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A decision not to list Aramco shares could have a negative impact on Bin Salman

August 29, 2018 at 10:07 am

Saudi Aramco logo. [Notizie Economiche/Twitter]

Reuters news agency has reported that Saudi Arabia has scrapped plans to list shares of the state-owned energy giant Aramco on international stock exchanges. The report further alleges that it was King Salman, who has been absent from the day-to-day governance of the country, who made the decision. The Saudi monarch has delegated most of the responsibilities for governance to his son, Crown Prince Mohammad Bin Salman. After initially refusing to comment on the Reuters report, Aramco finally issued a statement denying the allegations. “The Government remains committed to the initial public offering (IPO) of Saudi Aramco at a time of its own choosing when conditions are optimum,” the oil giant insisted.

Bin Salman has made his intention to take Aramco public very explicit. The IPO was meant to raise capital in order to fund the ambitious “Vision 2030… a plan to reduce Saudi Arabia’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism.”The government is hoping to raise about “$100 billion by offering the public the opportunity to own a small portion of Aramco.” Hence, the cancellation of the company’s listing could be a big deal in Saudi politics, and may well derail Bin Salman’s ambitions. Moreover, it stands to upset Donald Trump, who in November last year made it known that he “would very much appreciate Saudi Arabia doing their [sic] IPO of Aramco with the New York Stock Exchange.”

As expected, there has been much speculation about the IPO cancellation, including comments about possible discord between King Salman and his son. It could also be the case that the IPO is now “less urgent because oil prices have rebounded above $70 a barrel.” Suffice to say that if the Reutersreport is true, the decision is most likely to be a setback for Vision 2030 and Bin Salman’s wider socio-political transformation project; it could, indeed, be a political game changer in Saudi politics.

READ: Saudi King blocked Aramco stock market flotation 

Since taking office in last year, Bin Salman has implemented several reforms in the country. In November, he ordered the detention of a number of Saudi princes and businessmen at the Ritz Hotel in Riyadh. It has since emerged that those detained were forced to “relinquish portions of their wealth for their freedom.” Furthermore, as part of his transformation process, Bin Salman has allowed women to drive cars in public for the first time. Although this was hailed within the Kingdom and abroad as a positive political development, the subsequent arrest of women’s rights activists, particularly Samar Badawi and Nassimah Al-Sadah, has cast a shadow on the development. What’s more, a number of Saudi Arabian religious leaders have been killed, arrested or driven into exile over the past couple of years. In early 2016, hundreds of Shia Muslims marched through Qatif in the Kingdom’s Eastern Province in protest at the execution of prominent Shaikh Nimr Al-Nimr.

These developments have polarised public opinion against Bin Salman and the government of Saudi Arabia. It is precisely that which has raised interest in the reports that King Salman himself rescinded the decision to list Aramco. The sceptics suggest that perhaps the king is now “putting a lid on the unchecked powers of Bin Salman.” Could it be that there are some within the ruling Al-Saud family who have finally managed to have the ear of King Salman regarding Bin Salman’s abuse of power? There are likely to be more examples of disagreements between the Saudi King and his Crown Prince; this was bound to happen sooner or later. What many are hoping for is that such disagreements play out in public. If that happens, it could grant a reprieve to many people who are aggrieved, perhaps giving them room to lobby the king.

Under Bin Salman’s stewardship, Saudi Arabia continues to be in the news for the wrong reasons, and there are many Saudis who would like to see that changed. The arrests of Badawi and Al-Sadah, and the resulting diplomatic spat between Saudi Arabia and Canada, have attracted negative publicity, but it was the recent killing of 24 Yemeni children aged between 6 and 11 in a Saudi air strike that attracted the most international condemnation.

According to Al-Khaleej Online,Bin Salman has threatened to target women and children in Yemen with the Saudi-led Arab coalition despite such criticism. As a result, there are many who would like to see his downfall, including his immediate predecessor, former Crown Prince Mohammed Bin Nayef 2017. It was the Guardianwhich reported that the “deposed” Bin Nayef was “confined to his palace in the Red Sea city of Jeddah”, as Bin Salman sought to “consolidate his newfound power.”

Hence, the reports about the Aramco IPO have been welcomed by those still aggrieved by the Saudi Crown Prince. True or not, they will provide some momentum for those who want to see him deposed. A decision not to list Aramco shares could, therefore, have very negative consequences for Mohammad Bin Salman.

READ: Saudi Aramco listing plan halted, oil giant disbands advisors 

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.