The Chastened Kingdom

On December 1, Saudi Arabia officially assumed the presidency of the G-20. The task of leading the high-profile economic forum, which rotates annually among member countries, is usually more a matter of form than of substance. But for Saudi Arabia—the group’s only Arab member—the stakes are high. 

Riyadh takes the helm at a time of great uncertainty. The kingdom’s image has taken a hit following a litany of domestic and international crises, from a ruinous military intervention in Yemen to a stalled pressure campaign against Qatar to the widely publicized 2018 murder of Saudi journalist Jamal Khashoggi. The reputation and internal legitimacy of Saudi Arabia’s de facto leader, Crown Prince Mohammed bin Salman, or MBS, have suffered as a result. Foreign investment, which the Saudis need to reform their oil-dependent economy, has lagged. 

Eager to repair its image, the Saudi government is attempting a major course correction by the time world leaders gather in Riyadh for the annual G-20 summit in November of next year. Signs of the coming shift are already apparent. For the first time in years, Riyadh appears open to the possibility of a peace settlement in Yemen and a reconciliation with Qatar—both steps that would significantly reshape the Gulf’s political landscape and which seemed out of the question until recently. Neither conflict would allow of a quick fix—any lasting settlements would require time and long-term commitment to succeed—but Riyadh’s conciliatory moves nonetheless augur well for the region. 

ONE STEP FORWARD, TWO STEPS BACK

The year ahead is particularly important for MBS, who is first in line to become king. Since his father’s ascension to the throne in January 2015 and his official appointment as crown prince in June 2017, MBS has consolidated power like few Saudi leaders before him. He marginalized would-be rivals in the royal family and gradually but often unceremoniously replaced an older cohort of long-serving ministers and technocrats with younger cadres loyal to him. In late 2017, he ordered the detention of many of the country’s most prominent businessmen—they were famously held at the Ritz Carlton in Riyadh—in a move that sent shockwaves through the Saudi business community. He also centralized decision-making authority in two committees focused on political and economic matters and embarked on a series of economic and social reforms.

Eager to repair its image, the Saudi government is attempting a major course correction.

Among other things, MBS used his newfound power to pursue an ambitious plan to wean the country off of its reliance on petrodollars and reduce unemployment. The project, known as Vision 2030, is meant to promote a more vibrant private sector built around tourism and high-skills jobs. The recent sale of a 1.5 percent stake in the state oil company Aramco to private investors—a first in the country’s history—put this plan in motion by funneling cash into the kingdom’s Public Investment Fund, which will use the money to boost the domestic economy. 

MBS has also portrayed himself as a champion of the youth in a country where the majority of citizens are under the age of 30. A spate of long-awaited social liberalization policies have granted women the right to drive cars and to travel and work without the consent of a male guardian. Loosened regulations have allowed local entertainment industries to spring up in Riyadh and Jeddah, where music concerts, sports events, and theme parks are no longer uncommon. The result has been a social transformation that can be easily seen and felt in urban centers across the kingdom. The changes have met with little opposition from the country’s powerful and notoriously conservative clerics, whose influence has been curtailed through several prominent arrests and a legal decree limiting the power of the country’s infamous religious policy. 

These positive developments should be weighed against a number of controversial and outright repressive moves by MBS. Under his watch, the state has continued to arrest critics and human rights activists. Just before Riyadh lifted the driving ban for women in May 2018, it detained several women’s rights activists, including Loujain al Hathloul, Aziza al-Yousef, Eman al-Nafjan, and Hatoon al-Fassi. (Saudi prosecutors later accused the women of endangering national security by conspiring with an enemy country, widely assumed to be Qatar. When Canada called for their release, the kingdom downgraded its diplomatic relations with Ottawa. And if that wasn’t proof enough that Riyadh hadn’t changed its authoritarian ways, Saudi intelligence operatives murdered and dismembered Khashoggi in the Saudi consulate in Istanbul in October 2018.

A series of recent foreign policy blunders further damaged the kingdom’s international standing. The awkward detention and coerced resignation of Lebanese Prime Minister Saad Hariri on a trip to Saudi Arabia in late 2017 not only backfired (the Lebanese public and political elites stood by Hariri, who was promptly reinstated upon his return home); it also revealed the limits of the kingdom’s heavy-handed attempts to shape domestic politics in the Levant. The humanitarian catastrophe caused by a Saudi-led military intervention in Yemen has provoked worldwide condemnation, as has the two-year-long blockade of Qatar led by the Saudis in tandem with the United Arab Emirates (UAE). Criticism by the U.S. Congress, in particular, has been unusually sharp, with many U.S. lawmakers questioning MBS’s policies and leadership. 

The reputational damage has had knock-on economic effects in the form of dampened investor enthusiasm. Foreign direct investment in Saudi Arabia rose from $1.4 billion in 2017 to $3.2 billion in 2018, but that figure is well below the 2008 peak of $3.9 billion, according to the UN’s World Investment Report. Low oil prices, coupled with the exorbitant cost of the war in Yemen—an estimated $5 billion to $6 billion per month—are also hurting the kingdom’s finances, and the embarrassing Iranian-sponsored attack on Saudi oil facilities in September 2019 exposed the vulnerability in the oil industry and thereby depressed the value of the Aramco listing.

A NEW DETENTE FOR THE GULF?

Saudi Arabia appears eager to avoid further missteps, especially abroad. In Yemen, the kingdom has begun searching for an exit, having realized that its intervention, originally meant to contain the Iranian-sponsored Houthis, has only strengthened the rebels’ reliance on Tehran. In November, the Saudis helped broker an agreement to stop the infighting among rival anti-Houthi factions—a potential stepping stone for a broader peace agreement to end the conflict. Riyadh is also holding direct talks with the Houthis, and in November, MBS’s brother Khalid bin Salman traveled to Oman, which has long acted as a back-channel representative for the Houthis. All this suggests that Riyadh is serious about finding a way out of the conflict, provided it can end the Houthis’ reliance on Iran and Qatar, whom the Saudis allege have cultivated the rebels as a proxy force. 

No single agreement will provide a quick fix for tensions in the region.

Likewise, a thaw with Qatar is no longer out of the question. Back in July 2017, Saudi Arabia, along with Bahrain, Egypt, the UAE, and Yemen, abruptly cut diplomatic ties with Qatar, insisting that it cut its support for terrorist groups, severed ties with Iran, and closed the Al Jazeera media channel, among other demands. Yet the blockade proved to be another foreign policy fiasco. Two and a half years on, Qatar seems to have weathered the crisis and has yet to make any concessions. Meanwhile, the dispute has fractured the Gulf Cooperation Council (GCC), the political and economic organization of Arab Gulf states created in 1981 as a bulwark against Iran. Here, too, Riyadh has been making conciliatory noises of late. The result, in the medium term, may be an agreement between GCC member states not to interfere in each other’s domestic affairs, akin to what the council agreed upon in 2014 amid a similar dispute between Qatar and its neighbors. 

Commendable as any attempt at de-escalation with the Houthis or Qatar may be, no single agreement will provide a quick fix for tensions in the region. In a postwar Yemen, Saudi Arabia would likely need to keep the peace between myriad political and tribal groups and invest heavily in reconstruction efforts in order to reduce the recruiting and mobilizing power of terrorist groups such as al Qaeda and the Islamic State (ISIS), which have already gained a foothold in the country. Likewise, only time and confidence-building measures will rebuild trust between Qatar, Saudi Arabia, and the UAE. 

On the domestic front, even less optimism is warranted. As a recent wave of arrests of journalists and intellectuals showed, Riyadh’s crackdown on internal opposition continues unabated. MBS’s Vision 2030—the essential pillar of his leadership—may bring further economic and social reforms, but political liberalization is not in the cards.

Still, the G-20 presidency provides MBS with an opening to recalibrate away from the rash policy decisions of past years. By using the G-20 as a forum to discuss climate change and youth unemployment, both critical issues for the Middle East, the kingdom might be able to rebrand itself enough to improve its international image, and a more judicious foreign policy might restore investor confidence—and bring a modicum of stability to the region.