As a result of a widening budget deficit, the Saudi government has cancelled a quarter of a trillion-dollar development project, cut public spending and subsidies, raised gasoline and utility prices, resorted to borrowing billions both at home and abroad and decreased hiring at the public sector.
According to a Tuesday article by the New York Times, the austerity measures have been implemented despite the fact that an estimated 12,000-15,000 Saudi royal family members continue to receive billions of dollars in annual allowances, invest in the world’s most expensive real estate markets, purchase luxurious automobiles and consumer products, go on ostentatious international trips with their retinues and stash their Swiss banks accounts.
The report, which is based on dozens of interviews with diplomats, money managers, economists, real-estate and travel agents, interior decorators and members of the House of Saud as well as court records and real-estate documents, expressed doubt that the dynasty could simultaneously maintain its lavish lifestyle and its unchallenged grip on the country.
The “ever-expanding” members of the Al Saud clan rely on allowances, government jobs and positions in business, aided by the status and connections conferred by nobility, the report said.
“Under [King] Salman, princes again appear to enjoy a lot more material privileges, and the core allowance system has not been changed,” said Steffen Hertog, an associate professor at the London School of Economics.
In 2016, multiple Saudi family members purchased property in Paris, Dania Sinno, a real estate agent with Belles Demeures de France, said.
The scale of the dynasty’s fortune is kept confidential and it is not clear how much of the Saudi budget makes its way into royal coffers. The money is divided among many relatives and spread across several continents.
Based on property records, King Salman owns a dozen apartments in the affluent 16th Arrondissement of Paris, worth an estimated $35 million.
Apart from a network of palaces and countryside retreats inside Saudi Arabia, King Salman owns a luxury chateau on the Côte d’Azur in France and a palace in Marbella on Spain’s Costa del Sol.
The 80-year-old monarch has also been involved in offshore companies in Luxembourg and the British Virgin Islands.
According to a US embassy official in Riyadh who was granted unprecedented access to the Ministry of Finance Office of Decisions and Rules in 1996, the allowances granted to the royal family members ranged from up to $270,000 a month for a son of the founding king to $8,000 a month for his great-great-grandchildren.
Payments to other prominent families across Saudi Arabia, accounted for nearly $2 billion, the US official revealed in a memorandum.
As the internal dispute and power struggle in the royal family intensifies, the members of the clan have quickened the pace of purchasing homes abroad over the past two years.
“In the event the situation becomes dire for them, they want to have an option, and a place to go to live, a place to have assets. They are not only securing their capital, but also their future lives,” said Ardavan Amir-Aslani, a business lawyer who has advised Saudi princes on real estate acquisitions in France.
Observers say the Saudi rulers are currently facing a dilemma of choosing between continuing the extravagant budget of the royal family, as their most important constituency, and saving the country’s economy.