy of the House of Saud, the Wahhabis are self-proclaimed fundamentalists, whose legitimacy comes from its dogmatic interpretation and practice of Sunnah. According to Sunnah, the generation of Muhammad and the two generations afterwards are the best example of a Muslim society. However, Saudi Arabia’s political practices, including monarchy and familyconsensus-based hereditary system whereby throne passes down among brothers, are a deviation far from the way in which leaders were democratically selected in the Age of Prophets. 

Alliance with the US forced Saudi Arabia to accept a lot of modern elements, which are contradictory with the conservative teaching of the Sharia Law. As a result, the Wahhabis have become the target of attacks from the Salafists who are more ideologically conservative. Fundamentalists are the minority in Saudi Arabia. Wahhabis and Salafists only account for 23% of the Saudi population and are concentrated in Najd. The loss of the legitimacy of the Wahhabis reveals the fragility of the regime.

Fragility is also inherent in US-Saudi Arabia alliance from the very beginning. First, the US-Saudi Arabia alliance is maintained at the cost of domestic politics. The US government has shown tacit tolerance toward Saudi Arabia’s social and religious policies, which undermines the integrity of its moral obligation both domestically and internationally. On the part of Saudi Arabia, the government has to introduce minimum social reforms as requested by the US and take a moderate attitude toward the US supporting Israel. As a result, the Saudi government is more isolated at home and in the region. After the 911 attacks, the argument of clash of civilizations gained traction. The United States and Saudi Arabia, as leaders of two clashing civilizations and direct parties to the incident, had their alliance under stress. Second, after many developments, the oil and security foundation of the alliance is not strong any longer. US-Saudi Arabia cooperation started from oil exploration. Saudi Arabia’s oil production during the Second World War was less than 1% of that in the US. What prompted the US to extend protection to Saudi Arabia is the latter’s potential value and high fragility in security. On the security front, due to asymmetry in interests and perceptions, collective defense means that the two sides jointly confront security threats faced by each other and take on defense obligations that are unnecessary and even contradictory with one’s own interests. In the wake of the oil crises in the 1970s, Saudi Aramco was gradually de-Americanized. Afterwards, the two countries started to have diverse trading partners. The arms trade in the agreement on the US as the only means of paymentwas a manifestation of the alliance in name and no longer a symbol of their security commitment to each other. 

The foundation of the regime, which is fraught with conflicts, undermines the authority of the central authorities. To maintain the delicate balance between allies, the House of Saud has introduced a mixed governance mechanism that combines feudal allegiance and modern sponsorship. To be specific, state power is distributed among the princes in a traditional feudal way. In the meantime, the princes are allowed to compete for policy resources through modern political sponsorship in order to advance the agenda of the interest groups behind them.

Such a governance model creates two negative effects. First, the vertical division of power combined with a hereditary system has led to long-term, de facto divisions in some key sectors and provinces. Prince Saud al-Faisal, son of the late King Faisal, became Foreign Minister in 1975 and stayed on that job for 40 years until he died in 2015. The current King Salman had governed Riyadh Province for 48 years before becoming Minister of Defense. Before he was removed by then Deputy Crown Prince Mohammed bin Salman in 2016, Ali al-Naimi had been in charge of the Ministry of Petroleum and Mineral Resources and Aramco for 20 years. The succession in the House of Saud follows the principle of younger brother inheriting the throne from the elder brother. When it comes to enfeoffment at the local level, the practice of son inheriting from father was adopted on a priority basis. As time goes by, unsynchronized terms and long-term divisions strengthens different groups of interests and undermines the cohesiveness of the regime. 

Second, as the result of the sponsorship competition at the horizontal level, different interest groups in the regime form secondary communities of interest with specific departments of the allies, thus diluting their loyalty to the Saud family. Crown Prince Muhammad bin Nayef, who was in charge of counter-terrorism affairs for many years, was removed from office in June 2017 and had very close relations with the US security and intelligence authorities. It was feared that his removal might deal a blow to bilateral relations. Crown Prince Muqrin bin Abdulaziz, who was replaced in April 2015, was Governor of Hail Province and Governor of Madinah for a long time. When he was Director General of the Intelligence Agency, he had an important say on critical issues, including Saudi Arabia’s response to al Qaeda, relations with the Pakistani military and the Iranian nuclear issues. 

The rapid development of the oil economy provides an economic foundation for the regime, making it more resilient to the conflicts within. Saudi Arabia was a self-sufficient economy mainly composed of oasis agriculture until the 1930s. With its cooperation with the US in oil exploration, Saudi Arabia gradually discovered the best oil endowment in the world. This country sits on a massive oil reserve. The proven reserve in 2016 was about 260 billion barrels or 41 cubic kilometers, accounting for 16% of the world’s total. Most of the oil is found under the surface along the coast and 70% is light or super light oil. The cost of exploration and refinery is far lower than that in other countries. The profit margin is therefore higher. As Saudi Arabia has a small population, domestic oil consumption is moderate and a large share of the oil is exported. The huge oil revenues help to anchor US-Saudi Arabia cooperation and sustain the social traditions advocated by the Wahhabis. The monopoly on oil rights also gives the House of Saud new ways to command loyalty. The tremendous economic and political interests spur the Saudi government to step up investment in the oil industry. At the same time, other industries have been overlooked because of low returns and cheap import substitutes. While the government made several attempts to diversify the economy, Saudi Arabia inevitably developed a dependence on oil. The oil sector contributes nearly half of Saudi Arabia’s GDP, about 80% of its exports, and over 90% of its fiscal revenues. The private sector, which accounts for 40% of the GDP, mostly provides services, direct or indirect, for the oil sector. 

With oil a new source of allegiance, the House of Saud has taken a host of measures to strengthen oil autonomy and expand oil revenues. First, it took back Aramco by exchanging security for oil. In the late years of the Second World War, Saudi Arabia rejected President Roosevelt’s purchase proposal and took back oil concessions by leasing military bases to the US military for broader security cooperation. 

In 1950, the two sides revised the agreement. Saudi Arabia and Aramco jointly explored oil and shared profits 50/50.This was followed by rising nationalism in the region. In 1971, the UK withdrew from the Persian Gulf. Saudi Arabia got 20% of Aramco’s stakes from the US in exchange for security cooperation. In 1973, Saudi Arabia led efforts to devastate the American economy using oil as a weapon, showing its key influence on international oil prices. The US allowed Saudi Arabia to acquire all Aramco stakes under the precondition that Saudi Arabia committed to support America’s global hegemony by using the US dollar for settlement and stabilizing oil prices.  

Second, the campaign of the Shi’ites in Saudi Arabia for greater rights was crushed. The Shi’ites accounted for 15% of the total Saudi population and three quarters of the population in the East Gulf and the highland on the coast of the Red Sea in the west. The low-lying land in the East Gulf is home to not only the majority of oil reserves, but also the largest refineries. Every day, about 9 million barrels of crude oil were exported through oil tanks at the Ras Tanura and Ras al-Ju’aymah ports in the Persian Gulf or the pipeline via the Yanbu port on the Red Sea. The three places are all in the Shi’ites-dominated region. 

With fast accumulating oil revenues, the Saudi government has invested more in infrastructure in education, healthcare, housing, transport and telecommunications, which meets people’s expectation for social participation. Constrained by the Wahhabi doctrines, the Shi’ites could not gain equal social status. Before the 1970s, Saudi Arabia shaped domestic discourse and curbed activities of the minority by supporting regional nationalist campaigns. After the Islamic revolution, Saudi Arabia linked the call of the Shi’ites for more rights with the threat of Iran’s expansion in order to secure support from the US. 

III. Oil Bottleneck and Social Vulnerability 

The buyback of Aramco has created expectations for Saudi Arabia to reap substantial benefits and placed on it the responsibility to maintain the security of oil exports. Oil revenues have promoted social development in all dimensions while further widening the gap between the regime and society. Due to the changes in supply and demand on the global markets, oil exporters have diminishing impact on oil prices. As such, Saudi Arabia is stuck in a new crisis on the legitimacy of the regime. 

In 1973, Saudi Arabia and other oil producing countries adopted measures to cut oil production. As a result, international oil prices skyrocketed from 3 to 12 dollars a barrel. Saudi Arabia therefore accumulated a large amount of foreign exchange reserves. And the imported consumer goods improved people’s life. 

As oil interests expanded, the Saudi government had to increase security spending in three areas. First, Saudi Arabia had to make up for the shortfall of American military assistance. Under the “twin pillar” strategy, the US provided military assistance for Saudi Arabia, which increased from less than US$16 million in 1970 to over US$300 million in 1972. The oil crisis paralyzed the American economy and restricted its ability to provide assistance. In 1975, Saudi Arabia and the US reached an arms deal worth US$2 billion. Prior to that, the US pressured Israel to negotiate with Syria over the Golan Heights, and the Pahlavi Iran to recognize Bahrain. In return, Saudi Arabia lifted oil embargo and increased oil production to bring down oil prices. 

Second, it had to maintain the security of the oil routes. In the 1970s, Saudi Arabia and Iran jointly sent troops to help the Oman government quell the rebellions in Dhofar supported by Egypt and Southern Yemen. In addition, Saudi Arabia joined the US in supporting Pakistan and other countries within the Central Treaty Organization to forestall the Soviet Union southward threat to the oil transport routes. 

Third, it exported conservatism. In the wake of the oil crises, countries in the region were divided and regrouped. Arab nationalism was on the decline and overshadowed by Islamism. In the late 1970s, Egypt and Israel entered into peace talks. Following the revolution in Iran, radical groups emerged. The US released the Carter Doctrine and later sent the Fifth Fleet to the Persian Gulf. Losing the levers on its relations with the US, Saudi Arabia became more conservative in its regional diplomacy and established the Gulf Cooperation Council to realign the moderates. On the other hand, Iran exported revolution and sabotaged the haj, which provided justification for Saudi Arabia to tighten its domestic policy, especially the suppression of the Shi’ites within its borders. 
Oil revenues have facilitated the diversified development of the Saudi society, but failed to change its dependence on oil. The impact ofthe influx of oil revenues on the Saudi society was manifested first and foremost in the tremendous changes in the demographic features. Since oil was explored, foreign workers kept pouring in and Saudi urbanization started. Since the 1960s, thanks to imported food and modern healthcare facilities, the life expectancy in Saudi Arabia has increased by a big margin. As the Sharia Law encourages fertility, Saudi Arabia saw its population grew from 3.1 million in 1950 to 28 million in 2011, duplicating itself almost every 20 years. At the same time, Saudi Arabia’s urbanization rate reached 85%. By 2014, foreign workers in Saudi Arabia exceeded 10 million, most of whom came from South Asia and North Africa while some 100,000 from Europe and America. Thanks to a high fertility rate and the influx of foreign workers, Saudi Arabia boasted a young population. In 2012, 50% of the Saudi population was below 25 years old and 70% below 30 years old. Population explosion boosted domestic oil consumption. In 2015, domestic oil consumption accounted for one quarter of the annual output and continued to increase at an annual pace of 7%. The young population also drives the rapid growth of the real estate and infrastructure sectors, including power and telecommunications. The latter two are the mainstay of the non-oil economy and the major assets that have attracted public and private investment. 

Due to the self-imposed restraints of the Sharia Law, for example, the segregation of men and women in public places and the restrictions on some non-Halal industries, local people are prevented from acquiring relevant working skills, thus impeding the consumption market at home. The Saudis have no other choice but to spend a large part of the oil forex abroad for vacation, entertainment and modern education. The lack of local skilled workers becomes the biggest obstacle holding back Saudi Arabia’s efforts at economic diversification. In 2008, foreign workers took two thirds of Saudi jobs. The figure was as high as 90% in the private sector. Statistics show that only 40% of the work-age populationare fully employed, most of whom work in the government. Civil servants’ salary and social benefit subsidies constitute a heavy financial burden. Given the limited number of new jobs, Saudi Arabia has pushed for labour localization since 2000. 

As the balance of the global market shifted in favor of the demand side, Saudi Arabia’s excessive dependence on oil highlighted the fragility of the regime. When oil was in short supply, the main factors affecting prices were the war and revolution in oil producing countries. During the two oil crises in the 1970s, Iran, a populous OPEC nation, put forward more revolutionary oil price initiatives. Saudi Arabia, however, with a small population, belonged to the pro-status quo camp within OPEC and promised to increase production to bring down oil prices. It enjoyed substantial profits while filling the production gap left by Iran’s cut. In 1980, Saudi Arabia boasted an output of 10 million barrels per day, making it an undisputable leader in OPEC. 

In the early days of the Iran-Iraq war, high oil prices prompted the UK, Mexico and Canada to increase oil export. The industrialized countries in the West saw their consumption needs restrained by the economic crisis and switched to new energy. Consequently, international oil prices took a nosedive very soon. In 1986, Saudi Arabia and other GCC countries expanded exports in an attempt to expedite the end of the Iran-Iraq war, which prompted a crash in oil price. Saudi Arabia was forced to accept OPEC’s production quota. By setting up an oil reserve fund, Saudi Arabia expanded into refinery and chemical sectors to cushion off volatility of oil prices. 

In the subsequent 20 years, international oil prices remained around US$20 a barrel. Between 2003 and 2014, the Iraq War and the Iranian nuclear crisis highlighted the fear for oil shortage. At the same time, China and other emerging countries on the demand side have pushed up oil prices, which was not necessarily good for Saudi Arabia. First, the fast growing domestic consumption has eaten away Saudi Arabia’s additional production over this period. Its per capita GDP had never recovered to its height in 1985. Moreover, high oil prices made it unnecessary to localize the labor market. The risks associated with dependence on oil continued to build. The rise of the emerging countries shifted the global balance of power eastward. As a long-time supporter and beneficiary of the US-led international order, Saudi Arabia has to adapt to the evolving international order. 

IV. The Arab Spring and the Restart of State Building

The Arab Spring devastated the international establishment the Saudi regime had held on to. With foiled attempts to uphold the existing order, Saudi Arabia has accelerated its efforts to adjust its domestic and external policies and seek a new anchor for its regime. The new King Salman has worked to reform its relations with the two allies and the oil economy, and to push forward the state-building process which was aborted in the early days of the Saudi state, so as to reshape the relations between the regime and society.  

Saudi Arabia, which had worked to maintain the existing US-dominated international order, was only frustrated in its efforts to do so. The US-led Iraq War and the subsequent democratization reform tore apart the social foundation of the existing regional order and promoted the rise of the Islamist movement in the region.

Saudi Arabia labeled the conflicts in Iraq and other places as sectarian ones in order to divert anti-America sentiments in the region. This, unfortunately, stimulated the spread of extremism. After the US announced its Strategy Pivoting to the Asia-Pacific, Saudi Arabia was eager to support the US, willing to share the cost of American military presence in the region. In 2010, Saudi Arabia purchased US$60 billion arms from the US. The US, however, gave up Mubarak, which not only undermined the Saudi camp, but also showed that the US had no bottom line at all in its policy towards the region. 

The Obama Administration unleashed Shi’ites to enter Syria by facilitating the conclusion of Iran nuclear deal. This only cornered Saudi Arabia. Feeling abandoned, Saudi Arabia started to flex its muscles in the region. For many years, it has increased military spending in a resolve to confront Iran. In defiance of domestic religious forces, it came close to Israel, made military interventions in Bahrain and Yemen, incited sectarian conflicts in the region, supported the coup led by al Sisi in Egypt, and established the coalition of Arab forces and the Sunni counter-terrorism coalition. 

In March 2015, Saudi Arabia led the Arab coalition forces in launching air strikes on Yemen. As a result, its security spending soared and its forex contracted by US$130 billion in one month. At a time when the whole world is geared up to fight terrorism, especially in the wake of the refuge crisis in Europe, both Europe and America accused Saudi Arabia of sponsoring terrorism. By contrast, the Shi’ite counter-terrorism alliance spearheaded by Iran and Russia has taken most of the territory of the IS under the counter-terrorism pretext. More importantly, they have become rule makers of a shaping international order. In other words, Saudi Arabia and Iran, the two rivals in OPEC, are bound to have their positions shifted in a new international establishment. This will never be accepted by Saudi Arabia. 

Saudi Arabia also failed in its efforts to increase production to maintain its favorable position on the oil market. Saudi Arabia had remained the largest oil producer until 2005, with an output 1.7 times that of the US and 1.1 times Russia. By swinging its production, it plays a role as a price stabilizer. In the wake of the financial crisis, Russia and the US tried to tackle fiscal challenges by expanding oil output. In 2009, Russia produced more oil than Saudi Arabia. The US is poised to surpass Russia in 2018 thanks to its shale oil exploration. On top of that, the US and Russia helped South and North Iraq respectively restore oil production and export. In 2014, Iraq exported more oil to the US than Saudi Arabia did. In addition, Iran, after the nuclear deal concluded, soon restored its production to the pre-sanction level. While under sanction, Iran built a reserve of several hundred million barrels of crude oil, which could be soldoff at any price. To make matters worse, emerging countries including China experienced a shrinkage of demand for oil as their economies slow down amid industrial upgrading. 

In mid-2014, international oil prices started to fall. In the subsequent year, Saudi Arabia scrapped production quotas, expanded production, and enhanced cooperation with consumer countries in oil refinery so as to squeeze out competitors. In the oil sector, Saudi Arabia has two key advantages. First, it boasts a tremendous reserve. The production to reserve ratio still stands over 70. Second, the cost of production is low, less than 3 dollars per barrel. The dumping strategy proved extremely unproductive. Saudi Arabia suffered a loss of over US$200 billion due to selling oil at lower prices. Nevertheless, Saudi Arabia had never crushed America’s shale oil industry. The price competition compelled more shale oil companies to develop lower-cost exploration technologies. At the end of 2016, OPEC and non-OPEC countries reached an agreement to freeze output level at the initiative of Saudi Arabia and Russia. After multiple extensions of the agreement, oil price finally rebounded from less than US$30 to over US$50 and has since stayed at that level. The US is yet to join the agreement. Rebounding oil prices mean extra profits for US shale oil industry. At least for oil, the US is no longer the defender, but a destroyer of the establishment that Saudi Arabia has depended upon.   

As foreign reserves diminishes drastically, the Saudis’ confidence in the regime also dwindles. Low oil prices and production cuts sent the Saudi economy to a standstill. The economy even fell into recession in 2017. The Arab Spring brings about in Saudis paramount fear of uncertainty and disorder. During the reign of late King Abdulla, the Saudi government went all out to maintain both the existing international order and domestic stability. According to the IMF report, Saudi Arabia provided US$22.7 billion assistance to moderate countries including Egypt, Jordan, Bahrain and Oman, from 2011 to early 2015. In addition, it also provided covet support to particular factions in Lebanon, Iraq, Libya and Yemen.

Saudi Arabia spent an enormous amount maintaining stability at home. Shortly after Mubarak stepped down, Saudi Arabia announced a US$130 billion social subsidy program and promised another US$450 billion to improve people’s wellbeing. The government stepped up investment in a number of housing and road projects to tackle the chronic housing shortage that had long haunted young people. To maintain political stability, the government also increased subsidies to civil servants and the royal family. The subsidies granted to the latter were as high as US$13 billion a year. Such indiscriminate subsidies are neither efficient nor sustainable, gobbling up resources that should have been spent on youth-related issues, which are the most acute ones in the country. 

Since 2003, the Saudi government has through the KAICIID Dialogue Center, encouraged social participation of women and youth using social media. Every year, about 100,000 young people are sent to study in Europe and America. Virtual participation is hard to meet young people’s demand. Saudi Arabia’s real unemployment rate now stands around 30%. In the coming decade, over 1.9 million local university graduates and returned students from abroad will join those who seek jobs. Jobless, young people could be more sensitive to rising living costs. The crime rate among the young is poised to increase. The government under King Salman has adopted multiple measures such as cutting government subsidies, imposing value-added tax, and issuing Islamic bonds, to raise US$52 billion to develop the private sector in the hope that 1.2 million jobs will be created in the next 5 years. Two years have passed. Yet the private sector has shown no sign of investment growth. On the contrary, the fast dwindling of forex means a massive capital fleeing out of the country. In the royal family, there is also opposition to subsidy cuts. 

The state-building reform led by Crown Prince Mohammed bin Salman is first and foremost directed against institutional problems that have built up over many years. The late King Abdullah, with a pro-liberal leaning, made institutional and personnel maneuvering to curb the authoritarian tendency of the Sudairi Clan. In 2009, he established the Allegiance Council to institutionalize decision-making through informal family consultations. In 2013, he appointed Muqrin bin Abdulaziz over his elder brothers Second Deputy Prime Minister, a position usually reserved for the deputy crown prince. Keeping the royal family weak is instrumental for maintaining the two alliances of the regime, but is not conducive to a quick response to the real social crisis as revealed by the Arab Spring, i.e. the youth problem. The Wahhabis and the United States prove to be not only unreliable allies, but also obstacles in addressing the youth problem. 

As a response, King Salman together with Nayef as candidate to Crown Prince and Muqrin Deputy Crown Prince won the support from both the Sudairi Clan and the Allegiance Council and succeeded the throne smoothly. After ascending to the throne, King Salman transferred power to MohammedbinSalman, his favorite son, putting him in charge of the Court and the Ministry of Defense, positions reserved to the King and Crown Prince respectively. In April 2015, Muqrin who opted for engagement with Iran was forced to resign. In the same month, Saud al-Faisal, who held a similar standing, passed away. Nayef, then Crown Prince, didn’t get substantial power while Mohammed, on the contrary, continued to amass political power as he was put to chair the newly established Council for Economic and Development Affairs, which supervises 22 of the 31 government departments and addresses issues like employment, housing and people’s livelihood. 

As said earlier, many elites reserved allegiance to the royal family because of the two pillars. It is also why Crown Prince Mohammed must consolidates powers before he is able to pursue radical reforms. In this process, he has made full use of fractional conflicts and shifted between harsh and soft measures so as to avoid becoming the target of attack from all sides. The air strikes on Yemen starting April 2015 and the severing of diplomatic ties in early 2016 won him support from the conservative line at home in fighting the liberals. 

Saudi Arabia signed a major arms deal with the United States at the ArabIslamicAmericanSummit in April 2017 and cut off diplomatic ties with Qatar in June with repercussions felt in the region and beyond. On both occasions, Saudi Arabia used the excuse of international counter-terrorism and thus received tacit consent from the US over the removal of then Crown Prince Nayef who was also the counter-terrorism chief. Afterwards, Crown Prince Mohammed Salman made gestures to reform conservative religious forces to appease and confuse the liberals. In September, Saudi Arabia lifted the driving ban on women and loosened the enforcement of dress code in the street. 

In October, religious scholars were gathered to discuss the modification of some Islam doctrines in the name of curbing extremism. The incidents of missile attacks from Yemen and the resignation of Lebanese prime minister in early November served to distract regional and global attention. They also diverted attention from the security and emergency measures adopted by Saudi Arabia. The Anti-corruption Commission was established overnight with a mandate to arrest princes and business executives. This achieved three goals. First, the liberals were cleansed, weakening both potential adversaries within and America’s infiltration without. Second, government coffers were replenished by the confiscations while capital fleeing was curbed. Third, these measure are expected to boost the investment in Saudi Arabia’s private sector and the listing of Aramco overseas. Getting rid of the dependence on the liberals and the United States, paves the way for the Saudi government to further reform traditional social customs and develop a diversified economy. The Crown Prince is cautious in that he launched the smart city project yet limit the experiment to the coast of the Red Sea to concentrate both resources and risks so as to avoid the blow of a full-scale opening-up would deal to the conservative society. 

V. Conclusion

1. The ongoing reform is different from previous ones as the royal family started the reform by consolidating power. 

Saudi Arabia made several attempts to promote economic privatization and diversification, but all failed. Deep oil pocket reduced the incentives for sweeping reforms. Oil dependence can be traced back to the fragility of the House of Saud, which is yet to get away from its two allies. The oversupply on the international oil markets and the explosion of its population are now two established trends. Like it or not, the shift away from the oil dependence is taking place as oil revenues are falling. People expect the government to provide basic public security and social services. As the economic support of the regime has undergone fundamental shift and its two allies failed to respond effectively to the Arab Spring, consolidating power of the royal family is left to be the last resort to address the regime crisis and reduce dependence on oil. That said, it would be mission impossible to fulfill the tasks at such immense scale and within such narrow time window. Once power consolidation is completed and new source of regime legitimacy anchored, the most part of the reform is accomplished. 

2. The rise of the Crown Prince Mohammed offers a glimpse of the social radicalization in Saudi Arabia. 

Over the past few decades, people at the bottom of society have seen their living standards remain stagnant. The public are denied opportunity to participate in social affairs. Government subsidies are difficult to sustain. Prices keep rising. Some civil servants even work as part-time Uber driver to support family. The Crown Prince, King Salman’s favorite son, inherits from his father experiences and resources to govern the country. The energetic 35-year-old man is known to be a workaholic. He is receptive to advice and action-oriented. Naturally, he is the right person to move Saudi Arabia away from oil dependence to self-sustaining social development. The desire of 70% of the population for reform provides endorsement for the Crown Prince to consolidate power. His reform plan also speaks to the young people who are fed up with and dare to challenge the establishment. In fact, his military actions abroad and anti-corruption efforts at home show that he is serious and committed to reform, thus consolidating the confidence and support of the young people for reform. The regime the Crown Prince aspires to establish will interact directly with the society, which fulfill the incompleteness of state building left unfilled since Saudi Arabia was founded. 

3. Saudi Arabia will return to moderate regional role with more confidence and autonomy. 

While the power consolidation and aggressive actions in the region are risky, he still enjoys support from the United States and many regional countries. The reasons are as follows. First, Saudi Arabia remains the largest stabilizer in the region, the last resort more vulnerable moderate states can turn to. A failed Saudi regime or a revolution in the country will send the region into turmoil of greater proportions. On the other hand, the Crown Prince is a pragmatist largely free from ideological constraints. He does not reject cooperation with Israel. Looking conservative, as he does not smoke, drink or take vacation overseas, Mohammed is by no means a fundamentalist. When King Salman was governor of Riyadh Province, he turne the capital from a poor town with little oil into a cosmopolis through external cooperation, sound planning and prudent investment. Influenced by his father, the Crown Prince is fond of Japanese culture and interested in high technologies, which he believes provide ultimate solutions to social transition and security challenges in the region. With no apparent affiliations, he could easily rise above fractional conflicts. Extensive public support also puts him at a more favorable position between Wahhabis and the United States. At a time when sectarian conflicts gives way to major power competition in the region, it is very likely that Saudi Arabia will retreat from the current risk-taking stance and return to traditional, moderate policies. This is determined by its national interests. Risk-taking behaviors are necessary for the Crown Prince to win public support for power consolidation when there is a  radicalization at home. Despite the recent pick-up in oil prices, Vision 2030 and the ambitious plan of New Smart City remain the main tools for Saudi Arabia to manage social expectations and promote social participation. Saudi Arabia needs stability and security in the regionif only for the sake of the oil economy or diversified development. 

Zhang Weiting is Post-doctoral Fellow of the Center for West Asian and African Studies, Shanghai Institutes for International Studies.