"Thank Goodness The Stock Market Only Goes Up..."

Authored by James Howard Kunstler via Kunstler.com,

It must be exciting to wake up on a gilded bed somewhere in Riyadh and realize that you are Saudi Crown Prince Mohammad bin Salman, mover and shaker of Middle East order. Actually, exciting just to have woken up at all.

Perhaps Prince MBS checks to make sure that there aren’t seventy-two virgins in the room before he rises to prayers, state business, and the prospect of World War Three.

The Kingdom of Saudi Arabia (KSA) has been a giant gasoline bomb waiting to explode for decades. It occupies one of the geographically least hospitable corners of the earth. Its existence as a modern (cough cough) state relies strictly on the reserves of oil discovered as recently as the late 1930s, that is, within the lifetime of people still reading this blog. The oil supply is in steep decline, and so, of course, is the stability of the kingdom.

Politically, it’s a super-medieval operation, an absolute monarchy tied to a severe religious order with the law floating precariously between the two, and old-fashioned customs such as the public beheading of criminals (for misdeeds such as “adultery,” “atheism,” and “sorcery”). The Saud clan has controlled the throne all these years, and its grip on power is slipping as the country itself slips into the prospective next era of its history, minus the endless gusher of oil that has made its existence possible - hence, a true existential crisis without the usual pseudo-intellectual bullshit.

How are they going to support the thirty or forty million people who will still be there when the oil exports dribble down? Most of the work done in the country is performed by foreign “guests.” The indigenous folk don’t even remember how to milk a camel, let alone run routine maintenance on a desalinization plant. (And what are you going to run the de-sal plant on when the oil runs down?) These are questions that must drive thoughtful Saudi royalty mad.

Hence, the Kingdom is going mad. The current king, Salman bin Abdulaziz Al Saud, is the latest in a line of geriatric monarchs. His brother and predecessor, Abdullah, spent his last years in a limbo of medical life-support (virgins standing by), and Salman is reputed to be dotty. Crown Prince MBS has assumed more of the king’s duties by necessity, but the land is filled with thousands of other princes, many of them frustrated, angry, and jealous of the Crown Prince’s prerogatives.

One can only imagine the clouds of intrigue wafting through the ornate corridors of wealth and power. Crown Prince MBS is lately out to deprive his many royal rivals of those two critical assets, and a couple of said rival princes - Abdul Aziz bin Fahd and Mansour bin Muqrin - were offed altogether (gunfight, helicopter crash) two weeks back. A score of non-royal public officials and business poobahs have also been arrested, including top ministers (Finance, Economy & Planning), the former CEO of the national airline, and a brother of Osama bin Laden, whose family ran the country’s biggest construction company.

It really amounts to a nascent civil war and it comes around at exactly the moment that the Kingdom’s arch-enemy, Iran, is feeling comfortably aggressive. Iran, formerly known as Persia, is a much sturdier old polity that has been around long before there was much ado about oil. They were fighting the ancient Greeks and Romans back in the day, and won a few rounds. But, of course, Iran has a good deal of oil, too. And having pissed off the Americans not so long ago by overrunning the US embassy and all, our country has been striving to punish them ever since — especially making it difficult for them to sell oil to our “friends” in Europe. As it happens, there are plenty of customers elsewhere for Iran’s oil — and, yes, they will eventually face their own depletion problems, but they do have the world’s largest untapped reserve stash next door in Iraq, which they are steadily and increasingly coming to control. And they do have that millennium-and-a-half beef with Arabia’s Sunni branch of Islam headquartered in KSA.

Crown Prince MBS may see war as a unifying theme for his domestic difficulties. He has a fifty-plus years’ stock of American war toys that have hardly been used - except for turning neighboring Yemen into a landfill. The USA has been KSA’s staunch ally all these years, and MBS has every reason to believe we have his back, as Iran probably believes Russia has its back. And then there is Israel in the background with its nuclear-armed subs… Israel, which actually took seriously Iran’s declaration a few years ago to wipe it off the face of the earth - and which now much of the world castigates Israel for so doing.

And in the middle of all this, poor, feckless, Hezbollah-haunted Lebanon, and the boneyard formerly known as Syria. The region is seriously coming apart. Someone is going to make a dangerous misstep.

The Golden Golem of Greatness has been off far away sampling General Tsao’s chicken and Singapore noodles.

And this country is completely preoccupied with Sex Among the Stars. Thank goodness the stock market only goes up.

The Inside Story Of How The Saudi King's Son Plotted To Oust His Rival

Less than a month after the Saudi king stunned the world when on the morning of June 21 he unexpectedly announced a "historic shakeup" in which he removed the existing successor to the royal line, his nephew Mohammed bin Nayef - the country’s counterterrorism czar - and instated his eldest son, the 31-year-old Mohammed bin Salman and de facto "OPEC"s most important man" as Saudi Arabia"s crown prince, and following a surprising report ten days later that the "deposed" Mohammed bin Nayef has been barred from leaving the kingdom and confined to his palace in the coastal city of Jidda, the full story of what really happened in this transition of power has finally emerged.

As a reminder, the conventional timeline of this dramatic power transition focused on how "seamless" it was and unopposed:

In response to questions from The Times, a written statement by a senior Saudi official denied that Mohammed bin Nayef had been pressured and said that the Allegiance Council, a body of senior princes, had approved the change in “the best interest of the nation.”

The statement said Mohammed bin Nayef was the first to pledge allegiance to the new crown prince and had insisted that the moment be filmed and broadcast. The former crown prince receives guests daily in his palace in Jidda and has visited the king and the crown prince more than once, the statement said.

As it turns out, nothing could be further from the truth of what really happened: as the NYT details, contrary to the widely-accepted narrative it was Mohammed bin Salman, or MBS as he is also called, who orchestrated his succession to power. His motive is clear: a massive power grab, or as the NYT writes, "the collection of so much power by one young royal, Prince Mohammed bin Salman, has unsettled a royal family long guided by consensus and deference to elders.

“You may have now such a concentration of power within one branch and within one individual who is also younger than so many of the cousins and sons of former kings that it may begin to create a situation where the family is out of whack,” said Kristian Coates Ulrichsen, a fellow for the Middle East at Rice University’s Baker Institute for Public Policy, who studies Persian Gulf politics.

Furthermore, a different image of the future Saudi ruler is starting to emerge:

Mohammed bin Salman’s supporters praise him as a hard-working visionary who has addressed the kingdom’s challenges with extraordinary directness. His programs, including increasing entertainment opportunities inside the hyperconservative kingdom, have won him fans among the two-thirds of Saudis who are younger than 30.

But his critics call him rash and power-hungry, saying he has entangled the country in a costly and so far failed war in Yemen that has killed many civilians, as well as in a feud with Qatar. Neither has a clear exit

Below are the key highlights from the report:

The young prince’s supporters have lauded his elevation as the seamless empowerment of an ambitious leader. But since he was promoted on June 21, indications have emerged that Mohammed bin Salman plotted the ouster and that the transition was rockier than has been publicly portrayed, according to current and former United States officials and associates of the royal family.

To strengthen support for the sudden change in the line of succession, some senior princes were told that Mohammed bin Nayef was unfit to be king because of a drug problem, according to an associate of the royal family. The decision to oust Mohammed bin Nayef and some of his closest colleagues has spread concern among counterterrorism officials in the United States who saw their most trusted Saudi contacts disappear and have struggled to build new relationships.

The rivalry between the princes began in 2015, when King Salman ascended the throne and bestowed tremendous power on his favorite son. Mohammed bin Salman was named deputy crown prince, or second in line to become king, as well as defense minister; put in charge of a powerful economic council; and given oversight of the state oil monopoly, Saudi Aramco.

Mohammed bin Salman elevated his profile with visits to China, Russia and the United States, where he met with Mark Zuckerberg, the Facebook chief executive, and dined with President Trump in the White House. He has also guided Vision 2030, an ambitious plan for the future of the kingdom that seeks to transform the Saudi economy and improve life for citizens.

Mohammed bin Salman, 31, in June kissing the hand of Mohammed bin Nayef, 57,

* * *

The prince has risen at the expense of his elder relatives, including Mohammed bin Nayef, 57. As the head of the Saudi Interior Ministry, Mohammed bin Nayef led the dismantling of Al Qaeda in the kingdom after a deadly bombing campaign a decade ago. While he kept a low public profile, even after becoming crown prince in 2015, his work won him allies in the United States and other Western and Arab nations.

But while his removal struck many as sudden, it had been planned out.

On the night of June 20, a group of senior princes and security officials gathered at the Safa Palace in Mecca after being informed that King Salman wanted to see them, according to United States officials and associates of the royal family. It was near the end of Ramadan, the Islamic holy month, when Saudis were preoccupied with religious duties and many royals had gathered in Mecca before traveling abroad for the Eid al-Fitr holiday. That made it advantageous for a change, analysts said, like a coup on Christmas Eve.

Before midnight, Mohammed bin Nayef was told he was going to meet the king and was led into another room, where royal court officials took away his phones and pressured him to give up his posts as crown prince and interior minister, according to United States officials and an associate of the royal family. At first, he refused. But as the night wore on, the prince, a diabetic who suffers from the effects of a 2009 assassination attempt by a suicide bomber, grew tired. Meanwhile, royal court officials called members of the Allegiance Council, a body of princes who are supposed to approve changes to the line of succession. Some were told that Mohammed bin Nayef had a drug problem and was unfit to be king, according to an associate of the royal family.

For years, close friends of Mohammed bin Nayef had expressed concern about his health, noting that since the assassination attempt, he had experienced lingering pain and shown signs of post-traumatic stress disorder. His condition led him to take medication that some friends worried he had become addicted to.  “The weight of the evidence I have seen is that he was more injured in the assassination attempt than was admitted and that he then got onto a pain killer routine that was very addictive,” said Bruce Riedel, a former Central Intelligence Agency officer and director of the Intelligence Project at the Brookings Institution. “I think that problem got progressively worse.”

One American official and one adviser to a Saudi royal said Mohammed bin Nayef opposed the embargo on Qatar, a stand that probably accelerated his ouster.

Sometime before dawn, Mohammed bin Nayef agreed to resign. A video shot afterward shows Mohammed bin Salman kissing his hand.“We will never dispense with your instructions and advice,” the younger prince says. “Good luck, God willing,” the older prince replies.

Mohammed bin Nayef then returned to his palace in the Red Sea port city of Jidda, and he was barred from leaving it.

Also confined to his home was Gen. Abdulaziz al-Huwairini, a colleague of Mohammed bin Nayef who was crucial to the security relationship with the United States, according to current and former United States officials.

Days later, C.I.A. officials briefed the White House on their concern that the ouster of Mohammed bin Nayef and the possible removal of General Huwairini and other security officers could hamper intelligence sharing, United States officials said.

The senior Saudi official’s statement said General Huwairini was still in his job and had pledged allegiance to Mohammed bin Salman along with senior officers. Mohammed bin Nayef was replaced as interior minister by his 33-year-old nephew, Prince Abdulaziz bin Saud bin Nayef, who was an adviser to his uncle and who is believed to be close to Mohammed bin Salman.

* * *

Now that MBS is in charge, the big question is how much support there is for his elevation to Saudi"s ruler-in-waiting: according to the NYT, the answer as of this morning remains unclear. "Saudi state news media reported that 31 of the 34 members of the Allegiance Council supported the change, but analysts said many royals are hesitant to vote against the king’s wishes."

However, in what may be the sign of early trouble, some US officials and well-connected Saudis told the NYT there are rumblings of discontent, and analysts have pointed out hints. "Neither King Salman nor his son attended the Group of 20 summit meeting in Hamburg, Germany, even though one of the two men had attended each of the last three meetings. Analysts say that family disputes may have kept the men at home or that they did not want to face criticism for the isolation they and three other Arab states imposed on Qatar."

Saudis shocked by the changes say they have a lot to lose if splits within the family spill into the open and destabilize the kingdom.

“It’s not like people are going to go out on the street and say, ‘We want M.B.N.,’ ” said one associate of the royal family, using Mohammed bin Nayef’s initials. “We want this family. We want to preserve them as best we can.”

For now Saudi Arabia - and mostly the royal family - has managed to keep a calm facade, slamming every report that the crown prince transition was anything but seamless and well-orchestrated. However, it appears that behind the scenes the tensions inside the world"s largest oil producer are rising. Meanwhile, we remind readers of another potential geopolitical shock: as Petromatrix" Olivier Jakob wrote shortly after the Saudi shakeup, "with MBS now having greater control of Saudi Arabia... it is not really a question of if but rather of when a new escalation with Iran starts."

In Historic Shakeup Saudi King Removes Crown Prince, Names Son As First Heir

In a shocking development, on Wednesday Saudi Arabia’s King Salman appointed his 31-year-old son Mohammed bin Salman (his eldest son from his third wife) as crown prince, placing him as first-in-line to the throne and removing his nephew, 57-year-old Mohammed bin Nayef - the country’s counterterrorism czar and a figure well-known to Washington - from the royal line of succession, relieving him of his post as Interior Minister, and stripping him from all his titles.

Bin Salman already controls the Kingdom"s defense, oil and economic policies; today"s announcement merely consolidates his power. He was also credited with arranging Trump"s "successful" trip to Riyadh.

Al Arabiya television reported that the promotion of the prince was approved by the kingdom"s Allegiance Council with 31 of 34 members approving, and that the king had called for a public pledging of loyalty to Mohammed bin Salman on Wednesday evening in Mecca. The surprise announcement follows 2-1/2 years of already major changes in Saudi Arabia, which stunned allies in 2015 by launching a war in Yemen, cutting old energy subsidies and in 2016 proposing partly privatizing state oil company Aramco.

As AP further reports, in a series of royal decrees carried on the state-run Saudi Press Agency, the monarch stripped Prince Mohammed bin Nayef, who had been positioned to inherit the throne, from his title as crown prince and from his powerful position as the country’s interior minister overseeing security.

The newly announced Crown Prince Mohammed bin Salman already oversees a vast portfolio as defense minister and head of an economic council tasked with overhauling the country’s economy. And while he had previously been the second-in-line to the throne as deputy crown prince, numerous royal watchers had suspected his rise to power under his father’s reign might also accelerate his ascension to the throne.

The young prince was little known to Saudis and outsiders before Salman became king in January 2015, although he quickly rose to prominence when he emerged as the dominant voice in the OPEC production cut negotiations. He had previously been in charge of his father’s royal court when Salman was the crown prince. The Saudi monarch awarded his son expansive powers to the surprise of many within the royal family who are more senior and more experienced than Mohammed bin Salman.

King Salman also reinstated all allowances and bonuses that were canceled or suspended to civil servants and military personnel, SPA reported.

While the backroom negotiations that resulted in today"s stunning announcement will likely remain unknown indefinitely, today"s dramatic overhaul of the Saudi royal succession was previewed here as recently as December, when we discussed that the present Saudi king, Salman bin Abdul Aziz, is the last of the sons of the first Saudi king, Abdul Aziz al Saud, who will ever sit on the Saudi throne. After Salman dies, Saudi leadership will pass to a new generation of Saudi royals. But not all the descendants of the first Saudi king are happy about how the future succession may turn out.

Salman named his nephew, Mohammed bin Nayef, as crown prince after firing his half-brother, Mugrin bin Abdul Aziz, as crown prince after the death of King Abdullah in 2015. For good measure, Salman also named his son, Mohammad bin Salman, who is little-known outside the kingdom, as deputy prime minister. The 30-year old Mohammad bin Salman is seen by some as the eventual crown prince after King Salman figures out some way to ease Mohammad bin Nayef, the Interior Minister and close friend of the United States, out of the position of heir apparent to the throne.

More and more power has been concentrated into Mohammad bin Salman’s hands, including control over the Defense Ministry, the Council of Economy and Development, and the Saudi government-owned Arabian-American oil company (ARAMCO). The deputy crown prince and defense minister is the architect of Saudi Arabia’s genocidal military campaign against the Houthi rebels in Yemen and continued Saudi support for jihadist guerrillas in Syria and Iraq, as well as military support for the Wahhabist royal regime in Bahrain in its bloody suppression of the Shi’a Muslim majority population. Mohammad bin Salman is also the major force in Saudi Arabia seeking a military confrontation with Iran.

There is a schism within the Saudi royal family that has created a real-life «Game of Thrones» within the kingdom.

Finally, while it remains unclear what domestic consequences the King"s decision will have, a decree which an official said was "due to special circumstances", that this major power move comes at a time when OPEC and Saudi Arabia are both reeling, as a result of plunging oil prices leads one to believe that the current deteriorating state of the Saudi economy, coupled with plunging oil revenues, may have been a catalyst in today"s announcement.

Live feed from Saudi TV:

Saudi Power Struggle Could Destabilize The Entire Middle East

Authored by Cyril Widdershoven via OilPrice.com,

Political instability in Saudi Arabia is growing as King Salman bin Abdulaziz begins to overhaul the Saudi government, putting a long list of family members into positions of influence while increasing the power of his son, Deputy Crown Prince Mohammad bin Salman. These actions have the potential to lead to a direct conflict with Crown Prince Mohammed bin Nayef. The expected internal power collision, predicted by many analysts, finally seems to be heating up. The real surprise, however, is that it is taking place while King Salman is still alive rather than during the succession period. King Salman’s royal decrees, in which he has appointed two of his other sons, Prince Abdulaziz and Prince Khaled as Minister of State for Energy Affairs and Ambassador to the United States respectively, has opened up Pandora’s box.

At the same time, King Salman has decided to re-establish all allowances and benefits which were canceled last September during the oil price bust. Additionally, the King has stated that two months of salary will be paid as an allowance to the military and security personnel fighting in Yemen. The latter is a complete reversal on economic measures taken in 2016 when Saudi Arabia was hard hit by the global slump in oil prices.

The power struggle in the coming months could emerge inside of King Salman’s palaces as the current government overhaul is a direct move to increase the influence of the Salman branch of the Al Saud family tree. During this time, media sources in Saudi Arabia and the GCC have indicated that King Salman’s decrees have moved several allies of his son, Mohammed bin Salman, into key positions. King Salman has also shown a keen interest, likely supported or instigated by Mohammed bin Salman, in strengthening relations with the United States. The appointment of Price Khaled as ambassador to Washington is convincing evidence of this suggestion.

The appointment of Prince Abdulaziz bin Salman, half-brother of Deputy Crown Prince Mohammed bin Salman, as Minister of State for Energy Affairs is seen as very significant, as well. He will ease the overall burden on the Ministry of Energy, Industry, and Mineral Resources, Khalid Al Falih. Prince Abdulaziz will also be at the center of the Kingdom’s critical energy portfolio, including upstream oil and gas, renewables, and power generation.

The appointment of Prince Khalid, the full brother of Mohammed bin Salman, some suggest, is a move to push Crown Prince Mohammed bin Nayef further to the sideline. And while Nayef maintains strong high-level connections to the power brokers in Washington and the Trump Administration, it could also be seen as a move by King Salman to bring counterterrorism operations and political relationships back into the hands of the Salman Branch.

Mohammed bin Nayef remains the current Crown Prince. And though Mohammed bin Salman has never openly challenged Nayef’s claims to the throne, it is clear that there is a potential for an all-out power struggle, especially given the high-profile media coverage of Salman in the Kingdom. As the main power behind the Coalition War in Yemen, the plan to wean the Kingdom from its oil dependency via Saudi Vision 2030, and as the chair of Saudi Aramco, it is clear that Deputy Crown Prince Mohammed bin Salman is highly ambitious.

King Salman has also created a new National Security Centre. The role of the national security advisor will be filled by Mohammed bin Salih Alghfaili who Saudi insiders have already linked to Mohammed bin Salman’s inner circle. At the same time, another Salman loyalist, Major General Ahmed Assiri, was appointed as deputy chief of the General Intelligence Presidency. The NSC is in direct competition with the already existing security body, the Political and Security Council, headed by Mohammed bin Nayef, as the Minister of Interior leaving Nayef in a precarious position.

The direct impact of Salman’s reshuffle is obvious to most. Saudi Crown Prince Mohammed bin Nayef’s main power position has been hit hard. Nayef’s power structure is partly built on his links to the security establishment in the Kingdom. One of his main accomplishments before becoming Crown Prince were his very successful operations against Al Qaeda and other Islamic militants.

The increased internal power struggle, in which Mohammed bin Salman and his allies have the upper-hand, doesn’t bode well for the months to come. Stability on political and security levels are only possible if opposition elsewhere is countered. To quell political (or royal) discord, King Salman’s government must continue to push for higher oil prices and revenues. This will present the Kingdom with a major challenge. As prices are still floundering around $50 per barrel, Saudi Arabia will have to use all of its power and international influence to get a grip on volatile oil markets. Riyadh will need a continuous influx of cash to support higher government expenses, subsidies, and salaries while also investing in the ongoing economic diversification projects. An OPEC production cut extension is the only option.

Higher revenues are already expected by Riyadh, as optimistic statements by government officials are following each other quickly. Officially, the government’s financial position has improved, but the Kingdom is still set to run up a deficit of around $50-53 billion over 2017. The latter will be partly mitigated by the high success rate of its bond issues, but still a strict fiscal policy should be held. In general, a move to reverse the financial cutbacks is not a positive one. Financially, it should have been blocked, but internal political and societal issues have forced the hand of Salman.

Though opposition in Saudi Arabia is extremely quiet at present, the current situation could be the silence before the storm. King Salman’s unexpected reshuffle of the government, transferring all power into the hand of the Salman Branch, while also handing out additional money to the public and army, is still a sign that there is a high level of opposition to the dreams of the Deputy Crown Prince Mohammed Bin Salman’s coterie.

Global oil and energy markets should not take these internal Saudi developments lightly. The threat of a royal conflict in Saudi Arabia or increased unrest in the streets will destabilize OPEC’s de facto leader. Reports already show that there have been nationwide calls for protests. Wire reports have also stated that security forces lined the streets of central Riyadh, but no demonstrations or clashes have yet been disclosed. Opposition has become increasingly vocal, especially the so-called “April 21 Movement”, which has been using the Twitter hashtag to demand the reinstatement of benefits and has called for an end to the Aramco IPO plans. Some have even demanded the end of the constitutional monarchy.

In this light, Salman’s benefit reversal and government overhaul is a rational one. Stability is the primary goal for Saudi royals. If the people of Riyadh were to unravel, combined with ongoing issues in the Shi’a Eastern Province, things could quickly go from bad to worse. Additionally, a destabilized Saudi Arabia would be a god-send for Iran. Taking out Tehran’s main adversary would not only give Iran total freedom in Iraq, Syria and Yemen, but it could also threaten Bahrain - even Kuwait. Underestimating the still simmering conflicts in the region, especially between Iran and Saudi Arabia, is unwise. Internal unrest in Riyadh, in combination with the Iranian presidential elections (19 May), could start a bushfire which would be difficult to extinguish.