IS SAUDI ARABIA REALLY AT THE BRINK OF A
ECONOMIC AND POLITICAL DOWNFALL?
It seems that SAUDI ARABIA has
started to undergo the transformation various experts predicted. Those became
obvious when the sitting king SALMAN BIN ABDULAZIZ AL SAUD replaced his
deceased elder brother ABDULLAH BIN ABDULAZIZ AL SAUD in January 2015, and made
a number of quite unusual arrangements within the ruling elite, appointing the
head of the Ministry of Interior MUHAMMAD BIN NAYEF from ABDULLAH’S clan the
Crown Prince, while his 33-year-old son MOHAMMAD BIN SALMAN AL SAUDFROM the SUDAIRY
clan received the appointment of Deputy Crown Prince.
Even back then it was clear that
within a short period of time the king would try to hand over all power in the
country to his own son by sidestepping MUHAMMAD BIN NAYEF, while he himself
would retire due to Alzheimer’s disease, becoming sort of a “king-father” with
no real power, but with the right to an advisory vote on important decisions.
Needless to say, it’s a direct violation of the tradition of succession to the
throne from brother to brother that has been in place in SAUDI ARABIA that is
going to be replaced by the father-to-son succession. To make such a transition
one should be able to carry out a coup d’etat or win the approval of the
succession board, which is formed according to different sources by 7 or 11
members of the AL SAUD dynasty.
QUARREL
INSIDE THE HOUSE SAUD BECOMES STRONGER AMIDST ECONOMIC DOWNTURN
Now it seems that the wheels of
the political machine are moving again. Recent reports from RIYADH indicated
that his disease is taking a toll on the king and he wants to renounce his
reign in favor of the Crown Prince. But then neighboring states, especially QATAR
and the UNITED ARAB EMIRATES, started hinting that the members of the SAUDI
royal family along with the sheikhs of the strongest tribes, which are the
foundation of AL SAUD’S rule, are extremely dissatisfied with the sharp
deterioration of the economic and social situation in the country, leading to a
major drop in their personal incomes. It is no secret that RIYADH increased the
volume of oil production to weaken the positions of its main competitors –
RUSSIA, IRAN and VENEZUELA. But the kingdom had to take a punch as well, it was
forced to unseal its reserve fund and cut the funding of numerous social
programs.
GEOPOLITICAL
AND ECONOMIC CHESS GAME AMONG SAUDI ARABIA, IRAN, RUSSIA, SYRIA AND IRAQ
And then came the execution of 47
Shia public figures, including the popular human rights activist NIMR BAQIR
AL-NIMR. The executions were designed as a form of retaliation to IRAN and HEZBOLLAH
for the help they have provided to the SYRIAN people in the fight against pro-SAUDI
militants.
This step provoked massive unrest
in the SHIA areas of the kingdom, the areas that produce the better part of all
SAUDI oil. The country has found itself on the brink of a civil war and a
military conflict with IRAN at the same time, which has also provoked major
discontent in the West. After all, the West needs a politically loyal IRAN, a
country in which huge investments can be made, especially in oil and gas
sectors, in order to push RUSSIAN out of the EUROPEAN gas market and the
international oil markets at the same time. In this context TEHRAN is forced to
carry on relying on MOSCOW in the confrontation with SAUDI ARABIA to ensure its
safety and continue providing military assistance to SYRIA, IRAQ and SHIA
rebels in YEMEN.
SAUDI
KING TO RENOUNCE HIS THRONE TO HIS SON, MOHAMMAD BIN SALMAN AL SAUD
Now the highly respected
Institute for GULF AFFAIRS is stating that the king of SAUDI ARABIA SALMAN BIN
ABDULAZIZ AL SAUD is preparing to renounce the throne in favor of his son MOHAMMAD
BIN SALMAN AL SAUD, and has since brought his country to the brink of a
disaster.
It means that the 80-year-old SALMAN
is trying desperately hard to persuade his brothers on the succession board to
allow him to change the principle of succession of the SAUDI throne, since he’s
ready to leave, but not so ready for his nephew MOHAMMAD BIN SALMAN AL SAUD to
rule the country.
 |
| Storm clouds over Mecca Image by: Amr Abdallah Dalsh / REUTERS |
What the king has been doing is
allegedly done “only for the sake of the stability of the kingdom.” Although
the reality of the situation is clear – should SALMAN retain his position, the
disintegration of the kingdom is imminent, with certain Shia areas breaking
away, while the regions on the border with YEMEN which are mostly populated by YEMENI
tribes, more than happy to return home. Moreover, the Minister of Interior used
to be a habitual cocaine user, so he was only able to “produce” two daughters,
and now he’s somewhat incapable of producing more children. Should the king
manage to carry out the above described scheme, he will become the first SAUDI monarch
to leave the throne to his son.
HAVE
FALLING OIL PRICES REALLY STRUCK SAUDI ARABIA AT ITS HEART?
And the fact that there’s a
growing crisis in SAUDI ARABIA was evident from the cuts in subsidies and
bonuses that king SALMAN started at the beginning of this year to reduce the
country’s total dependence on oil. After decades of extensive use of oil
revenues to subsidize companies’ payment of generous salaries and providing
enormous social benefits, falling oil prices struck SAUDI ARABIA at its heart.
It’s enough to say that revenues
from oil exports in 2015 alone dropped by half. Ultimately it’s hard to say
which country suffers the most from these oil wars – RUSSIA OR SAUDI ARABIA,
since the latter has virtually no other sectors to support the economy. SAUDI
economist TURKI FADAAK believes that SAUDI ARABIA is exiting the policy of
“universal welfare”, so there’s an ongoing psychological shift in the minds of
the ruling elite of the state. FADAAK is convinced that the ultimate aim of
king SALMAN’S measures is to eliminate the SAUDI dependency on oil. But is it
really? According to leading international experts – the answer is a resounding
“no”, with all the arguments to the contrary nothing more than fantasy.
Although initially it seemed that
SALMAN, who came to power after the death of his brother, King ABDULLAH, will
continue his course, after assuming the throne SALMAN generously spent over 30
billion dollars from the budget on bonuses for civil servants, military
personnel, and students. Additionally, prices for basic goods and services,
including fuel, electricity and water prices were kept at extremely low levels
due to government subsidies from oil revenues. However, due to falling oil
prices, under the pressure of such costs the budget started to rupture. The
most important thing now for the kingdom is to execute the transition from the
extremely lavish social security system to a productive economy, but then the
subjects of the king will be forced to cut their costs, and it looks that they
do not agree with this notion. And accusations in the imminent economic collapse
will go SALMAN’S way, so it is better for him to leave now, before protests
even start.
CHANGE
IN TACTICS
It is curious that SAUDI ARABIA has
been rather realistic about its budget for the year 2016, since it was based on
the average price of oil keeping at the level 29 dollars per barrel. Last year,
the SAUDI budget deficit amounted to almost 98 billion dollars and the costs
were considerably higher than it was originally planned due to bonuses for
civil servants, military personnel and retirees. In 2016 the authorities
decided to put up to 49 billion dollars into a special fund to provide funding
for the most important projects in case oil prices drop even further. But it
was SAUDI ARABIA back in 2014 that proposed new tactics for OPEC, which implied
that there would be no cuts in the level of production, the tactics that drove
oil prices to today’s levels.
So we are to learn pretty soon
should RIYADH choose the path of the utter and complete collapse of the
kingdom, or the path of giving power to the young and pragmatic technocrats who
are going to pursue a comprehensive oil policy. Either way, SAUDI ARABIA will
be forced to put an end to the costly military adventures in SYRIA and YEMEN as
well as its confrontations with RUSSIA and IRAN.
By Peter Lvov via New Eastern
Outlook
No comments:
Post a Comment