MIDDLE EAST

Photo Source:
   NIAS Course on Global Politics
National Institute of Advanced Studies (NIAS)
Indian Institute of Science Campus, Bangalore
For any further information or to subscribe to GP alerts send an email to subachandran@nias.res.in

CWA # 304, 28 June 2020
MIDDLE EAST
Yemen and Oil, MBS’s two-path destruction in Saudi Arabia

  Padmashree A

The Crown Prince, who decided to enter the conflict in Yemen for regional power gains, has become a bog for Saudi Arabia. After five years of continuous war and exhausting its reserves and allies, the country has called for a ceasefire.

The devasting and ill-timed war in Yemen, falling oil production, and the unveiling of Vision 2030: the political specter of the Crown Prince of Saudi Arabia Muhammad bin Salman (MBS) has taken a hit as the global tide is fast-changing against him. Until recently MBS was seen rapidly ending the regressive national laws such as flogging, allowing women to take up driving jobs and promising to uplift Saudi Arabia at national, regional, and international levels. In a few years, the future king now looks to bear the cost of his own political and economic blunders. What lies behind MBS motives to withdraw from Yemen? How far can the leadership, sustain the economy with a hit in oil prices? Will the economic recession prolong jeopardizing his Vision 2030?

From a Bang to a Whimper, Saudi Arabia’s Costly Yemen Intervention

The Crown Prince, who decided to enter the conflict in Yemen for regional power gains, has become a bog for Saudi Arabia. After five years of continuous war and exhausting its reserves and allies, the country has called for a ceasefire. In the process, an alternative was opted by the Prince to contain the advancement of the Houthis by imposing economic blockades that choked the country of food and medical supplies. The strategic choking by MBS backfired not only due to the domestic pressure, but it also drove the Houthis closer to Iran, allowing the extremist groups to get control in Yemen. 

The global image of MBS was tarnished after the conflict in Yemen coincided with a famine, turning it into a humanitarian crisis. The reckless actions of the Prince came under criticism by many humanitarian crises groups. For MBS the chances of winning looked thin, but he continued for the fear of losing the status quo. This vindicates the short-sightedness of the Prince to go ahead with a costly and devastating engagement in Yemen. The fall in arms supply and loss of goodwill has made Salman realize that Yemen can no longer be his game. 

A short-sighted economic decision in oil exports

The energy dominance of the country has diminished by the short-sighted economic policy of MBS. Without anticipating the Covid-19 situation or the fragile state of the economy, MBS decided to fill his buyers with cheap oil. Provoked by Russia to compete in the oil market, the oil price war has cost his entire country to lose its oil industry. As countries went under lockdown, shutting their industries and working from home, the need for oil went below the demand curve. But never did the young ruler realize, what will happen if there was no storage left and demand remained deficient. 

Saudi Arabia was majorly dependent on oil exports and its non-oil sectors such as construction industries were linked to the revenues from oil. If the demand tends to stay critical, the country's budget will dive short estimating 2 billion dollars per week thereby making it vulnerable to face the pandemic. Although in recent days with ease in lockdown, the demand for oil has begun however there can be no affirmation for the prices to rise. 

Economic recession challenging the leadership

The fall in the demand curve of oil and the pandemic has overturned the economic promises with which he was able to politically consolidate as a leader. This is only an addition to the weight of the economy because the country has been under a slump in the last two decades. When Prince Salman was made the de facto ruler, he chose to open up the economy and created the Vision of 2030 to bring a new look to Saudi Arabia. In his vision, the Prince first aimed to break from being an oil producer by privatizing Aramco and diversify into other industries such as entertainment, sports, and films. Secondly, he sought to reduce youth unemployment by turning Saudi Arabia into a center for investments. But all seems to be in vain due to misdirection of the kingdom’s asset reserves. 

Starting with the miscalculation of intervening into Yemen that led to heavy economic costs and the pandemic further weakened its oil industry. The oil shocks seem to have an asymmetrical impact on its economy thereby affecting the government expenditures. The main reasons for the recession are the existing lapse in the growth of the Saudi economy followed by the actions of a self-centered young ruler to portray his lavish image to become the future king.

Saudi Arabia’s staggering future with MBS

This crisis poses a critical question on the leadership of Saudi Arabia as tripling VAT and cutting subsidies cannot be an answer to the economic recovery. The lapse in the economy must be altered with growth in non-oil GDP. It should privatize transport, telecommunication, and construction. And only through a redirection of the country’s sources towards the development of the economy and redrafting the foreign policy towards the US and Russia, will Saudi Arabia make substantial realignments. 

The political system has been unclear and the coronavirus crisis makes it more doubtful on MBS to carry out various divisive measures. As a Prince, his power to influence and status has grown weaker in the Middle East. Despite his efforts to bring foreign investments through social and cultural openness, the economic recession will be a challenge for the future king. But in the view of internal and external events, it is clear that Muhammad bin Salman as a de facto ruler has failed to use his power productively. His decisions have become a deadlock for Saudi Arabia and the Vision 2030 seems bleaker.

About the Author

Padmashree A is a Research Intern at NIAS. She is pursuing her Master's in International Relations from Stella Maris College, Chennai.

Print Bookmark

PREVIOUS COMMENTS

NIAS Global Politics Database
March 2024 | CWA # 1251

NIAS Africa Team

Africa This Week
NIAS Global Politics Database
February 2024 | CWA # 1226

NIAS Africa Team

Africa This Week
The World This Year
December 2023 | CWA # 1189

Hoimi Mukherjee | Hoimi Mukherjee is an Assistant Professor at the Department of Political Science in Bankura Zilla Saradamani Mahila Mahavidyapith.

Chile in 2023: Crises of Constitutionality
The World This Year
December 2023 | CWA # 1187

Aprajita Kashyap | Aprajita Kashyap is a faculty of Latin American Studies, School of International Studies at the Jawaharlal Nehru University New Delhi.

Haiti in 2023: The Humanitarian Crisis
The World This Year
December 2023 | CWA # 1185

Binod Khanal | Binod Khanal is a Doctoral candidate at the Centre for European Studies, School of International Studies, JNU, New Delhi.

The Baltic: Energy, Russia, NATO and China
The World This Year
December 2023 | CWA # 1183

Padmashree Anandhan | Padmashree Anandhan is a Research Associate at the School of Conflict and Security Studies, National Institute of Advanced Studies, Bangaluru.

Germany in 2023: Defence, Economy and Energy Triangle
The World This Year
December 2023 | CWA # 1178

​​​​​​​Ashok Alex Luke | Ashok Alex Luke is an Assistant Professor at the Department of Political Science at CMS College, Kottayam.

China and South Asia in 2023: Advantage Beijing?
The World This Year
December 2023 | CWA # 1177

Annem Naga Bindhu Madhuri | Annem Naga Bindhu Madhuri is a postgraduate student at the Department of Defence and Strategic Studies at the University of Madras, Chennai.

China and East Asia
The War in Ukraine
October 2023 | CWA # 1091

Annem Naga Bindhu Madhuri

Issues for Europe
IPRI Quarterly Forecasts I Triggers, Trends, and Trajectories
July 2023 | CWA # 1012

Bibhu Prasad Routray

Myanmar continues to burn
2022: The World This Year
December 2022 | CWA # 879

Padmashree Anandhan

The Ukraine War
Europe: Heatwaves, Wildfires, Droughts, and Ice Melt in Alps
November 2022 | CWA # 838

Rishma Banerjee

Tracing Europe's droughts
NIAS Africa Weekly
March 2022 | CWA # 705

NIAS Africa Team

In Focus: Libya
The World This Week: 150th Issue
December 2021 | CWA # 630

GP Team

Europe in 2021
Pakistan Reader
October 2021 | CWA # 588

Abigail Miriam Fernandez

TLP is back again
NIAS Fortnightly on Science, Technology & International Relations
August 2021 | CWA # 528

STIR Team

Space Tourism
Science, Technology and International Relations
September 2019 | CWA # 162

Lakshman Chakravarthy N

5G: A Primer
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 71

Mahesh Bhatta | Centre for South Asian Studies, Kathmandu

Nepal
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 70

Nasima Khatoon | Research Associate, ISSSP, NIAS

The Maldives
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 69

Harini Madhusudan | Research Associate, ISSSP, NIAS

India
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 68

Sourina Bej | Research Associate, ISSSP, NIAS

Bangladesh
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 67

Seetha Lakshmi Dinesh Iyer | Research Associate, ISSSP, NIAS

Afghanistan