In
the six weeks before Khashoggi’s disappearance, MBS not only
managed to anger the U.S. military-industrial complex but the world’s
most powerful bankers.
by
Whitney Webb
Part
3 - MBS – the “reformer” who wasn’t
Though
the media has long spun Vision 2030 as MBS’ “ambitious” plan to
wean the Saudi economy off its dependency on oil, the plan itself is
actually a free-for-all for private interests and involves the
neoliberalization of Saudi state-owned assets. Among its pillars are
the opening of Saudi financial markets to Wall Street and the
privatization of essentially everything in the Gulf Kingdom,
including healthcare and, of course, Aramco.
The fact
that Vision 2030 was essentially a neoliberal wish-list should not
come as a big surprise, however, given that it was based off a 2015
report authored by the McKinsey Global Institute, the research arm of
the U.S.-based consulting firm McKinsey & Company — the “most
prestigious” consulting firm in the world, known for its
“neoliberal solutions to real-world problems”.
According
to a report published last year in Foreign Policy, “McKinsey has
cultivated a generation of young Arab princelings enamored with
Western-style economic reforms, and with thoroughly mixed results.”
However, this was especially true of Saudi Arabia, where MBS
cultivated even closer ties with the firm and has relied on it, not
just for the blueprint of Vision 2030 but also for choosing his new
cabinet following his rise to the position of Crown Prince as well as
a list of prominent Saudi dissidents who were later repressed.
In
addition, McKinsey’s influence goes far beyond the firm itself, as
its past employees or “alumni” go on to serve powerful positions
in the corporate world or in government. Though the extent of
McKinsey’s influence in helping MBS rise to become crown prince is
unknown, it is certainly a possibility that the firm had used its
influence to “grease the wheels” in order to give
near-ultimate authority to one of these “young Arab
princelings,” who would embrace neoliberal reforms that older
generations would not.
Vision
2030 certainly seemed to win MBS the affection of the international
elite across the board — and it seemed that the new Crown Prince
enjoyed the limelight, at least for a while. However, it seems
reality began to set in for MBS, and he has consequently spent the
past several months looking for a way to indefinitely delay the
plan’s implementation.
This
first became clear earlier this year following speculation in July
that the Saudi Aramco Initial Public Offering (IPO) — i.e., the
beginning of the partial privatization of the Saudi state oil company
through the selling of shares — may not materialize after all.
Then, it was announced in late August that the entire IPO would be
shelved. Bloomberg called this “the most significant reversal in
Prince Mohammed’s plans” and added: “Rather than marking a
watershed in one of the most ambitious economic projects in history,
it [the shelving of the Aramco IPO] now highlights the
unpredictability of the country under a young leader who has
centralized political power in his own hands since becoming de facto
ruler a little over a year ago.”
As a
result, what would have been the biggest IPO in history was called
off overnight. The move was surely a disappointment to Trump, who
had personally lobbied MBS to list Aramco on the New York Stock
Exchange (NYSE), as doing so would have awarded the NYSE with the
largest stock market listing ever. However, it was a much, much
bigger disappointment for the behemoth financial institutions that
had worked frantically to secure their roles in the deal — Bank of
America, Goldman Sachs, and CitiGroup, among others — as the
shelving of the IPO meant that all their work on the deal would now
go without compensation, as banks are typically only paid when such
deals are finalized. In other words, MBS’ decision to put the IPO
indefinitely on hold meant that the most powerful,
politically-connected banks had essentially been forced to work for
free.
It seems
that MBS sensed the animosity he had caused in some of the world’s
most powerful financial institutions, given that, just a few weeks
later, he offered Goldman Sachs, Bank of America and CitiGroup a
prominent role in Aramco’s new plans to buy a majority stake in the
Saudi petrochemical company Saudi Basic Industries Corp (Sabic). As
part of that deal, Aramco has considered selling bonds in what could
become the largest sale of corporate debt ever. However that
Aramco-Sabic deal, valued at $70 billion, is still significantly less
than the $100 billion that the Aramco IPO was set to generate.
More
importantly, the deal shows that MBS got cold feet in his
privatization plans, as having a state-owned company (Aramco) buy a
majority stake in a private Saudi company (Sabic) is the complete
opposite of what MBS had promised in the months prior to his rise to
become Saudi crown prince. Indeed, as Bloomberg noted at the time:
“The [Aramco] bond sale would give Saudi Arabia some of the
financial payoff of an IPO, though without having to share ownership
with international investors — or revealing information the kingdom
would rather keep private.”
Thus, it
seems that it was the privatization of Aramco that had MBS spooked.
Far
beyond the cancellation of the IPO itself — MBS has endangered
other parts of the plan that these powerful financial interests had
been counting on for well over a year. That includes Vision 2030’s
plan to increase the Saudi Public Investment Fund (PIF) — which is
managed by a group of HSBC and Bank of America directors and a
CitiGroup investment banking alumnus — from its current $230
billion in assets to a massive $2 trillion. The dramatic increase in
the fund’s size would make the PIF the largest sovereign wealth
fund in the world. Without that injection of cash into the PIF from
the Aramco IPO, media reports have warned of a “ripple effect” on
the U.S. economy, including massive U.S. tech companies like Uber,
given that the PIF has invested heavily in such companies.
Evidence
has since emerged that MBS knows that these powerful banks are still
angry despite his efforts to placate them. On October 5, just a few
days after Khashoggi’s murder, MBS promised a new Aramco IPO within
a few years, this time valued at $2 trillion. However, media reports
on that announcement made it clear that Goldman Sachs, CitiGroup and
the like weren’t convinced.
Indeed,
with the entire privatization effort now in doubt, so too is the
estimated $6 trillion in direct investments from powerful interests
that had been planned to fund the privatization schemes that comprise
the entirety of Vision 2030. That figure could certainly explain why
so much pressure has been levied against MBS as of late over
Khashoggi. Indeed, given that the Saudis had butchered another
dissident writer in 1979 in their Lebanese consulate without the same
outrage that has resulted from Khashoggi’s murder, it is safe to
say that the establishment’s outrage over this latest extrajudicial
killing is motivated less by “human rights” than by trillions of
dollars of capital.
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