Forgive the naivety, but after a certain point doesn't cash just make more cash, and didn't the Saudis hit that a long time ago?
I figured they got rich on oil, but could now stay rich through investment.
I figured they got rich on oil, but could now stay rich through investment.
Saudi is trying to do this by spinning off part of Aramco in to public ownership and by stealing wealth from top officials. realistically they should have started 30 years ago.
It’s got to be pretty weird to work for or in a WeWork and know what sort of regime you are sustaining.
But the Saudis have the same problem nearly every other petro-regime has, which is spending that money on unproductive personal property (palaces, fancy cars, private jets, etc.) as well as unproductive state property (defense, mostly). They have built some universities and other public goods, but I suspect it's a small fraction of the wealth that's been extracted.
They have no comparative advantage over other nations in anything other than petroleum, and religious tourism. There's no particular reason why you'd want to build a factory or move your multinational company there. They could create reasons for people to want to do that, but it would probably be expensive (they'd need to have low wages, probably artificially depressed or subsidized, or a very lax regulatory environment, which has its own costs, or both).
In the short term I'd look for them to start borrowing to keep their budget balanced, using the oil still in the ground as collateral, basically. (They're effectively borrowing against future income.) If they do enough of this and build productive, sustainable economic assets, they might do okay. But eventually the cost of borrowing might get high, because as demand for oil falls and extraction costs increase, there will come a point where it's no longer economical to extract anymore and they'll have a load of "stranded assets" on their national books. The day they finally have to write those down will be the real day of reckoning, financially.
If the ruling class is smart, they'll make it seem as though it's all a big Western bankster conspiracy (when in doubt, blame the Jews), not their own long-running incompetence, because the immediate cause of the pain will probably be a debt crisis or default.
Also, how much is invested versus being spent lavishly on their princes and populace to keep them happy?