JAN
8

With or Without a Succession Crisis, a Host of Challenges

 

Saudi Arabia’s current king, Abdullah ibn Abdilaziz, is severely ill and has been hospitalized for over a week due to complications of pneumonia. As the King has reached the age of 91 and is reportedly incoherent in his speech, many are speculating that his death may be close at hand. The end of his rule comes during a period of intense challenges for the Kingdom, prompting oil market observers to revisit certain questions regarding the long-term stability of the world’s largest oil producing country. The next successor to King Abdullah is fairly straightforward, and a peaceful transition from his rule is anticipated. However, his established successor, Crown Prince Salman bin Abdulaziz Al Saud, is already age 79 and has had his own health issues and lengthy hospitalizations including a severe stroke. The half-brother to King Abdullah, current second Deputy Prime Minister and second Crown Prince Muqrin bin Abdul-Aziz is the current successor to Salman. However, he is the youngest member of the current generation that has ruled the kingdom since founding Saudi King Abdulaziz died in 1953. It is an open question how succession issues will be resolved after this time. The nature of the problem is that the House of Saud is a large family, composed of several vast male generations. As the Financial Times notes, uncertainty could arise through festering rivalries that will probably intensify as the new leaders carve out power bases for their immediate relatives and supporters within the family. As explained in Oil Security 2025, the death of a king from the elder generation, particularly if no other princes from the elder generation were alive to take power, could trigger competing claims from various next-generation princes of the House of Saud, many of whom have developed power bases through governorships and control of various ministries. In particular, the competition for influential posts that has been ongoing during the rule of Abdullah has provided further fuel for the rivalries among the princes. King Abdullah has promoted his sons to positions of power in recent years to support their future prospects, but once the King is no longer in power, underlying tensions with competitors for the crown could erupt into public view. In addition, a play to elevate a younger prince before the death of all remaining princes of the current generation could cause turmoil within the family. A struggle for the throne involving two or more factions of the royal family could undermine the authority of the central government at a time when the country is facing further strain. If a protracted power struggle is coupled with widespread protests and a general movement against the central government, which to this point has largely dragged its feet on economic and political reforms, the result could be a revolution or the breakdown of government control over parts of the nation. King Abdullah formed the Allegiance Council in 2007 to determine future succession, yet there currently remains no clear plan of succession in place that incorporates the sprawling next generation of the House of Saud. Against this backdrop, discontent about inequality in the Kingdom—despite the vast wealth and land holdings of the royal family and other elites, varied estimates and measures report that 40 percent of the population lives below the poverty line—has resulted in low-level protests, particularly during the Arab Spring in 2011. These protests have occurred despite the restrictive security atmosphere in the Kingdom. For oil markets, there are a variety of possible impacts from a succession crisis. In a severe case, a power vacuum could prompt successful secessionist movements in different regions of the Saudi Kingdom—particularly in the Eastern Province, which produces more than half of Saudi Arabia’s oil—undermining the stability of Saudi production. Any disruption of operations in the Eastern province, which contributes about 7 mbd to global supplies every day, and includes the massive Ghawar oil field, would cause a massive price shock, even in the current low price environment. If a succession crisis were to occur without bringing about a security vacuum prompting uprisings from those with grievances in Eastern Province and elsewhere, any oil market disruption would not last much longer than it takes for one prince to win the internal power struggle (although it might reduce resilience to further shocks). However, a violent revolution or separation struggle could last years, with crippling effects on the global oil market for the duration. The probability of a protracted succession crisis is low, as the high stakes for the Kingdom will encourage its leadership to see the necessity of laying the groundwork for a stable transition. Nevertheless, although it’s unlikely, there is historical precedent for a worst-case scenario, as the second Saudi state was brought down by a succession crisis of its own. But even without a succession crisis, the Kingdom could still face a vacuum of leadership. NPR reports there is discussion of the possibility that given the likely continuation of “slow decision making” the country will lack the “agility and flexibility that you need in difficult times.” Times are difficult indeed. Given that Crown Price Salman is speculated to suffer from early signs of dementia, it’s unclear if he is the appropriate leader for a country that faces a regional rivalry with Iran, the threat of attack from Islamic State, an oil price collapse, and more. The succession challenges, the vacuum of nimble leadership, and tightening of the nation’s budget giving oil’s price collapse all exacerbate longstanding vulnerabilities. Given the opportunity, many in the oil-rich—but often downtrodden and largely Shi’i—Eastern Province would likely seek to break free of a central government that is fundamentally tied to the discriminatory Wahhabi Sunni order. Riots after perceived insults from Sunni authorities in 2009 demonstrated Shi’i discontent and prompted greater support for secessionist leaders like Nimr al-Nimr. The western Hijaz region, home to the holy cities of Mecca and Medina, also has a distinct set of interests separate from Riyadh and the capital Najd region and could dissociate from the center in a breakdown of authority. Besides a succession crisis, there are other events that could also precipitate widespread unrest. An unpopular action by the central government, a labor strike with charismatic leadership, or—as in the case of Mohamed Bouazizi in Tunisia—a single visible act of defiance, all have the potential to touch off a movement among the downtrodden Shi’a of the province that could lead to a secessionist struggle. While they are far more likely to occur during an overt power struggle, uprising is possible even in the absence of a succession crisis, and will almost undoubtedly have an impact on Saudi Arabia’s oil production and global prices.