Saudi Arabia: Corruption Crackdown Moves One Prince to a Harsher Prison

3 MINS READJan 15, 2018 | 19:21 GMT
Forecast Update

In Stratfor's 2018 Annual Forecast, we noted that Saudi Arabia will wrestle with tricky reforms at home under the guidance of Crown Prince Mohammed bin Salman. Specifically, we said that the kingdom will take notable strides toward designing a new social contract that adjusts what citizens expect of their government, and vice versa. The recent developments in the anti-corruption crackdown are part of this social contract.

Saudi Arabia is taking its anti-corruption crackdown seriously. Saudi billionaire investor Prince Alwaleed bin Talal bin Abdulaziz al-Saud was transferred to the maximum security al-Ha'ir Prison on Jan. 13, where several al Qaeda and Islamic State suspects are also held. It's a marked change in venue: Bin Talal was previously confined at the Ritz-Carlton Hotel. Reports have emerged that bin Talal had made a counteroffer of unspecified terms for his release, rumored to involve him offering assets of his choosing. But Saudi Arabia's attorney general turned him down, and now bin Talal will remain in al-Ha'ir until the next round of negotiations.

Bin Talal is the highest profile holdout from the initial November crackdown. But recent arrests prove that the Saudi government isn't done targeting its royals as it cracks down on corruption and reworks the country's wasta, or social influence networks, to better favor Crown Prince Mohammed bin Salman.

It appears bin Talal was hoping the international investor community and his powerful foreign friends would pressure the Saudi government to release him. But while investors and two former French presidents have expressed concern about bin Talal's detention, no movement to free him has emerged.

Instead, his transfer to al-Ha'ir shows the Saudi government is unconcerned with international opinions. Rejecting bin Talal's initial counteroffer also shows the government is willing to play hardball to extract what it sees as fair compensation for the crimes the prince is charged with. But there's little incentive for the government to hold him indefinitely or drag the matter on to a formal trial. A settlement would speed things along calmly as Saudi Arabia embarks on an ambitious reorganization of the country's economy and society. Bin Talal's case could still upend that calm, however, as the community of international investors look to see if his arrest is related to an authentic corruption purge — in which case a stronger rule of law with better investment conditions will emerge — or if he's simply been targeted for political reasons.

But with no political power in Saudi Arabia, bin Talal has to make a deal. That means negotiating what price he must pay to leave his new, more austere jail.

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