In Saudi Crackdown, There’s More Than Alwaleed’s Empire At Stake

The 32-year-old crown prince ditched the traditional Saudi decision-making process that moved at a glacial pace, but preserved consensus among the royals. His domestic efforts have been more successful than his foreign ones.

He plunged Saudi Arabia into a costly war against pro-Iranian rebels in Yemen and led efforts to isolate neighboring Qatar. While pro-Saudi forces are gradually gaining ground in Yemen, rebel missiles have reached Riyadh twice in the past two months. The standoff with Qatar has gone nowhere.

The kingdom was also widely blamed for orchestrating the shock resignation of Lebanese Prime Minister Saad Hariri from Riyadh in November, a claim that Saudi officials denied. It sparked outrage in Lebanon, a chilly reaction from Egypt and the U.S., and a French intervention that helped Hariri remain in office.

At home, the prince, known among journalists and diplomats as MBS, cemented his power by sidelining senior princes. Security forces rounded up government critics before a decision to lift a ban on women driving in September. He is also spearheading an ambitious plan to overhaul an economy too reliant on petrodollars, with the sale of a small stake in monopoly oil producer Saudi Aramco in 2018 underpinning it. 

"We have reason to be more optimistic about his domestic projects than his foreign ones," Hawthorne said. "He has carefully consolidated power domestically whereas each of his foreign forays have so far mostly struck out."

Prince Mohammed's supporters say he has no option other than to move fast and act decisively to end the economy's unsustainable oil addiction and prevent Shiite-ruled Iran from dominating the Middle East.

The corruption probe had to take place without delay so investors "know it's a level playing field," Commerce and Investment Minister Majid Al-Qasabi said in an interview on Dec. 13 in Riyadh. "We can't tolerate the perception that you have to corrupt officials to get into a business in Saudi Arabia," he said. Asked about Alwaleed, the minister said the billionaire prince was "negotiating his settlement."

For decades, prominent businessmen benefited from close ties with royal princes to win major contracts and help international companies gain a foothold in the country.

In a secret 1996 cable published by WikiLeaks, a U.S. diplomat in Riyadh reported that a handful of the most senior princes enriched themselves by skimming from "off-budget" programs that received 12.5 percent of the country's oil revenues. The diplomat said some royals used their power to confiscate land and resell it at a profit to the government.

"Saudi Arabia has an economic and political system based on the privileged position of the royal family," said Paul Pillar, a former CIA officer who is now an academic. "MBS's moves have taken a form that can best be described as a shakedown. And, of course, his political ambition and what appears to be a drive for absolute power cannot be separated from any of this."