By Mihir Sharma
MOHAMMED BIN SALMAN, or MBS as he is often referred to, has led Saudi Arabia for about a decade, but the next few months will be his greatest challenge yet.
It was as defense minister back in 2015 that the crown prince coordinated a massive assault on the Houthi rebels in Yemen, announcing to the world that Saudi Arabia was under new management. And that won’t have made Saturday’s attack by the Houthis on Riyadh’s main airport any easier to bear. Twelve people died and more than 300 were injured, flights were cancelled or rerouted, and videos of panicked travelers spread across the Middle East.
The airport attack undercut one of the pillars of the bargain that MBS has offered his people. Saudi Arabia is not an easy country to rule. It is a young place, hosting all the aspiration and discontentment that goes with an average age of 25. The crown prince demands stability and loyalty, and in return promises security, prosperity, and reform. Globally he has sought to position the country as a reliable, attractive location for both investment and tourism.
The US and Israeli strikes on Iran put the first hole in that narrative, as the Islamic Republic counterpunched against whoever was closest to hand, including the Saudis. The cost of the damage to the kingdom’s oil infrastructure may have been in the tens of billions of dollars.
And now the Houthis have shown an ability to target the heart of MBS’s power. Riyadh airport has been hit multiple times, and Dammam airport in the country’s east has been struck as well. This week a missile hit the headquarters of state-owned oil company Saudi Aramco, thankfully with no casualties.
Saudi Arabia is one of the world’s largest arms importers, spending 6.5% of its gross domestic product on defense. But the country is even harder to defend than it is to rule. Vital infrastructure is dispersed across its vast geography. Iran and its proxies can attack from three sides. The kingdom’s armed forces are spread out, and command is traditionally kept fragmented — for political reasons. Plus it has the same problem as its Gulf neighbors: The drones the Houthis or Iranians send are far cheaper and more numerous than the Western-made interceptors that bring them down.
And so it’s tough for MBS to credibly guarantee security. Schools have moved online and some companies have let employees work from home. Investors might become warier as well. Later this month, the crown prince is due to host the lavish Future Investment Initiative, and it won’t be easy to match the glittering guest lists of past editions. Financiers can be reluctant to put money into places they feel are unsafe.
The kingdom has aimed for foreign investment of $100 billion a year by 2030, and it surged last year. But in the second quarter of 2026 it fell by 17% compared with a year earlier to $5.95 billion. There’s still some work to do to meet MBS’s promise to deliver prosperity.
Without steady flows of new money coming in, attempts to diversify Saudi Arabia’s economy away from oil might suffer. MBS needs modern jobs to keep younger Saudis content. The state can’t support them all because it’s already overstretched. The fiscal deficit this year is due to come in at almost 5%. Threats to oil infrastructure and the Strait of Hormuz mean that the kingdom’s GDP in 2026 will contract by 3.6%, according to its finance ministry, driven by a projected 21.8% decline in the petroleum sector. Most of the credit in the economy is going to support state-owned companies. Bank lending to these grew three times as fast as to the private sector in August.
If delivering security and prosperity is getting more difficult, how about that third MBS promise of reform? To his credit, many of his changes — liberalizing laws on male guardianship, opening up driving and the workplace to women and so on — are accepted today as normal. But the country’s ruling elite has long feared domestic Islamists as much as external threats. MBS’s reforms are his calling card, but they’re a potential rallying point for malcontents.
While the Saudi state may be undemocratic, it needs the consent of those it rules. MBS must somehow shore up faith in his promise to build a modern, secure, and respected nation. It is heartening that he has indicated a desire to rebuild frayed relations with his Gulf neighbors. He said recently that the region’s security was “indivisible,” and one of the UAE’s top officials repeated that exact phrasing last week.
Another recent change of tone is doubly intriguing. In MBS’s annual speech to the country’s quasi-legislative Shura Council three weeks ago, he did not start, as so often, with his vision for the future. Instead of shining new cities in the desert, he talked about the past. He spoke of his inheritance, claiming that over three centuries of rule his family had a consistent approach to governance that he was merely taking forward. The world’s most powerful millennial is, when dealing with the greatest crisis of his career, sounding as traditionalist as his predecessors.
BLOOMBERG OPINION