"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel"
I guess the biggest danger they would face is if they have to stop "paying off" their population, and this leads to an "arab spring" type of situation. But it seems even in that case they would unfortunately have the will and resources to use Syria-style brutal tactics to contain any uprising.
They are burning through reserves at these market prices.
Edit: To your point, it’s going to get ugly locally if market conditions persist.
2 No.
3 Yes.
The KSA spends 8.8% of its GDP on military expenditure. Seemingly the largest of any country.
https://en.wikipedia.org/wiki/List_of_countries_by_military_...
Russia does have superpower ambitions, which is a rather more expensive business.
My cynical suspicion is that much of the KSA military budget is really just a form of kickback - or possibly protection money, depending how you look at it - to the US mil-ind establishment.
While the Saudis are some of the worst people in the world, their ambitions are limited to keeping the ruling dynasty outrageously rich and maintaining power on their own patch of turf.
The Russian establishment is far more dangerous. It not only has links to organised crime, it also has a complement of nukes, bio, and chem weapons. And it has a very developed infowar, hacking, and social destabilisation arm, based on techniques pioneered by the US, with some home-grown twists to increase effectiveness.
This oil war and related COVID crash are going to do huge damage to the economies of both countries - and a lot of others besides - with increased prospects for instability everywhere.
I don't think anyone is expecting KSA to declare war against Russia, but they're currently at war w/ (part of) Yemen, and they're not exactly happy with Iran, either. The middle east is set to explode, even without US involvement.
Now not sure how long this will last, since the current price war is directly affecting the US producers. Time will tell.
[1] https://www.vox.com/2016/1/6/10719728/us-saudi-arabia-allies
You're talking about https://en.wikipedia.org/wiki/Iranian_frozen_assets right?
They probably aren't making enough right now to pay for all of their commitments, but they definitely aren't losing money and they can likely borrow in the short term.
https://www.reuters.com/article/us-saudi-economy-budget/saud...
Oil in Saudi Arabia pays the entire country
$8.98 might be the breakeven price for Saudi Aramco, but for the country, the breakeven point is, iirc, $80/barrel
If oil consumption enters extreme secular decline and SA doesn't transition to solar, then SA will be a horrendously poor country powered by oil.
If oil consumption enters extreme secular decline and SA does transition to solar, then SA will be a horrendously poor country powered by solar.
Either side could likely stop this with the consequence only being loss of face.
Are you sure? Everything I've read has said some variation of _Russia is heavily dependent on oil exports_ [1]. Russia has a massive cash reserve to weather this crisis but they're still being hurt just as badly as KSA.
[1] https://www.npr.org/2020/03/12/814824039/how-russia-is-react...
[1]: https://en.wikipedia.org/wiki/Economy_of_Saudi_Arabia [2]: https://en.wikipedia.org/wiki/Economy_of_Russia
https://edition.cnn.com/2020/02/18/politics/us-sanctions-ven...
In that sense, it doesn't matter one bit what the House of Saud does, the machine they built will keep going long after its gone.
Beyond a few articles in 2017, I haven't seen much of an update on that, anybody know if it was all just bluster, or are real things happening that would soften this blow coming?
1) Their climate sucks 2) They have very little arable land and lack water 3) Production of electricity is expensive 4) A lot of interior cities - not a lot of port access
So, from a geographical perspective, what is SA supposed to produce that gives them a comparative advantage against the rest of the world? Then you move into the political/religious aspects:
1) Uneducated workforce, despite offering scholarships to study abroad for every one of their citizens 2) They import most of their labor from other countries, ergo, their labor costs are higher with respect to the rest of the world. A factory in India will be cheaper than a factory in SA, all else being equal.
These disadvantages make the only real route to a viable economy a service-based one. This is what Dubai has done - Dubai has done their damndest to establish free trade zones, a legal framework, and a tax regime to get companies to establish their MENA HQ's there (and they've done so accordingly). SA is WAY behind on this (I would argue irrecoverably behind).
The biggest issue is the effect that the resource curse on the workforce, as you note. There is a small contingent of well-educated Saudis (largely found in Saudi Aramco), and the country has instead relied largely on giving their population sinecures in the government, which hasn't exactly done wonders for productivity.
Ex: During the Arab Spring, Kuwait handed out $500k checks to all Kuwaiti males above 18 years old. He also told the citizenry that he would forgive all car loans - population went and bought ferraris, range rovers, etc. and got the loans all forgiven by the government.
I worry more about the Arab countries that have high populations and cannot afford to pay everyone off - Saudi is on that list.
I did find this Reuters article which mentions "In 2011, to mark three major anniversaries, ruler Sheikh Sabah al-Ahmad al-Sabah granted 1,000 dinars to each Kuwaiti and free food rations for 13 months."
1000 dinars ~$3200
https://www.reuters.com/article/us-kuwait-parliament-debt/ku...
Do you have a reference for this? I had a look, but it's one of those things that is a bit difficult to search for.
Only Saudi Arabia beats them (barely) in the Middle East, and that's mostly from religious tourism to Mecca
I have to say, from flying across in a research airplane that was not allowed to measure (so no work for the scientific crew = lots of time to move from window to window and observe) - it is a colourful country and very beautiful from above. There is black and white, and red and yellow, and the many patterns in the sand and the mountains are interesting. I didn't know they had (extinct) volcanoes either. If I wasn't a woman I might have even considered going.
[0] https://qz.com/1684679/the-hajj-pilgrimage-to-saudi-arabias-...
It feels like a destination for the hyper-wealthy to Americans because our tourist offerings here are so much better - but not everyone can come here. My best analogy for Dubai is that it's like Vegas without the gambling - and while that may suck for some people, it can definitely be done. Vegas is also done at every price point!
You are forgetting the costs of running a city in the middle of a dessert.