Opinion |

America Buying Into Saudi Crown Prince Mohammed Bin Salman’s Vision

Fresh from a visit to the U.K., where Prime Minister Theresa May tried to land the lucrative prize of an Aramco IPO, the Saudi royal will be equally feted during his U.S. tour this week, with multibillion-dollar deals at stake

Dmitriy Frolovskiy
Dmitriy Frolovskiy
Saudi Arabia's Crown Prince Mohammed bin Salman walking to greet Britain's Prime Minister Theresa May outside 10 Downing Street in London, March 7, 2018.
Saudi Arabia's Crown Prince Mohammed bin Salman walking to greet Britain's Prime Minister Theresa May outside 10 Downing Street in London, March 7, 2018.Credit: Alastair Grant/AP
Dmitriy Frolovskiy
Dmitriy Frolovskiy

Saudi Arabia’s King Salman and his son, Crown Prince Mohammed bin Salman, have taken to crisscrossing the globe to pitch their Vision 2030 plan for the Saudi economy. Last October, the king traveled to Moscow to cement oil production cuts and sign multibillion-dollar trade agreements. Last week, the crown prince met in London with U.K. Prime Minister Theresa Mayand Queen Elizabeth II. Now the Saudi heir is headed to Washington to meet with his country’s most fervent – and most powerful – ally: President Donald Trump.

All of these visits share a common goal: Securing outside assistance to implement Riyadh’s radical economic reforms and ensure long-term solvency. Decades of ample oil revenue have meant Saudi Arabia has never had to impose major taxation on its citizens. Instead of developing a sound business climate or worrying about unemployment, the nation’s leaders splurged on the public sector and allowed a wasteful patronage system to flourish.

Now, at the impetus of the crown prince, Vision 2030 is an innocuous-sounding name for the complete restructuring of one of the world’s most prominent petrostates. Each of these three major state visits has been designed to solicit economic and commercial support from key partners and further the pursuit of an economy that no longer needs oil to survive.

Saudi Arabia’s ruling father and son have had a receptive audience at each stop – even in erstwhile adversary Russia. Foreign Minister Sergey Lavrov capped the Moscow visit by claiming relations between the two sides had “reached a new qualitative level.” May’s government, clearly seeing Saudi Arabia’s economic overhaul as its last (and best) hope to sell the global viability of post-Brexit Britain, similarly declared the prince’s visit would “usher in a new era in bilateral relations.”

Unfortunately for May, there was little progress on one she has advocated for nearly a year now: Securing the initial public offering (IPO) of Saudi Aramco for the London Stock Exchange (LSE). That Aramco listing, now slated for 2019, has pit the LSE against the New York Stock Exchange, and May against Trump.

Trump takes his turn welcoming the crown prince to Washington this week and is likely continue his push for an American Aramco listing. Trump himself framed the question with characteristic bluntness a few months ago. “I know they’re looking at London, I know they’re looking at others, they’re probably looking at themselves, they have a much smaller stock market. So I would like them to consider the New York Stock Exchange or Nasdaq.”

He may be preaching to the choir: Crown Prince Mohammed himself apparently prefers listing Aramco on the NYSE.

Beyond that, the Trump administration – like the British – sees a raft of potential opportunities for American companies within Vision 2030. In a sign of how close U.S.-Saudi relations have become under the current White House, this will be the crown prince’s second visit in just over a year.

This renewed enthusiasm for the bilateral relationship in both Riyadh and Washington did not stop the Russian press from portraying King Salman’s October visit to Moscow as evidence of a Saudi pivot away from its core alliances.

Russia even waded into the fight over the Aramco IPO: Kirill Dmitriev of the Russian Direct Investment Fund (RDIF) made headlines last month by announcing Russia’s readiness to participate in the Aramco IPO.

Should Downing Street and the White House be worried about competition from the Kremlin? Russian spin may have you believe so, but the honest response is: Not really. Moscow is eager to present its production agreement with Saudi Arabia as a strategic success in “economic diplomacy.” The state apparatus and media has even pivoted away from casting Saudi Arabia as an enemy.

Unfortunately for Russia, this rapprochement has little room to grow beyond shared energy interests. Russia can’t help Saudi Arabia implement major reforms to ensure national survival in the way the Americans or British can. Beyond energy deals, Russian companies are practically nonexistent in these discussions. Moscow’s main contribution to Vision 2030 is instead to boost international interest among other partners.

This is a critical distinction for the crown prince, who needs Saudi Vision 2030 to tackle youth unemployment of 32.6 percent, build up his country’s emerging high-tech industries, and expand the private sector through SMEs and female participation. All those initiatives are designed to insulate his country against future hydrocarbon shocks and declining prices.

The need to facilitate ties with the United States and the United Kingdom helps explain Crown Prince Mohammed’s willingness to steamroller ahead with both economic and social transformations. He has undone many severe restrictions on women, securing their right to drive and to pursue new economic opportunities. The unprecedented set of moves has broken years of deadlock over women’s roles inside Saudi Arabia. It has been greeted with enthusiastic praise in both London and Washington.

Cutting-edge technology is another key component of the reform drive. The Saudi government has been busy courting Western and Japanese tech companies. They have placed special emphasis on Silicon Valley: Google parent company Alphabet and Amazon are both in talks to build a technology hub and data servers to underpin the Saudi tech industry. San Francisco also features as a stop on the crown prince’s tour.

Looking to boost clean energy initiatives and recycling at home, the crown prince may also take the opportunity to pitch U.S. tech companies on one of his flagship initiatives: a new high-tech desert city called Neom.

By coming to Britain and the United States with major reforms underway, Crown Prince Mohammed has ensured a positive reception from two of Saudi Arabia’s most established and most important outside backers. Both countries have long been quietly pushing their most reliable Middle Eastern partner on questions of both social and economic reform. In King Salman’s son and heir, both May and Trump seem optimistic they have found their man.

Dmitriy Frolovskiy is a political analyst and independent journalist based in Moscow. He is a consultant on policy and strategy in the Middle East and Central Asia with private entities, and has written about Russia’s foreign policy toward the Gulf Cooperation Council states and former Soviet territories.

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