Saudi Arabia's populist Tempter

NEW YORK Most attempts to understand the political earthquake taking place in Saudi Arabia have focused on the psychology of the young prince, Mohammed bin Salman. But there are also structural reasons for Prince Mohammed's populist inside. Understanding these factors is the key to finding a better way forward.

In the past, political stability in Arabia has stood in three separate things: within the royal family; between the royal family and the traditional elites in the Kingdom; between the state and the population.

Asabiya is the root of the first ʹ the ability of an ambitious tribe to unite and monopolise power. But the royal family has grown too much and has become very divided to justify the cost of maintaining unity. A recent assessment says that 5,000 and more third - generation princes consume up to $50 billion per year.

As far as traditional elites are concerned, they are rooted in the Kingdom generation. These noble families were encouraged to collect more economic power. They had privileged access to government contracts, in subsidies, in capital, enjoyed protection from competition, and were able to import free by deeply instilling their companies in the country's economy.

This protected private sector elite has increased so much that it already shows over 50% of Saudi Arabia's GDP.

Populations, meanwhile, had been offered economic security in exchange for their game-of-the-art an institutionalised device through a non-represented network of well-paid public sector jobs, and from a series of genomous benefits of prosperity and subsidies. As a result, more than 75% of Arab citizens work for the state, while the rest of the public budget is spent on vital social support.

But this system has already become very expensive. The challenge for Prince Mohammed is in overseeing the transition towards a less extenuating political order, which would at the same time generate greater economic efficiency to prevent any possible civic unrest.

Other autocratic regimes in the region, with larger populations and less oil, such as Iraq, Egypt, Algeria and Syria, have followed a republican strategy, calming the poor through a series of forms of patrol and through oppressive economic elites. This has blocked the establishment of a creditable opposition at the price of protecting anemic, extremely informal and consumer-based economics.

A Venezuelan-style effort was similar to that of Prince Mohammed, the cause of populist enthusiasm, elite cleansing, and neutralisation of any serious opposition. Foreign and state-controlled firms can replace the elites mentioned in providing needed private services. And the balance of payments can be stabilised with reduced consumption and imports, part of the royal family and the wealthy.

The problem with this effort lies in delays that would make major changes in productivity growth. While other autocrats under pressure such as Recep Tayip Erdogan and Vladimir Putin are constantly choosing mype ways in sacrificing the private sector to survive their regimes, the Kingdom can do better than that, giving them assets available.

The alternative to the ruling ruling coalition of traditional elites is even less favourable to the current ruler of Saudi Arabia, because it would tighten the consumption rate for ordinary people and thus increase the pressure level. Internal conflict is the last thing the crowned prince needs.

A better road ahead requires more confrontations and better coordination. Pain from the rules set should be shared more equally among people, and reforms should focus more on expanding economic benefits.

This route is possible, thanks to the abundance of Saudi Arabia to its most productive: a new society that requires social emancipation, the most educated and fervent women for participation, and millions of jobs created for foreigners in the past that can be done even by locals.

What this scenario covers is the low productivity of private sector elites. To free this part, Saudi Arabia needs a democratization, if not in politics, then in its markets, through greater support in the law and a correct competition. Viewed by this prospect, Prince Mohammed's current anti-corruption campaign should be forwarded to efforts to establish a more incriminate order in the private sector.

If the private Kingdom sector can function, the economic challenge becomes more modest. About 200 thousand young people will enter the labour market annually. And women can also be employed by giving a breath to the private sector. Currently, there are nine million foreign workers working in the Kingdom.

More than new mega-investments in high technology, the difficult Saudiisation route initiated a decade ago, can be done gradually, if done through support for competition and for small and medium-sized companies. But the starting point is challenging because public sector servants receive salaries three times larger than private sector workers. To unify the labour market, a medium-term goal could reduce Saudi workers' salaries by increasing their productivity, and subsidising the rest from the state safe.

Popular temptation promises for the best, an authoritarian state with medium income. Saudi Arabia would benefit more from a strategy of economic and social inclusion that extends the basis of political support by convincing all influential groups of kings, nobles and others to view short-term cuts as an investment in the future of the Kingdom. Project Syndicate: Periscope