Bloomberg News

Crown Prince Sultan’s Death Starts Plan for Saudi Succession

November 01, 2011

(Updates markets in fifth paragraph.)

Oct. 23 (Bloomberg) -- Saudi Arabia’s Crown Prince Sultan bin Abdulaziz Al Saud has died, setting in motion succession plans for the world’s largest oil exporter.

Prince Nayef, born in 1934, is the most likely candidate for the crown prince position. King Abdullah, who is 87, underwent surgery earlier this month to relieve back pain after traveling to the U.S. in November for three months of medical care.

The Saudis will want to convey a “message of continuity in terms of their economic policies, and reiterate their commitment to oil market stability at a time of global uncertainty and OPEC divisions,” Jarmo Kotilaine, chief economist at Jeddah-based National Commercial Bank, said in a telephone interview. “There are certain policies that they have agreed on over the last few years and months, and they won’t change this.”

Saudi Arabia increased oil supply to help meet rising demand after exports from Libya collapsed during the uprising against Muammar Qaddafi. The kingdom failed in June to reach an agreement with other members of the Organization of Petroleum Exporting Countries to boost production quotas. It also announced $130 billion in social and housing spending after popular movements toppled leaders in Tunisia, Egypt and Libya this year.

Saudi Arabia’s benchmark stock index, the Tadawul All Share Index, rose 0.3 percent at 13:09 p.m.

Koran Verses

Saudi state television announced the death of Sultan, who is also minister of defense and aviation, then began playing verses from the Koran, as is the custom. The prince was born in Riyadh in 1928, according to the Saudi Embassy in Washington, and was heir apparent to the throne. He will be buried in an unmarked grave, as stipulated by the Sunni Wahabbi version of Islam.

Sultan died “outside the kingdom after suffering an illness,” the Royal Court said in a statement posted on the official Saudi Press Agency website. “Prayer will be held at Imam Turki Bin Abdullah Mosque in Riyadh after Asr prayer on Tuesday.”

During Sultan’s five decades as defense minister, Saudi Arabia relied on the U.S. for military protection in return for stable oil supplies. The kingdom spent $11.2 billion on U.S. weapons between 2005 and 2008, making it the biggest foreign buyer of U.S. arms during the period, according to the Congressional Research Service in Washington.

Six Kings

Six kings have ruled Saudi Arabia since it was established in 1932. When King Fahd died in 2005 after ruling the kingdom for 23 years, the Royal Court announced the same day that Abdullah would become the monarch. The 1992 basic law stipulates that the king must be a son or grandson of the kingdom’s founder.

“The succession scenario has been set in motion,” Theodore Karasik, director of research at the Dubai-based Institute for Near East and Gulf Military Analysis, said yesterday in a phone interview from Dubai. “It’s pretty obvious, based on what we know, that the next crown prince will be Nayef because of his credentials. I expect the transition to be smooth.”

Nayef is the next-most senior member of the royal family after Sultan, according to Hani Sabra, Middle East and Africa analyst at the New York-based Eurasia Group. Nayef has controlled the Interior Ministry since 1975.

Succession Rules

King Abdullah, who was born in 1924, changed the kingdom’s succession rules in 2007 to give an appointed commission of princes, called the Allegiance Council, more power to select a new ruler. The council would be responsible for naming a crown prince, who will then be in line as the new king.

“There is a possibility, and I don’t know how possible, that the king may decide to enact the Allegiance Council,” said Khalid al-Dakhil, a political science professor at King Saud University. “The process will be delayed if the king goes with this. With oil markets and the turmoil in the Middle East, they don’t want to give an impression of uncertainty.”

The council consists of appointed male descendants of the kingdom’s founder, Abdulaziz bin Saud, the SPA said. In March 2009, Abdullah appointed Nayef as second deputy prime minister, a role that makes him the most senior Saudi royal in the absence of the king and the crown prince.

Greater Transparency

The decree aims to give greater transparency to the royal family’s decision-making process, which in the past was done through consensus-building among princes. Abdullah’s son, Prince Abdul Aziz bin Abdullah, is the kingdom’s deputy foreign minister, while Sultan’s son, Prince Khaled, is the deputy defense minister. Nayef’s son, Prince Mohammad, is the assistant interior minister.

Sultan spent much of the period between 2008 and 2011 out of the country to receive medical care for an undisclosed illness. He traveled to New York in June for a “private holiday” that included medical tests, although the Saudi government didn’t release details about his health, according to the SPA. Time magazine reported in 2005 that he had colon cancer.

Sultan was named crown prince that year following the death of his brother, King Fahd. Sultan was appointed minister of defense and aviation in 1963, oversaw the expansion and modernization of the Saudi military into a force that participated in the U.S.-led war to oust Iraqi forces from Kuwait in 1991. Saudi troops also fought Houthi rebels along the nation’s southern border with Yemen in a three-month battle that ended in February 2010.

Arms Sales

The U.S. Defense Department told Congress in October 2010 that it wants to sell as much as $60 billion in weapons to Saudi Arabia. U.S. policy makers want the proposed sale to include F- 15 fighter jets, attack helicopters, and satellite-guided smart bombs to counter Iranian military ambitions in the Persia Gulf and regional extremists.

“King Abdullah will use the crown prince’s passing as an opportunity to reform the Ministry of Defense and Aviation,” Danny Sebright, vice president of the New York-based Cohen Group, said in an interview in Jordan. “What we will see is a process over the next number of weeks, months where there will be some leadership changes at the ministry.” The group was formed by former U.S. Secretary of Defense, William S. Cohen.

Sultan was educated in religion, culture and statecraft at the royal court of his father, King Abdulaziz Al Saud. His career in public service began in 1947, when he was appointed governor of Riyadh, whose main task is resolving disputes among the 7,000 members of the royal family. Five years later, he became the kingdom’s first minister of agriculture.

--With assistance from Nadeem Hamid in Washington. Editors: Digby Lidstone, Ann Hughey, Louis Meixler.

To contact the reporters on this story: Vivian Salama on the Dead Sea, Jordan, at vsalama@bloomberg.net; Glen Carey on the Dead Sea, Jordan at gcarey8@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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