Saudi Arabia’s $36 Billion Insurance Policy Against Regime Change Protests
If you suspected that the regime in Saudi Arabia was nervously watching events in Tunisia, Egypt, Yemen, Bahrain, and Libya, you’re correct. They have unveiled a $36 billion insurance policy for themselves, in the form of big bucks for their populace.
The king of Saudi Arabia last night announced $36bn (£22bn) of extra benefits for his people in an attempt to stop the wave of Arab uprisings spreading to the world’s biggest oil exporter, as experts warned Brent crude could hit $220 a barrel.
King Abdullah’s support package offers to give 18m lower and middle-income Saudi’s inflation-busting pay rises, unemployment benefits and affordable housing.
The cash-rich Saudi government pledged to spend a total of $400bn by the end of 2014 to improve education, health care and the kingdom’s infrastructure.
Charles Robertson, an analyst at Renaissance Capital, said investors are very concerned about what might happen in Saudi Arabia’s oil rich Eastern Province, the home of the kingdom’s restless Shi’ite minority. The Saudis produce 11.6pc of world output, but a much higher share of exports.
“There is potential for serious tension, and not just among the Shia. High unemployment and the youth bulge means unrest could be country-wide. If Saudi Arabia or Iran are engulfed, we have a serious problem,” Mr Robertson said.
The Washington Post notes that Saudi Arabia has become skittish, and points to this big payoff as well:
In a sign of its own concerns, the Saudi government announced Wednesday that it will pump $10.7 billion into a fund that gives interest-free loans to citizens and that government workers will receive a 15 percent wage increase, among other measures. Bahrain also gave cash to households just before protests erupted last week.
“Saudi Arabia fears a constitutional monarchy in Bahrain,” said Kristin Smith Diwan, an assistant professor at American University who studies Islamic movements in the Persian Gulf. “It’s about empowerment of the Shia and what that might mean for Shia in the eastern province” of Saudi Arabia, she said, in addition to fears about Iran’s influence, which she deemed largely unjustified.
“In this current crisis, none of the solutions look good for Saudi Arabia,” Diwan said. “A crackdown in Bahrain would be destabilizing. A reform itself would be destabilizing, unless Saudi Arabia was willing to make some reforms.”
The two countries are taking a cautious stance. Saudi Arabia controls large sectors of Bahrain’s economy, both through outright gifts of oil and through investment in Bahraini banks, businesses and real estate. And its military is just a 16-mile drive away over the King Fahd Causeway, which was built at least in part for precisely that strategic reason, observers say. In a sign of Bahraini fears, rumors constantly swirl on Manama’s streets about Saudi troop movements and an imminent invasion.
Saudi Arabia is vulnerable to the changes taking place around it. On one side Egypt, on another Yemen and across a 26 kilometre causeway on the eastern gulf, Bahrain. The Saudi royal family is locked in a dangerous time warp of its own making.
The US Consular Service advises on its website that the government of “Saudi Arabia is a monarchy ruled by a king chosen from and by members of the Al Saud family. The king rules through royal decrees issued in conjunction with the Council of Ministers, and with advice from the Consultative Council. The king appoints members of both councils…Saudi authorities do not permit criticism of Islam or the royal family. The government prohibits the public practice of religions other than Islam”.
Tensions have been simmering in the Middle East for decades, particularly Saudi Arabia. The majority practice a fundamentalist off-shoot of the Sunni branch of Islam, known as Wahabism. At least it does so officially. Compliance with the dictates of Wahabism is vested in the Mutawwa or religious police. They ensure that women are accompanied in public by their husbands or male relatives, that they do not drive motor vehicles and that they wear an Abaya, or equivalent in the case of Western women, and that female heads are covered with a scarf or shawl.
Women have few of the rights or freedoms that are taken for granted in Australia. Alcohol and drugs are forbidden, yet members of the wealthy elite and some members of the extended ruling family ignore this restriction….
……There is plenty of scope for unrest to develop inside Saudi Arabia. The population is just over 27 million. Thirty five percent or 7.5 million people are guest workers from Bangladesh, China, India, Sri Lanka, Indonesia, Nepal, Pakistan, the Philippines, Thailand and Vietnam; they are poorly paid and treated. Female domestic assistants are particularly badly treated with claims of abuse ranging from deprivation of liberty to beatings and torture and all too often rape.