(To be published in Arabic for Arrabi21)
Saudi Arabia is in the Neoliberal crosshairs. I remember when the US invaded Iraq in 2003, I remarked that they will not stop until they fly the American flag on top of the Ka’abah. At that time, with George W. Bush in office, I didn’t know if that would be literally or figuratively, or whether it would be accomplished under his administration, or afterwards; but it was clear to me that even the loyal US client states in the Muslim world would be subjugated well beyond political subordination. They would be undermined and sabotaged socially and economically until even the potential of independence would be decimated. Yes, Saudia is loyal, and acts as a useful instrument for US policy in the region; but it is rich, so, if it were to ever not be loyal, it could be problematic. The Saudi regime is largely out of step with the population; if Da’esh were to move against the kingdom, it would be less an invasion, and more of a popular uprising.
Since the drop in the oil price, Saudi Arabia has not slowed production; it is selling oil now for far less profit than it needs to meet its budget. They are offsetting this profit gap by using their foreign currency reserves, which are being depleted rapidly. Saudi Arabia is burning through their currency reserves at a rate of about 5% every two months; which means they could be completely out of foreign currency reserves in less than two years from when the oil price slump began.
So you see, keeping the price of oil low is extremely destructive to Saudi sustainability. The US has recently become a major player in determining the oil price, as new extraction technology has made America the top oil producing country in the world. The Saudis are clinging to an obsolete paradigm, thinking that by keeping production levels high, they can maintain their market share, but, with US oil now in the market, this strategy simply keeps the price of oil low, and Saudi costs high; it forces the Saudis to spend surplus cash to maintain their budget. This has put Saudi Arabia on the path towards the door of the International Monetary Fund, which will mean the neoliberal conquest of the kingdom.
Recently Saudi Arabia announced its “Vision 2030” plan for economic reform, which puts the country clearly on the neoliberal program. The IMF was pleased with the reform measures, but, as always, said they were not acquiescent enough. The economic plan “should include further adjustments in domestic energy prices, firm control of expenditures, and further increases in non-oil revenues”, the IMF said. Translated, that means, raise fuel prices for Saudis, cut public spending, and seek foreign investment. Seeking foreign investment means privatizing public sector enterprises…the selling off of the state.
This process is already underway. The foundation of the Vision 2030 plan is the selling of 5% of Aramco, the government-owned oil company. Once you have successfully loosed one finger from a hand that is gripping something, the rest of the hand will inevitably let go…it is only a matter of time. Proceeds from the sale of the 5% share will go into a fund; but this fund will only end up being spent to cover Saudi Arabia’s budget expenses, and eventually, to pay back loans from international lenders.
Saudi Arabia’s economy is being dismantled, piece by piece. They have entered the rigged maze of neoliberalism, in which every turn they take is the wrong turn.