Midas’s Touch: Saudi Style
- By Yasser Aboraya -
The Kingdom of “Kapsah”, oil, and the famous Saudi family has undoubtedly seen better days. This sandy OPEC member have long been seen to be thriving with its “too much” oil, relatively stable political and social scene, and good relations with the west. All of this however started going south shortly after the breakout of the lovely Arab-Spring and here are the points you need to know to understand why things are changing massively over there in the land of lavish Arab money.
- Boss Baby
First, you must’ve noticed that the current Saudi boss is just a 30-something year-old guy who’s bringing much changes to the table, but this is not necessarily a good thing especially in a kingdom and a society that is based on traditions and religious values.
- Old-school war to the south
Second thing to know is that amidst the current financial crunch the state is living-through, it chose to enter an actual war to the west with the “houthis” of Yemen.
- Regional war on terrorism
In additional to the Yemeni war which requires much funding, the Saudi family is also tagging along with several other states in fighting terrorism in the region, which costs more money and firepower.
- Cold war with the east
This one is not underlined in the news but if you’ve been paying close attention to the current state of affairs between Iran and KSA (especially right after Obama went out of office) you will notice that the Saudis are trying as much as they can to minimize the Iranian grip on the gulf region.
- A lover’s quarrel
This is still fresh; I am talking about none other than the recent sanctions laid on Qatar by several GCC countries, which largely points at the first actual moment of failure for this regional institution.
- Oil what again?
Oil isn’t useful if it isn’t sold at the right price, and with the ongoing crunch, the Saudi family is trying as much as they can to diversify their revenue streams starting with the HUGE wealth sovereign fund and possibly a partial IPO for the world’s largest oil company; ARAMCO.
- No money, no honey
For the time being, with the financially unnecessary (but for political and security reasons necessary) quarrels the Saudi’s are indulging in, the government began implementing some spending cuts here and there, and is about to join the rest of the GCC countries in setting a value-added tax by 2018.
Adding to all of this the fact that the world is currently changing towards implementing green energy and advancing electric technology, don’t expect oil prices to go that high (especially with the west and east being kind-of economically stagnant lately). Like Midas who turned everything into gold but couldn’t find much use for it, the Saudi’s should start acting quickly towards diversifying their “portfolio” so that they won’t find themselves with just cheap oil.