Saudis applaud the anti-corruption drive, but investors fret

CHECKING into Riyadh’s Ritz-Carlton usually costs about $300 per night. Checking out could cost the current guests billions. This month the Saudi authorities commandeered the hotel to serve as a gilded prison for more than 200 princes, ministers and businessmen held in an anti-corruption sweep. Though the kingdom has not released a list of suspects, some big names have been leaked. Among them are Prince Alwaleed bin Talal, a billionaire investor; Khaled al-Tuwaijri, the former head of the royal court; and Waleed al-Ibrahim, the chairman of the region’s largest satellite broadcaster. The arrests were engineered by King Salman and his son, Muhammad, the young crown prince.

Some of the suspects could soon buy their way to freedom. A new anti-corruption committee, led by Prince Muhammad, is offering release in exchange for a portion of their assets. Officials hope to recover at least $50bn this way. That figure may be too optimistic, and represents only a fraction of what graft has cost the kingdom. Still, it would boost a government struggling with a recession and a deficit that hit $79bn last year. Foreign reserves, while still plentiful at $475bn, are at their lowest level in more than six years. The central bank has burned through $250bn since mid-2014 to support an economy battered by low oil prices.

Those who refuse to pay up face an uncertain future. Officials have promised fair trials in the coming months, but some of the detainees have complained of being denied legal counsel. It would be easy enough for Saudi Arabia to seize assets from domestic firms, or from neighbouring countries. In the United Arab Emirates, authorities have asked banks for information about 19 wealthy Saudi clients. It will be harder to claw back the billions that Saudi citizens and companies have stashed further afield. Authorities in Europe and America will want to see evidence that the suspects received due process.

Prince Muhammad’s allies call the speed and scope of the arrests necessary—shock therapy for a kingdom that can no longer afford the lavish habits of a bloated royal family. It is a “limited, domestic affair”, one that would have “no impact on foreign direct investment”, says Khalid al-Falih, the energy minister. But foreign investors are rattled. Prince Muhammad needs them to overhaul the economy. He hopes to raise $100bn by selling a 5% stake in Saudi Aramco, the state oil giant, next year. In October he announced plans for NEOM, a $500bn city in the desert staffed by robots. He hopes to privatise other state firms, and to build new tourist facilities on the Red Sea coast. All of this requires confidence in Saudi institutions.

The purge has gone down better with ordinary Saudis, who have bristled at the government’s austerity. Many have rejoiced at the sight of pampered princes also having to make sacrifices. Expectations for Prince Muhammad’s rule are growing—along with his own touchiness. Earlier this year the police detained dozens of his critics. Prince Mutaib, the ex-commander of the powerful national guard (and a son of the previous king), now occupies a room at the Ritz. If the crown prince’s economic programme does not yield quick results, he may find himself preoccupied with fighting off more rivals.