John Bruton

Opinions & Ideas

Tag: Saudi Arabia

SAUDI ARABIA

I visited Saudi Arabia recently on business. It is a country that is going through a fiscal crisis because of the fall in the price of oil, the main source of government revenues. As a result the government’s budget deficit reached 15% of GDP in 2015. That said, the country has large financial reserves.

Salaries have been cut and subsidies on fuel, food, water and electricity are also being reduced. VAT and a tax on undeveloped land are being introduced.

The State sector is 60% of the economy and the government is committed to increasing the role of the private sector.

 It is also committed to increasing the proportion of women in the paid workforce from 22% to 30%. The position of women is anomalous. They are not allowed to drive a car, but make up more than half of students in higher education.

Meanwhile Saudi Arabia is the third biggest military spender in the world, and is engaged in an expensive civil war in neighbouring Yemen.

In the longer run the prospects for Saudi Arabia are good.

As well as oil, it has large untapped reserves of aluminium, gold, copper and uranium.

It has a very large immigrant population. Only one fifth of the people working in the retail sector are Saudi natives. But the question must be asked if Saudis would work at the prevailing wage level in the sector, and , if not, if Saudi consumers would willingly pay the higher prices that would arise if immigrant workers were replace by Saudis. A similar debate is taking place in the UK and the US, where curbs on immigration are being advocated.

Immigrants in Saudi Arabia send home $38 billion in remittance to families in their home countries,. So a downturn in the Saudi economy is keenly felt in countries like Egypt, Yemen, Lebanon and Jordan.

Saudi Arabia is a relatively recent creation, dating from the early 20th century.

The Al Saud family were dominant in the peninsula in the 18th century, and were at the time allied itself with the Wahabi branch of Islam which came into being around then, an alliance that continues to this day.

 But the Al Saud family lost their strong position in the 19th century, eventually finding themselves exiles in the British protectorate of Kuwait. It was from there that they launched their comeback in 1902.

Starting in Riyadh, the family, led by Abdul Aziz, gradually conquered most of the peninsula by a combination of force, guile and religious fervour.

The only areas they did not eventually take over were Yemen and the British protectorates along the Gulf (now UAE and Oman).

Then oil was discovered and their position was immensely strengthened. Initially much of the benefit of the oil discoveries went to the US investors, but following the oil crisis of 1973, Saudi Arabia took control of its oil.

Saudi Arabia, is a mix of tradition and modernity. There are brutal aspects to its traditions, like the extensive use of the death penalty. It has a very youthful population, some of whom have been attracted to terrorism. The country needs to find a more constructive outlet for their energies. So the country’s successful economic transformation is politically important for the world.

A BAD START TO THE NEW YEAR

2016 drawing
The clash between Saudi Arabia and Iran over the execution of a Saudi cleric of Shia Muslim faith, and the occupation of the Saudi Embassy in Teheran in retaliation for that, is deeply worrying for many reasons.

The two countries are supporting opposite sides in the Syrian Civil War, and the participation of both countries would be vital to any chance of the brokering of a truce in that long running and deeply destructive war.

If the two countries now have no diplomatic relations with one another, it is hard to see how they can contribute to the talks in Vienna aimed at ending the war. That is tragic.

The two countries are also supporting opposite sides in another civil war, in Yemen, one of the poorest countries in the Arab world, which can least afford a regional power struggle being staged on its territory.

Many of the people executed in Saudi Arabia were on the death row for a long time.

The Shia cleric was condemned to death in 2014, so the timing of his and the other executions on the one day is significant. It may have been designed for domestic Saudi opinion, to send a message internationally, or both.

Some have suggested that the Saudis are raising the temperature in the region because they are worried about the Iran nuclear deal, and the fact that this may end of Iran’s economic isolation, which might change the balance of power in the region. Iran has the much bigger population, and greater unrealised economic potential.

Also executed on the same day as the Shia cleric were a number of Sunni opponents of the Saudi government, who have been on death row for some time too. A sort of sectarian balance of pain may have been sought by having all the executions at the same time.

Given the chronic underdevelopment of the entire region, and the high levels of unemployment, the diversion of scarce resources to proxy wars is not in the interest of the people of the region.

Low oil prices are reducing the revenues of both countries, and one would think they could both ill afford the support they are giving to opposite sides in proxy wars in Syria and Yemen.

If the increased friction between the two countries prolongs, or intensifies, the Syrian Civil War, this will add to the refugee flow to Europe and to the suffering and the political instability flowing from that.

Europe has an obligation to take refugees, but so also have all the other countries of the world. So far there is little sign of help coming from any continent other than Europe.
Both Iran and Saudi Arabia practice the death penalty on a wide scale, which emphasises the large gap in values between both of them, and the European Union, where the death penalty is banned.

European countries have strong common interests and values, but they are having increasing difficulty in giving effect to these values in a coordinated way.

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