Saudi Arabia is at a Dangerous Crossroads | nsnbc international - 0 views
-
Ambivalence, political twists and turns and the adoption of mutually exclusive decisions on Syria clearly show how completely lost the Saudi leaders are and their distinct lack of understanding of the fundamentals of modern foreign policy. The leaders of the wealthiest countries in the world, the leaders of the Arab and Muslim world have fully displayed their political inadequacy, inability to manoeuvre and adapt to the realities of the modern world. The once infinite riches are melting away rapidly, and soon ordinary Saudis will be faced with the issue of cost-cutting in their simple everyday problems.
-
The current policy which is so inconsistent and lacks any elementary logic was not only unsuccessful, but plunges Saudi Arabia ever deeper into an abyss of hardship and misery, setting new, complex problems before the King. Primarily, this concerns the economic and financial problems that the once wealthy Saudi society has not yet encountered. As the director of the Middle East and Central Asia Department of the IMF, Masood Ahmed, said in an interview with The Wall Street Journal, the cumulative budget deficit of Middle Eastern oil-exporting countries in the next five years could reach $1 trillion. Moreover, the treasury of the regional leader, Saudi Arabia, is at risk of running dry, and the “kingdom of the welfare state” can expect bankruptcy. Up to now, financial holes – the budget deficit, which this year is projected to be 21.6 percent of GDP, has been covered by the earlier petrodollar savings. In particular, this summer the Saudi Arabian Monetary Agency was forced to withdraw $70 billion from foreign investment funds assets. It can be assumed that this is only the beginning of the return of capital to their homeland, to tide over the emerging new outgoings. Otherwise, a sharp reduction in expenditure could lead to a social explosion in the Kingdom, whose citizens have become used to living a well-off life during the oil boom.
-
Saudi Arabia is currently exploring the possibility of higher energy prices for consumers within the country, as reported by the Oil Minister Ali Al-Naimi. Responding to a question about whether the Kingdom is going to reduce energy subsidies in the near future, the Saudi official said: “Your question concerns whether we are considering such a possibility? Yes, we are considering it.” Energy prices in Saudi Arabia are among the lowest in the world. Saudi Arabia is in fact the leader of the Organization of Petroleum Exporting Countries (OPEC). Meanwhile, the Kingdom is losing out on potential revenue by selling oil on the domestic market at a much cheaper rate than on the foreign market. Currently, Saudi Arabia spends about 86 billion dollars a year in subsidies for oil producers.
- ...2 more annotations...
