MBS in the USA: 3 Messages From the Saudi Prince to U.S. Business Leaders
Mohammed bin Salman—the Saudi Crown Prince known globally as MBS—is on a marketing mission to the U.S. Job One for the prince will be selling President Donald Trump on his campaign to transform a formerly closed, hyper-conservative Petro-state into an open economy hungry for U.S. investments in industries as diverse as nuclear energy, farming and tourism.
MBS met with Trump at the White House on Tuesday, and while much of the conversation was behind closed doors, it’s likely that they discussed their shared support for spiking the Iran nuclear deal, and strategies for resolving Saudi Arabia’s feud with U.S. strategic ally Qatar. But the Crown Prince will spend the next two weeks courting business leaders in New York, Houston, and Silicon Valley. And MBS wants to return to Riyadh on a jet plane laden with new orders.
A Middle East expert who’s carefully followed the MBS’s rise to power, and has spoken extensively the black-bearded, 32-year old Crown Prince, is Bernard Haykel, professor of Near Eastern Studies at Princeton University. Maykel last met with MBS on Christmas Day, 2017, at the palace occupied by his father, King Salman. To Haykel, MBS comes off as a unusual combination of super-smooth operator and fierce revolutionary. “He’s a politician’s politician, in a class with Bill Clinton. He charms you with jokes,” says Haykel. He adds that MBS flatters guests by giving them his full attention; he complimented Haykel on the views his visitor expressed in specific articles and TV appearances.
Haykel notes that MBS’s background is unusual for a leader pressing for a far freer, cosmopolitan society. The Crown Prince lacks the Western education and language skills shared by many of the Saudi elite. “He wasn’t educated in the U.S. like many top Saudi officials,” says Haykel. “He studied law at home, at King Saud University.” Nor does MBS speak great English, though Haykel says his comprehension is excellent. (In their meetings, Haykel, an American, spoke with the Crown Prince in Arabic.) His great passion is mastering the intricacies of economic reform, and he presents himself as a masterful numbers man. “He inundates you with facts and figures and analysis, rattling off incredible amounts of information in the form of numbers,” recalls Haykel.
MBS is leading a three-pronged campaign to transform the Saudi economy. Here’s how the prince is likely to describe those prongs to Trump and U.S. business leaders, according to Haykel:
Diversifying a kingdom’s economy
First, he’s striving to lessen the kingdom’s heavy reliance on oil and petrochemicals by diversifying into such areas as religious tourism, financial services, and military equipment. “Saudi Arabia imports almost all of its defense equipment,” says Haykel. “MBS has a goal of manufacturing half of the armaments in Saudi Arabia.” Hence his plans to tour America’s biggest defense contractors on his current visit.
The diversification push is the rationale for the planned sale of shares in the state-owned energy colossus, Saudi Aramco. In their meetings, says Haykel, MBS explained that his goal is to monetize a large portion of the kingdom’s vast oil holdings upfront through an Aramco IPO, and invest the cash to develop new industries. Part of the proceeds, MBS explained, would go to building a sovereign wealth fund that would make investments abroad, bringing the kingdom sorely needed income.
Stepping up as the ‘new sheriff’
Second, the Crown Prince is battling to smash Saudi Arabia’s corrupt business culture, famously declaring that “there’s a new sheriff in town.” “The Saudi business elite would bill the government exorbitant amounts for all kinds of infrastructure and industrial projects, use part of the money to bribe ministers and members of the royal family, then subcontract out the work at half of what they were paid,” says Haykel. MBS has stated that the over-billing, bribes and kickbacks inflated the annual budget, totaling around $260 billion in 2017, by 10% to 20% a year, a painful number given that the kingdom is running big deficits.
MBS launched a crackdown by detaining several hundred of Saudi Arabia’s most renowned business leaders, and holding the elites at the Ritz-Carlton Riyadh hotel. The Crown Prince demanded that the detainees surrender stock, cash and real estate to compensate the Kingdom’s treasury for billions gained through kickbacks, bribes and excessive billing. The Saudi government announced in late January that it had obtained a gargantuan $107 billion by the time it released the prisoners (it later revised the sum upward to around $120 billion). But MBS was heavily criticized for allegedly subjecting the detainees to physical and mental abuse. One general who served MBS’s arch rivals, the children and descendants of MBS’s uncle, the late King Abdullah, died under mysterious circumstances while a prisoner.
Haykel defends MBS’s onslaught, and believes that the reports of abuse are highly exaggerated. “It was misinformation,” Haykel says. “Many of these people were never asked difficult questions in their lives. It was the first time they were confronted. They didn’t have their finger nails pulled out, they weren’t tortured.” Haykel notes that the campaign resembled a military operation. “But the detainees were treated with courtesy,” he says. “They had access to doctors, and a tailor even showed up and measured them for robes.”
In Haykel’s view, the strategy for recouping allegedly stolen loot proved highly effective. “They were shown the files detailing the evidence the government had amassed against them,” he says. “Then they were given a choice: Settle with the government, give back the money you took, or if you don’t, have the charges exposed in open court.” The elites were so afraid of having their practices publicly exposed, says Haykel, that most chose to settle rather than go to trial.
Reshaping a culture
Third, MBS is crusading to erase the tradition of entitlement that pervades the Saudi kingdom’s government offices and state-owned enterprise. Haykel points out that a cadre of the best and brightest hold top jobs in the energy and medical sectors, but that “it’s a thin elite.” “Seventy percent of the population works for the public sector,” he says, “and a lot of public sector employees do no real work. They show up at the office and work a couple of hours a day.”
The Crown Prince is visiting the U.S. to attract the investment that could galvanize a rich but underachieving workforce for whom a well-paying job has long been a birthright. Haykel plans to meet with MBS during the visit. “When you meet him, it’s obvious that though he’s charming, he has a backbone of steel.” He’s made plenty of enemies, adds Haykel, but for the right reasons. You can’t change the culture, he says, without shocking the system.