OUTLOOK Saudi Arabia: ‘Not Good For 15 to 20 Years’, Says an Analyst (Video)
Last month (during 4th of July holidays) we reached out to some analysts and observers for their opinions and insights on the region (we call it south of the Tropic of Cancer). Countries such as China, Pakistan, India, Saudi Arabia, UAE, Bangladesh, Afghanistan, etc. in our opinion are either getting bouquets and brickbats or a technical knockout (TKO) or a “hang in there” –to characterize how things are unraveling. Up north of the Tropic of Cancer, Banksy is doing a great job with his eye popping latest artworks –he unveiled new pandemic-inspired art featuring rats in face masks. Our wall is this: DesPardes (Home & Abroad). So we braved to plagiarize Banksy’s style –unintended and unwittingly. Since we stand for “an alternative to breaking news and report”, we decided to give a leg up and get unsanitized, non-institutionalized views from analysts on happenings in the region — all the good, the bad and the ugly while maintaining a fair and balanced selection of views from all shades of opinion. It’s a hard sell. Will try. Pray for us!
Here’s the first part of the first country: Saudi Arabia. Grim like Pakistan for next 15 to 20 years, analyst Rashid Husain Syed says. Should the two tango as “buddy” then? (OSHA safety rules requirement), asks Irshad Salim, Editor DesPardes.
Syed draws some comparisons between KSA and Pakistan –old traditional allies with history of bonhomie on most issues including Afghanistan.
In our view it is okay to club them together, as both the countries don’t have a marriage of convenience or an arranged one. The wedlock has been a natural one (kind of tongue and groove for last 70 years, some observers say) –notwithstanding the see saw of an unhinged geopolitical rivalry unleashed in the region post pandemic, the two are proverbially in “a marriage made in heaven”.
Syed’s horizon view is: “Saudi Arabia and Pakistan (are) (will be) in the same situation for the next 15 to 20 years”.
Syed, an energy and geopolitical analyst who lived in the kingdom for decades is now Toronto-based and continues to write for Globe & Mail, BBC, Dawn, etc. and makes valuable inputs to DesPardes and others when asked for his take. Listen to what he says (English transcript follows the video):
Mr. Irshad, there is another aspect of the instability of Saudi Arabia and the chaos that I am talking about and that is their economy.
• Their economy, if I could use an English word, is in dire straits. Their cost is about 250 to 300 billion dollars.
• Their total income is between 100 and 125 billion dollars and their expenses are increasing whether they are due to Yemen or whether they are involved in such matters as buying things from America. (They) keep making deals.
• But their income is declining and their expenses are rising. Most of this spending is still from the reserves and their reserves are about 400 to 425 billion dollars.
• There is a deficit of 100 to 125 billion dollars. If they meet this deficit from their reserve it is probably four years before they get bankrupt and the price of oil will not see much spike unless there is a geopolitical scenario.
• The consumption of petrol in the world is also decreasing and its production is increasing. In many places, including the shale region, if the price goes up a little bit, then the productivity of the shale that has gone down a little will increase again. So there is not much option for oil income to increase for Saudi Arabia.
• If Saudi Arabia does not use its reserves then it will take debts. It has already started taking debt both for domestic borrowing and international borrowing in one form or the other.
• Bonds have been generated in and for Saudi Arabia. It turned out to be oversubscribed: 10,12 or 15 billion dollars . It will be a great thing there but this is the same story that Pakistan had.
• If you look at Pakistan of 1950s and 1955s, it was called very prosperous Pakistan.
• Pakistan continued to increase its needs and to meet these needs. they used to take loans and say that “we drank for free and we thought that our hunger would one day bring color”.
Mr. Irshad Salim, Editor/Publisher of DesPardes adds: While I may generally agree with Mr. Syed’s analysis, there are however silver linings in the cloud and behind these challenges are opportunities.
Mr. Syed continues:
One more thing in (Saudi Arabia) is that the system that was there was on two things. On one hand, Alay Saud was ruling and on the other hand, Alay Sheikh was leading religious thoughts.
• Whether we agree or disagree is a different story. There were two pillars on which the state and the government was running.
• Therefore, no king would take a differing position than of Alay Sheikh and he used to extinguish them and go with them. But this government is also hostile to them.
• There are many scholars and Wahabbi scholars who have been part of their religious establishment. They have been sidelined.
• If their voices have been silenced, it has happened also with some of the royal family, with some human rights reformers, and some journalists, and same with some religious leaders. It has also happened with scholars and those scholars who used to be a part of their establishment for a long time.
• So, my own opinion is that the young Muhammad bin Suleiman (MBS) has opened many fronts at once and when so many fronts are opened at once and the economy is collapsing, things don’t last very long.
• The slightest misunderstanding takes a heavy toll.
• If Trump leaves the White House in January 2021 then who will be their closest ally. This is a big question mark.
• That’s why I’m saying so. I think it could be wrong, of course. Anyway, I think Saudi Arabia is heading toward chaos and instability. I look at Saudi Arabia and Pakistan in the same situation for the next 15 to 20 years.
The opinions expressed are those of the authors. They do not purport to reflect the opinions or views of DesPardes.