Saudi's Crown Prince Faces Some Tough Choices

(Bloomberg) --

We’re only in late April, but already Mohammed bin Salman’s banner year is unraveling.

After a failed boycott of neighboring Qatar, a disastrous military campaign in Yemen and international condemnation over the gruesome murder of columnist Jamal Khashoggi by Saudi agents, this was going to be a time for MBS, as the Saudi Crown Prince is known, to regroup.

He’s pushed hard on economic reforms to wean Saudi Arabia off its dependence on oil. He’s taken steps to show the country as more open and tolerant, encouraging tourism and giving greater rights to women. He’s the host of the Group of 20 nations, ready to welcome fellow leaders to Riyadh in November.

Now, as Donna Abu-Nasr writes, he’s been hit by the double whammy of a devastating oil price war and the economic destruction of the coronavirus, which has seen global tourism grind to a halt alongside the influx of much-needed foreign labor.

Prince Mohammed’s transformation effort was already faltering. But now he faces some tough choices about which projects at home and which forays overseas he can realistically afford. There are signs the kingdom is taking less of a hard line on regional foes Iran and Qatar, while it announced a cease-fire in Yemen earlier this month.

It’s notable also that King Salman bin Abdulaziz, who represents a more cautious and stable generation of Saudi leaders, has been more visible of late. Right now his son needs all the help he can get.

Global Headlines

Food supply | As coronavirus cases in the U.S. passed the 1-million mark, President Donald Trump signed an executive order that compels slaughterhouses to stay open, setting up a showdown between companies that produce America’s meat and the unions and activists who want to protect workers. The government will provide additional protective gear for employees, Jennifer Jacobs and Lydia Mulvany report.

• The first round of aid to small businesses was a boon to rural states that backed Trump but haven’t been hit as hard by the pandemic as Democratic strongholds on the coasts.

Wooing the base | Joe Biden is trying to win over progressives by courting the movement’s leaders and backing their calls for significant increases in pandemic relief. But the presumptive Democratic presidential nominee faces an uphill fight to convince skeptics on the left he won’t abandon working people in favor of Wall Street.

Political science | Boris Johnson’s most powerful political aide pressed the U.K.’s independent scientific advisers to recommend lockdown steps in a bid to tackle the coronavirus. Alex Morales and Suzi Ring report that Dominic Cummings played more than a bystander’s role at a key meeting on March 18 on social distancing options, which could cast doubt on the government’s assurances it has simply followed scientific advice throughout.

• The U.K. government is around three weeks out from releasing the tool it says is essential to easing the lockdown, a sign restrictions are set to largely continue until at least the second half of May.

Double trouble | The virus crisis is a fiscal test for governments on both sides of the Atlantic as they grapple with how to assist their hardest-hit members without being dragged down by them. The geography and political systems may differ, but the problem for the European Union and U.S. is the same: Both have central powers that want to avoid getting on the hook for the debts of under performers.

• Read how the smoke and mirrors of the EU budget math may not cut it after the virus.

Power play | Liquor is the latest battleground in the tug-of-war between India’s states and Prime Minister Narendra Modi’s government. A well-known teetotaler, Modi banned alcohol sales during the virus lockdown, blocking a crucial source of direct tax income for states already struggling to ramp up health infrastructure and provide food to millions left jobless. As Archana Chaudhary reports, it’s another bid by Modi to shift power away from the states.

What to Watch

• China will hold its highest-profile annual political meeting, where it usually announces growth and defense spending targets, from May 22, after it was postponed for the first time in decades due to the pandemic.
• South Korea’s military and spy agencies believe Kim Jong Un is handling state affairs “normally,” after weeks of speculation on the North Korean leader’s health.
• Australia’s call for an independent probe into the origins of the coronavirus is heightening tensions with Beijing, worrying businesses in the world’s most China-dependent developed economy.

Tell us how we’re doing or what we’re missing at balancepower@bloomberg.net.

And finally ... Photographs of hundreds of tattooed Salvadoran prisoners in their underwear crowded onto the cement floor in a forced embrace looked like they’d been sneaked out. Not so, Michael McDonald reports. They came from President Nayib Bukele’s office as he announced a state of emergency in the prisons in the latest show of his take-total-charge style.

©2020 Bloomberg L.P.