The Economist
In any other year, Mohammed bin Salman would be getting ready for his star turn. October 26 was supposed to be the scheduled start of the Future Investment Initiative (FII), an annual summit in the Saudi capital that is sometimes dubbed “Davos in the desert”. The crown prince usually spends the week glad-handing heads of state, titans of finance and other dignitaries, all eager to do business with his kingdom.
Not this year. The Houthis, an Iran-backed militia in Yemen, have spent weeks firing missiles and drones at Riyadh. The airport is still, in effect, shut after a series of deadly attacks. Many Western governments have warned their citizens not to travel to the kingdom. Executives were nervous hotels or other venues could be targets. After days of deliberation, organisers decided on October 19 to postpone the event until next year.
As he rose to power a decade ago, Prince Mohammed made a few big gambles. He wagered that he could defeat the Houthis; that he could reshape the Saudi economy; and Donald Trump would prove a reliable ally. All of them have gone awry. Cancelling FII is emblematic of Prince Mohammed’s annus horribilis. He faces a set of interlocking crises, none of which has a solution.
The Saudis failed to defeat the Houthis, but they had hoped a ceasefire agreed in 2022 would contain the threat. Instead, the truce began to unravel because of America’s broader war with Iran. The Houthis have seized additional territory in Yemen and battered Saudi Arabia. People close to the crown prince see only bad options. The kingdom can send ground troops into a bloody war; continue a campaign of air strikes that is unlikely to succeed; or make a deal that helps cement Houthi rule.
A long conflict will derail Prince Mohammed’s economic program, which was sputtering even before 2026. Big projects were being shelved amid a strain on public finances. Wages have not kept pace with inflation. Annual foreign direct investment is only about one-third of the crown prince’s $US100 billion ($143 billion) target. A year ago, the IMF expected the Saudi economy to grow by 4 per cent in 2026; now it expects a 3.3 per cent contraction.
Whether it rebounds in 2027 will depend on whether peace breaks out in the Middle East—and that, in turn, will depend largely on Trump. The kingdom thought it had influence over him. It wooed him by promising to invest implausible sums in America. It also made tawdry deals with the first family, paying Trump-owned golf courses to host Saudi-funded tournaments and investing $US2 billion with Jared Kushner, the president’s son-in-law. None of that stopped him from embarking on a disastrous war. “He’s not loyal to anyone for long,” says one well-connected Saudi.
Though there are no reliable public-opinion polls in the kingdom, it is fair to say most Saudis trust their government. Some have found the past few weeks unnerving, nonetheless: the war in Yemen has caused disruption. Yet since October 10, when a Houthi missile killed 13 people at Riyadh’s airport, Prince Mohammed has been largely invisible. It fell to ministers to visit victims and offer reassuring messages.
A few Western commentators have begun to ask whether this crisis-filled year poses an existential threat to the crown prince’s rule. The view among diplomats in Riyadh is that such talk is overblown. “He was in a much tougher place seven or eight years ago,” says one Western envoy.
Back then the prince was a newly appointed heir, still trying to consolidate his rule. The war in Yemen was already a quagmire, the blockade of Qatar was upsetting America, and much of the world was horrified when Jamal Khashoggi, a Saudi journalist, was murdered inside the kingdom’s consulate in Istanbul. Prince Mohammed’s grip on power is far more secure today: he has sidelined rivals and centralised power unlike any Saudi ruler since King Abdulaziz, the founder of the modern state. Though he has detractors, none could plausibly organise a putsch.
Nor is he facing much criticism from allies. The response to the recent escalation in Yemen has been telling: long-time critics of the war acknowledge the kingdom has little choice but to fight. “I do understand that this is a different moment than 2018 or 2020. They are facing these Houthi advances and Houthi rocket attacks,” says Chris Murphy, a Democratic senator who met the crown prince in Riyadh this month. “We should recognise that.”
Seen in another light, though, this is a more challenging moment for the crown prince. Because the woes of his early years were largely self-inflicted, they were easier to fix. By 2021 he was steering Saudi foreign policy in a more pragmatic direction. He ended the blockade of Qatar and sought a deal with the Houthis. Even the Biden administration, which took office having promised to make Prince Mohammed a “pariah”, grudgingly praised his direction.
This year is harder. The biggest decision is out of Prince Mohammed’s hands. He has urged Trump not to escalate the war with Iran. If the president ignores him and resumes bombing after the midterm elections in November, Saudi officials worry the kingdom will take blows from all sides: the Houthis to the south, Iraqi militias to the north and Iran itself to the east. They have a big country to protect — four times the size of France — and not many air-defence interceptors left to do it.
In his first decade, the crown prince made laudable strides towards liberalising Saudi society. Women can drive. Female labour-force participation has almost doubled. Concerts and cinemas are widespread in a country where fun was long forbidden. A few well-off foreigners can even enjoy a legal tipple. But the core of the Saudi state has changed little. Its economy still depends on oil, its army is still built to protect the regime rather than wage war, and its foreign policy still relies on America as an indispensable protector.
Perhaps eventually those things will change. The Mecca pact, a mutual-defence agreement with Pakistan and Turkey, is an effort to find new allies that could supplant an unreliable America. But those changes will take time. In his second decade, Prince Mohammed’s test will be to change the foundations, not just the façade.
© 2026 The Economist Newspaper Limited. All rights reserved
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
From our partners
About the Author
