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Secrets of the Kingdom: Saudi Royal Family Is Still Spending in an Age of Austerity

A Kingdom of Oil

From the beginning, the social contract between commoners and royals constituted a trade-off: a share of the country’s wealth in exchange for absolute rule by the Saud monarchs. A Life magazine correspondent visiting in 1943 described how, as King Abdulaziz waited on a roadside while a flat tire was fixed on his Packard, he gave a shepherd passing on camelback several gold pieces. In Riyadh, the king supported a soup kitchen for the poor, the correspondent wrote, with “an oven large enough for a camel.”

Salman bin Abdulaziz was born in 1935, just three years after his father proclaimed the new Kingdom of Saudi Arabia. The power and legitimacy of the new state rested on the twin pillars of the royal family and their allies in the ultraconservative Wahhabi religious leadership. Oil, discovered in the country’s east in 1938, provided a growing source of funding for both.

As a young prince, Salman recalled when the family still lived in tents part of the year, as he has recounted to Secretary of State John Kerry. He could not have assumed as a boy that he would someday rule his father’s dominion. King Abdulaziz entered into numerous marriages — with 17 known wives, producing at least 36 sons — to cement alliances with the many Arabian tribes.

Salman, believed to be the 25th son, had one advantage in this sprawling, competitive family, where royal succession does not always follow a straight line. His mother, Hassa al-Sudairi, was a favorite wife of the king, and Salman was one of seven full brothers, a powerful bloc known as the Sudairi Seven.

In contrast to the traditional robes and headdresses King Salman wears in public today, an early photo shows a dapper young man in a well-cut Western suit. In nearly half a century as governor of Riyadh, he presided over the explosion of a modest desert way station into a metropolis with millions of inhabitants, along with skyscrapers, multilane highways and palaces for the newly rich royals.

The global shock of the oil embargo in 1973 sent prices soaring and petrodollars flooding into the country. Despite imposing rigid adherence to a strict version of Islam on their subjects, some Saudi princes became fixtures at high-rolling pleasure capitals like Monte Carlo.

Through dozens of interviews with diplomats and money managers, economists, real-estate and travel agents, interior decorators and members of the House of Saud and by reviewing court records and real-estate documents, The New York Times has pieced together details of the family’s spending.

The scale of the clan’s fortune is a closely guarded secret. The money is divided among many relatives and spread across several continents, making a precise accounting difficult. The funding mechanisms are opaque by design. The share of the Saudi budget that ultimately makes its way into royal coffers is not disclosed. Even people who closely follow the Saudi royal family said they could not estimate its total assets.

While chinks in the wall of secrecy appear through legal cases and tabloid reports overseas, the royals have learned not to flaunt their wealth before the nation’s 30 million commoners. The family members have erected high walls around their palaces, bought overseas assets with shell companies, used intermediaries for large investments and demanded nondisclosure agreements from employees.

The so-called Panama Papers released in April revealed that King Salman was involved in offshore companies in Luxembourg and the British Virgin Islands. The records linked him to a yacht and multimillion-dollar properties in London — one a majestic home with a balustraded balcony near Hyde Park in the tony Mayfair district.

Photo

This property in the Mayfair district of London was linked to King Salman in 2009 documents released among the Panama Papers.

Credit
Andrew Testa for The New York Times

Saudi Arabia is not nearly as affluent on a per-capita basis as Qatar or Kuwait, which are also rich from oil and gas but support far fewer people than their large neighbor. (Both also have been hit hard by the low oil prices.) Despite a robust social safety net — including free education and health care — there are poor Saudis, and many in the middle class barely make ends meet.

Princes and princesses can take advantage of privileges like special hospital wings decorated like palaces with five-star hotel service, and royal airport terminals with enormous chandeliers, intricate tilework and rich carpets. But even among royals, there are big differences between direct heirs to the kings and cousins on the fringes. Some younger princes live in large, but not palatial, modernist homes outside Riyadh that would not be out of place in upscale California neighborhoods. They drive Range Rovers and boxy Mercedes S.U.V.s rather than the Lamborghini or Bugatti supercars their better-off cousins race around the Knightsbridge section of London.

And their ranks continue to swell. The founding king’s many children had many of their own — King Saud, the second king, alone had an estimated 53 sons. “Only a stadium suffices to hold the ever-expanding Al Saud clan,” an American diplomat wrote in a memorandum in 2009.

The relatives number in the thousands, but from there, estimates diverge, said Joseph A. Kechichian, who has studied the family for three decades and wrote a book, “Succession in Saudi Arabia.” He estimates that there are now 12,000 to 15,000 princes and about as many princesses. Princess Basmah bint Saud, a daughter of King Saud, five years ago put the number of royals at 15,000.

But the Saudi ministry spokesman, Mr. Qusayer, said there were no more than 5,000 members of the House of Saud. The difference may stem in part from whether or how one counts distant relatives and families who ruled back before the time of King Abdulaziz, the current king’s father.

At some point, the family could grow too large to support. “There has to be some decision about lopping off some of the branches,” said F. Gregory Gause III, a Middle East specialist at the Texas A&M University Bush School of Government and Public Service.

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