Saudi Arabia Hoping To Bribe Its Citizens Not To Revolt
Is Saudi Arabia the next domino to fall in the Middle East? The Royal family is hoping that money will be enough to make sure that doesn't happen.
As we watch the wave of protests on the verge of taking down a third Arab leader, the Saudi Royal Family apparently thinks it can bribe the populace into remaining docile:
The king of Saudi Arabia last night announced $36bn (£22bn) of extra benefits for his people in an attempt to stop the wave of Arab uprisings spreading to the world’s biggest oil exporter, as experts warned Brent crude could hit $220 a barrel.
King Abdullah’s support package offers to give 18m lower and middle-income Saudi’s inflation-busting pay rises, unemployment benefits and affordable housing.
The cash-rich Saudi government pledged to spend a total of $400bn by the end of 2014 to improve education, health care and the kingdom’s infrastructure.Charles Robertson, an analyst at Renaissance Capital, said investors are very concerned about what might happen in Saudi Arabia’s oil rich Eastern Province, the home of the kingdom’s restless Shi’ite minority. The Saudis produce 11.6pc of world output, but a much higher share of exports.
“There is potential for serious tension, and not just among the Shia. High unemployment and the youth bulge means unrest could be country-wide. If Saudi Arabia or Iran are engulfed, we have a serious problem,” Mr Robertson said.
The possibility of unrest in Saudi Arabia, and especially in its oil-rich and Shiite-dominate eastern provinces, has oil markets worried, with some analysts saying prices could skyrocket to levels never seem before:
The growing turmoil in the region led experts to warn last night that Brent crude oil prices may double from the $111 a barrel mark it peaked at yesterday if the crisis continues to spread to other Middle Eastern countries.
Nomura’s commodity team said oil prices risk vaulting to uncharted highs over coming weeks if chaos hits Algeria as well, reducing global spare capacity to the wafer-thin margins seen just before the first Gulf War.
On Wednesday, Brent crude rose more than 5pc to almost $112 a barrel, threatening levels that could derail the global economy. It closed at $111.25.
“We could see $220 a barrel should both Libya and Algeria halt oil production. We could be underestimating this as speculative activiites were largely not present in 1990-1991,” said Michael Lo, the bank’s oil strategist.
And, while some analysts in the West seem to be arguing that Saudi Arabia is different from the rest of the Middle East, the breeding ground for popular unrest seems obvious:
Saudi Arabia is vulnerable to the changes taking place around it. On one side Egypt, on another Yemen and across a 26 kilometre causeway on the eastern gulf, Bahrain. The Saudi royal family is locked in a dangerous time warp of its own making.
The US Consular Service advises on its website that the government of “Saudi Arabia is a monarchy ruled by a king chosen from and by members of the Al Saud family. The king rules through royal decrees issued in conjunction with the Council of Ministers, and with advice from the Consultative Council. The king appoints members of both councils…Saudi authorities do not permit criticism of Islam or the royal family. The government prohibits the public practice of religions other than Islam”.
Tensions have been simmering in the Middle East for decades, particularly Saudi Arabia. The majority practice a fundamentalist off-shoot of the Sunni branch of Islam, known as Wahabism. At least it does so officially. Compliance with the dictates of Wahabism is vested in the Mutawwa or religious police. They ensure that women are accompanied in public by their husbands or male relatives, that they do not drive motor vehicles and that they wear an Abaya, or equivalent in the case of Western women, and that female heads are covered with a scarf or shawl.
Women have few of the rights or freedoms that are taken for granted in Australia. Alcohol and drugs are forbidden, yet members of the wealthy elite and some members of the extended ruling family ignore this restriction.
There are some wonderfully contemplative, well-balanced and read Saudis, yet venality and mendacious is all too often encountered. It is a society run entirely for the benefit of ethnic Saudi males.
Charles Krauthammer spoke aboiut this last night, and noted that March 11th appears to be a crucial day as far as Saudi Arabia is concerned:
“The big one is March 11,” Krauthammer said. “There’s a Facebook call in Saudi Arabia for a day of rage all over Saudi Arabia on March 11. Now, the Saudis have really good intelligence. They are tough. They’re ruthless and they’re effective. There isn’t a lot of anti-government activity in Saudi Arabia.”
If it isn’t foiled though, Krauthammer said such unrest could spell dire consequences for the world economy and would warrant intervention.
“However in the eastern provinces, which are Shiite – if you get major eruptions on March 11, all hell is breaking loose,” he continued. “Saudi Arabia is the prize. It’s the treasure. I mean, it’s the gold at the end of the rainbow. It’s everything for the world economy. And then you have to think of Western intervention – if something like that happens.”
(…)
And remember, the Shiites in Bahrain, which is sort of a proxy for Saudi Arabia and Iraq, are pro-Iranian,” he said. “There are pro-Iranians among them. If Iran essentially gets proxy control of Saudi oil, the whole world has changed.”
“So I think the one we really — I mean there are humanitarian concerns in Libya that are significant,” he continued. “There are also strategic concerns, but there’s nothing compared to Saudi Arabia and it’ll be interesting. I’m not sure anything will happen on March 11, but if something does we got a whole new world we’re living in.”
Krauthammer is right, of course. If Saudi Arabia erupts into something akin to what we’ve seen elsewhere in the Arab world, then all bets are off. The price of oil will likely skyrocket just on the fear that the world oil supply could be cut off for even a brief period of time. The economic impact of $200 per barrel oil is totally unpredictable, but it’s doubtful that it would be good. This is why the Saudi leadership is trying to placate it’s citizenry. Will it work? I have no idea and I don’t think anyone else does. The one thing about the protests that have swept the Middle East that we’ve learned so far is that they’re totally unpredictable and anything is possible.
They are giving their citizenry a drop in the proverbial “oil” bucket. Considering the wealth the Royal family holds, their bribes are an insult to the people and may very well be taken as such by them.
But I wonder if the fact that Mecca is in Saudi Arabia might play some part in the outcome.
Any opinion on that, Doug?
I wish John Burgess would post on this here. Here’s John’s observation on the move. Essentially, he considers it the king’s move both shrewd and good but points out that it won’t solve the KSA’s problems which are structural.
The one thing that I would add to John’s observations is that there isn’t just one Saudi Arabia but many. There’s the Saud family, educated ex-pats, unemployed youth, older and more conservative people, and so on.
If I were to put down $5 on a bet either way … I’d chose no SA revolution.
At that same time, some part of me wants to see that scary movie.
Thanks to Dave for linking to my piece.
I certainly don’t see the KSA following in the path of Tunisia or Libya. One of the reasons it won’t is that King Abdullah is truly a popular figure. He does not have a past replete with corruption or underhanded dealings and has made a very public point of ensuring that his sons don’t either. He is, and is seen as pious, always a crowd-pleaser in the country. But even there, he has sought to lessen social intolerance. He’s certainly offered the Eastern Province Shi’ites the best deal they’ve ever had–though that’s not necessarily saying he’s given them everything they want or deserve. He’s even paid attention to the ‘other’ Shi’ites, those Ahmadis in the southwestern province of Najran.
I don’t see expats workers as players in the political equation at all. They can all have their visas canceled overnight and be shoved onto boats and planes as fast as they can be boarded. Yet those expat workers, no matter how sub-standard their condition, are unlikely to revolt because what they have in the KSA is still better than what they fled in their home countries.
The ‘stake holders’ (God, I hate that phrase!) in the KSA are generally seen as comprised of the Al-Saud family, the merchants on both coasts, the rising middle class, the clerical establishment, and the tribes. Young Saudis are wedging their way in, but are still politically naive (not that that ever stopped a revolution, of course). While they may have the technological means to foment dissent, they lack a coherent picture of what they actually want. At most, it’s just, “not this”. Oh, they want jobs, an income sufficient to marry, some sort of future they can picture in their own minds, of course. But rioting on the streets isn’t going to bring those about. They aren’t being gouged the way Tunisians were; they aren’t being oppressed by the state–though they are, certainly, being limited–as the Egyptians.
I truly expect to see reforms–social, economic, political–to be hitting a higher gear. The Al-Saud, and particularly this king, are not stupid. They see a dynasty worth preserving, not an individual worth protecting at all costs. They got rid of an ineffectual king (Saud) back in the 60s and would do it again, in a heartbeat, if necessary. Right now, Abdullah is the best thing the family has going for it. I suspect his reforms are going to be allowed to take place much more easily now.
When I mentioned “ex-pats” I didn’t mean people from other countries working in the KSA. I meant Saudis studying, working, or living overseas. I believe there’s quite a number of them and I suspect that they have views distinct from those of other Saudis.
Dave: Got it. But no.
Even Saudis living/working/studying outside the KSA are not terribly upset about the state of affairs. There are dissidents who really do need to stay outside the country; there are political exiles. But the KSA still is among the top countries in the world whose citizens, having obtained a temporary (business or student) visa for the US all return home. You don’t have to search Saudi media very deeply to find Saudi women’s sighs of relief when they get back home, to a ‘safe’ culture, and away from the constant worry about what sort of unintentional signals they might have been sending while abroad.
Sure, most Saudis like many aspects of life outside the Kingdom, ranging from women’s driving to being able to go to a movie. But they still go home at the end of their stays.
Saudi Arabia can no longer exist in bubble while the revolutionary movements are on the rise in the neighboring countries. And the reforms promised by the Saudi Arabian king are only a temporary solution to the desperate situation in which many people of the country have found themselves.
Good thing we have crap public transportation and weak gas mileage standards…