Is Saudi Arabia’s social contract under strain?

It was a question that Saudi Arabia’s Deputy Crown Prince and rising centre of power wasn’t keen to answer.

Mohammed bin Salman had just been asked, by Economist editor Zanny Minton Beddoes, whether plans to implement a sales tax would force the conservative Kingdom his father rules over to open up politically. Along with other far-reaching economic reforms, Beddoes said, in an interview published in January 2016, it looked like the social contract between the ruling Al Sauds and the people of Saudi Arabia was being fundamentally redrawn. Could you have taxation without representation, she asked?

The two things—economic reform and political freedoms, the young prince, who is only in his early 30s, said—were different. “The one thing is not related to the other.” That idea—that Saudi Arabia can reform economically without major social change—is now being put to the test as bin Salman attempts to make radical changes to the economy while keeping the brakes on the pace of social reform.

So far, it has worked. In September of 2016, the government announced salary freezes and capped public sector overtime and holiday allowances, leading to a fall in income for some civil servants of up to 25 per cent. Ministers and members of the Shura Council, an advisory body that is the closest thing the Kingdom has to a parliament, also saw their income cut by 20 per cent and 15 per cent respectively. In December 2015, the Kingdom had announced a gradual easing of fuel subsidies that could see gasoline prices, hitherto among the lowest in the world, increase by as much as 66 per cent. The introduction of a Value Added Tax, which the government approved in early January but is yet to be implemented, would further squeeze household budgets.

Where similar reforms have prompted unrest elsewhere in the region, there has been surprisingly little backlash in Saudi Arabia, either from the country’s social media-mad general public or its conservative clerics, who wield considerable power inside the Kingdom and have pushed back against attempts at economic reform in the past.

In part, this is because the Kingdom has done such an effective job of clamping down on dissent since 2011, when pro-reform groups inspired by the “Arab Spring” uprisings elsewhere in the region called for social and economic change. The perceived failure of the 2011 uprisings to provide much more than debilitating conflict and the return of strongman autocrats elsewhere in the region has also likely played a role in limiting criticisms. The government has also been keen to play up regional security threats, particularly its increasingly tense cold war with Iran, and the war in Yemen, which has spilled over the border into the Kingdom, and which Riyadh paints as being a conflict between Yemen’s Saudi-backed president and Iranian proxies, the Houthi rebels who control Sana’a, Yemen’s capital.

Unsurprisingly given the country’s dependence on its hydrocarbon wealth, Saudis are also keenly aware that oil prices on international markets are at relative lows, and that some belt-tightening is required. But part of their silence is also likely because of the promises bin Salman is making for the future. He is the chief architect of a new economic plan, Vision 2030, which promises to diversify the country’s economy and create millions of jobs for the country’s young people. Almost half the Saudi population is under the age of 25, and the so-called “youth bulge” is growing.

The new plan calls for some small—but significant in such a conservative country—social changes including a wider range of entertainment opportunities for young people, like concerts and even movies (cinemas are currently banned in the Kingdom). But entertainment needs to be paid for, and that means young people need an income. Saudi Arabia has historically struggled to provide jobs for young people outside of the government, and executives from the private sector often complain that the education system is not teaching the right skills for a dynamic, digital and global economy. The government can no longer hand out jobs—Vision 2030 aims to significantly boost private sector employment and reduce the burden of employment on the state—and with some 25 per cent of Saudis under 30 out of work, something needs to change.

This is where timing becomes important: if bin Salman’s plan works and he manages to create enough jobs in the coming years, he will be hailed as a hero. But the painful part of the reforms has been frontloaded: if job prospects remain the same or get worse in the coming years then he is likely to become increasingly unpopular. The Kingdom is hardly known for free speech—it was ranked 165 out of 180 countries for freedom of expression by Reporters Without Borders in 2016—but there is only so much people can take. And thanks to social media, young Saudis—among the most active Twitter and YouTube users in the world—have new outlets through which they can vent their frustration.

This puts bin Salman in a tricky position, particularly because it is his face that has been prominently attached to the vision and to the recent reform efforts. The Al Saud have known for years that they will have to reform economically at some point if their regime is to survive in the long-term, but until now most would-be reformers have either taken the slow and steady approach, as was the case with the previous king, Abdullah, or lost their nerve when oil prices rise again. The stumbling block has been social change. The question is whether or not the young Prince is willing to take that gamble.