Another explanation for Saudi extremism

[Louis Proyect <lnp3@xxxxxxxxx>]

[The bourgeois media has had some difficulty explaining the fact that
a number of the WTC attackers were Saudi citizens. Eventually this
was attributed to 'Wahabbism', the ultra-strict version of Islam that
has the blessing of the royalty. However, this does not begin to
explain why things were so quiet in Saudi Arabia prior to the most
recent past. Perhaps this NY Times article from 2 years ago provides
a more logical explanation.]

The New York Times, March 20, 1999, Saturday, Late Edition - Final

For Ordinary Saudis, Days Of Oil and Roses Are Over

By DOUGLAS JEHL

JIDDA, Saudi Arabia-- Not long ago, most Saudis scorned greasy spoons
like Abu Zeid's.

With barrels of oil money, they preferred the glitz of American fast
food or the cachet of French cuisine to the fluorescent lighting,
Formica tabletops and cheap mashed beans of Abu Zeid's. But faced
with a recession, soaring unemployment and declining incomes, Saudi
Arabia is undergoing a transformation, and what once seemed
inconceivable is slowly becoming routine.

The Government, famous for free health and education programs and
lavish military spending, and for never collecting a nickel's worth
of taxes, has announced deep spending cuts concentrated in the
military and security, even putting on hold a $1.7 billion arms deal.

Further steps are possible, including eliminating longtime utility
subsidies and even opening the long-closed kingdom, ever so slightly,
to foreign tourists and American oil companies.

Among ordinary Saudis, long the world's most voracious consumers, the
change is visible among shoppers who are forsaking luxury goods and
bellying up for dish of mashed beans at Abu Zeid's for 55 cents.

"When you are hungry you will take anything to fill your stomach,"
said Ibrahim, 49, a retired air force officer and father of eight,
including two unemployed sons, all of whom live at home. "And we are
hungry now; we are in need."

For more than two decades Saudi Arabia, with its vast oil reserves,
successfully walled itself off from the world beyond. Even when oil
prices dipped, its spending was sacrosanct.

But the shock of the last year, in which oil prices slid 40 percent,
has made clear to just about everyone that old habits must die -- a
conclusion that has not come without anguish.

"When the river dries out, where do the fishermen go?" asked Abdullah
Dabbagh, chief adviser to the Saudi Chamber of Commerce and a member
of the country's Majlis al-Shura, or consultative council. "If we dry
out, where do we go?"

Here in Jidda, the country's commercial center on the Red Sea, the
grim moods are reflected on the faces of anxious merchants.

"These are going to be hard times," said a luxury car salesman. He
said car sales had fallen 50 percent since late last year. "Hopefully
we can find a way to survive, because I can't imagine a dark future."

In 1998 the country's oil income plunged by about 40 percent or $20
billion, a result of the worldwide decline in prices. Having crept
into surplus for two years running, the Saudi budget fell deeply back
into the red, with a deficit of $13 billion, three times what had
been predicted. It was the biggest deficit since the end of the
Persian Gulf war of 1991.

Oil prices have spurted recently under a Saudi plan to slash
worldwide production. But to carry that off, the country has pledged
to cut its own production by more than 5 percent, something that will
limit its ability to recover lost income and will leave it with
continuing deficits. The plan is expected to be considered on March
23 at a meeting of the Organization of Petroleum Exporting Countries
in Vienna.

For now, though, Saudi Arabia is in recession, its first in six
years. The economy is expected to shrink in real terms this year by
about 2 percent -- the deepest decline since the mid-1980's.

With mounting deficits, the national debt is soaring and the cost of
interest alone consumes 15 percent of the budget. That has put
pressure on the currency, the riyal, the value of which is pegged to
the dollar.

Last year the country's economic output per person -- or gross
domestic production per capita -- sagged to an estimated $6,300 from
more than $7,000 in 1997 and $16,700 in 1980, when oil prices were
high and incomes peaked. Unemployment is rising, with an estimated
100,000 young men every year entering a job market with little
growth.

"In the last year, our eyes have been opened to things we haven't
seen before," said Said al-Shaikh, chief economist for the National
Commercial Bank. "There is no doubt these are major challenges for
Saudi Arabia.

In many ways, everyday life in Saudi Arabia has not had the
gold-plated vistas that immediately greet most foreign visitors: the
new-model cars, high-end shops and wide, modern highways.

Outside the big cities, shopping is still done at open-air markets,
not air-conditioned malls, and what passes for entertainment might be
a visit to a male-only drive-in featuring television programs, with
old sets balanced on tabletops at the edge of the desert.

Still, Saudis say, the effect of mounting economic troubles has
become evident in the last year. Sharp cuts in agricultural subsidies
have brought migrants to the desert outside the capital, Riyadh. In
that city's outlying areas, young children can sometimes be seen
peddling tissues at traffic lights, providing a glimpse of new
poverty.

Poor Saudis Knocking On Doors Seeking Food

In cities like Taif, two hours northeast of Jidda, and Abha, in the
country's mountainous south, residents say they have opened their
doors to poor people knocking in search of food. Some 45 percent of
all Saudis are 14 and under, and the fear is that the hard times
might only get worse.

"I'm really worried about my boys and my daughters," said Ibrahim,
who like most ordinary Saudis willing to speak frankly about the
country's economic difficulties would do so only on condition that
his full name not be used.

In cutting spending, the Saudis will allow many defense contracts to
expire. They have also warned American and other defense contractors
that they plan to stretch out hundreds of millions of dollars in
payments that would otherwise have been due this year.

Other big victims include the Saudi energy industry, particularly
among contractors employed by the Government-owned oil company, Saudi
Aramco, whose budget for exploration and construction has been
virtually eliminated this year.

At the same time, the Saudis have shown signs that they at last may
be willing to embrace changes aimed at attracting new sources of
income.

Last fall, Crown Prince Abdullah, effectively the country's ruler
because of King Fahd's poor health, cracked open a door closed since
the 1970's by inviting American oil companies to propose how they
might again play a role in the kingdom's energy industry. In the
short term, diplomats say, any role offered to them is likely to be
limited, but even that change would reflect a new openness to foreign
investment.

A New Industry: Foreign Tourism

In the last 18 months the Government has also permitted foreign
tourists to visit for the first time, an experiment that many
entrepreneurs hope will help create a new industry. A main focus has
been Asir Province in the south, where mountains soar to 10,000 feet
and preparations have begun for a college of tourism to help serve an
expected influx of visitors.

Already, Saudis and residents of neighboring gulf countries -- lured
by cool weather, Swiss-built cable cars and family-friendly amusement
parks -- have become regular summertime visitors to the region, but
the Saudi Government had never before issued tourist visas to other
foreigners, in a determination to protect the country's strict
Islamic culture.

But even within the royal family, many are saying the Government
should find a way to accommodate foreigners, particularly those who
might pay top dollar to visit Saudi Arabia's unspoiled Red Sea reefs
and its vast Empty Quarter desert.

"I think the Government has been very cautious about the effect of
hundreds of thousands of people from other cultures who would offend
local people without even knowing about it," said Prince Bandar ibn
Khalid, deputy chairman of Asir's tourism council.

"What I suggest." he said, "is that we build enclaves on the Red Sea
only for foreign and non-Muslim tourists, and within the enclave they
can do anything they want.

"As long as the people don't see the tourists except when they are
dressed properly, that's fine. Of course, the religious people and
the extremists won't like it, but they won't have to see it."

In Asir, where tourism provides the only new jobs, local people say
they are grateful for any new business they can get.

"The more the better," said Mohammed al-Alkemi, 95, a merchant who
wore a traditional silver dagger in his belt as he sold honey in the
market in Abha, the regional capital.

Of course, Saudi Arabia has announced austerity measures before, only
to postpone them as economic prospects improved.

A Job Program Makes Little Progress

In what was to have been a first step toward eliminating costly
Government subsidies, it doubled the price of gasoline in 1995 and
announced a plan to install Saudis in jobs held by foreigners.

But progress in carrying out the job program has been slow. With many
Saudis unable or unwilling to take on difficult work at low pay,
foreigners -- most of them other Arabs and South Asians -- still
account for 67 percent of the Government work force, and they hold a
staggering 95 percent of private jobs.

The economic weakness now confronting the country may finally be
driving home the message that change is unavoidable.

A soaring level of debt driven upward by uncontrolled spending now
amounts to $130 billion, equivalent to the country's total economic
output, and the debt is expected to swell by another $14 billion this
year.

Officially, the Saudis have so far financed most of that debt at home
-- only $7 billion is owed abroad -- but strains are beginning to
show.

With Saudi banks drawn to the limit, the Government has had to rely
heavily on its pension funds and other sources, including Saudi
Aramco, the Saudi oil company, which is officially autonomous but
last year borrowed more than $4 billion from foreign banks and
promptly transferred it to the treasury, Saudi bankers say.

Because of the cash crunch, diplomats say, the Government postpones
payments to Saudi contractors for as long as two months, then settles
its debts in Saudi bonds instead of cash.

A further indication of trouble came in January, when the Moody's
Investors Service downgraded Saudi bonds to junk status in what it
called a reaction to the size and growth of the Government's debt.

Those developments have caught the eye of international speculators,
who have put substantial pressure on the Saudi currency recently by
betting that the Government will be unable to maintain its rate of
3.75 riyals to the dollar.

Bankers and economists say Saudi Arabia has enough foreign exchange
to stave off such pressure. But the battle has cost the Saudis
billions of dollars in foreign currency reserves, they say, and was
almost certainly the reason for murky transaction late last year in
which as much as $5 billion is believed to have been transferred to
Saudi Arabia by the United Arab Emirates as part of a secret currency
swap.

Still, said Kevin Taecker, chief economist of the Saudi American Bank
in Riyadh, a devaluation by next year is not out of the question.

--
Louis Proyect, lnp3@xxxxxxxxx on 10/14/2001

Marxism list: http://www.marxmail.org


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