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Page added on February 24, 2011

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Saudi’s $36bn bid to beat unrest

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King Abdullah of Saudi Arabia announced financial support measures, worth an estimated SR135bn ($36bn), in a bid to avert the kind of popular unrest that has toppled leaders across the region and is now closing in on Libya’s Muammer Gaddafi.

The measures include a 15 per cent salary rise for public employees to offset inflation, reprieves for imprisoned debtors, and financial aid for students and the unemployed.

Saudi Arabia’s ruling family has thus far been spared the type of popular discontent that has toppled presidents in Tunisia and Egypt and brought Libya to the brink of civil war.

The announcement of the Saudi relief measures coincided with King Abdullah’s return to the country after three months. He had been abroad for medical treatment. Among those on hand to greet him was King Hamid bin Isa al-Khalifa of neighbouring Bahrain, which is struggling to contain a surging opposition movement.

The cash-rich Saudi government has pledged to spend $400bn by the end of 2014 to improve education, infrastructure and healthcare. “The king is trying to create wider trickle- down of wealth in the shape of social welfare,’’ said John Sfakianakis, chief economist at Banque Saudi Fransi. “The budget can handle that, but it is an aspirin to ease medium-term pain, not a solution for the long-term housing, and unemployment iss
Despite a prolonged economic surge, unemployment has remained above 10 per cent and is cited by government officials as one of their primary concerns.

Critics said the sweeteners did not address the Saudi public’s political aspirations. Protests, political parties and labour unions are banned in the conservative kingdom. “We need a new higher education minister, a new health minister, reform of the judiciary and codified laws – not hand-outs,’’ said Turki Al-Balaa, a 34 year-old businessmen.

“We want real change. This will be the only guarantee of security of the kingdom,’’ added Hassan al-Mustafa, one of 40 Saudi rights activists and journalists who signed an open letter requesting an elected parliament, more rights for women and enhanced anti-corruption measures.“A constitutional monarchy closer to the Kuwaiti model is not an impossible target to achieve right now.

More Saudis are pressing their demands online

Saudis have been venting their frustration on Twitter under hashtag #feb23sa and #saudimataleb (“Saudi demands”) saying the days when royal grants bought people’s support were over.

“We don’t want … money, I want to know that I’ll be protected under a written constitution for the rest of my short life,” a female student from Jeddah wrote on her Twitter feed.

Others, however, pointed out that the vast numbers who lack basic requirements will be satisfied with the economic benefits.

Saudi-based analysts and western diplomats suggest that the country can afford to fend off anger in the short term by deploying part of the $440bn in assets the kingdom has accumulated during the years of record oil prices.

Saudi officials have often warned that unemployment and a struggling middle class are their main concerns. Unemployment has remained at around 10 to 12 per cent for the past few years, in spite of an economic boom that has created thousands of jobs. Only 1 in 10 employees in the private sector is Saudi, according to a report by Banque Saudi Fransi.

Critics say that ignoring demands for political change, focusing only on economic issues, reflects a lack of understanding on the part of the leadership of what Saudis actually want.

A slow response could fuel frustration and raise the ceiling of their demands as people in the kingdom see themselves lagging behind even their Gulf neighbours in terms of political reforms, Saudi activists warn.

While it is impossible to detect wider public opinion because of lack of scientific polls, more Saudis are pressing for demands online. While they might remain an affluent minority, their determination might inspire and teach those who are more apathetic, analysts said. After all, Saudis were glued to their TV and computer screens watching Egyptian, Tunisians and now Libyan protesters brave bullets to remove their regimes.

One Saudi observer said the demands were discussed with a senior official close to the king, who assured them the ruler was thinking the same and was determined to push political reforms forward

With Libya, a major oil producer, in turmoil, political stability in Saudi Arabia is key for the stability of the world oil market. Saudi Arabia sits on one-fifth of global oil reserves and holds most of its $440bn foreign reserve assets in US Treasury bills.

The king’s return has calmed fears of a political vacuum. During his absence the ailing Crown Prince Sultan and the powerful interior minister Prince Naif were in charge of the kingdom.

FT



One Comment on "Saudi’s $36bn bid to beat unrest"

  1. James on Thu, 24th Feb 2011 11:28 am 

    I wonder how much money the (broke) U.S. is contributing to this endeavor? The U.S. is feverishly trying to figure out how to hold control over the Worlds remaining oil. I hope they fail so we can get on with Post Peak Oil efforts.

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