Saudi Arabia

Succession Watershed

Until recently, the senior members of the royal family have avoided taking any overt steps to begin grooming princes from the next generation to eventually rule the kingdom, a move that once initiated could potentially trigger a destabilizing power struggle among the dozens of grandsons of Abdul Aziz who for whatever reason perceive themselves to have a claim on the throne.

However, with the death of Crown Prince Nayef bin Abdul Aziz Al-Saud in June 2012, and his replacement by his younger full brother, Sheikh Salman, Saudi Arabia has moved that much closer to the end of the current generational line, and King Abdullah bin Abdul Aziz Al-Saud and his remaining brothers appear to have decided that it is time to take a first cautious step in that direction.
On November 5, Sheikh Muhammad bin Nayef, the second eldest son of the recently departed crown prince, was appointed head of the Ministry of Interior, making him the first grandson of Abdul Aziz to be handed responsibility for a major Cabinet portfolio. If the move is not an indication that he has jumped to the front of the line of succession among members of his generation, the senior leaders of the royal family have been negligent in failing to disclaim that quite understandable conclusion.
Assuming Salman survives long enough to ultimately succeed Abdullah, the change in monarchs is not expected to produce any major shifts in policy. His record as the long-time governor of Riyadh suggests that he is a technocrat in economic affairs, and although he is generally characterized as more moderate than Nayef in terms of his views on the relationship between the royal family and the conservative religious establishment, Salman is nevertheless a staunch opponent of social and political reforms.
After 10 years of delays, the Saudi government finally approved the law regulating housing mortgages in early July. The legislation faced strident opposition from conservative groups that argue that interest rates on loans and the repossession of homes for non-payment violate Islamic law. Although the law holds the potential to boost home construction, the concentration of large landholdings in the hands of a wealthy minority will continue to pose an obstacle to addressing the inadequate supply of housing, which is a major source of social discontent and a key driver of inflation.

Forecast Summary

SUMMARY OF 18-MONTH FORECAST

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