Saudi watchers may have been surprised to hear that eight intellectuals and writers were detained last week by the kingdom.
It’s not that arresting dissidents is anything out of the ordinary in Saudi Arabia, but doing so when the state-owned oil company Aramco is in the midst of a giant initial public offering and trying to woo foreign investors seems odd.
None of the eight were high-profile opponents of the regime or presented any kind of immediate threat to political stability. Saudi Arabia is already contending with a highly problematic record on human rights, so why stir the pot when it’s trying to sell shares? The IPO is already encountering interest no more than tepid, and reports about detentions will just make it harder to line up big institutional investors.
But it all makes perfectly good sense if you take a cold-eyed look at how Crown Prince Mohammed Bin Salman, the country’s effective ruler, is steering Saudi Arabia.
The promotional materials for Vision 2030, his strategic plan for the Saudi economy and society envisions something like a hotter, drier and sandier California -- a cutting-edge economy of tech, finance, tourism and entertainment driven by daring entrepreneurs. Oil will pay for the transition (hence the Aramco IPO), but it will recede in importance as the New Saudi Arabia emerges.
The vision is more than just about business. The crown prince has been undertaking liberal reforms (at least by the low bar the kingdom starts from) like letting women drive, inviting international stars to perform, developing a high-tech megalopolis and allowing visiting holiday-making tourists.
In his own way, bin Salman really does want to transform Saudi Arabia. But even if it’s never publicly expressed, his real model is China.
Embracing the dragon
Beijing has presided over 30 years of spectacular economic growth, creating world-conquering industries from scratch, corporate giants like Huawei and Alibaba and new cities on land that was once farm fields. It’s a compelling vision for an ambitious leader like the crown prince, and not just because China points the way to economic development but because it points the way to economic development without a shred of democracy.
The outline is pretty clear for anyone who isn’t distracted by Prince Mohammed's policies of social liberalization.
The Chinese model isn't a country of free and autonomous citizens, but a country of consumers, who enjoy what the increasingly higher standard of living and a fair degree of cultural latitude in exchange for ceding their fundamental freedoms to a benevolent government.
Nationalism is an important part of the equation, too, because even consumers need more inspiration than toys to stay loyal. But it’s a heavy-handed nationalism that brooks no dual loyalties, particularly religious ones.
Loyalty in Saudi Arabia once amounted to personal allegiance to the royal house and to its strict brand of Wahabi fundamentalism. Now the crown prince wants loyalty to be to the state alone, no longer answerable to the clerics any more than it is to human rights organizations.
That explains why he has clipped the wings of religious police and has taken a friendlier attitude to the country’s Shiite minority, the better to deter religious passions from either them or the Sunni majority. But that’s where his “liberalism” ends.
Unlike a lot of serial human rights violators, China succeeds in being a respected member of the world business community, which is another reason why Saudi Arabia aspires to the Chinese model. China can do that simply because it is too big and powerful economically for anyone to seriously take it to task. Case in point: Alibaba just pulled off a giant secondary IPO in Hong Kong this week even as the city has been wracked by protests demanding democracy.
Saudi Arabia’s economy isn’t on the same scale as China’s, but it’s big and important enough that it may be able to pull off the same balancing act. Case in point: Just a year after the gruesome murder and dismemberment of Jamal Khashoggi, last month’s Future Investment Initiative conference, the country’s premier investment event, drew the world’s biggest companies and moneymen.
The crown prince even had the audacity to hold the event at Riyadh’s Ritz-Carlton, where two years earlier he held some of the country’s most powerful businessmen hostage.
Low oil prices might be constraining Saudi Arabia’s grandest ambitions, but it still has a lot of money to spare. Democracy and human rights aren’t going to create an insurmountable obstacle for foreign companies angling to get their piece of the action. The Trump administration's friendly policy offers a seal of approval.
Whether it’s China or California, the model isn’t destined to succeed in Saudi Arabia. China’s rise started from poverty and after three decades it’s is still a middle income country, with a GDP per capita of about $8,800, compared with Saudi Arabia’s $21,000.
To rise up to the ranks of the rich, China will have to transition to a truly high-tech economy, and there’s no assurance it will succeed. One reason is that the Chinese model of free enterprise and oppressive government is not terribly fertile ground for an economy of innovation. It’s hard to tell people to be creative and think out of the box at work but stay quiet and submissive when they clock off.
China thinks it can square that circle, and so does the Crown Prince. My bet is they’re both wrong.
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