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News & Analysis

Saudi Kingdom Drowning in Problems

Brecht Jonkers

The year 2020 has been exceptionally tough for Saudi Arabia. The combination of an economy heavily dependent on oil exports whose prices have plummetted, lack of motivated domestic workforce as a result of heavy reliance on cheap foreign labour bordering on slavery and the general mayhem wrought by Covid-19 have dealt a heavy blow to the already weak system of the Wahhabi monarchy.

In the course of 2020, Saudi net foreign assets dropped no less than $17 billion in value. The Saudi oil corporation Aramco, that was touted to spearhead an ambitious neoliberal privatisation program under the Vision 2030 plan, reported a whopping 25% drop in net worth in the first quarter of the year.
Even before the pandemic erupted worldwide, doubts about what was planned to be the largest privatisation in human history had arisen. Simple analysis of large-scale privatisation and liberalisation plans in the past shows that lay-offs and heavy restructuring are to be expected after private corporate investors take over. Such a potential rise in unemployment is exactly the opposite of what Riyadh wants, especially considering the kingdom’s past generous public allowances for Saudi citizens. As a result, the plan to rapidly generate money by selling off much of the Saudi oil industry has been repeatedly delayed.

Another part of Vision 2030, that of investing in other economic sectors, has also faced difficulties. The Public Investment Fund (PIF) in charge of the procedures has been pumping enormous sums of money into companies and projects that ended up yielding very little return on investment, such as Tesla, Uber and SoftBank.

The ruling elite in Riyadh has responded to the growing issue in typical Western capitalist fashion: hard-hitting austerity measures and cutbacks in social spending. Through a tripling of the sales tax on basic goods and the abolition of cost-of-living allowances for public sector workers, the rulers hope to remedy the worsening situation. The obvious problem caused by this “solution” is that now even Saudi citizens are feeling the pinch.

The problems Riyadh is facing today hit all the harder when one considers the highly ambitious plans that were laid out by Crown Prince Mohammad bin Salman (MbS). Ploys to fill up the planned high-tech corporate haven called King Abdullah Business Park in Riyadh remain largely unsuccessful despite promises of 50-year tax exemptions, as even unscrupulous multinational corporations are having second thoughts about relocating to the prince’s backyard.

In an even more theatrical twist of fate, the $500 billion futuristic neoliberal dream city known simply as NEOM, touted as a “new chapter for mankind”, has turned out to be little more than a megalomaniacal pipe dream. In typical Saudi fashion, the city that is planned to be 33 times the size of New York, has been hitting the media as being seeped in the blood, sweat and tears of the local population and the quasi-slave status workers alike. In a tale as old as colonisation and imperialism, tribal societies such as the Huwaitat people have been the victims of MbS’ megalomaniac plans. They have resided in the area of northwestern Arabia since time immemorial, but are now subjected to eviction, repression, abductions and even murder since MbS thought up his “city of the future”. As the US news outlet The Daily Beast reported, quoting an anonymous expat: “A lot of people think NEOM is going to be an unmitigated disaster. It looks like a city drawn by a toddler.”

And while many Saudis may be moved to silence out of a sense of self-preservation, the PR blowback from cooperation in such a blood-soaked and far-fetched plan would definitely keep foreign companies from participating.

The Saudi monarchy vowed that Neom would fall outside of official Saudi jurisdiction, with a parallel legal system directly presided over by the crown prince and specifically aimed at turning a blind eye to violations of Islamic principles. Yet ironically, a place under the direct judicial authority of the butcher of Yemen who ordered Jamal Khashoggi’s body to be sawed into disposable pieces, may actually scare off potential investors rather than attract them.

In his biography of the Saudi prince aptly titled Blood and Oil, Justin Scheck summarised bin Salman’s frustration as follows: “The way foreign business leaders wanted to do business with him was different to the way he wanted to do business with them. They just wanted him to give them money. He wanted them to invest in Saudi Arabia. Despite all these enticements, this hasn’t happened.”

There is a simple reason for the general lack of durable investment in Saudi Arabia. The kingdom, for all its wealth and natural resources, does not have a large enough population to make large-scale investments profitable. With a population of 34 million, of which around a third are immigrant workers with generally little disposable income, there is little incentive for corporations to relocate here.

Or as Scheck phrases it: “The one thing he [MbS] can’t fix is that, as wealthy as the country is, it has a population of about the size of Mexico City. So why would you want to go and build an auto factory there? The local market is just not big enough.”

Despite raking in billions of dollar since the creation of the artificial kingdom to serve colonial interests, Saudi Arabia has always been relegated to secondary role at best. Considered useful mostly for its petroleum and more recently as a buyer, seemingly of limitless state-of-the-art technology and military equipment, Riyadh has always held relatively little sway in the decisions of its so-called allies.

It is not difficult to understand why this is a continuous source of frustration for an ambitious man like MbS. In fact, it is not impossible to see the Saudis refusing to go along with the US-brokered collaboration deals with Israel that were signed by the United Arab Emirates, Bahrain, Sudan and Morocco, as a form of protest. The US’ main ally in the Arab world, so far remains opposed to officially recognising the Zionist entity.

While this refusal should not be romanticised, it does remain an interesting fact. Former intelligence chief Prince Turki al-Faisal even went as far as to denounce Israel as “the last of the Western colonising powers in the Middle East” during a conference in Bahrain and in the presence of the Israeli Minister of Foreign Affairs. Al-Faisal, often seen as an old-school Saudi politician and known as one of the kingdom’s leading critics of US foreign policy, repeatedly stated that “a high price” must be demanded in return for any possible cooperation with Israel. Despite the vast power MbS has acquired, he has been unable to silence such open opposition so far.

What lies behind the Saudi decision to hold back on following the UAE and Bahrain in publicly recognizing the Zionist entity? Is it based on some sort of a principled stand, or due to fear of further internal infighting and instability? Could it be because the prince is playing a waiting game to see just how much he can get in return, is uncertain. Yet reports emerging from Saudi Arabia indicate that MbS’ position is far less comfortable. He does not go unchallenged even if he would like to create that impression.

As innumerable agents of US imperialism throughout history have found, there is a limit to the imperialist leash. Tug too much at it and the puppet master might just decide that the puppet is not worth the effort.

While Western corporate publications and mainstream media outlets are filled with semi-optimistic analyses about how Saudi Arabia can “overcome the challenges”, the facts remain unchanged. A kingdom that was founded by the decree of British colonial rulers, propped up and showered with wealth for decades and handed every opportunity on a silver platter, is failing in some of the basic duties of statehood.

Article from

Crescent International Vol. 49, No. 12

Jumada' al-Akhirah 19, 14422021-02-01

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