- Saudi authorities are reportedly offering elites who were swept up in a corruption crackdown their freedom if they sign over their assets.
- Analysts say the arrangement could essentially serve as settlements, allowing the country to avoid destabilizing court battles.
- The move will likely harden opposition to Crown Prince Mohammed bin Salman among some royals, but boost his standing among average Saudis, they say.
Saudi authorities are reportedly offering cash-for-freedom deals to dozens of the nation’s wealthy elites who were detained earlier this month on charges of corruption.
But Middle East watchers said the payments may not be as sinister as they first appear or create significant risks to Crown Prince Mohammed bin Salman, the powerful royal behind the purge.
To be sure, the arrangements threaten to provoke allegations of extortion and harden pockets of opposition to bin Salman at a sensitive time. King Salman bin Abdulaziz is expected to hand the throne to the crown prince soon, and Saudi Arabia, the world’s largest oil exporter, is seeking foreign investment to underwrite its economic transformation plan.
However, the asset seizures could essentially function like settlements, which would allow the nation to avoid messy court battles and move on from the purge, some analysts told CNBC.
Further, while the appropriations are likely to chafe some centers of power in the kingdom, they also stand to bolster bin Salman’s standing among average Saudis, many of whom resent the excesses of the sprawling royal family, analysts told CNBC.
The purge increases the risk that Mohammed bin Salman faces challenges over the short term,” said Ayham Kamel, head of risk consultancy Eurasia Group’s Middle East and North Africa practice.
“However, this consolidation and purge — or anti-corruption campaign — will eventually give him more power and allow him to have more leverage in implementing Vision 2030, his transformation plan, and generally changing the structure of Saudi Arabia.”
On Thursday, the Financial Times reported that Saudi officials were offering to release detainees who signed over assets. Authorities sought to appropriate as much as 70 percent of some Saudis’ wealth in a bid to shore up the nation’s finances, which have been pressured by a prolonged oil price downturn, according to the Times.
Reuters also reported on the deals, but said it could not confirm the 70-percent appropriations.
The crackdown has reportedly expanded. The Wall Street Journal reported on Friday that authorities have detained about two dozen military officials and several businessmen in recent days.
There is no doubt corruption is an entrenched problem in Saudi Arabia, but prosecuting elites would put Saudi Arabia on a long and difficult path that could destabilize the country, Kamel said. The alternative is to penalize the individuals through asset seizures, which also has the benefit of boosting the country’s finances, he said.
Helima Croft, global head of commodity strategy at RBC Capital Markets, said the messaging from Riyadh on the appropriations will be critical.
“The more they can make it look like a process that would happen in any Western country, the more they can convince investors that this is all going to be okay,” she told CNBC.
As for threats from within the kingdom, Croft said bin Salman has moved so forcefully, there are few who would stand up to him. Further, bin Salman has generated goodwill among the nation’s large youth population, and anyone who moved against him would have to convince the public that his reforms would continue.
“I think what we don’t appreciate here is how impactful his social reforms have been and how he has been able to make the lives of Saudi young people better,” she said.
Those improvements range from a greater sense of economic opportunity, to the simple freedom to attend concerts and play music in restaurants, she said.
While some say bin Salman is reforming Saudi Arabia, it could also be argued that he’s creating a “kingdom of fear,” said Simon Henderson, director of the Gulf and energy policy program at the Washington Institute for Near East Policy.
People will now be cautious of how and with whom they can safely do business, he said.
“For the moment, it would seem that despite everything, Mohammed bin Salman is considered a good thing, but for this judgment to be sustained, he needs to show positive results for what he’s doing and show that he’s got popular support within the kingdom,” Henderson told CNBC
The clearest test of that, he said, will be the appetite for foreign investors to continue doing business in Saudi Arabia.