Young Saudis See Cushy Jobs Vanish Along with Nation’s Oil Wealth
nytimes.com
nytimes.com
The USA made Saudi Arabia via Ibn Saud, and it will unmake it via Iran. The sanctions were lifted on Iran, because the USA saw the writing on the wall years ago about Saudi Arabia drying up. It needs to reposition itself as an ally of the next major middle eastern oil producer. Not only does Iran have oil, but it has some of the largest natural gas deposits in the world. [1] After years of conflict, and a proxy war in Yemen, Iran is likely to do anything to ruin Saudi Arabian. This means any power over production that Saudi Arabia used to wield via OPEC will be nullified once Iran is developed by Big Oil.
Its an end of an era. The war in Yemen keeps aggression pointed outward, but as soon as the populace tires and the payoffs stop coming it will turn inward. Another government will be recast as tyrants and despots, and the world will watch it fall.
[1] https://en.wikipedia.org/wiki/List_of_natural_gas_fields
Given just how much ownership they have in American companies, I imagine it would have been quite recently. Probably your mortgage is partly Saudi as well.
Of course this only works for the Saudi elite, not for normal Saudis.
> Its an end of an era. The war in Yemen keeps aggression pointed outward, but as soon as the populace tires and the payoffs stop coming it will turn inward
I would be terrified if I lived in a nation that has >30% foreigners that are kept from being citizens and kept out of the vast majority of decent jobs.
The US owns around 43% of all global wealth.
Saudi's foreign reserves (~$595 billion) represent the equivalent value of 2% of just the US residential housing market. Or a bit more than the market cap of one Apple or Google.
"Saudi Aramco's value has been estimated at anywhere between US$1.25 trillion and US$10 trillion"
or like 10 Apples. Plus they have other assets.
My family and I vacationed on Saudi Arabia back in 2000. We looked and looked for locally made items as souvenirs of our trip. Everything was imported. There was zero local industry. I finally picked up a discarded, hand-made camel hobble out of a dung pile. My family gave me a hard time, but hey! It was locally crafted with hand-woven rope and a hand-carved handle! It's now a unique momento hanging on our "travel wall" as a conversation starter.
Sadly that is not a Saudi Arabia thing. Last time I was in Jamaica, 95% of the shops were stuffed with Jamaican looking things.. generally all with a "made in china" tag.
It is a weird world we live in where even the handcrafted tourist trinkets are imported.
https://en.wikipedia.org/wiki/Ibn_Saud
Excerpt: "After World War I, he received further support from the British, including a glut of surplus munitions. He launched his campaign against the Al Rashidi in 1920; by 1922 they had been all but destroyed."
Looks like the Brits love supporting everyone ;)
"But what do you need a financial advisor for? Twenty years ago you had the highest Gross National Product in the world, now you're tied with Albania. Your second largest export is secondhand goods, closely followed by dates which you're losing five cents a pound on... You know what the business community thinks of you? They think that a hundred years ago you were living in tents out here in the desert chopping each other's heads off and that's where you'll be in another hundred years, so, yes, on behalf of my firm I accept your money."
Super fascinating film that I highly recommend - http://www.imdb.com/title/tt0365737/?ref_=ttqt_qt_tt
For example the largest vertically integrated dairy corporation in the world is in Saudi Arabia. They have the ability to green the desert and they are doing this right now.
They are also gearing up for future war (and not just in the headline making military acquisitions reporters get all excited about, I mean the boring nuts and bolts you need to sustain massive prolonged military campaigns)
It's easy for the mainstream and financial media to make fun of the Kingdom. They are not going anywhere anytime soon. If anything, the oil price is going to be a wake up call that forces them to diversify faster than they were already doing so.
Occidental Capital is a private enterprise it looks like, a private enterprise is not a nation. A private enterprise can relocate, it can shut down, it can spin off, it can undergo merger and a complete metamorphosis to a degree that it has no resemblance to the original company (unlike a nation). If occidental capital funded the initial setup of Saudi Aramco, it does not mean US nor UK did it!
Same thing with Saudi: US or any other country did what they did, I am sure taking into account their interests.
Since both India and Saudi Arabia are sovereign nations, it is their actions that have either propped them up or otherwise.
Tell that to the free trade/comparative advantage crowd.
When most countries industrialize, they go through significant social and economic changes. Saudi Arabia got to skip a lot of those changes, and the end result is that they're ill-prepared for when their reserves have dried up. Their non-oil sectors are practically non-existent, with very little non-petro industry in the country at all. They've got huge social stratification problems, and they have to deal with religious opposition to modernization and diversification (for fear of westernization). They've spent the 37 years since the Grand Mosque seizure radically empowering the extreme religious conservatives and bankrolling Wahhabi expansion overseas. It helped them avoid additional internal conflict by exporting their problem children, but when the money dries up, the devil's bargain is going to come to an end with it.
The reforms the Saudis need to make are too great, and they'd disrupt too many aspects of their economy at once. And that's before you include the religious opposition into the mix. Had they started years ago, and attempted to curtail some of the religious conservative's power early on, they might have been able to ride things out. As it is now, it's going to be a very bloody crash in every sense of the word.
"History may not repeated, but it sure do rhyme."
I know, but still - bear with me. The French assisted in the American Reovlution...
It's not going that well.
I bet on a revolution in the minds fought with civil disobedience.
... and overly self-confident guys with big sunglasses driving super expensive cars or ridiculously expensive sky-scrapers and bullshit like artificial islands ...
could please - somebody - tell me anything likeable about this country? Anything ...
[1] http://www.theatlantic.com/international/archive/2016/02/sau...
I don't see this ending well, there is no way this leads to a sustainable balanced system.
>90 percent of government revenues are from oil; 70 percent of working Saudis are employed by the government
I don't think they've worked out the problem of stable succession either, given that every change in King has been from a brother to another[0], rather than to a son.
[0]: https://en.wikipedia.org/wiki/King_of_Saudi_Arabia#Kings_of_...
http://www.amazon.com/The-Cost-Rights-Liberty-Depends/dp/039...
is an interesting read on this topic. It basically talks about how taxes are necessary and these movements to eliminate taxes completely are completely off base. I would argue that a sufficiently extreme distribution of wealth makes democracy impossible and the "rights" that the Saudis afford their people are not "rights" at all in any meaningful sense but rather just a way of placating people so they can hold onto control of the oil.
After all ol' Muhammad was a merchant by trade...
The whole situation brings to mind the 30 year war...
In Japan I think the problem is a slow rate of birth. So the fear is that the percentage of the population above 65 will increase until it breaks the economy.
1960-1980: 4m to 10m people
1980-2015: 10m to 30m people
650% increase in 55 years.
UAE 11000%, Kuwait 1250%, Oman 570%, Qatar 4800% and Jordan 680% have seen similarly massive increases.
(UAE is difficult to calculate due to political changes, either way it's a lot)
Syria 410%, Yemen 400%, Iraq 360%, Pakistan 300%, and Iran 250% have boomed to a slightly lesser extent as well.
Population growth by comparison over that time:
Australia 135%, Canada 100%, US 77%, France 47%, Japan 38%, UK 23%, Italy 20%, Germany 10%
Kenya 450%, Sudan 420%, Tanzania 400%, DR Congo 350%, Ethiopia 330%, Somalia 290%, Nigeria 280%, South Africa 210%, Egypt 200%
Malaysia 280%, Philippines 275%, Bangladesh 200%, Nepal 200%, Indonesia 185%, India 180%, Vietnam 165%, Myanmar 165%, Thailand 150%, China 100%, South Korea 100%
Venezuela 300%, Ecuador 250%, Mexico 220%, Dominican Republic 215%, Peru 200%, Colombia 200%, Brazil 175%, Argentina 105%, Cuba 60%
I(I'm from India) have some cousins working there to make a living. From everything I've heard, I get a feeling there is hardly any effort to build anything. No universties, and even those that exist run at the expense of people from other countries. There is crazy dole out of free cash, start from the king to the citizen.
The royal family from what I've heard literally wants everything government. The main king Ibn Saud had some I guess 10's of wives, from whom he fathered 100's of children, who now have reproduced to 1000's of grandchildren. Since not every one can be a king, you have to distribute government positions among the progeny of Ibn Saud, to keep people from dissenting and getting too ambitious to disrupt the line of succession. Apart from that from what I've heard, they also award prime contract, licenses and projects to their own family. So basically every thing stays and is designed to benefit only one family.
All this in a major tribal society, with heavy influence of the clerics. So they closely intermarry their own with the clerics and powerful tribes. Its basically a syndicate.
But they also realize that they can't do this forever. So they keep throwing some token pennies at their people. Basically building a welfare state.
There is no attempt to build self capabilities of any kind. They've tried and failed with a policy called 'Saudization'. To reduce the dependence on foreign nationals, they've tried everything. But people have so much dependence on free cash, they hardly feel the need to work. Lack of productivity(putting it mildly) among Saudi nationals or even a lack of desire to work, has been a source of jokes for decades.
Here is a hint to people in US. Look at a nation where there is "Universal Basic Income", or all those freebies and welfare benefit your guys ask for. Do you want your country, which is an example for remainder of the world for progress to turn into a nation like this?
Firstly I having UBI does not make 'a nation like this'. There are a bunch of other variable like religion and tribalism that separate western to Middle Eastern nations. Secondly, what wrong with humans producing 'low output' if the UBI is sustainable? The problem in SA is the oil is running out. IF UBI is built from automation and efficiency its an entirely different story. Thirdly UBI is, as it says in the name, is a 'basic income'. People then work for privileges to afford nicer cars, holidays etc which is likely IMO that a high proportion will. In the case of SA, this is not UBI, it is/was high paid salaries for jobs that dont really exist. 2 very different things.
You have KAUST there, which is a decent place.
I'm sorry, what?
"70 percent of working Saudis are employed by the government; and even the private sector remains heavily dependent on government spending."
No good stopping your production and eating the massive, massive loss when your "partner" will ramp up and get your share.
Rigs have gone down by 60-70%, oil production has gone down by ~4%. However even that pathetic 4% is not necessarily the result of rigs closing, as several oil storage facilities are quite literally full. There are a number of reports of oil rigs offering tankers full of crude free to anyone who'll come and get them. I'd bet we're going to find that a lot of crude has gotten dumped somewhere soon. None of that is counted in that statistic that's dropped by 4%.
Here's why : suppose you are a massively indebted oil producer, like all US oil producers are, and prices duck beneath your cost to produce. This does not delay loan repayments and/or interest repayments. What do you do ? Well, there's 2 things you can do:
1) You stop pumping. This stops cashflow and makes your situation obvious beyond any doubt. It also will immediately remove all control over the company by management and shareholders as bankruptcy proceedings begin.
2) You keep pumping. You stop paying suppliers ("delay" paying them is the polite term). You keep cashflow going. You're paying off most of your loans at the moment, because what's dragging you into the red is loan repayments. Bankruptcy proceedings will be delayed. In many cases the banks and your suppliers won't have many alternatives.
And so a lot of these companies are faced with a choice between "death now" and "death soon". In such cases you can bet "death soon" is going to be the more popular choice. That means insolvent companies will keep pumping up crude and selling it until their cashflow gets to the point the whole thing locks up.
It would not surprise me if the oil sales have in whole or in part ended up supplying extremist groups.
The Saudis have a history of hiring others to fight their wars for them.
They have to invent the IP, and sell the equipment, and use it in their own nation to sell the electricity or batteries for money.
It takes a different business plan than oil, but they have to adapt to it sooner or later.
Undersea cables are run for comms. So, super-massive-XXL sized superconductor versions of that...? ;)
We no longer have any guarantees that our parents had. We no longer have the resources or lack of debt from our previous generation of careless expenditure.
In lot of ways millenials are fucked, but looks like more so for countries that put all their eggs in one basket.
I often wonder just how bad the current generations will have it when compared to other recent generations. Will it be worse than those generations who lost so many and so much to WWI and WWII? Hard to tell except eventually in retrospect, but interesting to ponder.
"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel."
So it would appear that amongst their other concerns, the Saudis also need to start producing their own fatalistic proverbs, rather than importing them from Dubai.
[1] https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum
My dad had to leave Germany where he was born to escape the nazis. The past wasn't all that great.
On the other hand the millennials may have the singularity coming which I think will be quite a cool, once in history, thing to witness.