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The Rise of Prince Mohammed bin Salman

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What does this mean for the future of Saudi Arabia?

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The Rise of Prince Mohammed bin Salman

  1. 1. Whatdoesthismeanfor thefutureofSaudiArabia? TheRiseofPrince MohammedbinSalman June 2017
  2. 2. © Brunswick 2016 | 2 Inthedecree,KingSalman replacedhiserstwhile heir-apparent,Prince MohammedbinNayef,as crownprinceandstripped himof allofficialroles, includingasinterior minister,arolefor which hewasrenowned.The decreealsoblockedany potentialchallengesto MohammedbinSalman’s pathtotheSaudithrone, makinghimcrownprince aswell asdeputyprime minister,inadditionto his existingtitlesasministerof defenseandministerof oil. Whilemost Saudi watchers expected Mohammed bin Salman to become crown prince, thetiming of themove so soon after Salman became king, and itsabruptness, only highlight thespeed at which Saudi Arabia is moving under thenew leadership. Theappointment of MBS,as heisoften known colloquially, goes far beyond a promotion toclosing thechapter on theold, plodding Saudi Arabia, ruled by aging monarchs and a sclerotic bureaucracy, to anewer, more dynamic, and more muscular one ready to lead a turbulent region. RapidRise Prince Mohammed is theeldest son of King Salman’s third wife, and is widely regarded asa favorite of theking. Unlike many of hisbrothers and cousins, hewas educated in Saudi Arabia and remains deeply rooted in theKingdom’s traditions. Asa young man, hetried his handin theprivate sector, and long espoused cutting through Saudi Arabia’s infamous bureaucratic red tape. He thenjoined hisfatherin politics ashisadvisor and hasbeen a fixture at hisside. Yet MBSwas avirtual unknown before hisfatherbecame king in January 2015. He hadbeen in charge of his father's royal court whenSalman was thecrown prince, but quickly rose to prominence in 2015 whenhegained control of Saudi Arabia’s oil portfolio, aswell asthenational investment fund, theMinistry of Defense, and the economy portfolio. Vision2030 His latest appointment makes himthe key power in thecountry and frees his hand to drive forward with Saudi Arabia’s Vision 2030. Launched just a fewmonths after King Salman rose to thethrone, the“Vision for theKingdom of Saudi Arabia” articulates anew direction for Saudi Arabia’s economy away from oil-funded government jobs toward innovative private industry. Saudi Arabia’s King Salman binAbdulaziz punctuated a particularly turbulent and busy Ramadan early Wednesday with the appointment of his 31-year-oldson, Prince Mohammed bin Salman, as Crown Prince. In a royal decree released early Wednesday, the king broke the accepted order of succession inthe Kingdom and allbut cemented Prince Mohammed bin Salman’s plans to rewire the Saudi economy away from oil, and ushering in a more assertive regional power.
  3. 3. © Brunswick 2016 | 3 TheVision 2030 created what is expected tobecome theworld’s largest sovereign wealth fund,set off the planned IPO of Saudi Aramco and plowed vast investment into education and skills development, and the general reorganization of theeconomy. Inthemeantime, thenew spirit has encouraged ComicCon events and music concerts, and whispers that women may be able to drive in the Kingdom in time. Bin Salman’s pace hasmade Saudi Arabian ministers more punctual, more responsive and more present thanever before. Moreover, if there were doubtsabout hisplans proceeding, hisappointment asCrown Prince guarantees thereforms will be Saudi policy for decades to come. Prince Mohammed’s ascendancy also coincided with theannouncement on Wednesday thatMSCIwill include the MSCISaudi Arabia Index in its 2018 Annual Market Classification Review for potential inclusion in theMSCI Emerging Markets Index. The classification would open theway for billions in investment byemerging markets fundsinto Saudi Arabia’s Tadawul exchange, which surged 5.50% to 7,334.87 points on theback of MBS’ appointment and the retroactive reinstatement of allowances and bonuses for civil and military servants. Oil Prince Mohammed was already an influential figure in dictating the Kingdom’s policy towards itsmost precious resource: oil. Saudi Arabia is home nearly one-fifth oftheworld’s oil reserves, and isa preeminent voice in OPECpolicy. That voice will behis for decades to come. Analysts expect theprince to play a key role in deciding major issuesthat relate to thecountry’s position on oil and energy markets. He facessignificant challenges relating to energy markets, suchas global oversupply of oil, OPEC outputand potential production cuts, and a shortfall in oil export revenues to match government budgets. Additionally, hisgovernment faces the decision of where to list Saudi Aramco shares, as several international exchanges – including theNYSE and LSE – are courting thecompany as a listing venue. Regardless of howtheseevents play out,therecovery of oil markets will be key to thesuccessof Vision 2030. Muscularforeignpolicy Asdefense minister, MBShasalso presided over a more assertive Saudi foreign policy, asthecountry hastaken astrong stance on many issueswithin theregion. Afterdecades of Iranian assertiveness, Saudi Arabia hasruled out dialogue with itsarch-rival in the region, over allegations thatit supports terrorism and dueto sectarian differences. TheKingdom also led regional nations in isolating Qatar over itsalleged support of extremist groups in theregion, setting off themost serious regional crisis since the formation of theGCC. Additionally, theKingdom iswaging a war in neighboring Yemen under the prince’s oversight asdefense minister, placing Saudi forces in direct conflict with Shia rebels. Theprince hasalso personally worked to strengthen tiesbetween the Kingdom and theTrump administration in theU.S., as ties between thetwo countries were strained under theprevious Obama administration. This strengthening of tieswas underscored by avisit by Prince Salman to theU.S. earlier thisyear, and President Trump’s visit to Riyadh in May,in which hepublically praised the Saudi government and chastised Iran in front of aglobal audience. A busysummerahead It usedto be thatSaudis could enjoy summer idyll for months in Europe and beyond, confident thattheyhave missed nothing at home. With a demanding new boss now fully empowered, many are likely tobe cancelling vacations and staying put in Saudi Arabia’s torrid summer. Butcorporates, investors, and local business owners in theKingdom can take more comfort in knowing that the hand of theyoung king-in-waiting will touchmost aspects of their lives for potentially decades to come.
  4. 4. Brunswick Group Brunswick Group Brunswick is an advisory firm specializingin critical issues and corporate relations. Aglobal partnership with 23 officesin 14 countries. Founded in 1987, Brunswick hasgrown organically, operating as asingle profit center – allowing usto respond seamlessly to our clients’ needs, wherever theyare in theworld. Brunswick hasbeen in theMiddle East for 10 years, with offices in Dubai and Abu Dhabi, and experience in advising some of themost influential organizations in theregion. For more information Hassan Fattah Partner,AbuDhabi WajihHalawa Director, Dubai BrunswickGroup Level 5 GateVillage Building 10 PO Box 506691 Dubai International Financial Centre Dubai United Arab Emirates +971 4 446 6270 uaeoffice@brunswickgroup.com www.BrunswickGroup.com Contact Brunswick Dubai JamesAllan Associate, Dubai Hassan Fattah, Wajih Halawa, James Allan and Jonny Mulligan are with the Dubai and Abu Dhabi offices of Brunswick Group, a leading corporate advisory firm specializing in business critical issues. JonnyMulligan Associate, AbuDhabi