16Executive Focus&,AJLIFADSCHOOLOFCEVTRAL4PUBLICPOLICYEUROPEANUNVERIITYInvesting in rural peoplePenThe International Fund forAgricultural Development (IFAD) is anGeorge Soros Visiting Chairinternational financial institution and a specialized Ulnited Nationsand VisitingPractitionerChairagency dedicated to eradicating rural poverty and hunger.Irdoes so byinvesting in rural people.IFADfinances programmes and projects thatABOUTTHESCHOOLSuccsuandidatwbcholasincrcase agriculturalproductivityand raiserural incomes,and advocatesandlorpractitionerswhohaveat the local, national and international level forpolicies that contributeTheSchoolofPublicPoficy(SPP)Isademonstratedoutstanding academicto rural transformation.unique global institutionof teaching.achievementorhaveadistingulshedresearch.andpracticebased inrecordofparticipation in theIEADislookingforprofessionalswithstrategicvision,asolidBudapestHungaryWeoffermasteprofesional,journatisticpolitical,orteam orientation,proven capacitytogenerateresultsandadeepanddoctoratedegrees inpublicpolicy.civicworidofpublicpolicyunderstanding of and commitmentto development,IFAD) iscurentlyOurgoalistoempowerstudentsby.secking to recruit:SPascommitedtodiverityingitsgiving them theiknowiedgeand ilillsDirector, Human Resources Division (HRD),gradeD-1/D-2theywill nted to effedpositive changecommunityandsowelcomesforthe commongoodinthepublic.nominations andapplicationsfromAmemberofIFAD's Senior Managementteamwho is responsibleforindividualswho contributetothatnionprofit, and private sectors.thevisionstrategypolicyandguidanceofthedivision,for interactindiversitywith Senior Management the Executive Board and govemning bodies,ABOUTTHEUNIVERSITYand forensuringthatthedivisionhasall thenccessarymanagementHOWTOAPPLYpolitical and resourcesuppont it requires from its principal stakeholdersCentrat European Univerityis anto cary out its mission ofbeing astrategic, integratedand fullyTonominatesomeoneortoapplyforEnglish-ianguage,graduateuniverstytrusted professional partner with IFAD managers and staffAdynamiclocatedinudpeHungyeitherthe GeorgeSorosVialiting Chairoffenprogramsinthesocialsciencesorthe GeorgeSoros Visitingand accomplished professional who encouragesconfidence,leadshumanities,law,publicpolicy.businsPractitionerChair,please submitby eample and continues the development ofleading-edge HRmanagement,economic.applications andnominationstomanagementpolicies and practices to recnuit andretainthe best andenvironmentalsciencesandpolicy,andgeorgesoroschairpspp.ceu.edu.most appropriate talent to carry out IFAD's mission.mathermatics.TheUniveruty isIFAD offers a competitive remuneration and benefits package thatComplete applications indudeaaccredited intheUnited Statesand300-wordperonalnarrativeandaincludes tax-free salary,dependencyallowance education grant upHungaryresumeto university levd,medical and group life insurance homeleave andVISITING CHAIRSpension plan.For more detais on theIEAD is committed to achicving diversityand is seeking a balancedSppseeks nomirations andappilicatiorvnomietationpirocess,workforcefrom its Member Statos Women are particularly encouragedapplicationsforitsGeorgeSorosplease vhsitourwebsiteattoapplyVisiting Chalr and George Soros Visitingwww.spp.ceu.edu/gs-.chait.PractitonerChairforthefall,wintet.For detailed information, visit our website www.ifad.org/job.and spring termsPlease send yourapplicationthrough theIFAD online systemby27June2015.AERICANResolutionFoundationFinancialSectorDevelopmentOfficersThe Resolution Foundation is an award-winning independent think-tankfocused on improving living standards for those on low to middle incomes.Theprimaryrole ofthe African Developmerit BanksFinancial SectorDevelopmentCepartment is to help the regional member countries (RMCs)increasereachOur reputation for analytical work that results in effective policy solutions(e.g.financialinclutionl.depth (e.g.financialintermediationl.andbreadthotplaces us at the forefront of the UK debate on economic and social policynancialsystems(eg.Capitalmarket,cross-borderdevelopment).ThemissionoftheDepartmenthasfour longtermobjectives:)developmentofovibrantprivate sectorthroughan inclusiveaccess byhouseholdsandenterprisestofinancialDirectorICompetitivepackageILondon SW1services()strengthening.marktetspanticipantc(i)developing efficientcapitatmarketsand (w)deepeningregionalfinancialintegration,We're lookingfor an exceptionalcandidate with a track recordof intellectualTheFinancial SectorDevelopmentDepartment (OFSD)seeks to fill thefollowingleadership and the senior management and public communication skills tovacantpositions forthvree ofitsdivisions,All positions are based in Abidjan,Cote drivoire.lead our team and build on the Foundation's growing influenceFinancialMarkets Officers win assistthe Financial Markets Division of OFSDWorking closely with our new Executive Chair, David Willetts, the Directorto createmore efticientfinancialmarkets andinstitutions Capabieofmobiliuringdomestic savings and allocating sarce capital Because nvestment financewill develop and oversee a programme of research and policy developmentprovidedbythe development communitysupplies onlyaminutefraction ofthethat builds on the strengths of the Foundation (on issues ranging from lowCapitaluredbyprivateagents across AfricaCFSD3willendeavorto channeltheBank Group's resources in ways that develop Africa's financial markets.pay,thfutureofthejobsmarket,welfarerefom,housingandfiscal policyInvestmentOfficenswillassisttheFinancial institutionsDivision ofOFSDat the same time as it expands into new areas.tosupportFlstoon-lendtoinfrastructure,agribusinescwomenbusinessesSmEsetc In particular the Division: (t) engages in intermediation through FisIn addition to demonstrating intellectual rigour,analytical credibility,strong(primarily.ccommercial Banks as well as credituniont srvings banks post offices.etc(2)ConductsgorousevaluationsofFistoeitendssupporttoenhanceFlsmanagement skills and political sensitivity the post-holder will need thean-lendingto SMEs (3) Engagesin dialogue with apexbodies and initiativesvision to lead the next phase of our development at an exciting time for thetopromotocanc(4)SuporuyesnsnthDcosyFoundation. They must also have a clear commitment to achieving effectiveandincubateswork on remittancetcollateralregistrie,creditbureaus,etc.FinancialInclusionOfficenswllassiattheFinancialincusionDivisionofOFSDchange that improves the lives of those on low to middle incomes.to supportthe BanksRMCs in their aim fornearuniversalaccess ofessentialfinancial services The Incumbent will promote inclunive finance policies andIn exchange, we offer a competitive benefits package. For further detailssupport country andregional programs andprojectstofacilitate affordableand an application form (we do not accept CVs), visitaccess to bask financial services for Bhe unbanked andunderserved populationsleveraginginnovative and technology-led solutions to achievetheultimategoalswww.resolutionfoundation.org/about-us/opportunities/ofnearunivensalaccess in RMCsMoreinformationoneachaftheseroles isavailableontheAfricanDevelopmentBankResolution Foundation welcomes applications from under-represented communitiesGroup'swebsite:www.afdb.org Theclosingdateforapplications is 29May2015.and groups. We also welcome applicants on secondment and candidates from overseasInterested appantsshould pleaseapplyforthe.appropriatepositionontheas wellas the UK.website:www.afdb.org/en/careers/current-vacancies/Applicaritsshouldcompletethe Onlineandattachcopies of theircomplieteCurlculumVitaeinMs WoedformatorPOF,TheAfricanDeveiopment Bank is anequalosinn date-V201opportunitieseoyerand femiale candidates are stronglyowafdh.c10.huneaencoutaged to apply.The Economist May 23rd 2015
16 The Economist May 23rd 2015 The Resolution Foundation is an award-winning independent think-tank focused on improving living standards for those on low to middle incomes. Our reputation for analytical work that results in effective policy solutions places us at the forefront of the UK debate on economic and social policy. Director | Competitive package | London SW1 We’re looking for an exceptional candidate with a track record of intellectual leadership and the senior management and public communication skills to lead our team and build on the Foundation’s growing infl uence. Working closely with our new Executive Chair, David Willetts, the Director will develop and oversee a programme of research and policy development that builds on the strengths of the Foundation (on issues ranging from low pay, the future of the jobs market, welfare reform, housing and fi scal policy) at the same time as it expands into new areas. In addition to demonstrating intellectual rigour, analytical credibility, strong management skills and political sensitivity the post-holder will need the vision to lead the next phase of our development at an exciting time for the Foundation. They must also have a clear commitment to achieving effective change that improves the lives of those on low to middle incomes. In exchange, we offer a competitive benefi ts package. For further details and an application form (we do not accept CVs), visit www.resolutionfoundation.org/about-us/opportunities/ Resolution Foundation welcomes applications from under-represented communities and groups. We also welcome applicants on secondment and candidates from overseas as well as the UK. Closing date: 23:59 on 31 May 2015. First round interviews are likely to be held on: 8 and 10 June 2015. Executive Focus
TheEconomistMay23rd201517Briefing Saudi Arabiathat once they did. Under Mr Obama theThechallengedkingdomUnited States has been reluctantto engagein a region that is consumed by civil wars.Itsshale-energyboommakes itlessdependent on Saudi oil.And America is tryinghardtomakethat deal with Iran.SaudiArabia'sdecisiontointerveneinJEDDAHANDRIYADHYemen in March-an operation in which itThenewleadersof SaudiArabiawanttoincreaseitsclout.Theyfaceahardtaskisfirmlyinthedrivingseat,thoughwithBAYA-cladwomen swoonoverhispho-Aramco,the country's oil company."TheAmerican support in intelligence and lo-Ato on their smartphones; journalistscountrywasashipafloat withno compassgistics-is ostensibly aimed at crushing thegarlandeverymention of himwithfawn-and a dark sky" says Mohsen al-Awaji, aIranian-backed Houthi rebels. Its greateringadjectives;diplomatsscrambletorelaycleric and former government critic."It ispurpose,though,istodemonstratetoIrantitbitsabouthimtotheircapitals.Bureau-andothersthekingdom'snewwillingnessearlydays,butnowweatleasthavestars."crats who once snoozed all day attheirFortunate,if true-becausethe watersto lead."The war is not to do with Yemen,the country has to navigate are more peril-desksnowspendnightsintheministriestobutistryingtosendasignalof Saudi'sindohisbiddingMuhammad binSalman-ous than they have been for decades. It istentandcapacity"saysJohn Jenkins,whoSaudi Arabia's defence minister and, fol-surroundedbycivilwarsandfailedstates.wasonceBritain'sambassadortoRivadhlowinga recentdecreebyhisfather,Kingandthesharpfallintheoilpricehas dealtitand now heads the regional branch of theSalman, second in lineto its throne-hasa severeeconomicblow.ThroughvariousInternational InstituteforStrategicStudies,set Riyadh,the stifling Saudi capital,abuzz.Shia proxies its adversaryIran,isbothadda British think-tank.Gregory Gause,an ac-Littlewonder.King Salman,whotooking to the regional tumult and taking adademic,agrees that the Saudis are trying toover in January,is thesixth of the sons ofvantage of it. And Iran's influence andsend a message."The question", he goesKing Abdel Aziz bin Saud, the modernwealth seem set to grow further if, ason,"is what are they going to be demon-kingdom'sfounder,tohavewornitsseemslikelythesanctionsimposedasarestrating?*crown.His decision thathewillalsobethesponseto itsnuclearprogrammeareliftedForoneadvisertotherovalfamilythelastkingofthatgeneration,withthelineofas partof a deal with America,Russia andpoint being made is simple:"The Gulf andsuccession passingfirsttohis (son-less)Europelaterthissummer.SaudiArabia[arelnotgoingtohavethenephew.the55-vear-oldMuhammadbinPersiansorsectarianismdestroyourcounNayef (pictured, centre),and then to Mu-Thrustuponthemtries."Hesaysthe action shouldbe viewedThis all requires a new approach on Saudihammad bin Salman (pictured,right),whoas a precursor to a new Gulf military alli-isinhislate20sorearly30s,wouldbeabigArabia's part. The country has long en-ancestyledonNATOwithSaudiArabiaatshift under any circumstances,openingjoyedanimportancebasednotonwhatititshead.Suchideashavebeenmootedforthe possibility of a ruler similar in age todoes,butwhatitis;the source ofvastoilex-yearsbytheArabLeague,alargelyineffectheruled (seechartion nextpage).But Mu-ports and thehometo the holiestsitesin Is-tiveclub,butsuchSaudileadershiphashammadbinSalmanisnotmerelyayounglam.Now itsleaders feelitneedsto earn itsnever looked particularly plausible.Now,facein a gerontocracy;he isa dynamicandstatus by demonstrating an ability to con-though-to the discomfort of some Sau-apparentlypurposeful one.InafewshortfrontIranandsupportitsfellowSunnisindis-itistheonlyleadershipon offer.Egypt,monthshehaslauncheda warinYemen,theregion'ssectarianstruggles.amucholderandmorepopulouscountrytravelledto CampDavidtomeetBarackOn top ofthat, its leaders feelthey canusedtowieldregionalpowerButithasaObama,andbecometheoverseerof Saudino longer rely on America to the degreestagnant economy,fossilised politicsand
The Economist May 23rd 2015 17 1 ABAYA-clad women swoon overhis photo on their smartphones; journalists garland every mention of him with fawning adjectives; diplomats scramble to relay titbits about him to their capitals. Bureaucrats who once snoozed all day at their desksnowspend nightsin the ministries to do his bidding. Muhammad bin Salman— Saudi Arabia’s defence minister and, following a recent decree by his father, King Salman, second in line to its throne—has set Riyadh, the stifling Saudi capital, abuzz. Little wonder. King Salman, who took over in January, is the sixth of the sons of King Abdel Aziz bin Saud, the modern kingdom’s founder, to have worn its crown. His decision that he will also be the last king ofthat generation, with the line of succession passing first to his (son-less) nephew, the 55-year-old Muhammad bin Nayef (pictured, centre), and then to Muhammad bin Salman (pictured, right), who is in his late 20s or early 30s, would be a big shift under any circumstances, opening the possibility of a ruler similar in age to the ruled (see chart1on next page). But Muhammad bin Salman isnotmerelya young face in a gerontocracy; he is a dynamic and apparently purposeful one. In a few short months he has launched a war in Yemen, travelled to Camp David to meet Barack Obama, and become the overseer ofSaudi Aramco, the country’s oil company. “The country was a ship afloat with no compass and a dark sky,” says Mohsen al-Awaji, a cleric and former government critic. “It is early days, but now we at least have stars.” Fortunate, if true—because the waters the country has to navigate are more perilous than they have been for decades. It is surrounded by civil wars and failed states, and the sharp fall in the oil price has dealt it a severe economic blow. Through various Shia proxiesitsadversary, Iran, isboth adding to the regional tumult and taking advantage of it. And Iran’s influence and wealth seem set to grow further if, as seems likely, the sanctions imposed as a response to its nuclear programme are lifted as part of a deal with America, Russia and Europe laterthis summer. Thrust upon them This all requires a new approach on Saudi Arabia’s part. The country has long enjoyed an importance based not on what it does, butwhatitis; the source ofvast oil exportsand the home to the holiestsites in Islam. Now its leaders feel it needs to earn its status by demonstrating an ability to confront Iran and support its fellow Sunnis in the region’s sectarian struggles. On top of that, its leaders feel they can no longer rely on America to the degree that once they did. Under Mr Obama the United States has been reluctant to engage in a region that is consumed by civil wars. Its shale-energy boom makes it less dependent on Saudi oil. And America is trying hard to make that deal with Iran. Saudi Arabia’s decision to intervene in Yemen in March—an operation in which it is firmly in the driving seat, though with American support in intelligence and logistics—is ostensibly aimed at crushing the Iranian-backed Houthi rebels. Its greater purpose, though, is to demonstrate to Iran and others the kingdom’s new willingness to lead. “The war is not to do with Yemen, but is trying to send a signal of Saudi’s intent and capacity,” says John Jenkins, who was once Britain’s ambassador to Riyadh and now heads the regional branch of the International Institute forStrategic Studies, a British think-tank. Gregory Gause, an academic, agrees that the Saudis are trying to send a message. “The question”, he goes on, “is what are they going to be demonstrating?” For one adviser to the royal family, the point being made is simple: “The Gulf and Saudi Arabia [are] not going to have the Persians or sectarianism destroy our countries.” He says the action should be viewed as a precursor to a new Gulf military alliance styled on NATO, with Saudi Arabia at its head. Such ideas have been mooted for years by the Arab League, a largely ineffective club, but such Saudi leadership has never looked particularly plausible. Now, though—to the discomfort of some Saudis—itisthe onlyleadership on offer. Egypt, a much older and more populous country, used to wield regional power. But it has a stagnant economy, fossilised politics and The challenged kingdom JEDDAH AND RIYADH The new leaders ofSaudi Arabia want to increase its clout. They face a hard task Briefing Saudi Arabia
18 Briefing Saudi ArabiaTheEconomistMay23rd2015wealththekingdomhas spentless on itsfa-ness ofRiyadh,a dull backwater notmere1Theyoung onesvoured rebel groups than Iran has on prop-lycompared with glitteringDubai butalsoSaudi Arabiawith Manama,the Bahraini capital.It is notstartofreignping up theregime of Bashar Assad; what itAge of:KingsMuhammad bin Nayefhas spent it spread over too many groups,thesortofplaceothersaspiretobe.MuhammadbinSalmanforecastfailingto co-ordinateits efforts with others.If the world at large is unimpressed bySAUD FAZSALKHALEDABDULLAH SALMANThings may be changing. King Salmanthe kingdom's efforts towards regional100has started to set aside past differencesleadership, its people, while a bit per-FAHDwith Turkey, which could make a differ-turbed by the idea that princely youth.ence.Increased co-ordination with themighthaveitsfling,likeatleastsomeofTurks and Qataris in Syria has led to signif-what they see. The war in Yemen is veryicant rebel advances in the north-west ofpopular,and has sounded a new militaris-the country But the Saudirole in Syria,andtic note into the country's culture. Zain, aMedianageofpopulation2indeed more widely,is complicated by themobile-phone operator, has offered sol-rise of the so-called Islamic State (is).Thediers a 50%discount.Women responded20251950200010kingdom, which has suffered a handful ofwith greatenthusiasmto a Twitterhashtag60708090"estimated agelone-wolf attacks inspired byIs,isdeeplyasking whether they would marry a manSources: UN: Tme EconomisttKingAbdelAziz,1932-53concerned about the caliphate. It does notin uniform (Saudis are among the world'ssupportIs,and has moved quicklyto stopmostdevotedtweeters).Anditaddstotheterrorist attacks todeal with.Though its of-private funds from reaching it. Muham-carefully crafted popularity of the Kingficials sniff at the idea of Saudi Arabia'smad bin Nayef,who was in charge ofextir-and theprinces-especially Muhammad"Bedouins"leading the Arab world,theypating al-Qaeda from thekingdom afterbin Salman, the war'sfigurehead.have enough on their plate dealing with2o01,isassiduouswhenitcomestocounBy reshaping the succession, King Sal-themessthatused to betheirneighbourter-terrorism.He is said to have givenmanhasbothsettledalong-standingis-Libya. Iraq,built up as a bulwark againstsue-the jostling forposition between theAmericadetailsofeverySaudi whohasIran, has now become an Iranian proxy.travelledto the caliphate.8,ooo-odd princes of the family's thirdSyria has collapsed. Turkey has limited in-Butit is difficultforSaudito confront Isgeneration-and consolidatedpowerinafluence overits Arab co-religionists.when its ideology of religious purity andway thatthefamily isnot usedto.In some-Within hours of decidingto go into Ye-thingofapalace coup heremoved hishalf-intolerancebearsmanysimilaritiestoSaumen, Saudi Arabia was ableto gather upadi Arabia'sown Wahabbicreed:the waferbrother Muqrinfromhis place next in lineten-membercoalitionofSunnistates,in-thin--butcrucial-differenceisthattheWashortly soon after takingpowerto makecludingJordan,Morocco,Egyptand,signifhabbispreachloyaltytothesovereign.Theway for his nephew,who was already re-icantly,Qatar,withwhich ithas quarrelleddeal through which the royal family-seenspected by the public as a safe pair ofhands, and his favourite son. The Alle-oflate.In somethingofa diplomaticcoup,as being at the more liberal end of Saudithe kingdom also got the uN Securitysociety-wins legitimacy from the kinggiance Council,madeup ofprinces repreCouncilto backits action.dom's clerics by allowing their intolerantsenting the bloodlines of each of AbdelBut the war is hardly a diplomatic orideas free rein undermines the country'sAziz's 45 sons, rubber stamped the deal.military success.Although Saudi is theability to usethe religious softpower itRumourhasitthat thedisappointed Muq-world's biggest arms importer, its armedshould have as the birthplace of the Pro-rin hasnotgone unrecompensed.The thicket of committees in which de-forces are much better at some things thanphet Muhammad and thecountryof Mecothers,andarenotusedtoplanningwholeca and Medina to discredit is's teachings.cisionsusedtobemade-orleftunmade-campaigns.Theyhave been criticised forhas been replaced with two overarchingimprecisebombingand fora navalblock-Powersofconcentrationcouncilsthatputpowerinthehandsoftheadewhichhasstoppedalmost allfuelandSaudi Arabia's religious soft poweris thusnewCrownPrinceand hiscousinanddep-foodreachingthecountry.Mostotherstymied; its other sources of non-military,uty.Muhammad bin Nayef oversees themembersofthecoalition-someofwhombody co-ordinating security and internalnon-monetary prestige are scant.Com-were, in effect, ordered to take part,ratherparedwiththeEgyptofold,withitsfilminaffairs.Muhammad bin Salman heads itsthan asked-are contributing little,withdustry,orDubaitoday,withitssnazzyareconomiccounterpartresponsiblefordeonly three mounting air strikes: Pakistanchitecture, the kingdom has no culturalvelopment and oil. The previous kinghas refused to send troops.EgypthasseenAbdullah,favoured a Bedouin method ofclout.Anditissadlylackinginsavoirfaire.its role as checking Saudi ambition, ratherlitteredasitiswithprojectsflubbedintheirtryingtobuildbottom-upconsensus,float-thanfacilitating it.As coalitionsgo,thisexecution,from theemptybuildingsinRi-ing ideas in community gatherings acrossseems to be one ofthe unwilling.yadh's new financial district to the drabthecountrybefore acting;thathasbeensetOutside the kingdom there is a broadconsensusthatthe war is going horribly2Gettingand spendingwrong.The Houthis continue to advance.Aid agencies broadcast the humanitarianSaudi Arabio's budgetBrent crude priceSaudiArabia'sgovmmentbudget,2015forcast,balance,as%ofGDP2011-prnces,S per barreltoll-the n's reckoning of civilian deaths229Totalstands at 1,849-and the risk of famine3015065.2Not defined (principally defence)faced by millions.The Saudis,accused by2012057.9EducationYemenis of turning a blind eye to al-Qaeda-minded groupsin thehope of42.7Healthandsocialpushing back the Houthis, have no credi-19.7Governmentfinancingprogrammesble plan for a political settlement in Yemen,notleastbecausetheyrefusetotalkto16.8Infrastructureandtransportatiorthe Houthis."They are making itup as they16.0Wateragricultureandothgoalong,"saysoneobserverin Riyadh.10.7 Municipatity19952000100515Saudi Arabia's years of backing the re-bels in Syria have not revealed anydepthsSources: IMF; Thomson Reuters; Saudi Arabia's Ministry of Finance;Britain's Foreign and Commonwealth Office; Haver Analytics*2014estimate,2015forecastofdiplomatic orstrategicnous.Despite its
18 Briefing Saudi Arabia The Economist May 23rd 2015 2 terrorist attacks to deal with. Though its of- ficials sniff at the idea of Saudi Arabia’s “Bedouins” leading the Arab world, they have enough on their plate dealing with the mess that used to be their neighbour Libya. Iraq, built up as a bulwark against Iran, has now become an Iranian proxy. Syria has collapsed. Turkey has limited in- fluence over its Arab co-religionists. Within hours of deciding to go into Yemen, Saudi Arabia was able to gather up a ten-member coalition of Sunni states, including Jordan, Morocco, Egypt and, significantly, Qatar, with which it has quarrelled of late. In something of a diplomatic coup, the kingdom also got the UN Security Council to backits action. But the war is hardly a diplomatic or military success. Although Saudi is the world’s biggest arms importer, its armed forces are much better at some things than others, and are not used to planningwhole campaigns. They have been criticised for imprecise bombing and for a naval blockade which has stopped almost all fuel and food reaching the country. Most other members of the coalition—some of whom were, in effect, ordered to take part, rather than asked—are contributing little, with only three mounting air strikes: Pakistan has refused to send troops. Egypt has seen its role as checking Saudi ambition, rather than facilitating it. As coalitions go, this seems to be one ofthe unwilling. Outside the kingdom there is a broad consensus that the war is going horribly wrong. The Houthis continue to advance. Aid agencies broadcast the humanitarian toll—the UN’s reckoning of civilian deaths stands at 1,849—and the risk of famine faced by millions. The Saudis, accused by Yemenis of turning a blind eye to alQaeda-minded groups in the hope of pushing back the Houthis, have no credible plan for a political settlement in Yemen, notleastbecause theyrefuse to talkto the Houthis. “They are makingit up as they go along,” says one observer in Riyadh. Saudi Arabia’s years of backing the rebels in Syria have not revealed any depths of diplomatic or strategic nous. Despite its wealth the kingdom has spent less on its favoured rebel groups than Iran has on proppingup the regime ofBasharAssad; what it has spent it spread over too many groups, failingto co-ordinate its effortswith others. Things may be changing. King Salman has started to set aside past differences with Turkey, which could make a difference. Increased co-ordination with the Turks and Qataris in Syria has led to significant rebel advances in the north-west of the country. But the Saudi role in Syria, and indeed more widely, is complicated by the rise of the so-called Islamic State (IS). The kingdom, which has suffered a handful of lone-wolf attacks inspired by IS, is deeply concerned about the caliphate. It does not support IS, and has moved quickly to stop private funds from reaching it. Muhammad bin Nayef, who was in charge ofextirpating al-Qaeda from the kingdom after 2001, is assiduous when it comes to counter-terrorism. He is said to have given America details of every Saudi who has travelled to the caliphate. But it is difficult for Saudi to confront IS when its ideology of religious purity and intolerance bears many similarities to Saudi Arabia’s own Wahabbi creed: the waferthin—but crucial—difference is that the Wahabbis preach loyalty to the sovereign. The deal through which the royal family—seen as being at the more liberal end of Saudi society—wins legitimacy from the kingdom’s clerics by allowing their intolerant ideas free rein undermines the country’s ability to use the religious soft power it should have as the birthplace of the Prophet Muhammad and the country of Mecca and Medina to discreditIS’s teachings. Powers of concentration Saudi Arabia’s religious soft power is thus stymied; its other sources of non-military, non-monetary prestige are scant. Compared with the Egyptofold, with its film industry, or Dubai today, with its snazzy architecture, the kingdom has no cultural clout. And it is sadly lacking in savoir faire, littered asitiswith projectsflubbed in their execution, from the empty buildings in Riyadh’s new financial district to the drabness of Riyadh, a dull backwater not merely compared with glittering Dubai but also with Manama, the Bahraini capital. It isnot the sort ofplace others aspire to be. If the world at large is unimpressed by the kingdom’s efforts towards regional leadership, its people, while a bit perturbed by the idea that princely youth might have its fling, like at least some of what they see. The war in Yemen is very popular, and has sounded a new militaristic note into the country’s culture. Zain, a mobile-phone operator, has offered soldiers a 50% discount. Women responded with great enthusiasm to a Twitter hashtag asking whether they would marry a man in uniform (Saudis are among the world’s most devoted tweeters). And it adds to the carefully crafted popularity of the King and the princes—especially Muhammad bin Salman, the war’s figurehead. By reshaping the succession, King Salman has both settled a long-standing issue—the jostling for position between the 8,000-odd princes of the family’s third generation—and consolidated power in a way that the family is not used to. In something ofa palace coup he removed his halfbrother Muqrin from his place next in line shortly soon after taking power to make way for his nephew, who was already respected by the public as a safe pair of hands, and his favourite son. The Allegiance Council, made up of princes representing the bloodlines of each of Abdel Aziz’s 45 sons, rubber stamped the deal. Rumour has it that the disappointed Muqrin has not gone unrecompensed. The thicket of committees in which decisions used to be made—or left unmade— has been replaced with two overarching councils that put power in the hands of the new Crown Prince and his cousin and deputy. Muhammad bin Nayef oversees the body co-ordinating security and internal affairs. Muhammad bin Salman heads its economic counterpart responsible for development and oil. The previous king, Abdullah, favoured a Bedouin method of trying to build bottom-up consensus, floating ideas in community gatherings across the country before acting; that has been set 2 Getting and spending Sources: IMF; Thomson Reuters; Saudi Arabia’s Ministry of Finance; Britain’s Foreign and Commonwealth Office; Haver Analytics *2014 estimate, 2015 forecast Saudi Arabia’s government budget, 2015 forecast, $bn 57.9 Education 42.7 Health and social 19.7 Government financing programmes 10.7 Municipality 16.8 Infrastructure and transportation 16.0 Water, agriculture and other 65.2 Not defined (principally defence) 229 Total 1995 2000 05 10 15 0 30 60 90 120 150 20 10 0 10 20 30 + – Brent crude price 2011 prices, $ per barrel Saudi Arabia’s budget balance*, as % of GDP The young ones Sources: UN; The Economist *estimated age †King Abdel Aziz, 1932-53 Saudi Arabia 1 0 20 40 60 80 100 1950 60 70 80 90 2000 10 20 25 Age of: start of reign SAUD FAISAL KHALED FAHD ABDULLAH SALMAN Muhammad bin Nayef Muhammad bin Salman* forecast Kings Median age of population † 1
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20Briefing Saudi ArabiaTheEconomistMay23rd2015aside."Now we have pointing fingers atthat matters.They have made some at-could end up beingjust as disruptive.The potential for unrest is easily over-thetop,"saysa diplomat.temptstodeal withspending-Salman hasFor this newly consolidated power toculled some white elephants, including astated. Saudis have seen what happenedamount to much in the long term it willherd of newfootball stadiums.Anew taxelsewhere in the Arab spring, and the over-have tobeused to bring about economicon unused land isplanned,andthere iswhelmingmajority ofthem do notlikethetalkofintroducing vAr.Chargesforthe haj,reform.Thefall in the oil price from suo alook of it.Eventhemost downtrodden,barrel in May 2014 to $65 today has not yetthe pilgrimage to Mecca that all Muslimssuch as the suppressed minority Shia inpushed Saudi Arabia into financial crisis,mustdo oncein their lifetime,couldbe inthe east or the activists locked up simplyas the price slump ofthe late1990s did, be-creased.Butevenifall thatweretocometofor calling for reform, think they are betterpass the country is locked in to a level ofoff than the would be in Syria or Libya.Butcause the countryhasforeign cash re-servesof s697billion.Atroughlythe sizeofspending that it cannot afford in the medi-young people-globally connected and in-the country's GDp,thatis large enough notum term, assuming the current oil price.creasingly well-educated-want servicesjusttocushiontheblowbuttoallowtheAnd domestic energy consumption, cur-and housing at home rather than foreigncountry's leaders to look blase about it.rently around a quarter of production, isadventures abroad,and ifthey arenothan-The budget passed in December last yearrising frighteningly fast as the populationkeringforfull-blowndemocracytheystillcontainednotapeepaboutspending cuts,grows (itispredicted toreach 45mby2050wantagreater say.Historically the devout,rather than theinstead allowinga $36.8billion deficit.Onfrom28mtoday).Bysomeestimatestherehis accession in JanuaryKing Salman lav-liberal,havebeenthesourceofmostofthemaybenooiltoexportby2o30.ished a bonus on state employees and va-kingdom's instability. But the royal family,rious other goodies on the rest of his sub-Unpopularimperativesneeding the support of the clerics, hasjectsthatcouldcostafurther3-4%ofGDp.Efforts todiversifythe economybegan indone little to tame the WahabbistideologyButwithoilaccountingforsome9o%ofthe1990s,when theprice slump led then-which many, including Sunnis, see asgovernmentrevenuesandoil prices,whilecrown-PrinceAbdullahtodeclarethat"theforming an ideological pillarforviolent ji-age of abundance is over".When the oilhadism.Belief inside thekingdom is moreno longeraslowastheywere,showingnosigns of climbing more, suchgenerosityprice recovered the efforts faded, though,diverse than it was, and pretending other-and left little progress behind them. Thecannot last (see chart 2). Spending haswise is increasingthe rateat which the off-private sector is dominated by industries,cial scholars ofislam,the ulema,are losingsoared over the past decade to pay for agrowingwelfarestateandinfrastructuresuchaspetrochemicalsandaluminiumfollowers andlegitimacy.ButKing Salmanprojects.This year's fiscal deficit is likely tothat rely on subsidised energy. Althoughappears to be giving the ulema a longerbeabout$1oobillion,or15%of theGDPthe state spends heavily on education, theleash.He is said not to be urging them, asAbdullah did, to speak out against is.Inforecastby the IME,according to Jason Tu-country provides very few jobs for itsvey of Capital Economics,a research firm.young people-especially women,whoJanuaryhe dismissed the head of the reli-"Aslongasoil is $65andthey spend asif itmake up under 2o% of the labourforce.giouspolicewho wasviewed astryingtois sioo-with Yemen on top of that-theirDealing with this would require a level oftrim their claws.Viciousrants against Shiareserves will be drained," says a Riyadhcommitment to radical restructuring thatMuslims gounchecked.For King Salman and his heirs to makebasedeconomistthe cautious,conservativeroyalfamilyhasSome royals are worried. Lower oilnever shown before. Because changeSaudiArabiaacredibleleadertheymustprices are a"catastrophe",PrinceAlwaleedwould includethe slashing of some subsi-reformitseconomy.Intermsofsoftpowerbin Talal Al Saud, whofancies himselfasadies andatransformation ofthe country'sthey would do well to take on its extremistSaudi Warren Buffett, told his twitter fol-stand against the rights of women.itclerics, too. Both are huge tasks, and thelowerslastyear.Someinvestorsarejumpy.would raise political tensions that the re-first would make the second harderif thetoo.In Januarythemarket price of theriyalgimedoesnotwanttoface.Butavoidingre-ructionscausedbyeconomicrestructuringdropped a little belowthe official rate atstructuring and running out of moneytakeon areligiousform.Further complica-whichitispeggedtothedollar,hintingthattions could followfromthewayinwhichspeculative capital outflows were takingKing Salman consolidated power in hisplace.Between theend ofJanuaryandthebranch oftheroyalfamily.The House of Saudis well awarethat,atend of March, Saudi Arabia's foreign cur-rencyreservesdroppedby5%,suggestingtheturnof the2oth century,open conflictthat the central bank was sellingdollars tobetween its members brought down theoffsetcapitalflightofsomekind,perhapssecond Saudi state.But few imagine thatasrichfolk,banksorfirmstookfright.Abdullah's sons, or for that matter Mu-At that rate Saudi Arabia's reserveshammad bin Salman's elder brothers, arewould run out in just three years. If theoverjoyedwiththewaythesuccessionhaskingdomdoesnothavetospend topropbeenrearranged.Ifthingsstarttogowrongup its currency,though,its reserves will al-they might see a chance to undo thoselow it to live with big deficits forlongerchanges.It is also possible that the crownthan that. The state's balance-sheet is aprince and his deputy could fall out, Mu-good bit strongerthan itwas inthe199os.Ithammad bin Salman must bewell awarehas repaid almostall of its domesticdebts.that the precedent his father set in gettingWere it to continue to run a deficit of sioorid of a crownprincecould befollowedtobillion a year while emptying its reserveshis disadvantage.The Saudis may remain enraptured byand issuingdebt at homeworth upto50%ofGDp,itcould keep goingforten years.Ittheir young deputy crown prince for acouldalsoseeksupportfromoil customerswhile. And his ambition, properly chan-nelled, might earn his country the clout itoverseas,suchasChina.Ten years is a lifetime for Western fi-haslacked. If, decades on, he does one daynance ministers and oil traders, but forto becomeking,itcould bebecausehehaschanged the kingdom for the better, ButSaudi Arabia'srulers,among whom politi-Thenon-eternal flamescal lifetimesareactuallifetimes,itisa spansuchanaccessionisno surething
20 Briefing Saudi Arabia The Economist May 23rd 2015 2 aside. “Now we have pointing fingers at the top,” says a diplomat. For this newly consolidated power to amount to much in the long term it will have to be used to bring about economic reform. The fall in the oil price from $110 a barrel in May 2014 to $65 today has not yet pushed Saudi Arabia into financial crisis, as the price slump of the late 1990s did, because the country has foreign cash reserves of$697 billion. At roughly the size of the country’s GDP, that is large enough not just to cushion the blow but to allow the country’s leaders to look blasé about it. The budget passed in December last year contained not a peep about spending cuts, instead allowing a $36.8 billion deficit. On his accession in January King Salman lavished a bonus on state employees and various other goodies on the rest of his subjects that could cost a further 3-4% ofGDP. But with oil accountingforsome 90% of government revenues and oil prices, while no longer as low as they were, showing no signs of climbing more, such generosity cannot last (see chart 2). Spending has soared over the past decade to pay for a growing welfare state and infrastructure projects. This year’s fiscal deficit is likely to be about $100 billion, or 15% of the GDP forecast by the IMF, according to Jason Tuvey of Capital Economics, a research firm. “As long as oil is $65 and they spend as if it is $100—with Yemen on top of that—their reserves will be drained,” says a Riyadhbased economist. Some royals are worried. Lower oil prices are a “catastrophe”, Prince Alwaleed bin Talal Al Saud, who fancies himself as a Saudi Warren Buffett, told his twitter followers last year. Some investors are jumpy, too. In January the market price ofthe riyal dropped a little below the official rate at which it is pegged to the dollar, hinting that speculative capital outflows were taking place. Between the end of January and the end of March, Saudi Arabia’s foreign currency reserves dropped by 5%, suggesting that the central bank was selling dollars to offset capital flight of some kind, perhaps as rich folk, banks or firms tookfright. At that rate Saudi Arabia’s reserves would run out in just three years. If the kingdom does not have to spend to prop up its currency, though, its reserves will allow it to live with big deficits for longer than that. The state’s balance-sheet is a good bit stronger than it was in the 1990s. It has repaid almost all of its domestic debts. Were it to continue to run a deficit of $100 billion a year while emptying its reserves and issuing debt at home worth up to 50% of GDP, it could keep going for ten years. It could also seeksupportfrom oil customers overseas, such as China. Ten years is a lifetime for Western fi- nance ministers and oil traders, but for Saudi Arabia’s rulers, among whom political lifetimes are actual lifetimes, it is a span that matters. They have made some attempts to deal with spending—Salman has culled some white elephants, including a herd of new football stadiums. A new tax on unused land is planned, and there is talkofintroducingVAT. Chargesforthe haj, the pilgrimage to Mecca that all Muslims must do once in their lifetime, could be increased. But even ifall that were to come to pass the country is locked in to a level of spending that it cannot afford in the medium term, assuming the current oil price. And domestic energy consumption, currently around a quarter of production, is rising frighteningly fast as the population grows (it is predicted to reach 45m by 2050, from 28m today). By some estimates there may be no oil to export by 2030. Unpopular imperatives Efforts to diversify the economy began in the 1990s, when the price slump led thencrown-Prince Abdullah to declare that “the age of abundance is over”. When the oil price recovered the efforts faded, though, and left little progress behind them. The private sector is dominated by industries, such as petrochemicals and aluminium, that rely on subsidised energy. Although the state spends heavily on education, the country provides very few jobs for its young people—especially women, who make up under 20% of the labour force. Dealing with this would require a level of commitment to radical restructuring that the cautious, conservative royal family has never shown before. Because change would include the slashing of some subsidies and a transformation of the country’s stand against the rights of women, it would raise political tensions that the regime doesnotwantto face. Butavoiding restructuring and running out of money could end up being just as disruptive. The potential for unrest is easily overstated. Saudis have seen what happened elsewhere in the Arab spring, and the overwhelming majority ofthem do not like the look of it. Even the most downtrodden, such as the suppressed minority Shia in the east or the activists locked up simply for calling for reform, think they are better offthan the would be in Syria or Libya. But young people—globally connected and increasingly well-educated—want services and housing at home rather than foreign adventuresabroad, and iftheyare not hankering for full-blown democracy they still want a greater say. Historically the devout, rather than the liberal, have been the source ofmost ofthe kingdom’s instability. But the royal family, needing the support of the clerics, has done little to tame the Wahabbist ideology, which many, including Sunnis, see as forming an ideological pillar for violent jihadism. Belief inside the kingdom is more diverse than it was, and pretending otherwise is increasing the rate at which the offi- cial scholars of Islam, the ulema, are losing followers and legitimacy. But King Salman appears to be giving the ulema a longer leash. He is said not to be urging them, as Abdullah did, to speak out against IS. In January he dismissed the head of the religious police who was viewed as trying to trim their claws. Vicious rants against Shia Muslims go unchecked. For King Salman and his heirs to make Saudi Arabia a credible leader they must reform its economy. In terms of soft power they would do well to take on its extremist clerics, too. Both are huge tasks, and the first would make the second harder if the ructions caused by economic restructuring take on a religious form. Further complications could follow from the way in which King Salman consolidated power in his branch ofthe royal family. The House ofSaud is well aware that, at the turn of the 20th century, open conflict between its members brought down the second Saudi state. But few imagine that Abdullah’s sons, or for that matter Muhammad bin Salman’s elder brothers, are overjoyed with the way the succession has been rearranged. Ifthings start to go wrong they might see a chance to undo those changes. It is also possible that the crown prince and his deputy could fall out; Muhammad bin Salman must be well aware that the precedent his father set in getting rid of a crown prince could be followed to his disadvantage. The Saudis may remain enraptured by their young deputy crown prince for a while. And his ambition, properly channelled, might earn his country the clout it has lacked. If, decades on, he does one day to become king, it could be because he has changed the kingdom for the better. But The non-eternal flames such an accession is no sure thing. 7