Bin Salman's economic anxiety is risking war with Iran

The ambitious ruler-to-be is already overseeing wide ranging reforms at home, and has overextended the kingdom's resources in its proxy wars with Iran, so one can be forgiven for asking why MbS has chosen to escalate affairs with the Islamic Republic at this time.

At the core of MbS' decision-making has to be the overwhelming economic anxiety he has developed as he seeks to fundamentally change the Saudi economy.

In pursuit of the reforms laid out in his progressive Vision 2030 economic plan, the crown prince will be forced to make tough decisions at home (eg, adopting strict austerity measures such as reducing government subsidies) while convincing foreign investors to set up shop in the conservative kingdom.

While Iran is indisputably a threat to Saudi Arabia's interests in the region, its place in MbS' calculations is more nuanced. Bin Salman's actions towards Tehran are both calculated and reactionary. 

Bin Salman's actions towards Tehran are both calculated and reactionary

First, escalating tensions with Iran serves a practical purpose for MbS. He is undertaking the largest set of reforms - social, political, and economic - the kingdom has ever seen, and these moves are sure to elicit even more dissatisfaction from varying segments of the population.

For instance, many members of the royal family were disinterested in, if not outright hostile to, Vision 2030 for fear of losing their power and wealth in the current system.

Additionally, in preparation for privatising the economy and reducing the burden on the state's budget, MbS has moved to end subsidies to a population that has enjoyed them for years. The backlash to the move was immediate.

When confronting potential restlessness at home, MbS turned to one of the oldest tricks in the royal family's book: Shift attention to Iran.

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For both legitimate and farcical reasons, the regime in Tehran makes a perfect villain for MbS. One way to keep the uncertainty of the economy in the back of people's mind is to keep the threat of conflict with Iran in the spotlight.

For MbS, as steward of the economy, Iran is particularly troubling because he believes it could foil his efforts to steer foreign investment to his projects. Ever since sanctions were lifted in the wake of the Joint Comprehensive Plan of Action (JCPOA), investors from the United States, Europe, and East Asia have looked longingly at the potential markets in Iran.

When confronting potential restlessness at home, MbS turned to one of the oldest tricks in the royal family's book: Shift attention to Iran

There are still many problems in the Islamic Republic preventing a windfall of foreign investment, but foreign companies' early forays into Iran thus far have to be concerning for the young prince, particularly when he views investment opportunities in the region as zero sum.

Perhaps he is not completely wrong. When comparing the two potential markets, Iran has attractive trends for investors. Though Iran is also rich with oil and natural gas, its economy is already more diverse. Additionally, Tehran is rich with human capital resources, whereas the Saudi population has been tended to over the years as dependents, not cultivated to be an asset in terms of human capital.

Further, while both countries' ruling regimes exert unsettling levels of control over economic activities, Iran has less red tape and fewer barriers to foreign investors.

MbS did himself no favours either with his recent "anti-corruption" campaign. While uprooting corrupt business tycoons is laudable, investors were likely spooked by the seemingly arbitrary process that resulted in hundreds detained and hundreds of billions worth of assets frozen.

To lessen the threat of competition with Iran, why would MbS refrain from trying to bait Iran into reckless actions that could result in the imposition of sanctions?

When looking at Washington, the crown prince sees an unequivocal supporter in the Trump White House and he surely believes any dispute between Riyadh and Tehran will result in Trump siding with the Saudis.

In MbS' calculations, escalating the threat of conflict with Iran in Lebanon and Yemen could turn the international community on the Islamic Republic, saddling its economy with more sanctions and ending the prospects of foreign investment that might otherwise go to the Saudis.

For both legitimate and farcical reasons, the regime in Tehran makes a perfect villain for MbS

Mohammed bin Salman's recent escalatory rhetoric against Iran and its proxies was prompted by a number of factors, but the crown prince's economic anxieties could prove to be significant motivation.

As long as the prince faces domestic pressure and Saudi Arabia and Iran are both trying to draw foreign investment, the competition gives MbS reasons to bait Iran into costly behaviour that leaves it isolated and gives the Saudis an edge in securing new investments.

Marcus Montgomery is a Junior Analyst for Congressional Affairs at Arab Center Washington DC.

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, al-Araby al-Jadeed, its editorial board or staff.