Browse By

Who will speak for the Kingdom?

Who will speak for the Kingdom?

Bloomberg’ 21st April piece on His Royal Highness Prince Mohammad bin Salman (MBS) makes for an interesting read. It is the latest in a series of profiles that paint a portrait of the prince with unfettered access. Access that would have been un-imaginable two years ago.

Prince Mohammad Bin Salman (MBS) of Saudi Arabia on his visit to the Pentagon

Prince Mohammad Bin Salman (MBS) of Saudi Arabia on his visit to the Pentagon

Prince Mohammad bin Salman first shot to prominence on being named the deputy Crown Prince on the ascension of his father as King and then his role in leading the Saudi military strategy in Yemen. His most recent public appearance is associated with the failure of oil producing countries much hyped meeting on oil output freeze in Doha on April 17th. It was reportedly a call from the Prince that led to a last minute shift in Saudi posture at the conference, confusing allies and bewildering other participants at the conference.

A quick look at some of the dated profiles shows two separate and distinct public relationship battles being fought on behalf of the prince. Together they build an interesting profile. Almost as interesting and tragic as Prince Hamlet of Denmark:

Warrior Prince, Economic Reformer, Popular Royal, Prodigal and beloved son.

If we need to understand the future of oil prices, we need to understand Saudi plans for the commodity they produce in abundance. The key to Saudi plans and the future of crude oil, apparent after Doha, for now lies with Prince Mohammad Bin Salman.

The first shot across the bows in the PR Wars is recorded on September 29, 2015.  A series of negative pieces that cast doubt on the ability of the Prince to prevail and question his ability to lead Saudi Arabia into the future, especially when compared to the Crown Prince, Mohammad Bin Nayef (MBN) and other alternate candidates. 

Bruce Riedel for the Brookings Institution – The Prince of Counter Terrorism, 29th September, 2015

Mike Bird for Business Insider, UK – Saudi Arabia’s Game of Thrones. 30th October 2015.

Taylor Luck for Christian Science Monitor – Rival prince jockey for power in Riyadh. 10th November 2015.

Richard Spencer for the Telegraph – The son also rises. 11th November 2015.

The second round in January 2016. Starting off with what could be perceived as a difficult interview with the Economist, salvaged masterfully by the PR team through the Economist briefing on the Prince’s vision for Saudi Arabia. 

Not sure if it was insistence on behalf of the agency handling the interview or Economist editorial policy, but sharing the formal interview transcript shows the gaps left by the team working for the Prince. Read the transcript first, followed by the Economist’s briefing and you will get a sense of what many have felt.  Compare both pieces with the polished presentation made by Bloomberg yesterday and you would realize that someone on the Prince’s team also noticed.

The Economist – Transcript – Interview with Mohammad Bin Salman. 6th January 2016.

The Economist – Young Prince in a hurry. 6th January 2016.

Bill Law for the Independent – The most dangerous man in the world. 9th January 2016.

Times of India – Naïve, arrogant Saudi Prince is playing with fire. 11th January 2016.

The third round, three weeks before the unveiling of the grand national reformation plan on April 25th, 2016. Primarily positive, other than some representation from the opposing houses. Notice the difference in tone between the Economist coverage and Team Bloomberg’s editorial treatment.

Petti Domm for CNBC. The 30 year old who is changing the world. 4th April 2016.

Chris Tomlinson for Houston Chronicle. The new unpredictable voice in Saudi Arabia. 19th April 2016.

Peter Waldman for Bloomberg. The plan to get Saudi Arabian economy off oil. 21st April 2016.

Adam Taylor for Washington Post – The millennial prince has a plan to fix it . 22nd April 2016.

A number of announcements are expected on April 25th when the royal plan will be unveiled. But there are core questions that need to be answered before we assess the impact of the 25th April announcement.

  1.  Why would Saudi Arabia consider listing a public stake in the most valuable company on the planet when oil prices are at their historical lows? The Saudis are shrewd traders. What can they see that the rest of the world can’t?
  2. The timing of the releases and the profiles? A pre-release campaign for building support for the reform announcement on April 25th or a deeper signal embedded in the news?
  3. Would an investment fund based strategy that diverts proceeds from the sale of oil based assets into a diversified investment fund act as an effective hedge against a carbon free future? The Saudi Investment Fund (SIF) strategy seems remarkably close to founders equity swaps used to diversify founder ownership interests in valuable technology companies without actually diluting ownership.  it essentially involves exchanging risk ownership interest (shares) for a risk free asset (treasury bills).  That strategy hasn’t worked well for many founders, will it scale well for a nation state? For one hundred years of oil reserves? More importantly which risk free assets are we talking about? The same funds and markets in which US$ 970 billion of Saudi funds are already invested? Isn’t the Saudi nest egg already over exposed to the dollar denominated asset class?
  4. We see familiar quotes again and again from the consultant’s report (at last count three separate occurrences of the same statement in multiple mainstream respected press reports just this week in April). It may sound impressive in the Royal Court and on the streets of Riyadh where young men and women are in awe at the prospects of buying out Apple, Google and Berkshire Hathaway.   But it shows an absence of sophistication and maturity on part of  the report writer and the source being quoted.

Big enough to buy Apple, Google, Microsoft and Berkshire Hathaway. 

Here is what is wrong with the statement. These companies are not for sale. Their ownership is not interested in selling their interest. There is no asset class in the world where the inflow of Saudi cash will not significantly increase the underlying risk profile.  It is called concentration and geo-political risk. Ironically speaking the best students and teachers of that painful lesson are sitting right across the Persian Gulf in Iran.

There is a line in the April 21st Bloomberg interview where His Royal Highness mentions reading up on Sun Tzu. I don’t know how to say this without appearing rude (I have nothing but respect for what the Prince has managed to achieve and where he wishes to take the Kingdom) but his highness needs to brush up on Shakespearean tragedies before it is too late.

Comodo SSL