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Saudi Arabia – Where to Now?

Published 02 Jun 2023
Bakar Mohamed

Many view Saudi Arabia as the head of the Middle East, the economic powerhouse and a constantly rising power on the global stage. But Saudi Arabia’s future as a monarchy is at threat because of two factors:

  1. The global trend away from oil reliance, and
  2. The rise of dissent due to the Kingdom drifting away from religious rule.

Since the establishment of the modern Kingdom of Saudi Arabia in 1932, it has been a monarchy ruling by Islamist values. The exploitation of oil in 1941 saw the Saudi state rise to become one of the richest countries in the Gulf region and globally. Importantly, this richness crystallized an agreement between the ruling elite and its citizens; provision of welfare for all in exchange for reduced civil liberties.

While Saudi Arabia’s GDP has consistently increased, the country faces a decline due to the world’s move towards green energy, especially because 70% of the country’s exports are oil. This threat is not only one of economics, but one of political stability. As mentioned above, civil stability is dependent on welfare provision. If the Saudi state has a declining GDP, this will impact their ability to provide welfare. Consequently, political instability will result from much of the criticism that has simmered under the surface of the new Prince, Mohammed bin Salman (MBS). An example of lessened welfare is seen through the Kingdom’s introduction of a Value Added Tax in 2016 which started at 5% but then increased to 15% in 2020 amidst the pandemic.

It’s crucial to note that Saudi Arabia is not free from dissent or displeasure amongst its population, and the Muslim population at large. Being the capital of Islam and holding the two most religious sites for Muslims, Saudi’s threat goes beyond its population and extends to the discontent of the entire Muslim world. This global threat and discontent is terrible news for the current Prime Minister, Mohammed bin Salman (MBS), who has been on a path of liberalisation, receiving much critique from Muslim clerics in Saudi Arabia and around the world. In a recent survey, 75% of young Arabs in the GCC thought their country should be ruled be Sharia Law which is under threat by MBS’ vision. Unluckily for the monarchy, the alignment of both lessened welfare due to reduced oil dependence and increased dissent because of liberalisation, is a formula for rebellion.

Although 90% of young people between the ages of 18-24 view Mohammed bin Salman’s leadership in a positive light, Saudi’s political violence risk score remains high at a rate of 56% and its political stability remains low compared to the early 2010’s. This puts the Saudi monarchy at a crossroads. With increasing taxes, citizens will demand more rights and threaten the monarchic state, especially at a time of heightened dissent due to liberalisation. Given this, the Saudi monarchy has one of three pathways:

  1. Retain its current form and resist the rise of dissent. This risks heightened instability and civil war.
  2. Slowly transition towards democracy, allowing citizens more rights. The monarchy would be reluctant to take this step as it threatens their power. Additionally, observing neighbouring countries, the pathway to democracy does not seem promising.
  3. Halt the imposition of taxes and return to the agreement of welfare over liberty. This would require massive economic diversification by the Saudi state to fill the oil gap.

Given Saudi’s vision 2030, the pathway they seem to be taking is option three. Increased diversification will help the monarchy maintain the status quo and lessen the imposition of taxes amidst the cut on oil barrel exports.

Bakar Mohamed is a 3rd year student in the social sciences and prospective M. International relations student. He currently hosts a podcast and produces short form content on his channel, BM Discourse, revolving around Middle Eastern development. Bakar aspires to make the international relations space more accessible to others as he understands the difficulty and competitiveness, especially for those from disadvantaged backgrounds.

Bakar is an intern with the Australian Institute of International Affairs NSW.