Saudi Arabia carries out royal purge despite economic crisis, pandemic

Saudi Arabia is going through a crisis this year. The Kingdom is witnessing shrinking economy, budgets have been cut, their oil tankers are being targeted, and has suffered four terror attacks in the past month.

Also read: Amid pandemic, Crown Prince Mohammad bin Salman challenges Saudi Arabia's old order

Despite all this, the game of thrones in the country continues. Crown Prince Mohammad bin Salman is carrying out another royal purge. 

It's being called the mini Ritz, a smaller version of the major crackdown that took place in 2017 when scores of royals were detained in the Ritz Carlton hotel in Riyadh.  

Saudi Arabia's churn is not unique. All oil economies have been forced into a hard reset this year. But given Saudi Arabia's stature in the region, it's challenges appear more pronounced and has a bearing on others.

The economic crisis in the country is driven by a sole factor, oil. It hit rock bottom this year as oil prices fell below zero. However, it has recovered since, but the rates remain at an all-time low. 

Demand has plummeted and producers are leaving more supplies in the ground, due to this, Riyadh is making unprecedented cuts to its budget. The Kingdom of Saudi Arabia wants to cut spending by 7.3 per cent.

Riyadh is running a budget deficit because of coronavirus pandemic. The Kingdom expects to be short of close to $80 billion this year which is around 12 per cent of Saudi Arabia's GDP. 

With a deficit so huge, Riyadh has no options but to cut spending. It wants to slash spending to $264 billion this year. This is expected to bring the deficit down to less than five per cent of the GDP.

The pandemic has hit demand in oil due to which prices have dropped. Riyadh is no longer earning what it used to from oil. 

Saudi Arabia hasn't given a breakdown for oil and non-oil revenue in its budget. Saudi Arabia's oil infrastructure is under attack by two means. First, the pandemic, and second, extremists are attacking Saudi oil tankers.

This is the second time that an oil tanker was targeted in recent weeks. Two days ago, a fuel transport ship was attacked. A boat laden with explosives rammed into it. It happened when the tanker was anchored at the port of Jeddah. It's an important port because of its unique location.

It is right in the middle of the international shipping route between the west and the east. No one was hurt but some oil may have leaked.

Saudi Arabia is calling this a terrorist attack. This explosion is the latest in a series of attacks against the Kingdom. Earlier, a mine exploded and damaged a ship off the coast of Saudi Arabia. Riyadh had blamed Yemen's Houthi rebels for this. Another attack targeted a cargo ship in Yemen's far east.

However, the crisis is not limited to the economy. Saudi Arabia is suffering a setback on the diplomatic front too. Germany has extended its ban on arms sales to Riyadh for another year. It was first imposed in 2018 after the death of journalist Jamal Khashoggi. 

It couldn't have come at a worse time for Saudi Arabia because France and Canada are also facing calls to revisit arms deals with Riyadh. US President-elect Joe Biden is facing similar demands. The German ban sets a difficult precedent for Riyadh.

Despite the crisis, the Kingdom is going through a royal purge.