October 13 , 2017
Saudi Women Get to Drive
In a momentous change for the Kingdom of Saudi Arabia, they have decided to enter the 20th century, merely a hundred years behind schedule, by allowing women to start driving cars in 2018. This was not some democratic decision by an elected government, but a decree from Crown Prince Mohammed Bin Salman. Known as MBS, the Crown Prince has an ambitious but highly risky agenda for changing Saudi Arabia.
MBS derives his power from his father, who is the current King of Saudi Arabia. But his father is elderly, and not wielding real power. MBS essentially pulled off a coup, putting the previous Crown Prince under functional house arrest, and putting himself in line to be the next king, which could come as early as next year if he can get his father to yield the throne.
MBS is only 32 and represents the next generation of the House of Saud. He is functionally already in control of the government, and he has racked up a series of contradictory moves. On the one hand, he has pursued an aggressive foreign policy that has been pretty much a failure. The Saudi assault on Yemen has been a humanitarian catastrophe for that impoverished nation, and there is no sign of peace and end to the civil war that Saudi Arabia has stoked.
MBS is also behind the attempt to strangle Qatar and force it to abandon its evenhanded policies toward Iran and to shut down Al-Jazeera. This move has backfired as Qatar is wealthy enough to avoid being pushed around. Finally, the Saudi policy of supporting the Sunni rebels in Syria appears to have collapsed as Assad has gradually strengthened his grip, and Turkey, which was once allied with Saudi Arabia on the Syrian issue, has changed its tune now that the Syrian Kurds have made significant battlefield gains.
On the flip side, MBS does realize that the current Saudi system is unsustainable. The Kingdom rests on massive oil sales, with the wealth being spread around society through a massive welfare state and a plethora of make-believe government jobs. These jobs employ most Saudis, but they are really just a way to pass oil wealth down to the citizens, the work that is being done is of little or no real value. Outside of oil, Saudi Arabia has no real internal economy that produces useful goods and services like most normal countries do.
MBS can see that this is not going to work in the long run. Saudi Arabia needs to transform its economy and create a real private sector. It needs to establish actual industries, and needs to put people to real work. The plan is to massively invest in creating this new Saudi Arabia. Some of the money is to come by selling a partial stake in the Saudi national oil company, known as Aramco, to private investors, and let those shares trade on the stock exchange. A 10% stake in Aramco could go for 300 billion dollars.
In addition to investments, privatizing government owned companies, and promoting the private sector, Saudi Arabia needs to tap the economic value of its women. Currently, women make up only 15% of the Saudi workforce, even though they are over 50% of university students. These educated women will want to work and have careers. But as long as women can’t drive, their ability to be part of the economy is hugely limited.
The decision by MBS to allow women to drive is not driven by a commitment to gender equality, or a change in the noxious version of Islam embraced by the Wahhabi clerics of Saudi Arabia. It is an economic decision. But don’t expect the roads to be inundated with Saudi women. They are still subject to the guardianship rules which leaves them legally bound to an adult male relative, either a father or husband or brother, or even in some cases, a son. Without their permission, a woman will still not be able to drive, and many conservative Saudi men have no intention of letting their women drive. Driving will not just be a way to get to work. It will liberate women in all sorts of ways. But even if many Saudi men initially are reluctant, some of the more liberal will allow it, and it will slowly seep into the rest of society. In a few years, women drivers will seem normal.
Letting women drive may have some positive impacts for the economic reforms of MBS. But the Saudi economic future looks rather bleak. The engine that has driven their economy for 60 years has been oil sales, but oil as a product is going to be phased out over the next 40 years. China and India have banned gasoline cars starting in 2030, and Britain and France are not far behind. General Motors has announced it will launch 22 new electric vehicles in the next few years, with the goal of an all-electric fleet in the medium term. The overwhelming use for oil is the internal combustion engine that powers cars and trucks. If that market starts to even weaken, the price of oil will collapse. The second era of high oil prices lasted from 2004 to 2014, and oil now trades around 50 dollars per barrel. But even that price will not hold once oil consumption starts to decline. The price will collapse, and this will mean a new reality for the petrostates. This could happen within the next 10-15 years.
If oil revenues are going to plunge in less than 15 years, that gives the Saudis little time to diversify and privatize their economy. There is no culture of entrepreneurship, private sector competitiveness, or hard work among the average Saudi. Everyone is fat and happy with government checks, and most Saudis have no interest in working hard for a living. Hard work is done by the guest workers from Asia sending back remittances to their families. This lack of a real work ethic and the do or die nature of truly free economy which no Saudi has any familiarity with is going to be a major bottleneck in forcing reform to the Kingdom.
If MBS wants to normalize and modernize Saudi Arabia, letting women drive is only a first, and partial step. More importantly, the guardianship system needs to be abolished, and adult women should be treated as adults by the law, and not as children. But beyond gender equality, Saudi Arabia needs to move toward democracy.
There is no basis for monarchical rule in the modern world, or in Qur'anic principles. Saudi Arabia needs to become a real democracy that embraces not just women drivers, but gender equality and equal treatment for all before the law, regardless of sect or religion. Only a democracy is going to have the legitimacy to carry out the painful reforms that Saudi Arabia will need when the oil gusher runs dry.
