A10| Thursday, March 12, 2020 ** THE WALL STREET JOURNAL.
prince’s biggest political rivals
Initially, say people close to
MBN, the new crown prince
kept his cousin under house ar-
rest. By November, MBN was al-
lowed to move between his Ri-
yadh homes, desert camp and
family events. But his bank ac-
counts had been drained and
the once-powerful prince—a for-
mer interior minister and a top
antiterrorism contact for U.S.
officials—was sullen and full of
complaints, the people say.
The crown prince’s men kept
close tabs on MBN and relayed
his gripes to their boss, say the
people close to MBN. In No-
vember, MBN visited his uncle,
the king’s brother Prince Ah-
med bin Abdulaziz and com-
plained his wife and daughters
were being “starved” since
their royal stipends and finan-
cial holdings were curtailed.
Within Saudi Arabia’s
charged royal politics, such
seemingly innocuous griping
can be inflammatory. The crown
prince cut MBN’s family’s royal
stipends, confiscated their as-
sets and restricted their travel,
say the people close to MBN.
Later in November, MBN got
a call from the Royal Court. Pay
a visit to the National Guard, an
official told him, or face conse-
quences, say the people close to
him. The former crown prince,
they say, ignored the message.
Days later, Royal Courtguards descended on MBN’s Ri-
yadh palace and took away a
group of his closest employees,
say the people close to him,
confiscating electronics and
jailing employees including
non-Saudis. They built a fence
around MBN’s helicopter pad,
says a person familiar with the
matter, possibly to prevent him
from escaping.
Guards questioned the jailed
employees about whether MBN
was plotting an escape or coup,
say the people close to him.
The employees were released,
but MBN’s security was put in
the hands of men working for
the Royal Court.
On Friday, Royal Court
guards wearing masks and
dressed in black went to the
homes of MBN and the king’s
brother, Prince Ahmed, detain-
ing them and others, say people
familiar with the episode.
Prince Ahmed is a full brother
of the king and has been criti-
cal of the crown prince publicly
and privately in recent years.
Members of the royal family
who disagree with the crown
prince’s governance have sug-
gested privately that Ahmed
should be the next king.
The timing remains unex-
plained. Neither MBN nor
Prince Ahmed had behaved in a
way suggesting they believed
they were at risk of arrest.
Prince Ahmed had recently re-turned home from a weekslong
hunting trip, say the people fa-
miliar with the episode.
The royal court declined to
make MBN and Prince Ahmed
available to comment.
A government minister who
specializes in cybersecurity,
called royal-family members to
tell them Prince Ahmed and
MBN were being held on suspi-
cion of treason, say people fa-
miliar with the matter.
It was possible the Royal
Court presumed that, with the
world preoccupied with the cor-
onavirus and financial markets,
news of the arrests would re-
ceive less attention, say the peo-
ple familiar with the episode.Oil shock
The crown prince’s second
surprise move this weekend
harks to another persistent an-
noyance: low oil prices. Since
he rose to power with his fa-
ther’s ascent to the Saudi
throne in early 2015, prices
have been depressed in part be-
cause U.S. shale drillers flooded
world markets, offsetting Saudi
attempts to reduce supply.
Low prices meant Saudi Ara-
bia had to borrow to balance its
budget and made it difficult for
the crown prince to carry out
his expensive economic-trans-
formation plans, which include
a new $500 billion high-techcity in the desert. The Saudi
Aramco IPO was supposed to
bring in cash to help fund those
plans, but low oil prices made
its shares less attractive.
Saudi Arabia got a reprieve
in 2017, when it joined with
Russia to limit supply and prop
up prices. The alliance held up
through the December 2019 IPO.
But in the months after, Russia
grew keen on increasing pro-
duction to boost its economy.
The crown prince asked his
father, King Salman, to phone
Russian President Vladimir Pu-
tin and request cooperation on
further cutting output, say peo-
ple familiar with the episode.
Mr. Putin initially said he was
too busy to talk, an embarrass-
ing slight to an absolute mon-
arch, the people say. When the
men did talk on Feb. 3, Mr. Pu-
tin didn’t commit to a deal,
they say. A spokesman for Rus-
sia’s energy ministry declined
to comment. A Kremlin spokes-
man didn’t respond to a re-
quest for comment.
The Saudis and Russians
tried to forge a long-term alli-
ance. Under one scenario, Saudi
Arabia would have sped up its
investments inside Russia and
backed the Kremlin’s efforts in
Syria, say some of the people fa-
miliar with the episode. Ulti-
mately, the crown prince
wouldn’t agree to a deal because
he didn’t want to alienate the
U.S., a longtime ally, they say.
Then, Russian representa-
tives in early February told an
emergency meeting of the Or-
ganization of the Petroleum Ex-
porting Countries they
wouldn’t make a deal because it
was too early to assess the im-
pact of the coronavirus on
global oil demand, say people
familiar with the meeting and
its aftermath.
The crown prince still ex-
pected an agreement. “This is
when it started to look bad for
several of us,” says one of the
people.
The situation festered for
close to a month, with Saudi En-
ergy Minister Abdulaziz bin Sal-
man lobbying the crown prince
last Thursday to cut production
for only three months, say the
people familiar with the meet-
ing. The crown prince overruledMiddle East chose a weekend
when the world was preoccu-
pied with the novel coronavirus
and faltering markets to assert
his standing at home and
abroad—consolidating his
power in Saudi Arabia while
showing he will use the king-
dom’s sway over the oil market
to achieve his political ends.
In doing so, the crown
prince, known as MBS, flexed
his market power abroad in a
way Saudi Arabia hasn’t for
more than four decades, since
then-King Faisal launched an
oil embargo against the U.S. in
1973, says Adel Hamaizia, an
associate Middle East fellow at
London’s Royal Institute of In-
ternational Affairs.
“It certainly makes sense to
view the royal detentions in the
context of the collapsing oil ne-
gotiations with Russia,” says
Kristin Smith Diwan, of the
Arab Gulf States Institute in
Washington. The crown prince,
she says, “understands that
things are going to get really
rough economically and wants
to make sure everyone is in line
in advance of these new chal-
lenges. He needs more revenue.”
People familiar with the
kingdom’s decision-making say
the crown prince overrode the
opinions of the current oil min-
ister, his brother, to start the
price war. A Saudi Embassy
spokesman in Washington de-
clined to comment or to make
Crown Prince Mohammed, oil
minister Abdulaziz bin Salman
or other Saudi officials avail-
able for interviews. A Royal
Court representative didn’t re-
spond to questions.
At home, the crown prince
has ended many social restric-
tions while trying to diversify
the oil-dependent economy. At
the same time, he has sidelined
would-be rivals in government
and cracked down on critics. He
has jailed dissidents, and men
working for him killed critic Ja-
mal Khashoggi in 2018. The
crown prince has denied order-
ing the killing.
On the global stage, one of
his main goals was to carry out
an IPO of Saudi Aramco. The
December offering was the
world’s biggest, raising $25.
billion and valuing the com-
pany at about $1.7 trillion. But
bankers widely saw it as disap-
pointing because it occurred on
the small Saudi stock market,
rather than on a global ex-
change as the crown prince
originally planned.
Palace politics
The crown prince’s domestic
crackdown on Friday harks back
to November in the isolated Ri-
yadh palace of Mohammed bin
Nayef, the former crown prince
known as MBN, say people
close to the deposed prince. In
2017, Mohammed bin Salman
had put his former rival for the
throne under tight restrictions
when he pushed him out of the
crown-prince role.
MBN and his uncle, who is a
brother of the king and was also
detained, are two of the crown
ContinuedfromPageOne
Saudi Crown Prince Mohammed bin Salman, right, with Russian President Vladimir Putin during talks in Riyadh in October.ALEXANDER ZEMLIANICHENKO/ASSOCIATED PRESSbut visitors over the years have
been impressed. “There’s that
wow factor when people walk
in,” says Mr. Knowles, a 68-
year-old music professor at
New York City’s Juilliard School
and a record producer.
The office, which Mr.
Knowles uses for grading pa-
pers and other tasks, includes a
sturdy desk worthy of a com-
mander in chief, couches that
face opposite each other, and a
rug that bears the Great Seal of
the United States. Mr. and Ms.
Knowles are selling their 9,000-
square-foot home for an asking
price of nearly $2.8 million, and
their Oval Office office has be-
come a key talking point—
much to their surprise. “I
thought it was going to be all
about the pool,” says Mr.
Knowles.
Throughout the country,
homeowners have created their
own versions of the Oval Office,
with variations.
Frank Luntz, a pollster and
television political commenta-
ContinuedfromPageOne
tor, fashioned an Oval Office in
his Brentwood, Calif., home. He
says he is proud of how close
he got to the look of the origi-
nal, noting he did research at
several of the presidential mu-
seums, which include re-cre-
ations of the office. But he
added his own flourishes: When
visitors come, he hits a button
and a recording of “Hail to the
Chief” plays.
“Everyone switches their
camera from still to video to
capture this,” Mr. Luntz says.
Ron Wade, a collector and
dealer in presidential memora-
bilia, created a faux Oval Office
in his Longview, Texas, home,
eating up part of his driveway
to accommodate the space. Mr.
Wade is another stickler for de-
tail, going so far as to acquire a
rocking chair that he says was
once used by President John F.
Kennedy in the Oval Office.
Over the years, Mr. Wade
has learned the challenges of
maintaining a presidential of-
fice within a home. He doesn’t
let visitors sit in the Kennedy
seat because of its historical
value, but he couldn’t convince
a former cat of his to stay
away. “She loved that chair,” he
says.
A few retailers specializing
in presidential-style furnishings
and accessories are making it
easier for those who want to go
down this road. Lori FerberCollectibles, in Scottsdale,
Ariz., sells items including a set
of three throw pillows with the
Great Seal of the United States
for $449.85, a “The Buck Stops
Here!” desk plaque for $56.95,
and a replica of the Resolute
desk, the 19th-century desk
used by many presidents, for
$8,945. (The original was a gift
from Queen Victoria to Presi-
dent Rutherford B. Hayes, made
from wood from the H.M.S.
Resolute.) “We just sold three
to an overseas buyer giving
them as gifts,” says Steve Fer-ber, the company’s co-owner, of
the desks.
The New-York Historical So-
ciety, in Manhattan, recently
unveiled its own Oval Office,
created at a cost of about $
million. The office is part of a
“Meet the Presidents” exhibit,
intended to increase under-
standing of the country’s high-
est office. It has a tweak of a
different sort: Hidden behind
one of the doors is an area that
can double as a bar—just in
case a group wants to use the
office for a special event.While the Oval Office may be
considered the White House’s
signature space—“the pulpit of
our democracy,” says Eli Attie,
a former speechwriter for Vice
President Al Gore who became
a writer and producer on tele-
vision’s “The West Wing”—it is
actually a newer feature of the
building.
The first such office was cre-
ated during the administration
of President William Howard
Taft (1909-1913) as part of an
expansion of the West Wing.
But it was rebuilt in a new loca-tion during the administration
of President Franklin D. Roose-
velt (1933-1945).
Mr. and Ms. Knowles, the
couple selling their house, are
planning a bigger push in the
coming weeks, saying they can
show the house, which sits on
10 acres of land, to its best ad-
vantage in the spring.
Mr. Knowles says he didn’t
have a particular president in
mind when he planned his of-
fice, though he confesses a soft
spot for Jed Bartlet—the fic-
tional president in television’s
“West Wing,” portrayed by
Martin Sheen. Some of the
color choices he and his wife
made in the room—notably, the
blue carpeting—were inspired
by what they saw in the series.
Mr. Knowles also admits he
has had to make some less-
than-presidential design
choices. The space, done on a
five-figure budget, was too
small to fit a replica of the Res-
olute desk, for example. And
even if it might seem utilitarian
by the Oval Office’s stately
standards, Mr. Knowles needed
to have his printer in the room
for work-related tasks. “This is
a real music office,” he says.
Meanwhile, the couple is
looking ahead to purchasing a
home in California, saying they
plan to downsize in retirement.
“There will not be an Oval Of-
fice,” Ms. Knowles says.him, insisting the curbs last the
year, say some of the people.
As he was preparing to
squeeze his royal rivals at
home, the crown prince tried to
turn the screws on Russia, de-
manding bigger production
cuts, say some of people famil-
iar with the meeting. When
Russia didn’t budge, he told
several Saudi ministries to pre-
pare for a no-deal scenario in
which there would be no pro-
duction cuts even though global
demand was tumbling because
of the coronavirus, some others
familiar with the meeting say.
“The message the Saudis
wanted delivered to the Rus-
sians was you are either agree-
ing on a cut,” says a Saudi offi-
cial familiar with the matter,
“or we won’t cut at all.”
Again, the Russians didn’t
budge. “I have no idea how did
the Saudis think that this kind
of pressure would have worked
on Putin,” says an OPEC dele-
gate familiar with the matter.
“This was utterly suicidal and
we all knew the outcome would
be disastrous.”
On Saturday, Saudi officials
said instead of cutting produc-
tion, they would boost it, driv-
ing down the price of oil. “It
was the Saudi declaration of
war against Putin,” says a se-
nior Saudi official.
Within hours, the Royal
Court told finance-ministry of-
ficials to prepare a budget sce-
nario with benchmark Brent
crude prices dropping into a
$12-to-$20-a-barrel range, say
people familiar with the direc-
tive. They feared spending cuts
would wreck the Saudi econ-
omy, already battered by the
cancellation of religious pil-
grimages to the Muslim holy
cities of Mecca and Medina.
Inside Saudi Arabia, the
Royal Court on Sunday began
releasing MBN and other royal-
family members who were de-
tained or summoned to the
court and questioned, say peo-
ple familiar with the episode.
The royal family also released
photos and videos of the 84-
year-old king to dispel rumors
he was ill.
When Asian oil trading be-
gan Monday, prices fell a fifth.
Aramco’s shares fell 18%. Both
sides escalated their feud, with
Russia saying it would it would
boost production and Saudi
Arabia responding that it would
raise capacity. Oil fell another
3% on Wednesday.
Russian Energy Minister Al-
exander Novak in public com-
ments Wednesday said: “It
would be better to maintain
production levels at those that
were achieved in the first quar-
ter of this year, and we have
taken such an initiative as part
of our general agreement. Un-
fortunately, however, our part-
ners did not agree with our
proposal.”
Concern that Aramco would
make business decisions based
on Saudi political concerns was
one reason some investors said
they stayed away from its IPO.
Aramco declined to comment.
A spokesman for the Saudi en-
ergy ministry didn’t respond to
requests for comment.
“This has proved to inves-
tors that their worst fear about
Aramco were a reality,” says a
Saudi official familiar with the
IPO. “The company’s plans and
its output decisions are based
on MBS’ erratic behavior.”
—Warren Strobel contributed
to this article.A Prince’s
Two-Front
Battle
Home Oval
Office Up
For Sale
FROM PAGE ONE
Price War Pressures
Kingdom’s BondsSaudi Arabia’s oil-market
war with Russia prompted in-
vestors to demand higher
yields on the kingdom’s bonds
this week, pointing to a possi-
ble financial stressor as ten-
sions between the two energy
exporters escalate.
Prices for Saudi bonds have
dropped since Friday, when a
longstanding oil-output collabo-
ration between Saudi Arabia
and Russia splintered, prompt-
ing the kingdom to crank up
tensions by signaling plans to
boost production and slash
prices.On Wednesday, it said it
would increase its production
capacity to a record 13 million
barrels a day.
The sharp drop in crude fu-
tures following the price-war
instigation will test foreign in-
vestors’ confidence in the Gulf
nations.
Saudi Arabia, like its Gulf
neighbors, has been on a bor-
rowing binge since 2016, after
oil prices started to slide, and
has greatly expanded its dollar-
denominated debt issuance.
The Gulf Cooperation Council,
comprising of Saudi Arabia, Qa-
tar, the United Arab Emirates,
Oman, Bahrain and Kuwait, sold
a total of $41.9 billion of bonds
denominated in foreign curren-
cies in 2019, according to Dea-logic data, compared with the
$16.1 billion raised in both local
and foreign markets 10 years
earlier.
If crude prices remain at
current levels for an extended
period, it may leave the region
with even larger budget and
current account deficits.
Riyadh won’t allow oil prices
to remain this low for long, ac-
cording to Peter Kisler, a port-
folio manager at London-based
North Asset Management. His
firm doesn’t hold any Gulf na-
tions’ debt.
“Both Russia and Saudi Ara-
bia are vulnerable, no matter
what they say, when oil prices
are at $30 [a barrel],” Mr. Kisler
said.
—Avantika ChilkotiThe Oval Office in Greg and Katie Knowles’s New York home. The house is now for sale.PIERCE JOHNSTON PHOTOGRAPHY