Saudi Arabia Tries to Buy Peace for $36 Billion

February 23rd, 2011
in econ_news

Saudi King Abdullah Econintersect:  Saudi Arabia  has thus far been spared the type of popular discontent that has toppled presidents in Tunisia and Egypt, disrupted Yemen and Bahrain, and brought Libya to the brink of civil war.  It seems that King Abdullah wants to keep it that way.

The king has announced immediate measures, including a 15% salary increase for public employees and financial aid for students and the unemployed, totalling $36 billion.  He has also announced reprieves for imprisoned debtors.

Follow up:

There are problems that the $36 billion do not address.  From the Financial Times:

The cash-rich Saudi government has pledged to spend $400bn by the end of 2014 to improve education, infrastructure and healthcare. “The king is trying to create wider trickle- down of wealth in the shape of social welfare,’’ said John Sfakianakis, chief economist at Banque Saudi Fransi. “The budget can handle that, but it is an aspirin to ease medium-term pain, not a solution for the long-term housing, and unemployment issue.”
Critics said the sweeteners did not address the Saudi public’s political aspirations. Protests, political parties and labour unions are banned in the conservative kingdom. “We need a new higher education minister, a new health minister, reform of the judiciary and codified laws - not hand-outs,’’ said Turki Al-Balaa, a 34 year-old businessmen.

“We want real change. This will be the only guarantee of security of the kingdom,’’ added Hassan al-Mustafa, one of 40 Saudi rights activists and journalists who signed an open letter requesting an elected parliament, more rights for women and enhanced anti-corruption measures.“A constitutional monarchy closer to the Kuwaiti model is not an impossible target to achieve right now.” 

The potential for unrest in Saudi Arabia appears to be more from political forces than from economic forces, although unemployment has been a problem, remaining above 10% in spite of economic strength from higher oil prices.  From Investment Watch:

Reformists including Prince Talal bin Abdelaziz, the king’s half brother, have called for similar reforms. Saudi Arabia is an absolute monarchy ruled by consensus among the royal family and in alliance with an austere religious establishment that preaches obedience to the king. The country’s leading clerics have warned against the “evils” of the regional unrest which they say were incited by foreigners to foment instability in Muslim countries.

Hundreds of people have signed up to a Facebook campaign calling for a “day of rage” across Saudi Arabia on March 11, although it is not clear if any protests will materialise. Analysts said the late date suggested that activists wanted to give the government time to introduce reforms, and not a real desire to take to the streets.

“We don’t want money,” a female student from Jeddah said on her Twitter feed. “I want to know that I’ll be protected under a written constitution for the rest of my short life.”

A lawyer wrote that the Saudi people seek “dignity, reform, freedom of expression, transparency, justice, respect, wise governance, not grants’’.

Sources:  Financial Times and  Investment Watch









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2 comments

  1. MonkeeRench Email says :

    Why does there seem to be NO discussion whatever of one of the most significant issues in Saudi Arabia -- that the majority Shia are disadvantaged and repressed? To what extent can financial bribery EVER be effective and equitable under such discrimination? No wonder sudden international blowbacks are claimed to be complete surprises!

  2. Admin (Member) Email says :

    @MonkeeRench:

    Thanks for the added point. The Shia - Sunni divide seems to be pervasive in the Arab world, much like the Catholic - Protestant divide was influential in American life 100 years ago and in Ireland more recently.

    One wonders how much of the disagreement is religious and how much is political/economic.





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