More updates on the purge in Saudi Arabia

Kingdom Tower in Riyadh, Saudi Arabia. Image courtesy of Adobe Stock.

As pointed out in the last article mentioned below, few articles on Saudi Arabia are going for the idea that the current wave of high-profile arrests is really about fighting corruption. There is a far deeper effort. Here are my comments on a number of articles from the last few days. Sort it out for yourself.

11/6/17 – Karen House at Wall Street Journal – The Strategy Behind the Saudi Strife   – Article provides a more nuanced background on the arrests. One entertaining point, which I mentioned in earlier post, is that with the widespread malfeasance, misfeasance, and flat-out corruption, every Prince and every official is vulnerable to charges of corruption. I’ll guess every person with any government or business power has created massive amounts of electronic evidence.

Article speculates this is a part of the effort to modernize by MBS. Going after a huge number of corrupt senior royals, high-level businessmen, and a wide variety of government officials not only sends a very powerful message that the corrupt old days are gone but puts fear into everyone that hasn’t been arrested yet. It won’t take long for realize that they either play along and keep quite or go to jail. Article says this will have the benefit of increasing his popularity with younger people.

More importantly, consider this in relation to the dramatic efforts for social change over the last year. Granted there needs to be humongous social change to catch up with the 20th century, but there has been a dramatic amount of change in the last year. If those efforts create individual freedom, the current anti-corruption campaign makes corruption a bad thing, and the social guard rails of the religious police go away, then there might be a chance, slim though it may be, that the country could actually modernize and move beyond its deadly addiction to oil.

All these pieces fit together as a crash course in modernization, according to Ms. House’s theory in the article. The main idea is that personal freedom could lead to financial responsibility which could lead to entrepreneurialism and a vibrant, expanding economy.

11/7/17 – The Guardian – “This is a revolution”: Saudi’s absorb Crown Prince’s rush to reform – Article also makes the point that the massive arrests are part of a major effort to transform the country. The super elite, who are untouchable until last weekend, will now be removed or warned to get out-of-the-way.

Article points out the changes so far this year have been radical. The religious police have lost much of their power. More social changes on the way. Another article mentioned below says a lot of clerics and activists got arrested in September.

The new Crown Prince is trying to remove the old way of doing things. One of the biggest changes is moving to what many MBS and many people are referring to as a “moderate Islam.” Moving away from the more radical Wahhabi will be a massive transition.

At Instapundit, Steve Green said in a comment (which I can’t find now), that we will have to wait to see if MBS pulls off the massive transition of an entire country or gets stood up against a wall and shot.

11/6/17 – Daily Mail – EXCLUSIVE: Humiliation of the Saudi billionaire and his fellow princes photographs sleeping on bare mattresses after ‘corruption’ arrest as Trump say they ‘have been milking their country for years!’ – Photo leaked by the Saudi government purports to show at least five people sleeping on the floor with only a thin mattress, with said mattresses placed close together.

Leak suggests those detained are not enjoying the five-star part of the Ritz.

Two tweets from the U.S. President indicate support for the Saudi crackdown.

New officials have been sworn in to replace those arrested.

Highlight at the start of the article says the head of the Saudi navy was also arrested, although article doesn’t give any more details.

Charges against Prince Al-Waleed bin Talal reportedly include bribery and extorting officials, along with money laundering.

11/6/17 – The Million Dollar Way – Why I Love to Blog – Reason #4,783 (No, that isn’t really the 4,783rd in a series – when he is having an unusually large amount of fun writing a post, he uses that title and puts in a random number.)

Post points out the group arrested contains the first, second, and fifth most wealthy people in Saudi Arabia. Personal net worth of those 3 players is reported to be around $33B.

Included on the list is the brother of Osama Bin Ladin.

11/7/17 – Al Jazeera – Saudi Arabia’s crackdown – Article has infographic of senior level princes and ministers under arrest. Also tallies $40.5B of estimated personal/family net worth for 9 individuals, with unknown amounts for another 6.

Article points out that Mohammed Bin Nayef, the ousted former Crown Prince (that means he used to be #2 in line of succession) has not been seen in public since he was ousted by MBS and is assumed by the paper to be under house arrest.

If you want to roughly reconcile the $33B guess from MDW to the $40.5B guess from Al Jazeera, just look at the ousted Crown Prince, who with his $6B net worth is included on the Al Jazeera list but not MDW.

Other senior staff under arrest:

  • Brother of Osama Bin Ladin, head of a construction company
  • Minister of Finance
  • Minister of Economy and Planning
  • Former Governor of Riyadh
  • Minister of National Guard
  • Former head of Air Force

11/7/17 – Wall Street Journal – Saudi Crackdown Target Up to $800 Billion in assets – Saudi government has announced that the proceeds from corruption will be seized and become government property.

This article says sources in the government think that somewhere around $530B to $800B could be seized. That would be quite a lucrative way to simultaneously offset the devastation from low oil prices and wipe out the economic power of internal opposition as the opposition sits in jail for a short time.

To put that $500B to $800B guess into perspective, foreign reserves for the country fell from a high water mark of $730B back in 2014 to $488B in August 2017. That $242B drop is due to oil prices paid less than what is needed to balance the government budget.

So the government is potentially able to seize corruption proceeds somewhere in the range of the total amount of foreign reserves as they stand now or perhaps as much as they were back in 2014.

Article says a large group of people have been banned from foreign travel, with the count of travel-banned people numbering in the “hundreds.”

11/7/17 – Wall Street Journal – Saudi Arabia Expands Crackdown on Elite – The arrests continue, with an unidentified number of businessmen arrested since Saturday. Two tribal leaders are reportedly under arrest. The Saudi Attorney General said this is the beginning. There will be more arrests.

A few more details of charges are leaking out. The former head of the National Guard is accused of procurement fraud, with the stolen amount alleged to be in the range of tens of billions, according to the article. A very senior member of the cabinet stands accused of selling clothes to several departments at inflated prices.

Article says dozens of bank accounts have already been frozen. A list with hundreds of names has been sent out by the central bank with request to freeze accounts of any individuals listed.

Article hints the seized funds could be in the range of billions of dollars.

11/7/17 – Bloomberg – Saudi Crackdown Widens as More Bank Account Said Frozen – Article also says that accounts have been frozen for dozens of people who haven’t been arrested. The Saudi Arabian Monetary Authority, the central bank, has reportedly sent out a list of hundreds (yes, hundreds plural) of names ordering a freeze on any account held by those named individuals.


11/5/17 – The Economist – Saudi Arabia’s unprecedented shake-up Article gives some background on the internal political balance in the country. Apparently there are seven family groups, each of which is headed by a brother of the others, with each of those concentrations being descendents on a particular line from the founder of the country. Each one of those groups are a major concentrations of power. There is a careful and delicate balance of power between them.

One brother and descendants have five decades of control over the Defense Ministry, another running Interior Ministry for four decades, and another controlling the National Guard for five decades. All of those senior positions are now under the control of MBS, according to the article.

Back in September there was another roundup, reeling in “dozens” of people, including a number of clerics and human rights activists.

Article says most of those arrested in the latest roundup are not very powerful. Other than the descriptions of a couple of individuals, such as head of the National Guard and the manager finance, I don’t understand the significance of many arrests. Article closes with comments that a large part of the reason for the arrests would be to send a message to everyone who has not been arrested that the rules have changed and everyone had better cooperate. Or else.

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