Too Late?
The question is whether the reaction to the more than halving in the price of a barrel of crude has come too late, especially given the Saudi influence over the oil market. The country will only freeze output if Iran and other major producers do so, the prince said.
An International Monetary Fund study in 2014 noted there were “many examples of failure” by countries trying to reduce reliance on energy production and few successes. Gulf Arab monarchies may have missed their best chance when oil prices were above $100 a barrel rather than about $40 now.
“It is clear Saudi Arabia needs to reform, diversify, and re-energize its economy, but this will involve more than just increasing investments in non-oil industries,” said Paul Sullivan, a professor of security studies at Georgetown University in Washington. “One cannot order economic reforms like a multiple course dinner.”
Taking Control
Prince Mohammed has consolidated more power than anyone in his position since the founding of the kingdom in 1932. His attempt to shake up the economy comes against the backdrop of mounting domestic security threats and regional turmoil, with the Sunni-ruled kingdom fighting a war in Yemen against Shiite rebels it says are backed by Iran.
As Defense Minister, Prince Mohammed leads the military effort. He also oversees ministries including finance, oil and the economy through the Council for Economic and Development Affairs. The council, which was established after his father became king, also controls the Public Investment Fund.
More Casual
Appearing casually in a white robe, but without the traditional Saudi headdress, the prince sat in an office adorned with posters of King Abdulaziz Al Saud, the founder of Saudi Arabia, King Salman and Crown Prince Muhammad Bin Nayef.
He said the wealth fund already holds stakes in companies including Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, and National Commercial Bank, the kingdom’s largest lender.