As though there aren't enough surprises in the Middle East, consider these: Speculation about the sale of at least some assets of the Saudi Arabian-owned oil company Aramco to investors, plus another shuffling of Saudi King Salman's cabinet, starting with replacement of long-serving oil minister Ali al-Naimi with Khaled al-Falih, chairman of Aramco. This news has sent shockwaves throughout global economic and diplomatic realms.
With oil prices hovering around the discouragingly low of $43 a barrel, the desert kingdom is considering its options over what to do next. Saudi Arabia's financial power derives from its oil wealth; thus, offering for sale some of Aramco's precious assets could have serious consequences for the royal family's existence. So why is the king pursuing this strategy?
First, the kingdom could well be broke by August 2018 if it keeps dipping into its financial reserves (about $655 billion by some estimates) to support not only the royal family's lavish lifestyle (such as large numbers of Airbus A380s outfitted with gold) but its wide array of social services, all offered while forgoing taxation. This all-that-glitters scenario comes with the full understanding that, yes, the price of oil will not go above $43 a barrel anytime soon -- and could plunge even lower in coming months.
Second, by offering Aramco's assets as an initial public offering, the kingdom hints it knows something the rest of the world does not. One thing I'm certain of is that the kingdom has never disclosed the exact amount of its oil reserves. U.S. intelligence has been trying for years to find this out, all to no avail. Some estimate it to be about 260 billion barrels of oil, which could supply the world market at its current consumption for the next 80 years. But we're guessing here.
Third, Saudi leadership likely realizes it no longer plays an influential role in Middle East affairs, especially in the aftermath of Iran's nuclear agreement with the West. That deal means yet more oil in the market and the possibility of at least some rapprochement in the long term between the United States and Iran when it comes to shared interests. And any sale might be driven by the need for the kingdom to cash out and scatter before Islamic State, al-Qaida and other terrorist groups that harbor deep hatred for the kingdom finally storm the gates.
This is, after all, the Middle East, where anything can and will happen.
Whatever, OPEC's June meeting should provide a clue as to whether the kingdom will move forward with any Aramco sale. I remain skeptical. Mind you, the sale of Aramco assets -- no matter how little -- will be perceived by some as the beginning of the end of the al-Saud dynasty. Rival royal family members and international enemies might see this as an opportunity. Even mere speculation diminishes and undermines the legitimacy of the royal family as absolute stewards of Mecca and Medina and ultimate arbiters of oil prices in the almighty OPEC.
In recent history, the al-Saud family has derived tremendous power from its ability to unilaterally manipulate the price of oil whenever it chose. Taking Aramco public might disrupt that power in the global marketplace by dropping another element into the mix: investors.
As for the sudden reshuffling of the royal cabinet, it goes well beyond what King Salman did when he took the helm of power from his half-brother, the late King Abdullah. This abrupt cabinet reshuffle puts the stamp of approval on his son, Deputy Crown Prince Mohammed bin Salman, and his economic reform proposal, Vision 2030, which sets up priorities and policies for a world of flattened oil prices. Imagine.
While King Salman's royal decree to reshuffle the cabinet may bring new blood and fresh ideas, I doubt it will. The disoriented, ill-conceived policies the kingdom has embraced since the royal ascension of 2015 only highlights further internal turmoil within the Saudi establishment. Royal infighting over control and power could mark the start of the end for the Kingdom of Saudi Arabia as we know it. Far-reaching consequences would resound not only economically and politically but also religiously and geopolitically.
One does not have to look far to see how entangled the kingdom is in Yemen, which pretty much proved the crown prince's naiveté in global affairs when he decided to embark on a military adventure there. Images broadcast on al-Jazeera and BBC (but hardly at all on U.S. media outlets) show Saudi Arabia, an outrageously rich country, pummeling Yemen, one of the poorest in the Arab world. All this has generated criticism of the Saudis and sympathy for Houthi rebels.
That's not what King Salman needs now.
And tensions between Iran and the desert kingdom show no sign of abating, especially when it comes to Iran's nuclear program. Recently, Prince Turki al-Faisal, Saudi Arabia's former intelligence chief, announced that "all options" would be on the table if Iran moves toward a bomb, "including the acquisitions of nuclear weapons to face whatever eventuality might come from Iran." Good luck to the next U.S. president who must deal with this volatile and sensitive situation.
I see no compelling reason for the Saudi royal family to expose its dirty laundry by selling off Aramco assets. Yet if this happens, it could prove detrimental to the monarchy and the state. At that point, it will probably be time to drop "Saudi" in Saudi Arabia. The Muslim world will be saying, "Good morning, Arabia!"