The Saudi Prince or the Pauper?


The world's most disruptive entrepreneur doesn't live in Silicon Valley. He visits Washington and New York this week amidst growing friction with his Middle East homeland's longtime ally the United States.

Saudi Arabia's Princely Disrupter

Meet Saudi Arabia's Deputy Crown Prince Mohammed bin Salman, favored son of 80 year old Saudi King Salman. No 30 year old anywhere is a bigger threat to the world's status quo.

He controls more assets than any entrepreneur on the planet (think trillions of dollars), but he's plagued by a burgeoning financial strain which is likely making it hard to put on a great face. His swift accumulation of power has earned him the behind-the-back moniker "Mr. Everything". Despite legions of detractors he is on a mission to transform his nation. As a part of his quixotic vision he is solidifying relationships with diverse world leaders from President Obama, to France's President Hollande, to Russia's Vladimir Putin.

Mohammed bin Salman is the world's youngest Minister of Defense. He has already taken the Kingdom to the number three nation globally in defense spending. But his portfolio vastly exceeds the military, everything and everyone oil related in the country reports to him.

As oil prices plummeted from the record $100+ level in 2014 all of OPEC expected him to reduce supply and support prices. Instead he broke with Saudi tradition and opted for greater market share.

The prince continued to pump record amounts leaving oil nations groaning as prices collapsed to $27 a barrel earlier this year.

The Ultimate Irony

As disruptor-in-chief the prince plans to end the Saudi economy's dependence on oil. This activist investor speaks staccato statistics supporting his "Vision 2030".   He's exploring taking the state oil company Aramco public--probable valuation approaching $3 trillion--making it the most valuable corporation in the world.

Armed with a massive $2.5 trillion war chest his vision is to invest in technology and industrial opportunities everywhere. He’s just getting started with the recent $3.5 billion bet on Uber announced in early June.

Harsh realities confront the prince's bold ideas. In bordering Yemen the Prince's forces fight Houthi rebels backed by Iran. Steadily an arc of Shiite dominated nations-- Iran, Iraq and Syria coalesce against Sunni powerhouse Saudi Arabia. Iran has staged an extraordinary oil production comeback to 3.5 million barrels per day since America lifted the sanctions with the nuclear accord.

Saudi Arabia's record production as prices plummet has caused enormous local pain. Last year the Kingdom posted a $100 billion budget deficit.  Credit watcher Moody's cut Saudi's ratings and the Kingdom considers IOU's for more than $40 billion in unpaid obligations to contractors.  70% of Saudi's are under 30, most are under-employed and unemployed.

In December King Salman unveiled an austerity program involving $10 billion of budget cuts. Fuel and utility subsidies have been slashed and there is a proposal to reduce public sector wages.

And OPEC faces more dysfunction, Saudi Arabia and Russia agreed to cap production as long as others followed.  Incensed, Iran skipped OPEC's Doha meeting altogether. Recent sessions in Vienna proved no more fruitful. But to the prince's good fortune, oil prices lifted anyway because disruptions elsewhere caused world production to drop by millions of barrels a day.

On cue prices jumped 90% in 90 days and continue to hover near the $50 per barrel level. But many oil producing nations are addicted to oil revenues--and even at lower prices Iran, Iraq, Russia, Venezuela and others intend to pump, pump, pump….

So being prince of Saudi oil hardly gives you the last word.

And it can't be lost on our disruptive visionary that the US Senate just unanimously passed a bill to hold the Kingdom accountable if it's found complicit in the 9/11 attacks.

It could be a long pressured filled week for Mr. Everything as he makes the rounds in America.

Peter D. Kiernan is an award winning New York Times bestselling author who is also an entrepreneur, venture capitalist and philanthropist following a multi decade career on Wall Street. Today he spends much of his time fighting poverty as a 26 year member and former Chair of the board of the Robin Hood Foundation.

He is a regular contributor to the FOX Business Network and appears frequently on national TV and radio talk shows, as well as many different public forums.