ABAYA-clad women swoon over his photo on their smartphones; journalists garland every mention of him with fawning adjectives; diplomats scramble to relay titbits about him to their capitals. Bureaucrats who once snoozed all day at their desks now spend nights in the ministries to do his bidding. Muhammad bin Salman—Saudi Arabia’s defence minister and, following a recent decree by his father, King Salman, second in line to its throne—has set Riyadh, the stifling Saudi capital, abuzz.

Little wonder. King Salman, who took over in January, is the sixth of the sons of King Abdel Aziz bin Saud, the modern kingdom’s founder, to have worn its crown. His decision that he will also be the last king of that generation, with the line of succession passing first to his (son-less) nephew, the 55-year-old Muhammad bin Nayef (pictured, centre), and then to Muhammad bin Salman (pictured, right), who is in his late 20s or early 30s, would be a big shift under any circumstances, opening the possibility of a ruler similar in age to the ruled (see chart 1). But Muhammad bin Salman is not merely a young face in a gerontocracy; he is a dynamic and apparently purposeful one. In a few short months he has launched a war in Yemen, travelled to Camp David to meet Barack Obama, and become the overseer of Saudi Aramco, the country’s oil company. “The country was a ship afloat with no compass and a dark sky,” says Mohsen al-Awaji, a cleric and former government critic. “It is early days, but now we at least have stars.”

Fortunate, if true—because the waters the country has to navigate are more perilous than they have been for decades. It is surrounded by civil wars and failed states, and the sharp fall in the oil price has dealt it a severe economic blow. Through various Shia proxies its adversary, Iran, is both adding to the regional tumult and taking advantage of it. And Iran’s influence and wealth seem set to grow further if, as seems likely, the sanctions imposed as a response to its nuclear programme are lifted as part of a deal with America, Russia and Europe later this summer.

Thrust upon them

This all requires a new approach on Saudi Arabia’s part. The country has long enjoyed an importance based not on what it does, but what it is; the source of vast oil exports and the home to the holiest sites in Islam. Now its leaders feel it needs to earn its status by demonstrating an ability to confront Iran and support its fellow Sunnis in the region’s sectarian struggles.

On top of that, its leaders feel they can no longer rely on America to the degree that once they did. Under Mr Obama the United States has been reluctant to engage in a region that is consumed by civil wars. Its shale-energy boom makes it less dependent on Saudi oil. And America is trying hard to make that deal with Iran.

Saudi Arabia’s decision to intervene in Yemen in March—an operation in which it is firmly in the driving seat, though with American support in intelligence and logistics—is ostensibly aimed at crushing the Iranian-backed Houthi rebels. Its greater purpose, though, is to demonstrate to Iran and others the kingdom’s new willingness to lead. “The war is not to do with Yemen, but is trying to send a signal of Saudi’s intent and capacity,” says John Jenkins, who was once Britain’s ambassador to Riyadh and now heads the regional branch of the International Institute for Strategic Studies, a British think-tank. Gregory Gause, an academic, agrees that the Saudis are trying to send a message. “The question”, he goes on, “is what are they going to be demonstrating?”

For one adviser to the royal family, the point being made is simple: “The Gulf and Saudi Arabia [are] not going to have the Persians or sectarianism destroy our countries.” He says the action should be viewed as a precursor to a new Gulf military alliance styled on NATO, with Saudi Arabia at its head. Such ideas have been mooted for years by the Arab League, a largely ineffective club, but such Saudi leadership has never looked particularly plausible. Now, though—to the discomfort of some Saudis—it is the only leadership on offer. Egypt, a much older and more populous country, used to wield regional power. But it has a stagnant economy, fossilised politics and terrorist attacks to deal with. Though its officials sniff at the idea of Saudi Arabia’s “Bedouins” leading the Arab world, they have enough on their plate dealing with the mess that used to be their neighbour Libya. Iraq, built up as a bulwark against Iran, has now become an Iranian proxy. Syria has collapsed. Turkey has limited influence over its Arab co-religionists.

Within hours of deciding to go into Yemen, Saudi Arabia was able to gather up a ten-member coalition of Sunni states, including Jordan, Morocco, Egypt and, significantly, Qatar, with which it has quarrelled of late. In something of a diplomatic coup, the kingdom also got the UN Security Council to back its action.

But the war is hardly a diplomatic or military success. Although Saudi is the world’s biggest arms importer, its armed forces are much better at some things than others, and are not used to planning whole campaigns. They have been criticised for imprecise bombing and for a naval blockade which has stopped almost all fuel and food reaching the country. Most other members of the coalition—some of whom were, in effect, ordered to take part, rather than asked—are contributing little, with only three mounting air strikes: Pakistan has refused to send troops. Egypt has seen its role as checking Saudi ambition, rather than facilitating it. As coalitions go, this seems to be one of the unwilling. Outside the kingdom there is a broad consensus that the war is going horribly wrong. The Houthis continue to advance. Aid agencies broadcast the humanitarian toll—the UN’s reckoning of civilian deaths stands at 1,849—and the risk of famine faced by millions. The Saudis, accused by Yemenis of turning a blind eye to al-Qaeda-minded groups in the hope of pushing back the Houthis, have no credible plan for a political settlement in Yemen, not least because they refuse to talk to the Houthis. “They are making it up as they go along,” says one observer in Riyadh. Saudi Arabia’s years of backing the rebels in Syria have not revealed any depths of diplomatic or strategic nous. Despite its wealth the kingdom has spent less on its favoured rebel groups than Iran has on propping up the regime of Bashar Assad; what it has spent it spread over too many groups, failing to co-ordinate its efforts with others.

An interactive guide to the Middle East's tangled conflicts Things may be changing. King Salman has started to set aside past differences with Turkey, which could make a difference. Increased co-ordination with the Turks and Qataris in Syria has led to significant rebel advances in the north-west of the country. But the Saudi role in Syria, and indeed more widely, is complicated by the rise of the so-called Islamic State (IS). The kingdom, which has suffered a handful of lone-wolf attacks inspired by IS, is deeply concerned about the caliphate. It does not support IS, and has moved quickly to stop private funds from reaching it. Muhammad bin Nayef, who was in charge of extirpating al-Qaeda from the kingdom after 2001, is assiduous when it comes to counter-terrorism. He is said to have given America details of every Saudi who has travelled to the caliphate. But it is difficult for Saudi to confront IS when its ideology of religious purity and intolerance bears many similarities to Saudi Arabia’s own Wahabbi creed: the wafer-thin—but crucial—difference is that the Wahabbis preach loyalty to the sovereign. The deal through which the royal family—seen as being at the more liberal end of Saudi society—wins legitimacy from the kingdom’s clerics by allowing their intolerant ideas free rein undermines the country’s ability to use the religious soft power it should have as the birthplace of the Prophet Muhammad and the country of Mecca and Medina to discredit IS’s teachings.

Powers of concentration

Saudi Arabia’s religious soft power is thus stymied; its other sources of non-military, non-monetary prestige are scant. Compared with the Egypt of old, with its film industry, or Dubai today, with its snazzy architecture, the kingdom has no cultural clout. And it is sadly lacking in savoir faire, littered as it is with projects flubbed in their execution, from the empty buildings in Riyadh’s new financial district to the drabness of Riyadh, a dull backwater not merely compared with glittering Dubai but also with Manama, the Bahraini capital. It is not the sort of place others aspire to be.

If the world at large is unimpressed by the kingdom’s efforts towards regional leadership, its people, while a bit perturbed by the idea that princely youth might have its fling, like at least some of what they see. The war in Yemen is very popular, and has sounded a new militaristic note into the country’s culture. Zain, a mobile-phone operator, has offered soldiers a 50% discount. Women responded with great enthusiasm to a Twitter hashtag asking whether they would marry a man in uniform (Saudis are among the world’s most devoted tweeters). And it adds to the carefully crafted popularity of the King and the princes—especially Muhammad bin Salman, the war’s figurehead.

By reshaping the succession, King Salman has both settled a long-standing issue—the jostling for position between the 8,000-odd princes of the family’s third generation—and consolidated power in a way that the family is not used to. In something of a palace coup he removed his half-brother Muqrin from his place next in line shortly after taking power to make way for his nephew, who was already respected by the public as a safe pair of hands, and his favourite son. The Allegiance Council, made up of princes representing the bloodlines of each of Abdel Aziz’s 45 sons, rubber stamped the deal. Rumour has it that the disappointed Muqrin has not gone unrecompensed.

The thicket of committees in which decisions used to be made—or left unmade—has been replaced with two overarching councils that put power in the hands of the new Crown Prince and his cousin and deputy. Muhammad bin Nayef oversees the body co-ordinating security and internal affairs. Muhammad bin Salman heads its economic counterpart responsible for development and oil. The previous king, Abdullah, favoured a Bedouin method of trying to build bottom-up consensus, floating ideas in community gatherings across the country before acting; that has been set aside. “Now we have pointing fingers at the top,” says a diplomat.

For this newly consolidated power to amount to much in the long term it will have to be used to bring about economic reform. The fall in the oil price from $110 a barrel in May 2014 to $65 today has not yet pushed Saudi Arabia into financial crisis, as the price slump of the late 1990s did, because the country has foreign cash reserves of $697 billion. At roughly the size of the country’s GDP, that is large enough not just to cushion the blow but to allow the country’s leaders to look blasé about it. The budget passed in December last year contained not a peep about spending cuts, instead allowing a $36.8 billion deficit. On his accession in January King Salman lavished a bonus on state employees and various other goodies on the rest of his subjects that could cost a further 3-4% of GDP.

But with oil accounting for some 90% of government revenues and oil prices, while no longer as low as they were, showing no signs of climbing more, such generosity cannot last (see chart 2). Spending has soared over the past decade to pay for a growing welfare state and infrastructure projects. This year’s fiscal deficit is likely to be about $100 billion, or 15% of the GDP forecast by the IMF, according to Jason Tuvey of Capital Economics, a research firm. “As long as oil is $65 and they spend as if it is $100—with Yemen on top of that—their reserves will be drained,” says a Riyadh-based economist.

Some royals are worried. Lower oil prices are a “catastrophe”, Prince Alwaleed bin Talal Al Saud, who fancies himself as a Saudi Warren Buffett, told his twitter followers last year. Some investors are jumpy, too. In January the market price of the riyal dropped a little below the official rate at which it is pegged to the dollar, hinting that speculative capital outflows were taking place. Between the end of January and the end of March, Saudi Arabia’s foreign currency reserves dropped by 5%, suggesting that the central bank was selling dollars to offset capital flight of some kind, perhaps as rich folk, banks or firms took fright.

At that rate Saudi Arabia’s reserves would run out in just three years. If the kingdom does not have to spend to prop up its currency, though, its reserves will allow it to live with big deficits for longer than that. The state’s balance-sheet is a good bit stronger than it was in the 1990s. It has repaid almost all of its domestic debts. Were it to continue to run a deficit of $100 billion a year while emptying its reserves and issuing debt at home worth up to 50% of GDP, it could keep going for ten years. It could also seek support from oil customers overseas, such as China.

Ten years is a lifetime for Western finance ministers and oil traders, but for Saudi Arabia’s rulers, among whom political lifetimes are actual lifetimes, it is a span that matters. They have made some attempts to deal with spending—Salman has culled some white elephants, including a herd of new football stadiums. A new tax on unused land is planned, and there is talk of introducing VAT. Charges for the haj, the pilgrimage to Mecca that all Muslims must do once in their lifetime, could be increased. But even if all that were to come to pass the country is locked in to a level of spending that it cannot afford in the medium term, assuming the current oil price. And domestic energy consumption, currently around a quarter of production, is rising frighteningly fast as the population grows (it is predicted to reach 45m by 2050, from 28m today). By some estimates there may be no oil to export by 2030.

Unpopular imperatives

Efforts to diversify the economy began in the 1990s, when the price slump led then-crown-Prince Abdullah to declare that “the age of abundance is over”. When the oil price recovered the efforts faded, though, and left little progress behind them. The private sector is dominated by industries, such as petrochemicals and aluminium, that rely on subsidised energy. Although the state spends heavily on education, the country provides very few jobs for its young people—especially women, who make up under 20% of the labour force. Dealing with this would require a level of commitment to radical restructuring that the cautious, conservative royal family has never shown before. Because change would include the slashing of some subsidies and a transformation of the country’s stand against the rights of women, it would raise political tensions that the regime does not want to face. But avoiding restructuring and running out of money could end up being just as disruptive.

The non-eternal flames The potential for unrest is easily overstated. Saudis have seen what happened elsewhere in the Arab spring, and the overwhelming majority of them do not like the look of it. Even the most downtrodden, such as the suppressed minority Shia in the east or the activists locked up simply for calling for reform, think they are better off than they would be in Syria or Libya. But young people—globally connected and increasingly well-educated—want services and housing at home rather than foreign adventures abroad, and if they are not hankering for full-blown democracy they still want a greater say. Historically the devout, rather than the liberal, have been the source of most of the kingdom’s instability. But the royal family, needing the support of the clerics, has done little to tame the Wahabbist ideology, which many, including Sunnis, see as forming an ideological pillar for violent jihadism. Belief inside the kingdom is more diverse than it was, and pretending otherwise is increasing the rate at which the official scholars of Islam, the ulema, are losing followers and legitimacy. But King Salman appears to be giving the ulema a longer leash. He is said not to be urging them, as Abdullah did, to speak out against IS. In January he dismissed the head of the religious police who was viewed as trying to trim their claws. Vicious rants against Shia Muslims go unchecked. For King Salman and his heirs to make Saudi Arabia a credible leader they must reform its economy. In terms of soft power they would do well to take on its extremist clerics, too. Both are huge tasks, and the first would make the second harder if the ructions caused by economic restructuring take on a religious form. Further complications could follow from the way in which King Salman consolidated power in his branch of the royal family. The House of Saud is well aware that, at the turn of the 20th century, open conflict between its members brought down the second Saudi state. But few imagine that Abdullah’s sons, or for that matter Muhammad bin Salman’s elder brothers, are overjoyed with the way the succession has been rearranged. If things start to go wrong they might see a chance to undo those changes. It is also possible that the crown prince and his deputy could fall out; Muhammad bin Salman must be well aware that the precedent his father set in getting rid of a crown prince could be followed to his disadvantage.

The Saudis may remain enraptured by their young deputy crown prince for a while. And his ambition, properly channelled, might earn his country the clout it has lacked. If, decades on, he does one day become king, it could be because he has changed the kingdom for the better. But such an accession is no sure thing.