News analysis

Saudi govt shake-up promises much, but may deliver little

RIYADH • Troubled by low oil prices and unsettled by a hostile landscape in the Middle East heightened by a growing rivalry with Iran, Saudi Arabia is moving to chart an ambitious new direction for the kingdom.

In a series of sweeping royal decrees announced on Saturday, King Salman replaced top ministers and restructured government bodies, the first steps in a bold plan to reduce the country's heavy dependence on oil, diversify its economy and improve its citizens' quality of life.

The decrees, which included a restructuring of the oil ministry and the replacement of its longtime minister, Mr Ali al-Naimi, set in motion a plan that was announced last month to great fanfare by the king's son, Deputy Crown Prince Mohammed bin Salman.

"What you are seeing in Saudi Arabia is a genuine need for reform that is felt at the very top of the ruling establishment," said Mr Adeel Malik, Globe fellow in the economies of Muslim societies at Oxford University. "You can clearly see that there is fire under the seats of the rulers."

Prince Mohammed was the driving force behind the country's new development plan, Saudi Vision 2030, which many Saudis have lauded as a powerful statement of purpose from a royal family that has often failed to communicate its plans or do much to prepare for the future.

Mr Khalid, chairman of Saudi state oil giant Aramco, replaces the country's veteran oil minister as part of sweeping government changes.
Mr Khalid, chairman of Saudi state oil giant Aramco, replaces the country's veteran oil minister as part of sweeping government changes. PHOTO: AGENCE FRANCE-PRESSE

But analysts and economists have questioned the ability of Saudi Arabia's bloated bureaucracy and unproductive native work force to meet the plan's aggressive targets.

Many of the changes announced on Saturday were aimed at restructuring the government so it would work toward the plan's goals. These included the replacement of Mr Naimi, who is 80 and had held the position since 1995.

Mr Naimi was named an adviser to the royal court and was replaced by a younger official, Mr Khalid al-Falih, who had previously run the Health Ministry and served as chairman of Saudi Aramco, the state-owned oil company.

In the announcement on Saturday, the Ministry of Petroleum and Mineral Resources was renamed the Ministry of Energy, Industry and Natural Resources, a semantic shift meant to indicate the country's commitment to diversifying away from oil.

Most energy experts, however, said they did not see Mr Naimi's departure as a sign that oil policy would soon change. Underlining this view, Mr Falih said yesterday that Saudi Arabia would maintain its petroleum policies.

"We remain committed to maintaining our role in international energy markets and strengthening our position as the world's most reliable supplier of energy," he said in an e-mailed statement.

"We are committed to meeting existing and additional hydrocarbons demand from our expanding global customer base, backed by our current maximum sustainable capacity."

Other decrees announced on Saturday changed the head of the central bank (with Mr Ahmed Alkholifey taking over from Mr Fahad Al-Mubarak), renamed and combined ministries, and put new officials in charge of water, commerce, social affairs, health and transport.



A version of this article appeared in the print edition of The Straits Times on May 09, 2016, with the headline 'Saudi govt shake-up promises much, but may deliver little '. Print Edition | Subscribe