As a global economic crisis wreaks havoc on Saudi Arabia, the kingdom should reduce military spending

A perfect storm of difficulties has gripped Saudi Arabia. Some, such as the pandemic and the crash in global demand for oil, are outside its control. Others, such as the war in Yemen and unrest in the royal family, are the result of the reckless policies of the Crown Prince Muhammed bin Salman (MBS). The kingdom needs to undertake significant changes in its policies, beginning with a drastic cut in military spending. The next U.S. administration should push the Saudis in the direction of downsizing an expensive military that provides very little bang for their bucks.

Like many countries, Saudi Arabia has been hit hard by the coronavirus. According to the government’s not-always-reliable figures, the country has around 70,000 cases. It has been under lockdown orders for weeks, with curfews during Ramadan and Eid. The minor pilgrimage to Mecca and Medina has been cancelled, and the annual hajj is probably going to be shut as well, in July. Mosques are closed for worship. The shutdown costs the kingdom millions in tourism revenue, especially for the Hejaz region. Meanwhile, the Saudis promise to start opening up soon, but have provided few details.

The virus has spread within the royal family. The governor of Riyadh is reported to have been infected, and dozens of other princes and princesses are ill. The king and crown prince have cut back their schedules to avoid infection. Foreign workers are particularly vulnerable amid poor work and living conditions, accounting for roughly two-thirds of infections in the kingdom. Tens of thousands have repatriated home, especially to South Asia.

The steep fall in oil prices has decimated the economy. Saudi Arabia needs oil to be priced at around $85 per barrel to fund its budget, but prices have been well short of that mark for years. Now, prices are roughly $25 per barrel, down from about $65 a barrel six months ago. They have been spending down on reserves for five years to make up for budget shortfalls, and reserves are down from $750 billion to about $500 billion today. Amid a major economic crisis, prices are unlikely to rebound until the global economy recovers.

The king has responded by tripling value-added taxes, cutting subsidies, and imposing austerity measures — all of which hurt the poor disproportionately. The prospects for social unrest are high, especially when the curfews are lifted.

Amidst all this, the quagmire in Yemen has not gone away, despite the repeated Saudi calls for a ceasefire. All of the Saudis’ allies have abandoned the cause — even Bahrain, which the Saudis still occupy and fund. The Houthi rebels control most of the north, southern separatists have Aden, and the fighting continues to flare intermittently. The Saudis’ military performance has been abysmal, despite the billions spent.

The virus is out of control in Yemen. Five years of war and Saudi bombing have crippled the health infrastructure of the poorest country in the Arab world. Now the United Nations says the health system has “in effect collapsed.” There is no way to stop the disease from spreading, and Aden is especially hard-hit. Given the porous nature of the Saudi-Yemeni border, the disaster in Yemen will impact the Saudi struggle with the pandemic.

The Yemeni imbroglio is part of the kingdom’s regional rivalry with Iran. The Saudis’ critical oil facilities at Abqaiq were attacked last September by Iranian missiles, and the Saudis were unable to respond to the unprecedented violation of their sovereignty. It was a further demonstration that the hundreds of billions spent on kingdom’s military have been wasted.

In March, MBS had his predecessor Prince Muhammad bin Nayef and his uncle Prince Ahmed bin Abdulaziz arrested. Detaining members of the royal family is highly unusual in Saudi Arabia, especially when one (Ahmed) is a son of the modern kingdom’s founder, King Ibn Saud. Other princes have also been confined. There have been persistent rumors that Nayef is seriously ill, or even dead.

The arrests suggest that MBS is worried that elements of the family want to see him deposed. There is no doubt that many in the family had their fortunes stolen when he rounded them up at the Ritz Carlton for an old-fashioned shakedown. MBS’ deployment of a Saudi hit team to murder journalist Jamal Khashoggi in Istanbul also antagonized some, by recklessly tarnishing the kingdom’s image.

The pandemic and the oil price crash will doom the crown prince’s ambitious effort to reform the Saudi economy by 2030 and to build a new city, NEOM, in the northwest of the kingdom. The Saudis will need to concentrate on austerity measures, end the war in Yemen, and cut their bloated defense budget.

Saudi Arabia has ranked among the top five for largest national military expenditures, worldwide, for years. The Stockholm International Peace Research Institute reports that the Saudis spent over $60 billion in 2018 on their military, actually a small reduction from the year before. Only the United States, China, Russia, and India spent more; Saudi Arabia spent more than France, Germany, or Japan. It spent three times the military expenditures of Israel.

The Trump administration has encouraged Saudi arms sales, and it has consistently exaggerated how much it is selling to the Saudis. President Obama actually made the single biggest arms deal with the kingdom. Both administrations have backed the disastrous war in Yemen.

The next administration should cut off military assistance to Saudi Arabia until it ceases all military operations in Yemen and withdraws its forces from any Yemeni territory. Only a clear acknowledgment that the Saudis are leaving will convince the Houthis to call off their attacks. We should encourage the Saudis, Emiratis, and others to pay for the humanitarian catastrophe they created (although they are unlikely to follow through on pledges to do so).

But the next administration should do more. It should also sponsor a global and regional effort to reduce military spending in the region. Working with other arms suppliers like the United Kingdom, France, and Canada, Washington should encourage fewer arms sales, not more. The region has far too many weapons, it needs to reduce. The region faces the deadly virus, with a depressed economy, and it is long past time to focus on making peace. The cost of lost arms sales will be marginal next to the potential gains in slowing down tensions and conflict in the region.

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