By Vivian Nereim and Matthew Martin
Saudi Arabia increased its payments to some members of the royal family just as officials were wrapping up a controversial anti-corruption campaign that targeted some of the kingdom’s richest men and most prominent princes, according to three people with knowledge of the matter.
The most recent monthly stipend — paid after the government had stopped covering electricity and water bills for royalty — was raised by as much as 50 percent, two of the people said. A Saudi government official said the report was “absolutely not true.”
It’s not clear whether the payment was a one-time bonus or will continue each month, or how widely the money was distributed. One of the people said it extended beyond the descendants of King Abdulaziz, Saudi Arabia’s founder, to include more distant branches of the family. Another person said the payment was only given to adults who had reached a particular age. The three spoke on condition of anonymity because of the sensitivity of the issue.
The revelation of the payments will likely raise questions over how serious the government is in curbing wasteful spending. It also shows how Crown Prince Mohammed bin Salman, Saudi Arabia’s predominant leader known among diplomats as MBS, is trying to avoid unrest while seeking to overhaul a decades-old social contract built on generous state handouts in return for political loyalty.
“MBS may seek to discipline his royal relatives, but he can’t cut them loose,” said Kristin Diwan, a senior resident scholar at the Gulf States Institute in Washington. “The government denial shows he’s keen to maintain his populist edge.”
Over the past three months, authorities imposed value-added taxation and announced sharp increases to fuel and utility prices to repair public finances. Dozens of the country’s richest men, including billionaire Prince Alwaleed bin Talal, were among those held at the Ritz Carlton in Riyadh in the anti-corruption purge.
Some of the moves appear to have backfired.
After complaints about rising prices, King Salman ordered a handout worth more than 50 billion riyals ($13.3 billion) to support many ordinary Saudis, helped by a rise in Brent oil prices to about $70 a barrel. The attorney general said 11 princes were sent to jail after staging a protest against the decision to stop paying their utility bills, though another prince challenged that official account.
The increase in the royal stipend “fits into the recent pattern of using somewhat higher oil prices to tamp down potential objections to the range of changes that MBS is implementing,” said Gregory Gause, a professor of international affairs and Saudi specialist at Texas A&M University.
The 32-year-old heir to the throne is spearheading efforts to prepare the Saudi economy for the post-oil era. His plans include slashing generous subsidies and selling a host of state assets to raise non-oil revenue.
In the roughly three years that saw his meteoric rise to power, Prince Mohammed has sidelined more senior royals, eased social restrictions on women, pledged to steer Saudi Arabia away from radical Islam and even announced plans for a $500 billion city on the Red Sea powered by more robots than humans.
But the purge was the prince’s boldest move yet. It was popular among many young Saudis who have long complained that the kingdom’s wealthy were unaccountable. Some critics dismissed the detentions as a power grab, a charge Saudi officials have repeatedly denied.
The attorney general said this week that all but 56 people held were released either for lack of evidence or after they agreed to pay part of the allegedly ill-gotten money. The government has reaped more than 400 billion riyals in settlements, he said.
The additional royal payments are “less about utilities and more about tamping down any possible family dissent over MBS’s consolidation of power within the family,” Gause said.
The payments, subject of complaint among some Saudi citizens, are paid to members of the Al Saud ruling family, who number in the thousands. The government has never disclosed how many people receive them or how large they are.
A U.S. diplomatic cable in 1996 released by WikiLeaks said that members of the royal family receive the monthly payments from birth, with the amounts depending on their proximity to King Abdulaziz. At the time, the payments ranged from a low of $800 a month to a high of $270,000 a month, and the diplomat estimated the total cost to the state at about $2 billion.
— With assistance by Ben Holland