Saudi transformation in 2017 and the year ahead

Saudi transformation in 2017 and the year ahead

To say that 2017 was an eventful year for Saudi Arabia is an understatement. It was full of great achievements, formidable challenges, and some surprises. Regional and international events aside, domestically Saudi Arabia went through a real transformation in governance and economic policy. There were several milestones during the year, but I will address three: Prince Mohammed bin Salman’s elevation to crown prince in June, the unprecedented campaign against corruption in November, and the expansionary budget announced last week during one of the worst economic downturns in recent years.
On June 21, on the recommendation of the Allegiance Council, King Salman chose Prince Mohammed to be his crown prince and next in line to the throne, in addition to being deputy prime minister and minister of defense. That move streamlined Saudi governance at the highest levels and was accompanied by major restructuring of several government institutions. The Office of Public Prosecutor,  for example, was elevated to Cabinet level, reporting to the king directly. It was granted more independence in carrying out its quasi-judicial tasks, a move that was essential later in the year when it handled the anti-corruption campaign.
On Nov. 4, Saudi Arabia launched its largest anti-corruption campaign in recent history. Authorities arrested hundreds of senior princes, officials and businessmen suspected of shady deals, and froze the bank accounts and other assets of many more. Over 200 individuals were detained during just the first week of the campaign, and 1,200 accounts frozen.
The charges against those detained include bribery, embezzlement, money laundering and misuse of public funds. As in any such large-scale investigation, some people were released, re-detained or set free, and new suspects detained, depending on the evidence and interest of the investigation. A number of high-profile detainees have been released after plea bargains with prosecutors.
Saudis by and large have been supportive of, even jubilant at, the launch of this campaign, something for which they had been hoping for decades. At a time of belt-tightening it no longer made sense to tolerate corruption in high places while millions were fighting to maintain their standards of living during the economic downturn caused by falling oil prices.
The anti-corruption campaign eased young Saudis’ concerns about their future. They became hopeful that from now on there will be a level playing field, without nepotism, favoritism or financial corruption. Equally important was the reaction of international organizations concerned about corruption and its corrosive effects on development, such as the World Bank, the International Monetary Fund, the United Nations Development Program and other organizations and development experts. They have long concluded that corruption acted as a drag on development and a country’s ability to attract investors, eroded confidence in state institutions, and weakened the rule of law.

The three key events were the elevation of Prince Mohammed bin Salman to crown prince, the new anti-corruption campaign and an unprecedented expansionary budget.

Abdel Aziz Aluwaisheg

It was therefore not surprising that the latest Saudi campaign received accolades far and wide. That the campaign has been conducted through a transparent legal process reassured all that the rights of those arrested would be safeguarded and that the investigation would be thorough and fair.
The campaign has been evidence-based and fair, conducted in accordance with Saudi law and international standards of due process of law, and the arrests were based on lengthy investigations going back years. The pre-trial detention of the accused is fully justified because of the realistic risk of flight and other factors that may jeopardize their trial appearance or the gathering of evidence.
Through a transparent and credible legal process, Saudi Arabia will be able to recover billions of dollars embezzled, siphoned or skimmed from government coffers. Equally important, such a process will establish for future generations a new standard for government service. Because most corrupt officials made their fortunes by flouting rules, it is now more important than ever to restore respect for the rule of law in dealing with them. Stolen public funds have to be returned, clearly. Fines and remedies have to be paid. Punishments have to be meted out where legally justified. At the same time, those cleared of wrongdoing should be able to resume their normal lives. Young people, in particular, will learn the most from this anti-corruption campaign.
On Dec. 19 , Saudi Arabia announced its 2018 budget, the largest ever at nearly $300 billion. The general government budget for 2018 is projected at 978 billion riyals ($261 billion), plus additional funding from the Public Investment Fund and the Development Fund, for a total of $296 billion. What made it even more remarkable was that it was adopted during one of the worst downturns in recent history. It took considerable courage and economic savvy to take such a move during a time of declining oil revenues.
The 2018 budget is projected to have a deficit of $52 billion, or about 7 percent of the GDP. Despite the high budget, government debt is reduced to about 9 percent of the GDP, one of the lowest public debt ratios in the world.
This magical reversal of the government finances compared with 2017 or 2016 was made possible by several factors. First, through active diplomacy Saudi Arabia brought about a consensus between OPEC and non-OPEC producers, especially Russia, to stabilize the oil markets. Second, by improving the efficiency of government spending, for example through fighting corruption and mismanagement. Third, by introducing new taxes, including excise duties on tobacco, energy drinks and soft drinks, and a value added tax on most goods and services, starting on Jan. 1, 2018. To help low- and middle-income Saudis cope with the new measures, the government introduced a financial support program that started last week. 
During 2017, Saudi Arabia was one of the most interesting countries to watch; 2018 promises to keep that interest going.
• The author is a columnist for Arab News. Email: [email protected] Twitter: @abuhamad1
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