By the end of 2015 the BND, the German foreign intelligence service, had grown so concerned that it warned the government about Saudi Arabia’s new Deputy Crown Prince and defence minister, 30-year-old Muhammad bin Salman. “The previous cautious diplomatic stance of older leading members of the royal family,” it wrote, “is being replaced by an impulsive policy of intervention.”
At that point Prince bin Salman had been defence minister for just one year, but he had already launched a major military intervention in the civil war in Yemen and committed Saudi Arabia to open support for the rebels in the Syrian civil war. He had also taken the bold decision to let oil production rip and the oil price crash.
No wonder the BND characterised Prince bin Salman as “a political gambler who is destabilising the Arab world through proxy wars in Yemen and Syria.” Not just a gambler, but one who was betting on the wrong horses.
The first bet to fail was his intervention in the Yemeni civil war, with an aerial bombing campaign that has killed at least 10,000 Yemenis (around half of them civilians) and cost Saudi Arabia tens of billions of dollars.
Prince Muhammad bin Salman (or MBS, as he is known in diplomatic circles) sold the war as a short, sharp intervention that would defeat the Houthi rebels in Yemen and put Saudi Arabia’s own choice for the presidency, Abd Rabbuh Mansur Hadi, back in power. It has turned into a long, exhausting war of attrition: the Houthis still control of the capital, Sana’a, and Hadi will not be going home any time soon.
Then the Deputy Crown Prince’s second big bet, an open commitment to support the Syrian rebels, failed when the Syrian army, with Russian and Iranian help, reconquered eastern Aleppo last December. Not one of Syria’s big cities is now under rebel control, and Saudi Arabia will have to live with a victorious and vengeful Assad regime.
MBS’s biggest gamble was his plan to restore the Saudi kingdom’s dominance in global oil markets by driving the new competition, the American producers who get oil out of shale rock by fracking, into bankruptcy.
The frackers had doubled American oil production in eight years, but the extra US production was creating an over-supply in the market and depressing the price of oil. Then the prince decided to make matters worse.
He reckoned that the frackers were high-cost producers who would go broke if the price of oil stayed low enough for long enough. So Saudi Arabia kept its own oil production high and persuaded its partners in the Organisation of Petroleum-Exporting Countries (OPEC) to do the same.
At several points in the past two years the oil price fell below $30 per barrel, compared to a peak of $114 in 2014, but the strategy didn’t work as MBS had planned.
The US frackers shut down their less profitable operations temporarily and some
smaller players went bankrupt, but the survivors are ready to ramp production up again as soon as the oil price improves. Meanwhile, Saudi Arabia has been burning through $100 billion a year in cash reserves to keep government services and subsidies going.
Last November the prince admitted defeat. Saudi Arabia and its OPEC partners agreed to cut production by 1.2 million barrels per day, and Russia and Kazakhstan chipped in with another half million barrels. The oil price is up to $55 per barrel, Saudi Arabia’s cash flow has improved, and the political stresses at home due to wage and subsidy cuts have eased off.
But many people are asking: “What was all that about, then?”
The prince is not a fool. He should have known that foreign interventions in Yemen rarely succeed, that the Russian intervention in the Syrian civil war meant that Assad was likely to win, and that the American frackers could probably wait him out. In fact, he probably did know.
The problem is that Muhammad bin Salman is in a hurry to produce some positive results. His prominence at such an early age owes everything to the support of his father, King Salman, who ascended to the throne just two years ago. But the king is 81 and in poor health (suffering from mild dementia, according to some), and his son is not his obvious successor.
Normally the successor to the Saudi throne is not the current king’s son, but a senior prince chosen by his peers as best fitted to rule. The current Crown Prince is 57-year-old Prince Muhammad bin Nayef. Even the title of Deputy Crown Prince is new, and MBS owes it entirely to his father.
So to have any hope of succeeding to the throne when King Salman dies, Prince Muhammad bin Salman must prove his worth quickly. That’s why he was open to such high-stakes, long-odds gambles: one big success could do the trick for him.
He is probably still up for another roll of the dice.
To shorten to 725 words, omit paragraphs 8, 10, and 15. (“The frackers…worse”; At several…planned”; and “Normally…father”)
“They hit everything, hospitals, orphanages, schools,” Hisham al-Omeisy told The Guardian newspaper six months ago. “You live in constant fear that your kids’ school could be the next target.”
No, he’s not talking about the wicked Russians bombing the eastern side of Aleppo in Syria, which is stirring up so much synthetic indignation in Washington and London these days. He was talking about the air force of Saudi Arabia, that great friend of the West, bombing his friends and neighbours in Sana’a, the capital of Yemen.
The Saudi Arabian bombing campaign in Yemen is now eighteen months old, and is responsible for the great majority of the estimated 5,000 civilian fatal casualties in that time. The Saudi authorities swear that it wasn’t them every time there is an especially high death toll – “(our) forces have clear instructions not to target populated areas and to avoid civilians” is the familiar refrain – but they are the only side in the conflict that has aircraft.
A case in point is last Sunday’s strike on the Great Hall in Sana’a, a very large and distinctive building of no military importance whatever. Last Sunday it was crowded with hundred of people attending the funeral of Ali al-Rawishan, the father of the current interior minister, Galal al-Rawishan.
The younger al-Rawishan is the interior minister in the government that sits in the capital, which is supported by “rebel” Houthi tribesmen from the north of Yemen and by the part of the army that still backs the former president, Ali Abdullah Saleh. His father’s funeral was therefore attended by many senior Houthi officials and supporters of the former president, as well as large numbers of other people.
By the sheerest coincidence, we are asked to believe, an air-strike accidentally hit the Great Hall at just the right time on just the right day to kill 150 people and wound 525, among whom there would probably have been a dozen or so “rebel” government officials.
Even the White House, which has loyally backed Saudi Arabia’s war against Yemen, said that it is launching an immediate review of its policy. US National Security Council spokesman Ned Simon said it was part of a “troubling” pattern of Saudi air attacks on civilians, and warned that “US security cooperation with Saudi Arabia is not a blank cheque.” But it is, actually.
This war is really about Saudi Arabia’s ability to control Yemen’s government. The two neighbours have about the same population but Saudi Arabia is thirty times richer, so that should be easy.
Yemen’s long-ruling dictator, Ali Abdullah Saleh, was hostile to Saudi Arabia, so the latter took advantage of popular protests against him in 2011-12 (part of the “Arab Spring”) to engineer his replacement by a Saudi puppet, Abd Rabbuh Mansour Hadi.
Saleh then made an alliance with his former enemies, the Houthi tribes of northern Yemen, and struck back. When the rebel forces seized Sana’a in late 2014 and eventually drove Hadi out of the country, Saudi Arabia put together a “coalition” of conservative Arab states and launched the current military intervention to put Hadi back in power.
However, none of the “coalition” members wants to risk the casualties and the consequent unpopularity at home that would come from fighting a major ground war in Yemen. The intervention therefore consists mostly of air strikes, which produce lots of civilian casualties – some deliberate, some not.
The other motive behind this foolish war is the Saudi belief (or at least claim) that Iran, its great rival in the Gulf, is the secret power behind the rebel forces in Yemen. No doubt Iran does sympathise with the Yemeni rebels, since they are mostly fellow Shias, but for all the talk of “Iran-allied Houthis”, faithfully repeated in Western media, there is no evidence that Iran has given them either military or financial aid.
So, then, three conclusions. First, the Saudi-led coalition will not get its way in Yemen if it remains unwilling to put large numbers of troops on the ground – and it might not win even if it did. Second, the relentless bombing of civilians is largely due to the coalition’s frustration at the failure of its political strategy (although the sheer lack of useful military targets also plays a part).
And third, this is the stupidest of all the wars now being fought across the Middle East. Who runs Yemen is not a matter of vital strategic importance to Saudi Arabia, and the Saudi obsession with the Iranian “threat” is absurd.
Yemen is of no imaginable strategic value to Iran, nor could the Iranians help the rebel government there in any concrete way even if they wanted to. And while Iranian influence has undoubtedly grown in the Gulf region in the past decade, that is entirely a result of the US invasion of Iraq in 2003, not of some nefarious Iranian plot.
Does the Washington foreign policy establishment finally understand all this? Only on Mondays, Wednesdays and Fridays. Old habits die hard, and it’s all too easy to condemn Russian air strikes in Syria while condoning similar Saudi air strikes in Yemen.
To shorten to 700 words, omit paragraphs 7, 11 and 15. (“Even…actually”; “However…not”; and “Yemen…plot”)
“No one can set the price of oil. It’s up to Allah,” said Saudi Arabian Oil Minister Ali al-Naimi in May. But less devout people believe that Saudi Arabia has been trying very hard to set the price of oil – and to set it low. Moreover, it has been remarkably successful, because last week the price of oil was in the mid $40s per barrel, down from just over $100 last May. But Riyadh is not achieving its objective.
Saudi Arabia, like any oil producer, likes a high price for its oil, but since it is very rich and has huge reserves it thinks long-term. Watching American oil production almost double in the past seven years, mainly thanks to the rapid rise of fracking, the Saudis could see that they risked losing their role as the “swing producer” who can raise or lower the oil price just by cutting or increasing its own production.
The only way Saudi Arabia could keep that role was to drive the American frackers out of business. Production costs are secret in the oil world, but the Saudis assumed that the injection of water, sand and chemicals into shale rock at high pressure makes hydraulic fracturing – fracking – very expensive.
So the Saudi strategy is to keep its own production high in order to push the the oil price down. If the price stays low enough for long enough, high-cost producers like the frackers will have to close down. Then, once the competition had been eliminated, Saudi Arabia jacks the price back up by cutting its own production, and the glory days return.
In the meantime Saudi Arabia is losing income too, of course, and oil revenues account for 90 percent of the national budget. It can live on savings for a while, but it needs a fairly quick win.
It would be politically unwise to cut the lavish government spending that keeps the Saudi population happy, and the government is also involved in an expensive war in Yemen. The missing income has mostly been replaced by withdrawals from the country’s huge foreign reserves, estimated a year ago at $700 billion – but those reserves have fallen by $65 billion in the past year.
The Saudis don’t want to run those reserves down too far: without them, it could not afford to play the role of “swing producer”, and would lose most of its diplomatic clout. So last week, for the first time in eight years, Saudi Arabia started selling government bonds, planning to raise $27 billion by the end of the year. The strain is starting to show.
The strain of this attritional battle is also showing in the United States, where various shale oil producers have cancelled or postponed new drilling projects. But the shale producers have consolidated into bigger companies and increased the efficiency of their production processes, and US oil production is actually continuing to grow this year. It is now at about 90 percent of Saudi production.
The brutal fact is that the Saudis are losing this battle. When the US was the biggest producer of oil, before about 1970, it was the swing producer. Within a few years, it will have overtaken Saudi oil production and will be the swing producer again. And there is nothing Riyadh can do about it.
The Saudis made two mistakes. The first was to overestimate the cost of US shale oil production, and assume that any price below about $80 per barrel would make it unprofitable. There are some shale oil plays for which this is true, but the costs vary wildly, according to the local geology, and can be as low as $20 per barrel. Most shale oil is profitable at $60 per barrel, and that proportion is rising rapidly as consolidation proceeds and efficiency rises.
Their other, bigger mistake was to believe that victory was possible at all. When you stop production from a conventional oil well, there is a large permanent loss of flow when you restart production. The pores in the oil-bearing rock clog up, and that permanently reduces the “bottom-hole” pressure that forces the oil to the surface.
Stopping production at a shale-oil site incurs no such loss, since the producers create the pressure themselves. Uncap it, and the flow resumes as before.
So even if the Saudis succeeded in forcing most of the shale-oil sites to close, the shale producers would just turn the flow on again as soon as Saudi Arabia declared victory and cut production to get the price of oil back up.
It will take a little more time to the Saudis to acknowledge their mistake, and they may not even be able to get the price back up to where they need it by cutting production. American production will continue to rise, and Iranian oil will probably also be coming back on the market in a big way by next year.
The Saudis will stay rich, but they will have to cut their spending and they will suffer a permanent loss of influence. Their only consolation will be that Iran, which they see as their greatest enemy, won’t be able to use its oil to buy influence either.
To shrten to 725 words, omit paragraphs 7 and 8. (“The Saudis…production”)
Once upon a time big military operations were given obscure names so the enemy wouldn’t guess what the plan was. The German plan for the invasion of France in 1940 was called “Fall Gelb” (Case Yellow); the American counter-attack in the Korean War that recovered Seoul was “Operation Chromite”. But then the PR guys got their hands on it.
By the 21st century we were getting dramatic titles like “Desert Storm” (the 1991 Gulf war), and then aspirational ones like “Operation Iraqi Freedom”. So it was only natural, when Saudi Arabia decided to bomb the Houthi rebels who had taken over most of Yemen, to name the operation “Decisive Storm”. That sounds nice and decisive, and stormy too.
And when the Saudi military spokesman, Brig-Gen Ahmed al-Asiri, announced on Tuesday that Saudi Arabia was calling the bombing campaign off after one month and 2,415 bombing sorties, he naturally claimed that it had been a decisive victory. The bombing had destroyed 80 percent of the Houthis’ “transport lines” (colloquially known as “roads”), and they had also knocked out all of the rebels’ ballistic missiles.
Ballistic missiles? Yes, the Houthis had captured a base outside Sana’a that was home to some Scud B ground-to-ground missiles (range 300 km., vintage 1965), although they might not actually fly after half a century of Yemeni-style maintenance, and they could barely reach the country’s own borders if they did.
Anyway, the Saudi Arabian Air Force took them out, so we can all rest easier now. A Saudi billionaire has even promised to give each of the 100 Saudi pilots involved in the bombing campaign a Bentley (sort of a down-market Rolls-Royce) in gratitude for their efforts.
Moreover, said General al-Amiri, the Houthi militia is no longer in a position to harm civilians. He didn’t actually say so, but you would assume from the context and his manner that Yemen is now at peace, and the Houthis have all gone home to their own tribal territory in the north of Yemen, and Yemen’s legitimate president is safely back in Sana’a, the capital.
What’s that? The legitimate president is still in exile in Saudi Arabia? And the Houthis haven’t gone home either? They still control most of Yemen right down to Aden. And the remainder of the country is now ruled by Al Qaeda in the Arabian Peninsula, except for the bits run by its even nastier Islamist rival, ISIS. How is that a victory?
Have some pity for poor General al-Asiri. He had to say something positive; he works for the government. But the one scene that defines the event was a television studio in Sana’a where a Yemeni news anchor was running a clip of Asiri’s speech. When the anchor comes back on the screen and picks up his script, he can’t say anything. He’s trying to, but he’s corpsing.
He giggles, he snorts, he fans himself with his script, he puts his head on the desk, he completely loses it. And then the people behind the camera start laughing too. This is known in PR-speak as “abject failure”. When you are trying to convince your audience that your bankruptcy was actually a canny tactical move, you do not want them to collapse in hysterical laughter.
What can have possessed Saudi Arabia to launch this foredoomed aerial campaign, and rope in practically every other Sunni Arab state to send a few planes along to help? Mostly, it was simple paranoia. The Saudi Arabian authorities have convinced themselves that the “Shias” (by which they usually mean Iran) are on the offensive, and gobbling up any Arab territories where they can find fellow Shias. The Houthis are Shias. Q.E.D.
There was a lot of talk about Iran supplying arms to the Houthis at the start of the bombing campaign, and the Saudis managed to get almost every other Sunni Arab counry to send a couple of planes along to help. At the end of it, General al-Asiri didn’t mention the Iranians at all. Maybe they all went home (although it would be hard to leave with all the airports shut and the coast under naval blockade). Or maybe they were never there.
Bigger countries have made bigger mistakes and paid quite small prices: the United States invasion of Iraq, for example. Saudi Arabia won’t pay a big price either, for it appears that the grown-ups in Riyadh have intervened after a month and turned the military machine off. No follow-up ground invasion, just a smooth transition to “Operation Restore Hope”, the humanitarian aid they would have provided after they’d won, if they had won.
Saudi Arabia is well out of it, and as outcomes go, it’s less bad than many. Just a bit of advice. Stop using those American-style names for operations. When the United States started using them is when it started fighting dumb wars, and losing them.
STOP PRESS: On Wednesday, the Saudis started bombing again, but just a bit, they said. Oh, well…
To shorten to 725 words, omit paragraphs 5 and 11. (“Anyway…efforts”; and “There was…there”)