(From Jairus Banaji on FB)
The story has just broken that the Leonardo that Mohammed bin Salman
paid $450 million for at a Christie’s auction in 2017 is a fake. In
other words, the painting ‘Salvator Mundi’ was by one or more of his
assistants and only given the final touches by Leonardo himself. When
the Louvre wanted it for a Leonardo exhibition in 2019, MbS refused to
lend it unless the museum was willing to display it next to the Mona
Lisa and say it was 100% by Leonardo. The French decided they couldn’t
do that.
What the episode illustrates is that to a host of autocratic rulers
worldwide (Putin and Modi among them), appearances matter infinitely
more than truth. But beyond that, those were years when the Saudis were
being asked to tighten their belts in a drive for austerity brought on
by a major downturn in the global oil market. More than anyone, it was
the brash, headstrong, impulsive MbS, the Crown Prince, who was seen as
the architect of the austerity programme. Yet he was, reportedly, even
willing to pay up to $1 billion for the Leonardo and had, not so long
before that, paid close to €500 million for a luxury yacht he had seen
in the Mediterranean which belonged to Russian billionaire Yuri Shefler.
The name of this 440-ft superyacht—‘Serene’. Of course, the horrific war
he was on the verge of launching against the Houthi rebels in Yemen
would be anything but serene. It has been one of the biggest
‘humanitarian catastrophes’, I think they call it, of the 21st century.
MbS today presides over one of the most authoritarian regimes in the
world, which is saying a lot given the sheer number of such regimes
(whether monarchical, post-Stalinist or pseudo-democratic) worldwide.
Saudi Arabia is the world’s largest arms importer, with the highest
military spending as a % of GDP anywhere in the world. It also has the
world’s largest reserves of oil, of course, and a brilliant company
(Saudi Aramco) that has been integrating downstream into refining and
petrochemicals to become what its former chief executive Khalid al-Falih
wanted it to become, the largest integrated oil & gas major in the
world. But with oil demand growth expected to slow in the next two
decades and the titanic struggle between Russia and the Saudis that is
currently playing out in terms of control of the global oil market, a
shadow of pure finitude looms over the kingdom of oil.
As the bottom fell out of the oil market in 2014-15, the death of
Arabia’s previous king Abdullah saw major changes between the different
royal factions, with power shifting decisively to the Sudairi brothers,
the seven sons from the marriage of the kingdom’s founder Ibn Saud to
his favorite wife Hassa bint Ahmad Al Sudairi (from an influential Najdi
clan). What followed the accession of the present king Salman in January
2015 was a purge of Abdullah’s allies and sons and rapid consolidation
of power by his family (one of the Sudairi ‘royal factions’), with the
king’s son MbS amassing power with lightning speed as he became defense
minister, chief of the royal court and president of a newly created
economic council, all within a week of his father’s accession. By 2017
he became crown prince as well, displacing the incumbent Mohammed b.
Nayef who was ousted by a majority of votes in the Allegiance Council.
Of the three members of that Council who didn’t vote for his
appointment, one, Ahmed bin Abdul Aziz , the sole remaining full brother
of King Salman, was said by one Guardian correspondent to be facing
arrest in March 2020 (along with Mohammed b. Nayef himself) on charges
of ‘treason’.
The Saudi government budget is of course crucially dependent on the
price of oil, since well over eighty percent of the budget comes from
petroleum revenues. The ‘budget breakeven price’ of oil is estimated to
be around $84 a barrel, much higher than anything recent years have
seen. Bloomberg were told that ‘last year (2015) there was near-panic
among the prince’s advisers as they discovered Saudi Arabia was burning
through its foreign reserves faster than anyone knew, with insolvency
only two years away’. McKinsey made a strong plug for diversification,
estimating that the country would need $4 trillion in investment in the
non-oil economy to diversify away from oil by 2030. But diversification
meant handing power over to a set of money managers in charge of a
massive sovereign wealth fund that would eventually invest half its
holdings overseas to ‘produce a steady stream of dividends unmoored from
fossil fuels’. This fund, called the Public Investment Fund, has become
the heart of MbS’s economic strategy. Its voracious appetite for capital
underpinned the bizarre ‘anti-corruption’ crackdown of November 2017
when over ‘300 princes, tycoons and former government officials were
rounded up in the Ritz-Carlton hotel in Riyadh’ and subjected to ransom
demands which, in the case of the kingdom’s wealthiest private
capitalist, Prince al-Waleed bin Talal, is said to have come to ‘at
least $6 billion’. Al-Waleed was released after a detention of 83 days
and too terrified to say anything in one of the first interviews he gave
after his release. He kept saying, ‘It’s a confidential and secret
agreement’, ‘a confirmed understanding with the government’. And the
most he was willing to say was, ‘It’s not easy to be held against your
will’. ‘There are rumours that the state will place some private
companies under the custody of the government’s Public Investment Fund’,
Khashoggi wrote at the time.
As a biographer of the Crown Prince has noted, the committee leading the
campaign against corruption was ‘led by MBS, the source of whose own
wealth had never been scrutinized’. This should remind us here in India
about the inherent duplicity of ‘anti-corruption’ campaigns and
crusaders. Since then, Aramco has become the other major source of PIF
funding, the basic idea being to steer oil profits away from the company
and the Saudi central bank to the PIF, but this has encountered
resistance both from the technocrats who have been in charge of the
company till recently at least (in 2019 Khalid al-Falih, Aramco’s chief
executive, was replaced by Yasir al-Rumayyana, a close confidant of MbS
and governor of the sovereign wealth fund) and presumably from the Saudi
Arabian Monetary Authority (the country’s central bank) as well.
The much-publicized Aramco IPO which MbS hoped would inject a straight
$100 billion into the PIF (5% of a desired valuation of $2 trillion) was
shelved in the middle of 2018 after king Salman was warned that a
foreign listing would mean full public disclosure of Aramco’s financial
details, including how much the royals (of whom there are thousands)
were receiving from its revenues.
This post is too long already so there’s no room to say anything about
how a new Saudi nationalism has emerged which, amplified on Twitter,
becomes a powerful tool to keep the existing culture of fear in place.
If MbS was once seen as the Gulf monarchies’ answer to the Arab Spring,
then democrats in the Arab world needn’t worry.
May be an image of 1 person and indoor
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