Saudi Arabia / Michael Field. - [Electronic ed.]. - Bonn, 1999. - 19 S. = 78 Kb, Text . - (FES-Analyse)
Electronic ed.: Bonn : FES Library, 2000

© Friedrich-Ebert-Stiftung



  • Saudi Arabia is facing a financial crisis. It has debts, mainly domestic, of $150-170 billion - which are more than its GDP. Its oil revenues this year are expected to be no more than $30 billion.

  • Its problems come from long term overspending, on defence and on subsidies for its people and business community. Further sums are wasted through corruption.

  • The population has great expectations that Crown Prince Abdullah, who is taking over the running of government from King Fahd, will solve the country’s problems. He has a reputation for being relatively austere financially, and he has recently been consulting government and business on forming new policies. The prince, though, is old, and he will probably be less radical than people expect. What reforms the prince does implement will represent a consensus that is already being formed at the top of the royal family.

  • Government policies are increasingly being influenced by the appointed parliament, the Majlis as-Shura, and by the civil service and ministers. The new policy of reshuffling senior posts every four years has greatly improved ministries’ performance, making them more responsive to the public.

  • The government is moving slowly towards privatisation. It has announced plans for the privatisation of electricity, which will involve a reduction in subsidies and, probably, the collection of bills from members of the royal family. It is intended that telecommunications and the airline, Saudia, will also be privatised, though so far no detailed plans have been announced.

  • A new initiative, led by Prince Abdullah, has involved the Kingdom inviting foreign oil companies to submit proposals for their re-entering the hydrocarbons sector. Initially this will mean their investing in gas production and distribution. Saudi Arabia needs to capture more of the growth in international oil demand, but inviting foreign companies back into oil production, which is what some radicals favour, would be highly sensitive politically.

  • The Kingdom’s economy is still mainly closed to foreign investment, and although the government is intending to join the World Trade Organisation and needs to attract foreign business to create jobs, the signs are that it is opening up very slowly. Whatever action it takes will probably come too late to prevent a financial crisis and devaluation later this year or next.

  • Politically the government is under much less pressure. The Islamist opposition abroad is discredited and at home it is in prison. The population would like to live in a freer society and have more say in government. Some senior members of the royal family recognise the popular mood and they are thinking of ways of responding, possibly by giving greater authority to the Majlis as-Shura.

© Friedrich Ebert Stiftung | technical support | net edition fes-library | September 2000

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