The restive Spanish region of Catalonia faces a potential $500 million financial hit in the fourth quarter as business-related travel dips following the attack in Barcelona and the uncertainty generated by the disputed independence referendum.

In an interview Monday with The Associated Press at the World Travel Market in London, Catalonia’s top tourism official Patrick Torrent said the region will likely see a 10-12 percent fall in tourist numbers during the fourth quarter, which would equate to around 450 million euros. The large bulk of that fall is related to a drop-off in business travel to events such as conventions.

Despite the anticipated fourth-quarter decline, the executive director at the Catalan Tourist Board, said Catalonia is set to see revenues this year outstrip those last year and that the expectation is that revenues will rise again next.

However, more insight will emerge at the turn of the year when the bulk of pre-reservations are made. His staff, he said, are “on alert” about the impact on the main booking season.

The worry among many economists is that deteriorating business environment in Catalonia, which has seen around 1,500 firms move their headquarters out of the region, could worsen further amid all the uncertainty. Credit ratings agency Moody’s has warned that the region’s financial recovery is being jeopardized

“Moody’s believes that the political instability will negatively affect the region’s economy, in particular foreign investor sentiment and the tourism sector, and add pressure to the region’s already weak finances,” it said last week.

The Catalan tourism industry, a key income generator in what is Spain’s richest region, has had a difficult few months. After the August attacks in Barcelona and a nearby town that saw 16 people killed, the region has been embroiled in a battle of wills with Spain over the disputed independence referendum in early October which prompted Madrid to impose direct rule and seek the arrest of members of the Catalan government, including its leader, Carles Puigdemont, who has fled to Brussels.

The impact of the attack in Barcelona on holiday travelers was short-lived, according to Torrent, and “less important” than other cities in Europe, such as Brussels or Paris.

“The perception of Barcelona and Catalonia as a safe destination has not suffered any impact,” he said, noting figures showing tourism numbers higher in September.

Torrent said he met up with Alvaro Nadal, the Spanish minister of energy, tourism and digital matters, on Monday for the first time since the triggering of Article 155 of the Spanish Constitution which imposed direct rule on Catalonia.

Torrent said the Spanish government has made no requirements upon him or his staff and that it is “business as usual” until an early Catalan regional election on Dec. 21.

“It’s not intervention. It’s more a kind of coordination,” he said. “It’s easy, it’s not complicated, with good relations without problems, at this moment.”

Before direct rule, Torrent would speak with Spanish tourism officials two or three times a month. Now, it’s that amount of times a week.

Torrent urged all participants in upcoming demonstrations in Catalonia before the election, including one this Saturday, to remain peaceful and law-abiding.

“It’s important to say that our streets are normal, our restaurants are working as usual, our destination is exactly the same situation,” Torrent said.
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Two weeks ago the glitzy Ritz Carlton hotel in Riyadh was the site of an international conference promoting Saudi Arabia as an investment destination, with over 3,000 officials and business leaders attending.

Now the hotel is temporarily serving as a luxury prison where some of the kingdom’s political and business elite are being held in a widening crackdown on corruption that may change the way the economy works.

By detaining dozens of officials and tycoons, a new anti-corruption body headed by Crown Prince Mohammed bin Salman is seeking to dismantle systems of patronage and kick-backs that have distorted the economy for decades.

But it is a risky process, because the crackdown is hurting some of the kingdom’s top private businessmen — leaders of family conglomerates who have built much of the non-oil economy over the past few decades.

Many industries could suffer if investment by these families dries up in coming months, at a time when the economy has already fallen into recession because of low oil prices and austerity policies.

New breed of companies

Meanwhile, a new breed of state-backed companies is rising to compete with the old guard; many of the new enterprises are linked to the Public Investment Fund (PIF), the kingdom’s top sovereign wealth fund. But it is not clear how smoothly the transition to these firms will happen.

“The rules of the game are changing. But they’re changing indiscriminately,” said one financial analyst in the region, declining to be named because of political sensitivities. “Even people who thought they were within the rules don’t know if they will still be within those rules tomorrow. There’s just uncertainty.”

Some private businessmen in Saudi Arabia are now trying to move their money out of the country “while they still can,” the analyst said.

For many foreigners, the most shocking aspect of the purge has been the detention of billionaire Prince Alwaleed bin Talal, the flamboyant, internationally known chairman of investment firm Kingdom Holding.

But for Saudis, the names of other detainees have been equally stunning: Nasser bin Aqeel al-Tayyar, founder of the Al Tayyar Travel group; billionaire Saleh Kamel; and Bakr bin Laden, chairman of the huge Saudi Binladin construction conglomerate.

State contracts

The saga of the Binladin group underlines how the business environment is changing. Binladin and another big construction group, Saudi Oger, long enjoyed preferential access to the kingdom’s biggest projects and control over pricing as a result of their close relationships with royal patrons.

But the bottom fell out from under both companies last year, when a cash squeeze resulting from low oil prices caused the government to cancel or suspend projects and delay payments.

The firms faced multi-billion dollar debt restructurings; Binladin has laid off tens of thousands of people while Oger’s bankers say it has essentially stopped operating.

New construction company

At the same time, state oil giant Saudi Aramco is moving to set up a construction company with local and international partners to build non-oil infrastructure in Saudi Arabia — potentially taking billions of dollars of business that would previously have gone to the family conglomerates.

Aramco and PIF, the sovereign fund, have also linked up with U.S. construction firm Jacobs Engineering to form a management company for strategic projects in the kingdom.

Many in the Saudi business world are celebrating the downfall of the old patronage system and the shift toward a “cleaner” business environment.

“It’s great news for the clean ones among us — 99.99 percent are ecstatic,” said one senior executive.

But others express disquiet about the possible economic fallout of the purge. Some are concerned that banks could start calling in loans to families implicated in the probe, using loan clauses that permit this in cases of legal jeopardy; this could collapse companies’ share prices.

Business deals put in limbo?

Many new business deals may be put on hold. A businessman at a foreign technology services firm told Reuters he had been considering a venture with a Saudi partner, but decided against it this week because of the partner’s ties to the detained Bakr bin Laden.

The new anti-corruption commission has broad authority to seize assets at home and abroad. Some businessmen wonder if these powers could be used to pressure firms into participating in Prince Mohammed’s economic development projects.

“It’s the old royal fiefdoms that are not in the Al Salman branch of the royal family that are now being purged,” said a Western analyst. “It’s a further centralising of political and economic power, and a seizing of the private assets that those fiefdoms have accumulated.”

 
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A revamping of the Federal Reserve’s leadership is widening with the announcement Monday that William Dudley, president of the New York Fed and the No. 2 official on the Fed’s key interest rate panel, will retire next year.

Just last week, President Donald Trump chose Fed board member Jerome Powell to replace Janet Yellen as Fed chair in February. The post of Fed vice chair remains vacant. So do two additional seats on the Fed’s seven-member board. And a fourth seat may open as well next year.

The unusual pace of the turnover has given Trump the rare opportunity for a president to put his personal stamp on the makeup of the Fed, which operates as an independent agency. Investors are awaiting signals of how Trump’s upcoming selections might alter the Fed’s approach to interest rates and regulations.

Trump has made it known that he favors low interest rates. He has also called for a loosening of financial regulations. The Fed has played a key role in overseeing the tighter regulations that were enacted after the 2008 financial crisis, which nearly toppled the banking system.

The uncertainty surrounding the Fed’s top policymakers has been heightened by the slow pace with which the Trump administration has moved to fill openings.

To date, the administration has placed one new person on the Fed board: Randal Quarles, a veteran of the private equity industry who is thought to favor looser regulations, was confirmed as the first vice chairman for supervision. That still left three vacancies on the Fed’s board: Just as Quarles was joining the board last month, Stanley Fischer was stepping down as Fed vice chairman.

And Yellen herself could decide to leave the board when her term as chair ends on Feb. 3, even though her separate term on the board runs until 2024.

Dudley’s announcement that he plans to retire by mid-2018 also creates an opening on the committee of board members and bank presidents who set interest rate policies. Dudley’s position is particularly crucial: As head of the New York Fed, he is a permanent voting member of the Fed committee that sets interest rates.

The committee is composed of the board members and five of the 12 regional bank presidents. Unlike the New York Fed president, the other regional bank presidents vote on a rotating basis. The New York Fed president also serves as vice chairman of the rate-setting panel.

Some economists said that while financial markets have so far registered little concern about the number of key open Fed positions, that could change quickly, especially if investors begin to worry that the central bank will accelerate interest rate hikes.

“We need to get rid of this uncertainty, and until these seats are filled, there is going to be uncertainty,” said Diane Swonk, chief economist at DS Economics.

Analysts are trying to read the two decisions Trump has made — picking Powell for the top job and Quarles for the key post for banking supervision — as signs for where he might be headed. With Powell, the president opted for continuity on rates by selecting someone who for years was the lone Republican on the board but who remained a reliable vote for the gradual approach to rate hikes Yellen favored.

And in the bank supervision post, analysts say Trump might have been signaling that he wants to reverse, or at least weaken, Yellen’s backing of the reforms instituted by the 2010 Dodd-Frank financial overhaul law. During the campaign, Trump argued that Dodd-Frank was harming the economy by constraining back lending.

Quarles has been critical of aspects of that law. To a lesser extent, so, too, has Powell, who will be the first Fed chairman in nearly 40 years to lack a degree in economics. Powell, a lawyer by training, amassed a fortune as an investment banker at the Carlyle Group.

“With his background, Powell can be expected to work well with Wall Street and the business community in general,” said Sung Won Sohn, an economics professor at California State University, Channel Islands.

A senior administration official indicated that one important attribute for the open positions will be a diversity of backgrounds.

“We believe the Fed will function best with a wide range of skill sets,” said the official, who spoke on condition of anonymity to discuss personnel decisions. This official would not give a timetable for when the administration’s next nominations for the Fed might occur.

Though Trump will choose officials to fill the openings on the board, the choice of Dudley’s replacement will fall to the board of the New York Fed. The New York Fed said a search committee had been formed to choose a successor to Dudley, who joined the New York Fed in 2007 after more than two decades at Goldman Sachs.

The announcement from the New York Fed said Dudley, 64, intended to step down in mid-2018 to ensure that his successor would be in place well before the mandatory end of Dudley’s term in January 2019.

After overseeing the New York Fed’s securities operations for two years, Dudley succeeded Timothy Geithner as its president after Geithner was tapped by President Barack Obama to become Treasury secretary in 2009.

Dudley won praise for the work he did with Geithner and Fed Chairman Ben Bernanke to contain the fallout from the 2008 financial crisis. Dudley supported Yellen’s cautious approach to raising the Fed’s benchmark rate and the plan the central bank has begun to gradually shrink its $4.5 trillion balance sheet, which is five times its size before the financial crisis.

The balance sheet contains $4.2 trillion in Treasurys and mortgage bonds that the Fed bought since 2008 to try to hold down long-term borrowing rates and help the economy recovery from the worst recession since the 1930s.

In a statement, Yellen praised Dudley for his “wise counsel and warm friendship throughout the years of the financial crisis and its aftermath.”
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Media organizations across the world revealed a massive leak of millions of financial documents Sunday that outlined the elaborate steps taken by elite politicians and other wealthy individuals to shield their wealth from tax collectors.

The leak, which has been dubbed the Paradise Papers, contained more than 13 million files taken mostly from a single Bermuda-based legal services company, Appleby.

The files were initially leaked to the German newspaper Sueddeutsche Zeitung, which then shared them with around 100 different media outlets affiliated with the International Consortium of Investigative Journalists (ICIJ).

The disclosures date back as far as 70 years ago and show the murky, but mostly legal, ways in which some of the biggest names in politics and media protect their wealth through various offshore schemes.

So far, the documents have revealed how millions of dollars’ from the Queen’s private estate wound up in a Cayman Islands fund, numerous offshore dealings by high-ranking members of President Donald Trump’s cabinet and shown how Russian state financial institutions invested millions of dollars in Twitter and Facebook.

Also implicated in the Paradise Papers is Canadian Prime Minister Justin Trudeau’s chief fundraiser, Stephen Bronfman, who helped move millions of dollars through a complex web of offshore accounts.

Appleby claims to have investigated all the allegations contained in the Paradise Papers and found “no evidence of wrongdoing, either on the part of ourselves or our clients.”

“We are a law firm which advises clients on legitimate and lawful ways to conduct their business. We do not tolerate illegal behavior,” the company added, in a statement to The Guardian.

The Paradise Papers leak marks the second largest data leak in history and closely resembles the Panama Papers leaked last year from the law firm Mossack Fonseca. Those leaks similarly showed the ways in which the wealthy use secretive offshore accounts to avoid paying taxes.

VOA’s Ray Choto is among the journalists involved with the Paradise Papers. He says it is much bigger than the Panama Papers in terms of files and that more journalists were involved.
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The writers of the television drama series “Game of Thrones” would be hard pressed to pack into one episode what happened in Saudi Arabia Saturday, which saw breathtaking arrests of scores of princes and ministers once considered untouchable.

The kingdom-wide swoop has left international investors shocked and analysts scrambling. It drove up the price of oil to its highest close in two years.

Included in the unprecedented roundup ordered by King Salman and overseen by his son, Saudi Arabia’s Crown Prince, was one of the world’s richest men, Prince Waleed bin Talal, the billionaire businessman who co-owns the Four Seasons hotel chain and is a major investor in Rupert Murdoch’s worldwide media empire.

Others among the 50 who have been detained and corralled in opulent hotels across the Saudi capital include Alwaleed al-Ibrahim, the owner of the largest satellite television network in the Middle East, MBC, and Bakr bin Laden, brother of Osama bin Laden and chairman of the Gulf kingdom’s biggest construction company.

And along with them prominent military figures, including Prince Fahd bin Abdullah bin Muhammad, a former defense minister, and Prince Miteb bin Abdullah, the minister of the elite 100,000-strong National Guard and son of the late King Abdullah, whose death two years ago led to Mohammed bin Salman’s appointment as Crown Prince by his ailing father, the kingdom’s 81-year-old current monarch.

The round-up, which saw palaces surrounded in the dead of night and the grounding of private jets at Jeddah’s airport to prevent those targeted from fleeing, is being described as an anti-corruption drive by Saudi officials. The detainees’ assets have been frozen.

But the scale of what is being dubbed by analysts “a purge”, further consolidates the power of the 32-year-old Crown Prince and future king. He will chair a commission to monitor and investigate corruption, which King Salman’s communique described as the “exploitation by some of the weak souls who have put their own interests above the public interest.”

The commission has the authority to investigate, arrest, issue travel bans and freeze assets, say Saudi officials. They suggested more royals, the ruling House of Saud comprises an estimated 15,000 family members, could be detained in the coming days, and more assets seized. “The amounts, which prove to be linked to corruption issues, would be returned to the treasury of the State of Saudi Arabia,” the Information Ministry said Sunday.

Few Saudi-watchers believe weeding out corruption is the main point of the high-risk swoop. State finances and private finances of the members of the House of Saud have long been hopelessly mixed and seen as one and the same thing. The arrests have as their goal the tightening of the Crown Prince’s grip on power, say Saudi-watchers. Their scale suggests mounting fears by the Crown Prince and his father that a coup against them might have been in the throes of being hatched.

“The determination to consolidate power in the hands of the crown prince suggests both ambition and anxiety,” says analyst Bruce Riedel, a former CIA analyst and author of the upcoming book “Kings and Presidents: Saudi Arabia and the United States Since FDR.”

Family divisions

Writing for the website Al Monitor, Riedel says, “The young prince is a man in a hurry with a sweeping vision of transforming his country. But Mohammed bin Salman is also aware that his rise to power has alienated many in the royal family who have been sidelined.”

He says the large-scale wave of arrests “suggests deep opposition to the young prince’s ambitions.”

The kingdom is at a crossroads and has seen several of the policies being pushed by the future king fail to come off. Saudi Arabia has been locked in a two-and-a-half-year war in neighboring Yemen against Iranian-backed rebels. A move to discipline another neighbor, Qatar, with an five-months-long economic blockade has failed to pay dividends.

And the kingdom’s principal rival in the region, Iran, has been gaining increasing influence across the Middle East.

Radical reforms

With that as a backdrop, the Crown Prince has been pushing radical reform, from recently lifting a ban on women driving to launching an ambitious economic overhaul designed to make the country less dependent on oil. He has pledged to steer Saudi Arabia towards a moderate interpretation of Islam.

Reform makes enemies, say analysts. The House of Saud’s control of the kingdom has been based on twin pillars, oil-wealth that has allowed it to reward all the extended family, and appeasement of the austere ultra-conservative religious movement known as Wahhabism.

According to Zubair Iqbal, an analyst at the Middle East Institute, a Washington-based think tank, the House of Saud “has been broken into two parts between the traditionalists, who believe in consensus, against those who say they are going to enforce rules, regulations and policies without going through the process of consensus, which takes too much time and ends up diluting the intended policy.”

He told VOA, “The conflict is being taken care of by taking arbitrary measures against those who don’t agree with you,” adding he worries the Crown Prince is too impatient in how he is implementing change.

Some analysts who believe the crackdown’s scale and timing indicate fears of a coup, point to a mysterious helicopter crash Sunday near the Yemen border in which a senior Saudi prince, the son of another prominent royal pushed aside by King Salman, and seven top-ranking officials were killed. The Saudi Interior Ministry has not given a cause for the crash.

“Fear of a coup,” tweeted Jane Kinnenmont, an analyst at Britain’s Chatham House, a policy research group, “different from an actual coup.” Along with other analysts, she maintains that if the roundup Saturday was part of the crushing of a coup already unfolding, there would have been more arrests.

 
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Wireless carriers Sprint and T-Mobile called off a potential merger, saying the companies couldn’t come to an agreement that would benefit customers and shareholders.

The two companies have been dancing around a possible merger for years, and were again in the news in recent weeks with talks of the two companies coming together after all. But in a joint statement Saturday, Sprint and T-Mobile said they are calling off merger negotiations for the foreseeable future.

“The prospect of combining with Sprint has been compelling for a variety of reasons, including the potential to create significant benefits for consumers and value for shareholders. However, we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record,” said John Legere, president and CEO of T-Mobile US, in a prepared statement.

T-Mobile and Sprint are the U.S.’ third- and fourth-largest wireless carriers, respectively, but they are significantly smaller than AT&T and Verizon, who effectively have a duopoly over U.S. wireless service. The two companies have said they hoped to find a way of merging to make the wireless market more competitive.

Sprint and its owner, the Japanese conglomerate SoftBank, have long been looking for a deal as the company has struggled to compete on its own. But Washington regulators have frowned on a possible merger. D.C. spiked AT&T’s offer to buy T-Mobile in 2011 and signaled in 2014 they would have been against Sprint doing the same thing. But with the new Trump administration, it was thought regulators might be more relaxed about a merger.

Sprint has a lot of debt and has posted a string of annual losses. The company has cut costs and made itself more attractive to customers, BTIG Research analyst Walter Piecyk says, but it hasn’t invested enough in its network and doesn’t have enough airwave rights for quality service in rural areas.

T-Mobile, meanwhile, has been on a yearslong streak adding customers. After the government nixed AT&T’s attempt to buy it in 2011, T-Mobile led the way in many consumer-friendly changes, such as ditching two-year contracts and bringing back unlimited data plans. Consumers are paying less for cellphone service, thanks to T-Mobile’s influence on the industry and the resultant price wars.

“T-Mobile does not need a merger with Sprint to succeed, but Sprint might need one to survive,” Piecyk wrote in an October research note.
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U.S. President Donald Trump urged Saudi Arabia Saturday to list its state-owned oil company on the New York Stock Exchange when the company goes public in what is expected to be the largest-ever initial public offering in which shares of a company are sold to investors.

“Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!,” Trump tweeted from Hawaii, his first stop ahead of a 13-day trip to Asia.

Saudi officials have reportedly said the government intends to list 5 percent of  the company’s shares on local and global stock exchanges in 2018 but have yet to select an overseas venue. Saudi officials have estimated the IPO will be worth about $100 billion.

The NYSE has had discussions with the Saudis about the upcoming IPO as has the London Stock Exchange. Exchanges in Hong Kong, Singapore, Tokyo, Toronto and the U.S. are also soliciting portions of the public offering.

New York-based NASDAQ, which provides technology to Saudi Arabia’s exchange, has been leveraging that relationship in an attempt to win the listing.

Trump has developed a close relationship with Saudi Arabia. During his visit there last summer, he signed a $110 billion defense agreement with Saudi King Salman.

At a $2 trillion valuation Saudi officials have projected for Aramco, selling five-percent of the company’s shares would reap $100 billion.

The public offering of shares of Aramco, the world’s largest oil producer, is part of Saudi government plans to sell state assets as a recession slows Riyadh’s effort to eliminate a budget deficit caused by low oil prices.

 
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The recent flurry of social and economic reform coming out of Saudi Arabia has left some Saudis ecstatic, others more circumspect, and a few conservatives bewildered or even angry.

Saudi Crown Prince Mohammed Bin Salman told a crowd of investors at a conference in late October that he was merely attempting to “return Saudi Arabia to the moderate Islam that once prevailed” before the Iranian Revolution in 1979. He stressed that 70 percent of Saudis are younger than 30 and vowed “not to spend another 30 years of our lives living under extremist ideas.”

The young crown prince also proposed an ambitious plan for a new economic zone on the Red Sea near Jordan and Egypt. In April, he put forward an economic road map for the kingdom, called Vision 2030. Part of the plan calls for privatizing 5 percent of the country’s flagship petroleum company Aramco, in addition to attracting foreign investment capital.

​Too much change too fast

Clarence Rodriguez, who spent 12 years as a French foreign correspondent in Riyadh and recently wrote a book called Saudi Arabia 3.0 on the aspirations of Saudi women and young people, tells VOA that she believes Saudi Arabia “is in crisis, due to the drop in the price of petroleum,” and that it has found itself under pressure to “diversify its economy, which necessitates societal reform involving women and young people, as well.”

Rodriguez points out that the late King Abdallah, who died in 2014, started the reform movement by allowing Saudi women to run for the country’s consultative “Shoura” council and to enter the work force, becoming lawyers, bankers and salespeople.

She worries, however, that some recent moves to change the status of women have angered parts of the kingdom’s mostly conservative population. Traditionalists, she says, are “not used to such quick change” and many “are afraid, because things are moving too fast for them.”

On a recent talk show on an Arabic-language news channel, a conservative Saudi caller told the show’s host that he thinks Saudi King Salman and Crown Prince Mohammed Bin Salman are “violating (Islamic) sharia law” with some of their recent reforms “and should go to jail.”

Saudi commentator Jamal Kashoggi tells VOA that he’s “not optimistic about the reforms,” but that he would “still like to be optimistic … since everyone will suffer if they fail.” Kashoggi worries that the reforms are “not engaging Saudi society, enough.” 

“We wish Mohammed Bin Salman well, and we need economic (and social) reform,” he said, “but, we also need to discuss (these issues). The change,” he said, “is being done in very narrow circles. (Ordinary) people are not feeling engaged.” 

Was Saudi society more moderate?

Hilal Khashan, who teaches political science at the American University of Beirut, is not convinced that Saudi society was more moderate before the Iranian Revolution in 1979. He thinks that parts of Saudi society have always had a conservative streak to them, pointing out that Wahabi conservatives killed many moderate Muslims, including the Shafa’i mufti of Mecca when they overran the city and the nearby resort city of Ta’ef in 1924.

A handful of prominent Saudi conservative clerics have been arrested since Mohammed Bin Salman replaced his cousin, Mohammed Bin Nayef, as crown prince, in June. 

“By weakening the clerical establishment and making clerics simple government workers,” Khashan said, “(Mohammed Bin Salman) will be able to give women more rights, as he is proposing.” Saudi women were allowed to drive, starting in September, and this week were given permission to attend sports matches with their families.

Khashan believes that economic considerations are a key factor in the decision to allow Saudi women to drive. 

“If 10 million women are given the right to drive in Saudi Arabia,” he said, “and if just a fraction of those women buy cars, take driving lessons or buy insurance, that would contribute to stimulating Saudi Arabia’s stagnant economy.” Allowing women to drive will also curtail the expensive practice of hiring foreign chauffeurs to drive women around.

Both Kashoggi and Khashan believe that the Saudi government will eventually prevail in its efforts to reform society. 

“Conservatives,” Kashoggi said, “have already lashed out. They’ve been lashing out since 2003. Al-Qaida, or ISIS, or the radical Wahabis … these are the extremists in Saudi Arabia … and they don’t want change. They have resisted, and will continue to resist. … The only thing stopping them is (government) security.”

Clashes with clerics

Khashan points out that in clashes with conservative clerics back in the 1960s, after King Faisal opened a school for girls in Riyadh, and when the king opened the first TV station in Riyadh in 1965, the government prevailed. 

“Whenever the state clashes with the (conservative) clerical establishment, the state emerges victorious,” he said, “and there’s no reason to believe that things will not be the same, this time.”

Jordanian analyst Shehab Makahleh is less certain about who will come out on top, however. 

“There is a kind of opposition among royal family members who are not happy (about the reforms),” he said, “and they have had a number of meetings to clarify where the country is heading in the coming five to 10 years.”

Makahleh believes that King Salman may soon abdicate in favor of Mohammed Bin Salman “in order to gain more support from the international community” for his ambitious reform program and to promote a more secular model of society.
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For Yu Kaiguang, harsh new United Nations sanctions on North Korea are a disaster.

The trader in the Chinese border city of Dandong has seen business all but dry up, and he spends his days scrambling to obtain payment from the suddenly broke North Korean state companies to whom he sold on credit.

“They have no money to pay us in cash, and the worst is that because of sanctions they can’t settle the bill with goods such as coal, as they did in the past,” said Yu, reached by telephone at the offices of his Dandong Gaoli Trading Company.

Yu said he’s owed about $1 million in all for deliveries of toothpaste, instant noodles and other household items. He’s trying to avoid laying off staff by continuing to export foodstuffs such as pine nuts and red beans. “If they become unemployed, it would be bad for both the state and society.”

​Common problem for traders

Yu’s plight appears increasingly commonplace across Dandong, where the bulk of the cross-border trade is handled. Interviews with four trading companies and recent media reports indicate Chinese companies are hurting in a city where North Korean trucks used to rumble across the Yalu River bridge several times a week delivering metal scrap and returning with everything from televisions to toilet bowls.

The owner of another firm, Dandong Baoquan Commerce and Trade Co., which used to import iron ore and coal and export basic consumer goods, said he was owed around $200,000 by his North Korea clients.

“I had to lay off about 10 staffers, but I had no other choice because it was the government policy,” Han Lixin said, referring to the sanctions. “I’m still in business hoping to trade with other countries, but it takes a lot of time and efforts to develop customers.”

Large-scale trade involving North Korean resources such as iron ore and coal has been banned entirely under the sanctions, dealing a big blow to Dandong’s port, whose operator defaulted on a $150 million corporate bond this week in part because of cratering revenues.

Both economies hurting

“The sanctions have a broad effect, and both the economies of North Korea and China are suffering a lot,” said Jin Qiangyi, professor at the Institute of Northeast Asia Studies at Yanbian University in Northeast China. “Chinese companies doing business with North Korea may see quite a lot of losses, and the companies that have already invested in North Korea will suffer more.”

Dealing with North Korean companies was never easy. Wang Chengpeng, former manager of Dandong Hongwei Trading Company, quit doing business with the North entirely because of hassles, restrictions and low-profit margins, even before the latest sanctions began to bite.

Despite that, China has long been the North’s biggest economic partner. Beijing accounted for more than 90 percent of its neighbor’s foreign trade of about $6.5 billion in 2016, according to the South Korean-owned Korea Trade Investment Promotion Agency. China continues to be a key source of food and fuel aid to help keep North Korea’s weak economy from collapsing, and Chinese officials say they won’t agree to measures that could cut off basic life necessities and possibly cause Kim Jong Un’s dictatorship to topple.

Sanctions holding

China’s patience with Kim has grown increasingly thin, however, and Beijing has lent its support to increasingly tough resolutions unanimously approved by the Security Council this year that target North Korea’s economy in response to its ballistic missile launches and latest nuclear test.

China has said it sees sanctions purely as a means of inducing North Korea to return to nuclear disarmament talks and has rejected unilateral measures not approved by the Security Council, of which it is one of the five veto-wielding permanent members.

Still, despite some allegations of cheating, China appears to be seeking to enforce the sanctions that also ban exports of lead, textiles and seafood, prohibit joint ventures, and bar any country from authorizing new permits for North Korean workers, all sources of hard currency for Pyongyang.

The sanctions have also blacklisted a number of firms in the extraction and financial industries, imposed travel bans and frozen the assets of some government officials, banned the import of natural gas liquids and condensates, and capped the country’s crude oil imports.

It’s hard to gauge the exact impact of sanctions on the North Korean economy because the crucial food and energy sectors are less likely to be hurt by external conditions, said Lee Seok-ki, a senior researcher at the South Korean government-run Korea Institute for Industrial Economics and Trade.

However, while the North’s economy has been expanding, by 3.9 percent in 2016, according to an estimate by the Bank of Korea in South Korea, that rate almost certainly can’t be sustained if sanctions continue, Lee said.

China for its part is watching North Korea to see how its ally will respond to the new measures, eager for signs of a shift in tactics by Kim and an improvement in relations between Beijing and Pyongyang that have “sunk into a standstill,” as Jin puts it.
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