Crisis puts future of Saudi reforms and GCC in doubt

By James M. Dorsey

A three-week-old, Saudi-UAE-led diplomatic and economic boycott of Qatar threatens to complicate newly promoted Saudi Crown Prince Mohammed bin Salman’s reform plans and undermine the Gulf Cooperation Council (GCC), the Middle East’s most successful regional association.

Designed to impose Saudi Arabia and the UAE ‘s will on a recalcitrant Qatar, the boycott suggests that power politics irrespective of cost trump the need for reforms in Prince Mohammed’s world.

The stakes for 31-year old Prince Mohammed and Saudi Arabia’s ruling Al Saud family are high. Failure to deliver sustainable economic and social reforms could undermine the prince’s popularity whose age has allowed him to connect with significant segments of the kingdom’s youth, who account for two thirds of the population, in ways his predecessors could not.

“The isolation of Qatar is but one example of how the politics of the Gulf Arab states are getting in the way of economic diversification and transformation,” said Karen E. Young, a senior scholar at The Arab Gulf States Institute in Washington, in an analysis of the impact of the Gulf crisis on the region’s economic reform plans. Ms. Young noted that the depth of the crisis and the hardening of positions on both sides of the divide “suggests that economic growth and the liberalization of these political economies are secondary priorities for all parties involved.”

Irrespective of how the Gulf crisis is resolved, it already has damaged institutional as well as informal building blocks of a restructuring of the Saudi as well as the region’s economy. The GCC that groups Saudi Arabia, Qatar, the UAE, Kuwait, Oman and Bahrain, has suffered a body blow that it may not survive.

Continued Qatari membership is in doubt with the Gulf state’s refusal to accept Saudi-UAE demands that would end its at times provocative policies and render it a vassal of the kingdom. Kuwait and Oman are likely, in the wake of the crisis, to be more reticent about further regional integration, having long charted relatively independent, albeit less boisterous, courses for themselves.

The fragility of GCC unity beyond Qatar was already on public display three years ago when then US Secretary of Defense Chuck Hagel backed a Saudi push for greater military integration. In a rare public statement against Gulf union, Omani Minister of State for Foreign Affairs Yousef bin Alawi al-Ibrahim, a one-time representative of a separatist movement, rejected the proposal in no uncertain terms.

"We absolutely don’t support Gulf union. There is no agreement in the region on this… If this union materializes, we will deal with it but we will not be a member. Oman’s position is very clear. If there are new arrangements for the Gulf to confront existing or future conflicts, Oman will not be part of it," Mr. Al-Ibrahim said.

The Omani official argued that the Gulf’s major problems were internal rather than external and should be the region’s focus. Earlier, Ahmed al-Saadoun, at the time speaker of the Kuwaiti parliament, also rejected a Gulf union, saying that as a democracy Kuwait could not unite with autocratic states.

This week, UAE State Minister for Foreign Affairs Anwar Gargash suggested that Qatar and the GCC would have to part ways if the Gulf state refused to accept demands by its detractors that effectively emasculate it and put it under guardianship. It’s unlikely that Kuwait and Oman would back such a move, which could split the six-nation association down the middle. Kuwait responded to the crisis by seeking to mediate while Oman helped Qatar circumvent the boycott by allowing Qatari vessels to dock at its ports.

Complicating Prince Mohammed’s reform plans, laid out in a document entitled Vision 2030, is the kingdom and the UAE’s handling of the crisis as well as a renewed 20 percent drop in oil prices since January. The crisis, beyond the balance between power politics and economic necessity, raises questions about key issues needed to inspire confidence in an effort to diversify the kingdom’s economy, streamline its bloated public sector, and strengthen the private sector.

Sanctions imposed on Qatar challenge concepts of equitable rule of law, the principle of freedom of movement, security of private ownership, and a modicum of freedom of expression in a region in which that basic right is already severely restricted. The sanctions include a ban on travel to Qatar; ordering Saudi, Emirati, and Bahraini nationals to leave the Gulf state; expelling Qatari nationals; shuttering offices of Qatari companies and ejecting Qatari-owned assets, including thousands of Qatari camels and sheep; prompting expelled Qataris to fire sell assets held in the Gulf states opposed to it; and closing airspace for flights to and from Doha.

Restrictions on freedom of expression were taken to new heights with a ban on expressions of sympathy for Qatar that in the UAE could earn someone sporting an FC Barcelona jersey with the logo of Qatar Airway, the sponsor of the Spanish soccer giant, 15 years in prison. Space for creativity, a prerequisite for building a 21^st century knowledge economy, was further cast in doubt by the Gulf states’ unprecedented effort to force closure of more freewheeling Qatari media, including the controversial Al Jazeera television network.

As the crisis drags on, concern is likely to rise among the Gulf’s trading partners, oil and gas customers, and migrant labour suppliers. Those concerns are reinforced by fears that protagonists on both sides of the Gulf divide are likely to emerge from the crisis bruised and with their reputations tarnished irrespective of how the dispute is resolved.

A survey of young Saudi men conducted by Mark C. Thompson, a Middle East scholar at King Fahd University of Petroleum and Minerals laid out what is at stake for Prince Mohammed. Mr. Thompson concluded that youth in the kingdom were willing to buy into Vision 2030’s concept of providing economic deliverables in exchange for acceptance of an absolute monarchy that limits basic freedoms.

“There was consensus amongst these young men that reducing unemployment, providing affordable housing and decent healthcare should be the government’s ‘top priorities’ as these issues are considered the most contentious and problematic in wider society: as one young man argues ‘basically if we have these then everything else is satisfactory’,” Mr. Thompson said.

The scholar noted however that initial enthusiasm for Prince Mohammed’s vision “has evaporated amongst some young men, who complain that whilst they were hopeful when the Vision was launched, as the months have passed they see few tangible results.” Mr. Thompson argued that performance was crucial because Prince Mohammed’s reform plans, the boldest to date, come on the back of earlier promises of change by Saudi leaders that never materialized.

Further undermining confidence is the fact that Prince Mohammed’s plan involves a unilateral rewriting of the kingdom’s social contract that offered a cradle-to-grave welfare state in exchange for political fealty and acceptance of Sunni ultra-conservatism’s austere moral and social codes. “The problem is that Vision 2030 has become synonymous with cutting salaries, taxing people and stop-ping benefits,” Mr. Thompson said.

Saudis have, since the introduction of cost-cutting and revenue-raising measures, seen significant rises in utility prices and greater job uncertainty as the government sought to prune its bloated bureaucracy and encourage private sector employment. Slashes in housing, vacation and sickness benefits reduced salaries in the public sector, the country’s largest employer, by up to a third.

‘I was an intern at a SANG (Saudi Arabian National Guard) hospital and most people there were angry about the Vision because their salaries were being cut. The soldiers around here are also angry because they work all the time. It’s unfair to take SAR 1000 ($266.50) from a 5,000 salary. My military father is angry because most of his salary and allowances have been cut. Some people’s incomes have already been reduced by 30% (except if you are a soldier in the south). It seems that the government wants to solve the current economic problems by force. They are doing this by raising taxes but not explaining anything to us. Prices keep rising regardless!” Mr. Thompson quoted a medical student as saying.

Increased grumbling and online protests persuaded the government in April to roll back some of the austerity measures and restore most of the perks enjoyed by government employees. Mr. Thompson cautioned that to succeed, implementation of Prince Mohammed’s “vision needs to be accountable and transparent, in other words a model of good governance… It is the government’s responsibility to ensure that young Saudis feel they are part of the National Transformation Plan, because if young Saudis believe they can make meaningful contributions to national development, then they will contribute.”

A foiled attempt this month by the Islamic State to attack the Grand Mosque in the holy city of Mecca was likely an effort to undermine Prince Mohammed’s reform plans that involve a loosening of Sunni Muslim ultra-conservativism’s strict and austere social codes and morals. A siege of the mosque in 1979 prompted the government to give the kingdom’s ultra-conservative religious establishment greater control of public mores.

The kingdom’s religious establishment has criticised Prince Mohammed’s social liberalization effort, including introduction of modern forms entertainment, but largely endorsed his economic plans. Social change has been embraced by a significant swath of Saud Arabia’s youth.

A 24-year-old speaking to The Guardian, cautioned however that ultra-conservatism maintains a hold on significant numbers of young people. “You know that the top 11 Twitter handles here are Salafi clerics, right? We are talking more than 20 million people who hang on their every word. They will not accept this sort of change. Never,” the youth said.

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africa as well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.