Saudi Prince Calls For Royal Coup

Tyler Durden's picture

In the wake of the petrodollar’s dramatic collapse late last year, we’ve been keen to document the projected effect on global liquidity of net petrodollar exports turning negative for the first time in decades. We also moved to explain how this dynamic relates to the FX reserve liquidation we’re now seeing across EM. 

Of course we’ve also endeavored to explain that while grasping the big picture is certainly critical (and even more so now that China’s efforts to support the yuan in the wake of the August 11 deval have thrust FX reserve liquidation into the spotlight), understanding what “lower for longer” means specifically for Riyadh is important as well.

To recap, the necessity of preserving the status quo for everyday Saudis combined with funding two regional proxy wars while simultaneously defending the riyal peg isn’t exactly compatible with intentionally suppressing crude prices in an effort to outlast ZIRP and bankrupt the US shale complex. The difficulty of balancing all of this has created a current account/fiscal account outcome that makes Brazil look quite favorable by comparison and it has also forced the Saudis into the debt markets, suggesting that the kingdom’s debt-to-GDP ratio is set to rise sharply by the end of 2016 (although it would of course still look favorable by comparison in even the worst case scenarios). 

Thrown in a catastrophic crane collapse at Mecca and an incredibly horrific hajj stampede (followed by some epic trolling out of Tehran) and you have a recipe for social upheaval. 

It’s against this backdrop that we present the following from The Guardian followed by extensive commentary from Nafeez Ahmed.

From The Guardian

A senior Saudi prince has launched an unprecedented call for change in the country’s leadership, as it faces its biggest challenge in years in the form of war, plummeting oil prices and criticism of its management of Mecca, scene of last week’s hajj tragedy.

 

The prince, one of the grandsons of the state’s founder, Abdulaziz Ibn Saud, has told the Guardian that there is disquiet among the royal family – and among the wider public – at the leadership of King Salman, who acceded the throne in January.

 

The prince, who is not named for security reasons, wrote two letters earlier this month calling for the king to be removed.

 


 

“The king is not in a stable condition and in reality the son of the king [Mohammed bin Salman] is ruling the kingdom,” the prince said. “So four or possibly five of my uncles will meet soon to discuss the letters. They are making a plan with a lot of nephews and that will open the door. A lot of the second generation is very anxious.”

 

“The public are also pushing this very hard, all kinds of people, tribal leaders,” the prince added. “They say you have to do this or the country will go to disaster.”

 

A clutch of factors are buffeting King Salman, his crown prince, Mohammed bin Nayef, and the deputy crown prince, Mohammed bin Salman.

 

A double tragedy in Mecca – the collapse of a crane that killed more than 100, followed by a stampede last week that killed 700 – has raised questions not just about social issues, but also about royal stewardship of the holiest site in Islam. 

 

As usual, the Saudi authorities have consistently shrugged off any suggestion that a senior member of the government may be responsible for anything that has gone wrong.

 

Local people, however, have made clear on social media and elsewhere that they no longer believe such claims.

 

“The people inside [the kingdom] know what’s going on but they can’t say. The problem is the corruption in using the resources of the country for building things in the right form,” said an activist who lives in Mecca but did not want to be named for fear of repercussions.

 

“Unfortunately the government points the finger against the lower levels, saying for example: ‘Where are the ambulances? Where are the healthcare workers?’ They try to escape the real reason of such disaster,” he added.

???? ???? ???? ????

?????? ?????? -????-

*  *  *

Submitted by Nafeez Ahmed via Middle East Eye

On Tuesday 22 September, Middle East Eye broke the story of a senior member of the Saudi royal family calling for a “change” in leadership to fend off the kingdom’s collapse.

In a letter circulated among Saudi princes, its author, a grandson of the late King Abdulaziz Ibn Saud, blamed incumbent King Salman for creating unprecedented problems that endangered the monarchy’s continued survival.

“We will not be able to stop the draining of money, the political adolescence, and the military risks unless we change the methods of decision making, even if that implied changing the king himself,” warned the letter.

Whether or not an internal royal coup is round the corner – and informed observers think such a prospect “fanciful” – the letter’s analysis of Saudi Arabia’s dire predicament is startlingly accurate.

Like many countries in the region before it, Saudi Arabia is on the brink of a perfect storm of interconnected challenges that, if history is anything to judge by, will be the monarchy’s undoing well within the next decade.

Black gold hemorrhage

The biggest elephant in the room is oil. Saudi Arabia’s primary source of revenues, of course, is oil exports. For the last few years, the kingdom has pumped at record levels to sustain production, keeping oil prices low, undermining competing oil producers around the world who cannot afford to stay in business at such tiny profit margins, and paving the way for Saudi petro-dominance.

But Saudi Arabia’s spare capacity to pump like crazy can only last so long. A new peer-reviewed study in the Journal of Petroleum Science and Engineering anticipates that Saudi Arabia will experience a peak in its oil production, followed by inexorable decline, in 2028 – that’s just 13 years away.

This could well underestimate the extent of the problem. According to the Export Land Model (ELM) created by Texas petroleum geologist Jeffrey J Brown and Dr Sam Foucher, the key issue is not oil production alone, but the capacity to translate production into exports against rising rates of domestic consumption.

Brown and Foucher showed that the inflection point to watch out for is when an oil producer can no longer increase the quantity of oil sales abroad because of the need to meet rising domestic energy demand.

In 2008, they found that Saudi net oil exports had already begun declining as of 2006. They forecast that this trend would continue.

They were right. From 2005 to 2015, Saudi net exports have experienced an annual decline rate of 1.4 percent, within the range predicted by Brown and Foucher. A report by Citigroup recently predicted that net exports would plummet to zero in the next 15 years.

From riches to rags

This means that Saudi state revenues, 80 percent of which come from oil sales, are heading downwards, terminally.

Saudi Arabia is the region’s biggest energy consumer, domestic demand having increased by 7.5 percent over the last five years – driven largely by population growth.

The total Saudi population is estimated to grow from 29 million people today to 37 million by 2030. As demographic expansion absorbs Saudi Arabia’s energy production, the next decade is therefore likely to see the country’s oil exporting capacity ever more constrained.

Renewable energy is one avenue which Saudi Arabia has tried to invest in to wean domestic demand off oil dependence, hoping to free up capacity for oil sales abroad, thus maintaining revenues.

But earlier this year, the strain on the kingdom’s finances began to show when it announced an eight-year delay to its $109 billion solar programme, which was supposed to produce a third of the nation’s electricity by 2032.

State revenues also have been hit through blowback from the kingdom’s own short-sighted strategy to undermine competing oil producers. As I previously reported, Saudi Arabia has maintained high production levels precisely to keep global oil prices low, making new ventures unprofitable for rivals such as the US shale gas industry and other OPEC producers.

The Saudi treasury has not escaped the fall-out from the resulting oil profit squeeze – but the idea was that the kingdom’s significant financial reserves would allow it to weather the storm until its rivals are forced out of the market, unable to cope with the chronic lack of profitability.

That hasn’t quite happened yet. In the meantime, Saudi Arabia’s considerable reserves are being depleted at unprecedented levels, dropping from their August 2014 peak of $737 billion to $672bn in May – falling by about $12bn a month.

At this rate, by late 2018, the kingdom’s reserves could deplete as low as $200bn, an eventuality that would likely be anticipated by markets much earlier, triggering capital flight.

To make up for this prospect, King Salman’s approach has been to accelerate borrowing. What happens when over the next few years reserves deplete, debt increases, while oil revenues remain strained?

As with autocratic regimes like Egypt, Syria and Yemen – all of which are facing various degrees of domestic unrest – one of the first expenditures to slash in hard times will be lavish domestic subsidies. In the former countries, successive subsidy reductions responding to the impacts of rocketing food and oil prices fed directly into the grievances that generated the “Arab Spring” uprisings.

Saudi Arabia’s oil wealth, and its unique ability to maintain generous subsidies for oil, housing, food and other consumer items, plays a major role in fending off that risk of civil unrest. Energy subsidies alone make up about a fifth of Saudi’s gross domestic product.

Pressure points

As revenues are increasingly strained, the kingdom’s capacity to keep a lid on rising domestic dissent will falter, as has already happened in countries across the region.

About a quarter of the Saudi population lives in poverty. Unemployment is at about 12 percent, and affects mostly young people – 30 percent of whom are unemployed.

Climate change is pitched to heighten the country’s economic problems, especially in relation to food and water.

Like many countries in the region, Saudi Arabia is already experiencing the effects of climate change in the form of stronger warming temperatures in the interior, and vast areas of rainfall deficits in the north. By 2040, average temperatures are expected to be higher than the global average, and could increase by as much as 4 degrees Celsius, while rain reductions could worsen.

This would be accompanied by more extreme weather events, like the 2010 Jeddah flooding caused by a year’s worth of rain occurring within the course of just four hours. The combination could dramatically impact agricultural productivity, which is already facing challenges from overgrazing and unsustainable industrial agricultural practices leading to accelerated desertification.

In any case, 80 percent of Saudi Arabia’s food requirements are purchased through heavily subsidised imports, meaning that without the protection of those subsidies, the country would be heavily impacted by fluctuations in global food prices.

“Saudi Arabia is particularly vulnerable to climate change as most of its ecosystems are sensitive, its renewable water resources are limited and its economy remains highly dependent on fossil fuel exports, while significant demographic pressures continue to affect the government’s ability to provide for the needs of its population,” concluded a UN Food & Agricultural Organisation (FAO) report in 2010.

The kingdom is one of the most water scarce in the world, at 98 cubic metres per inhabitant per year. Most water withdrawal is from groundwater, 57 percent of which is non-renewable, and 88 percent of which goes to agriculture. In addition, desalination plants meet about 70 percent of the kingdom’s domestic water supplies.

But desalination is very energy intensive, accounting for more than half of domestic oil consumption. As oil exports run down, along with state revenues, while domestic consumption increases, the kingdom’s ability to use desalination to meet its water needs will decrease.

End of the road

In Iraq, Syria, Yemen and Egypt, civil unrest and all-out war can be traced back to the devastating impact of declining state power in the context of climate-induced droughts, agricultural decline, and rapid oil depletion.

Yet the Saudi government has decided that rather than learning lessons from the hubris of its neighbours, it won’t wait for war to come home – but will readily export war in the region in a madcap bid to extend its geopolitical hegemony and prolong its petro-dominance.

Unfortunately, these actions are symptomatic of the fundamental delusion that has prevented all these regimes from responding rationally to the Crisis of Civilization that is unravelling the ground from beneath their feet. That delusion consists of an unwavering, fundamentalist faith: that more business-as-usual will solve the problems created by business-as-usual.

Like many of its neighbours, such deep-rooted structural realities mean that Saudi Arabia is indeed on the brink of protracted state failure, a process likely to take-off in the next few years, becoming truly obvious well within a decade.

Sadly, those few members of the royal family who think they can save their kingdom from its inevitable demise by a bit of experimental regime-rotation are no less deluded than those they seek to remove.

*  *  *

We would only ask if all of the above means that future vists to the US will look dissimilar to this:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
DirkDiggler11's picture

Need to turn the kingdom of Saud from sand into glass.

monk27's picture

I love the smell of Middle East conspiracies in the morning...

weburke's picture

The damn family. Of evil

Ms No's picture

You guys better stop trash talking the Saudis being that they are now represented on the UN's human rights council.  Hannibal lechter's ambassador must be showing them how to properly torture and terrorize populations.  

This is peak inversion.... has to be.  

strannick's picture

Maybe each half of the family will execute the other for some bullshit Sharia law infraction and so make the world a better place.

Any Saudi Arabian  discontents for the behavior of these medieval muderous muslims can take their complaint to the UN Human Rights tribunal.

Wish the US ould bring some of its chaos creaating middle east magic foreign policy to the Kingdom

strannick's picture

Wonder how well those Black limos would do in the dersert sand, with Toyota Tacomas full of ak waving jihaadist hot on their tails

38BWD22's picture

 

 

Hey!  I'd be a good King, appoint me.

No, I am not in the Royal Family, nor a Saudi, but what difference at this point does it make?

A little affirmative action is the only right thing to do.  And I would only be the slightest bit corrupt, promise!

ali-ali-al-qomfri's picture

I'll vote for ya, provided you have the proper bearings ;)

38BWD22's picture

 

 

That's certainly one point in my favor.  I would buy good highly-engineered 52100 steel products at good value.  So there is that.

I'd pick up some gold for the Treasury too.  I promise I would take less than 5%.  Maybe less than 3%.

junction's picture

Off with all the Saudi Royals' heads!

toady's picture

http://thefreethoughtproject.com/saudi-prince-sexually-assaults-3-women-...

I can't find my image of W holding hands with the Saudis, so that link will have to do....

Lorca's Novena's picture

OT: The fat guy in black with the glasses reminded me of that freak in Beetlejuice. Carry on.

 

kliguy38's picture

Looks like the sharks are smelling blood.....wait till the cauldron of shit blows. 

Lorca's Novena's picture

The petro-dollar will end, as will as these shitbags. 

Kaiser Sousa's picture

Putins moves r sending tremors.....

Freddie's picture

I so respect the Persians (Iranians) more than these vile shitbag Saudis. This is particularly true with Hezbollah helping protect all Syrians including Christian Syrians and also the vile Saudis using cluster bombs against the Yemenis.  Also plenty of those ISIS shitbags in Syria are Saudis.

I doubt the House of Saud are even really Muslims.  I think they are Red Shield Mi6 actors.  Lawrence of Arabia?  He was an Mi6 stooge helping the Red Sheild grab the oil. 

Hezbollah is respected in Lebanon by Christians and obviously Muslims.

https://www.youtube.com/watch?v=JElx0Eg2iZs

Famous Christian singer in Lebanon singing about Hezbollah defending Lebanon and ALL Lebanese people from you know who. 

The word was if the aggressors hit Beruit that Hezbollah would hit Tel Aviv (2006).  Beruit was not attacked.

 

Salah's picture

all the result of sibling miscegnation, once-removed

to wit: http://consang.net/index.php/Global_prevalence

Tracerfan's picture

The sooner the Shitdom collapses, the better for the rest of the world.

Scooby Dooby Doo's picture

Bedouin cultures are known as the ultimate democracies. Consensus appoints the leaders.

SgtShaftoe's picture

Nuke it from orbit.  It's the only way to be sure. 

But first, make sure the Bush family is all assembled in Ryhad with Cheney strapped head first into a camel's ass. 

 

ali-ali-al-qomfri's picture

what did the poor camel do to deserve that??

fleur de lis's picture

Agreed. Poor camel has no say at all. Since time immemorial they have safely carried travellers across hostile terrain and this is the thanks she gets. 

SilverDOG's picture

 

 

 

Cheney camel sphincter suffocated, anywhere will suffice.

Catullus's picture

So how long before their finally armed military turns the guns around and overthrows the House of Saud? Their military isn't armed in their own country. They're terrified of their own people.

Nexus789's picture

Need a colour revolution.

ToSoft4Truth's picture

Right after Texas leaves the Union? 

CHoward's picture

Hmmmmm - aren't coups usually done quietly and behind closed doors? 

Wahooo's picture

The Persians and Putin must be licking their chops. They've played their hands well and deserve the Saudi oil fields.

Freddie's picture

Somehow I think Iran and the Saudis made a deal with China that China can have Saudi Arabia.

The USA is so stupid and corrupt.  At least the USA has shale and lots of nat gas.

The Z-Scum in the Z-State department treat all people around the world as subhuman.

Unless they spew the most virulent forms of Islam and in that case they get free tickets to Maine, Minnestoa, Colorado and other places where the Soros Red Shield Z-State Dept dumps Somalis and other vermin.

38BWD22's picture

 

 

They'll let in Muslim extremists, but not Christians.

Explain that to the neighbors of Somalistan in Minnesota.  Well, MN, ME and CO did vote for Obama, so maybe they're now even...

847328_3527's picture

Should become interesting when Barry flies in another ten to twenty thousand ... for starters. Then the various fighting Moslim factions can continue their tribal disputes here and duke it out here in Merika.

 

I wonder what names they'll give their gangs? Camel Jocks v the Ragheads, for example?

38BWD22's picture

 

 

Too bad I can't name their gangs for them.........

SWRichmond's picture

This certainly sheds some light on the Syria pipeline thing, doesn't it?

nnnnnn's picture
nnnnnn (not verified) Sep 29, 2015 8:30 PM

"followed by a stampede last week that killed 700"

 

700 dead - they were shia muslims from iran  

i assume it was planned to kill them by jew-ruled sunni arab trash

 

Freddie's picture

http://syrianperspective.com/2015/09/damascusmoscow-teheran-belarus-to-s...

One poster there posted this.

Report: Mossad and Saudi’s pre-coordinated the Mina stampede to abduct key members of The Iranian Revolutionary Guards Corps (IRGC)

http://awdnews.com/top-news/report-mossad-and-saudi%E2%80%99s-pre-coordi...

 

Ms No's picture

This is just incredible, all of it.  The Saudis and the US are throwing everything they have at Russia right now as far as oil goes.  We have even begun to unleash Iran's oil. 

Here in a few months we may just be able to roughly calculate how much oil we can produce globally.  Yeah I know, of course it wont be perfect and there is going to be all of this miracle technology that is going to change everything in unicornistan and then there is all of the huge stores that are just left fallow for no credible reason but you can bet some will be watching. 

grunk's picture

Appoint Caitlyn Jenner Queen.

MalteseFalcon's picture

I understand that Caitlyn is willing to wear a burkha.

JustObserving's picture

The current cruel, corrupt, criminal regime in Saudi Arabia should have been replaced decades ago.  Everyday the Saudis are committing new crimes:

131 civilians killed in alleged Saudi airstrike on Yemen wedding

http://www.rt.com/news/316830-yemen-airstrikes-wedding-casualties/

The large convoy of Mohammad bin Salman Al Saud, the King's son, caused the stampede that killed 717 & wounded 863

The Lebanese daily Al Diyar reported late Thursday that the stampede was triggered by the arrival on the scene of a large militarized convoy transporting the 30-year-old deputy crown prince, who is also the country’s defense minister.

“The large convoy of Mohammad bin Salman Al Saud, the King's son and deputy crown prince, that was escorted by over 350 security forces, including 200 army men and 150 policemen, sped up the road to go through the pilgrims that were moving towards the site of the ‘Stoning the Devil’ ritual, causing panic among millions of pilgrims who were on the move from the opposite direction and caused the stampede,” the newspaper reported.

Son of Captain Nemo's picture

Russia.

Nuke the whole worthless fucking kingdom on behalf of these people and the ones in Syria that use to be your business partner doing their best to survive without your support!

Son of Captain Nemo's picture

P.S.

You should have done it during the "Hadj" but maybe you can kill two birds with one stone in a few more months with Chanukah!!!

Wilcox1's picture

Seems like I've seen some classic literature that followed this story line--In Greek maybe?

earleflorida's picture

the ussa is covertly behind the saudi's

both the saudi's and ussa benefit from lower oil prices

ussa will bankrupt the soviet's, 'energy dependent economy', while the saudi will benefit from the soviets demise in the energy sector and have a monopoly on gobal energy once again 

here's  how it works:

in 2010 the total cost of imported energy from the persian gulf was ~ $10bn +/+ annually, while the cost to the DOD was ~ $50bn +/+, a ratio of 1:5... to keep the region under ussa hegemony/control, with the DOD having an annual FY budget of ~$260bn +/+ forever?

now with that ratio 1:5 the ussa can sectretly subsidize the kingdom with free armaments and defense systems holding iran's ambitions at bay

http://www.eia.gov/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUSSA1&f=A

http://www.eia.gov/pet/hist/LeafHandler.ashx?n=pet&s=mttimussa1&f=a

  WOW!!! link above just won't work,-- sorry exhausted all my option :: if interested plug in link physically ps. just reinforces belows reference link.  

https://butnowyouknow.files.wordpress.com/2008/11/oil-prices1.jpg

 

Ps. when bush #43 got into office all he cared about was building out reagans 'star-wars program' via an ellaborate missile defense system in which he accomplished along with integrating the preditor drone program in the fore

well done MIC

Ps2.    note that in 1998-99 the FRB raised rates and at the same tyme 'opec' cuts [making matters worse?] production as is a mirror image of today, with a coincidentally russian financial crises [who'd of known?!?]

Ps3.    remember it was the IMF easy money that created the problem in the asian financial crises and it was their austere money lending  later [solving the problem/ lol?] that set the mood for  a loss of 70% in the baby tigers EM's before all was said and done...

fowlerja's picture

So what's the problem...just call for early elections. :)

nmewn's picture

The "royal family" is pretty much fucked and they know it. 

Paying off indolent working age males to sit on their asses all day, obstensively cuz "they're special" but really to keep the young males hands otherwise "occupied" only goes so far ;-)

mpyre's picture

At cozy mansions in Geneva, London and Los Angeles...

nmewn's picture

Yeah, otherwise that "could be their head-in-a-basket".

The heads (and all sense of worldly reality) of the commenters on ZH would explode if I were to say there is very little difference between King Salman, Obama, St.Pooty, the "Queen" (lol), Assad, Soros, Hillary!, Jeb! and Trump.

They all want one thing...power...and to amass personal wealth. If they have to put half (or all) of "their citizens" on EBT or into public housing etc. they'll certainly do it. It doesn't cost them (personally) a dime.

And the crowds go batshit crazy wild for moar, look how generous they are! ;-)