Saudi Ara­bia be­gins to over­haul au­toc­racy

Saudi Ara­bia takes its first baby steps to­ward over­haul of an au­toc­racy

The Washington Times Weekly - - Editorials -

For­ever is a long time, but it doesn’t last for­ever, not even in the Mid­dle East. The Saudis are tak­ing the first baby stops to over­haul their no­to­ri­ously au­to­cratic regime. Younger mem­bers of the royal fam­ily, many ed­u­cated abroad (some of them in the United States) rec­og­nize that the shale revo­lu­tion has changed the na­ture of the world en­ergy mar­ket. De­spite re­sis­tance from en­vi­ron­men­tal­ists and the ab­sence of mod­ern tech­nol­ogy in some coun­tries, the ex­ploita­tion of shale oil and gas de­posits, which are widely dis­trib­uted around the world, is con­tribut­ing to sur­pluses of fos­sil fuel.

Amer­ica is emerg­ing as a gas and oil ex­porter again, to chal­lenge Saudi Ara­bia as the ar­biter of the price of oil. Barack Obama’s nu­clear deal with the Ira­ni­ans, suc­cess­ful or not from the point of view of the West, has be­gun to lift sanc­tions against the mul­lahs in Tehran and Iran is slowly re­turn­ing to world oil mar­kets with its re­serves, among the largest in the world. Other smaller pro­duc­ers are emerg­ing in West Africa and Asia and Latin Amer­ica. They can help re­sist ob­sta­cles thrown up by Libyan, Syr­ian or other Mid­dle East pro­duc­ers to keep prices high.

Mo­hammed bin Sal­man, the 30-year-old deputy crown prince and the king’s fa­vorite son, is lead­ing the charge for the new nor­mal. Saudi pol­icy af­ter the World War II era has been preser­va­tion of the sta­tus quo. As the guardians of the Mus­lim holy shrines in Mecca, the Saudis have had dis­pro­por­tion­ate in­flu­ence not only in Ara­bia but through­out the Is­lamic world. Mus­lims must make a trip to Mecca at least once in a life­time.

Bin Sal­man rec­og­nizes that the king­dom’s pub­lic fi­nances are un­sus­tain­able, and there’s un­likely to be a re­bound of oil prices to the old level. The prince wants to change all that with some­thing called “Vi­sion 2030.” This is the plan to slash gov­ern­ment spend­ing, de­velop an econ­omy based on some­thing be­side oil, and wean the Saudis from depen­dency on cra­dle-tograve ben­e­fits. Khalid al-Falih, the new chairman of state-owned oil com­pany Aramco, rec­og­nizes that Saudi Ara­bia can no longer con­trol the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries (OPEC), that in the past dic­tated world oil prices.

The Saudis are late in fol­low­ing in the foot­steps of oil-rich neigh­bors who have moved away from crude oil. Abu Dhabi, much wealth­ier on a per capita than Saudi Ara­bia, has strug­gled with some suc­cess to do that. Dubai, where oil was once half of the GDP, has en­gi­neered a trans­for­ma­tion over the past 40 years that makes its econ­omy no longer de­pen­dent on oil.

Nev­er­the­less, changes in Saudi Ara­bia will be dif­fi­cult. Pub­lic wages are to be re­duced to 40 per­cent of the na­tional bud­get by 2020, down from 45 per­cent. This might spur trou­ble­some pub­lic op­po­si­tion, given ex­pec­ta­tions of ris­ing in­fla­tion. Gov­ern­ment fees and taxes, in­clud­ing a sales tax, in­come taxes on non-Saudi res­i­dents and “sin taxes” on harmful prod­ucts like to­bacco, are com­ing. The Saudis aim to balance the bud­get by 2020, with debt ris­ing to 30 per­cent of GDP from 7.7 per cent by the year 2020. The IMF fore­casts a bud­get deficit of 14 per­cent this year.

All this is to be ac­com­plished while the Saudis con­tinue to try to mo­bi­lize their fel­low Arabs, with Amer­i­can sup­port, against the threat of the Is­lamic State, or ISIS, and ter­ror­ists in Syria and Iraq. These Saudi en­e­mies will try to ex­ploit the tra­di­tional un­rest among Saudi Ara­bia’s Shia mi­nor­ity in the crit­i­cal oil fields of south­east­ern Saudi Ara­bia. The fu­ture, like the present and the past, is al­ways dif­fi­cult in the Mid­dle East.

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