I ended my column from two weeks ago with the following words: "The importance of the words of the crown prince cannot be overstated. For the first time ever, Saudi Arabia now has an economic and political future." Even I couldn't, apparently, overstate the importance of Crown Prince Mohammed bin Salman's words. I had no idea how quickly that future would come. In the last two weeks much has changed. Over the weekend nearly a dozen Saudi princes have been imprisoned. Media titans have been jailed. The son of a former crown prince died in a mysterious helicopter crash. Another Saudi prince, Abdul Aziz bin Fahd, son of King Fahd was reportedly killed in a firefight before the Saudi government denied that report. Despite the denial, the public appearance by the prince has been reported, leading to rumors of his imprisonment.
In the last four days, nearly 500 Saudis are reportedly imprisoned on "corruption charges." Rumors of an attempted coup and assassination attempt on the young crown prince spread in the early hours of the royal purge. The kingdom is very much a closed one. This means there are no formal charges filed with a judicial system accessible to outsiders. In other words it is impossible to know who has been charged with what crimes and by whom. Of those arrested, both the son of former King Abdullah, as well as perhaps the most famous Saudi prince, Prince Al Waleed bin Talal, owner of Kingdom Holding, have been arrested. Al Waleed is a famous investor in many tech companies and has amassed a fortune of over $20 billion dollars. How he was involved in any corrupt dealings is yet uncertain, if at all. What need would he have to be involved in corruption is another question that has come up at this stage.
On the very day that these arrests were made, Yemen fired ballistic missiles at Riyadh - intercepted by U.S. Patriot missiles - and Lebanese Prime Minister Hariri resigned his post and sought refuge in Saudi Arabia. How these events are connected with the arrests and the death of the prince in the helicopter crash are anyone's guess at this point. Could they all be coincidental?
Nearly 70 percent of Saudi Arabia's population is younger than 32-year-old Prince Mohammed bin Salman. Unemployment among these youth is rampant and civil unrest among them is a pressure cooker long whistling with desperation. Perhaps the crown prince realized this and aimed to release some of this pressure. Perhaps his moves now will delay the talk of regime change long festering in Saudi civil society. The extravagant spending by Saudi royals coupled with mismanagement of government funds makes them a very common and easy target to criticize.
Saudi Arabia is a poor country. For those who have never been, the majority of the population live in poor neighborhoods. There are many areas of the country without running water or electricity. Income inequality is perhaps nowhere more extreme than in the kingdom. The continuation of the status quo, especially at such depressed oil prices, is impossible. Whether or not these charges are legitimate, the average Saudi citizen, especially the youth, are overjoyed that some form of accountability exists for royals.
The major issue that will soon come up, however, is fear by those Saudis who have participated in corrupt activities, that their wealth could be frozen and taken by the government. These funds are in the hundreds of billions of dollars. If you are a Saudi billionaire or multi-millionaire witnessing the arrests of cousins of the king and crown prince, you begin to ask yourself, what's stopping anyone else from arresting you? The answer is nothing. With that, I anticipate a major flight of capital from the kingdom in the near future. As soon as possible, many Saudis will move funds to countries out of the long-arm reach of the Saudi government. If you can properly identify the countries that will most benefit, you may be able to find yourself a good investment.
This week I'm in India and will recap my experiences next week comparing India today with China of 15 years ago.