This is the story of a country - a country built on oil.
Modern Saudi Arabia has been a single resource economy since the discovery of black gold in 1938. Its successive governments have introduced 10 development plans so far, the first in 1970, the latest in 2015.
Their single strategic goal? To achieve economic diversification away from the kingdom’s over-dependence on oil.
But at least nine of those plans have failed miserably in realising that objective. The kingdom has yet to build any serious industrial infrastructure, beyond some basic petrochemical, plastic and food processing plants.
The results from the latest – and 10th - development plan, the National Transformation Plan (NTP), remain to be seen. It is a five-year vision, running from 2015 till 2020, that forms the first phase of the much bigger Vision 2030, the Saudi government's long-term diversification strategy.
Still addicted to oil
Vision 2030 states that the government will achieve its goal by selling public assets and reinvesting the funds, raising revenues through "new" channels other than oil. But this is not true: the value of those assets still derives from the oil-dependent economy.
In July 2017, the government announced plans to sell significant minority stakes (up to 49 percent) in King Khaled Airport, which reportedly handled 22.5 million passengers in 2016.
But this movement of people is only a result of economic activity, an outcome of government oil-money spending - and an artificial value based on a temporary oil-based economy. Despite government claims, it is not diversification but continued capitalisation from the same source.
US President Barack Obama at King Khaled airport, which Saudi plans to sell, in June 2009 (AFP)
For investors, the future could be gloomy, subject as it will be to fluctuating oil prices and the government's continuous ability to finance its budget. These are not strong economic fundamentals upon which professionals would wish to base their decisions.
Riyadh also plans to sell a portion in Aramco, the world’s largest oil producer, as part of an effort “to raise $200 billion over the next several years”. It anticipates a world where green economics are increasingly the dominant force and wants to prepare Saudi for a post-fossil fuels planet.
Eventually, the kingdom aims to create the world’s largest public investment fund (PIF), estimated to be worth $2 trillion. The government wishes the fund to become the country's new oil, to reinvest that money and deliver constant profits to finance the ever-increasing consumption-based budgets.
It doesn’t have to be this way: the government needs to allow public participation to avoid political shocks
However, the decision to sell airports and, more importantly, the oil company - the country's only source of income - are major moves which will determine the fate of Saudi. As such, they should be subject to public approval and are beyond the scope of any one person, including the king or his son.
This can only be obtained through free public dialogue, followed by an open referendum. But Saudi lacks the political will and institutional capacity for this. Instead, it is an extreme environment where the government either takes all the credit or all the blame.
It doesn’t have to be this way: the government needs to allow public participation to avoid political shocks.
Does anyone know what they're doing?
A government that has always relied on the easy money of oil sales is inadequately positioned to lead the post-oil era. Riyadh lacks the cultural capacity to govern in a different world. Oil sales produce constant and rapid flows of cash, in contrast to the pro-investment approach, which is a much more daunting long-term mechanism for money creation.
The Saudi government has a track record of indiscipline when it comes to allowing investments to pay dividends. At times of booming prices, Riyadh usually invests its cash surpluses internationally. When oil plummets, they rush to liquidate their positions.
A Saudi trader takes orders in the dealing room of the Saudi Investment Bank in Riyadh (AFP)
Furthermore, Vision 2030 states that the funds raised by selling public entities will be reinvested to produce “high returns”. But financial professionals always advise that investment schemes which promise high returns are risky, often because they are prone to high volatility or value fluctuations.
Do the Saudi government and the Saudi public know what is involved in making such decisions?
We already know from experience that the Saudi government lacks self-discipline (or what investment gurus call emotional intelligence). This is a key characteristic for a return on investment to be realised, regardless of any pressures on decision makers, as in, falling oil prices.
Who is to be held responsible for gambling with the nation’s only treasure, the Saudi oil company Aramco, in exchange for hope?
We should also ask whether Riyadh has the technical capacity to effectively and efficiently make crucial decisions as to when to exit a position and run the losses short; and when to wait for prices to rebound, if they ever do.
Who is to be held responsible for gambling with the nation’s only treasure, Aramco, in exchange for hope? Could the authorities not think of any better alternatives to raise money for the purpose of investment than the sale of Aramco or any other public companies? Why do the authorities treat Vision 2030 as an untouchable and unamendable holy Quran?
These are some of the questions the Saudi public is asking – as seen by the debate on social media - and to which the government fails to respond.
Too much power in one place
But the Saudi monarchy is a centralised system of power, which not only blocks any real attempts at debate but also at real efforts to create a diverse economy reliant on human capital.
Take the Saudi education system. In a globalised economy, there are standard skills that all education systems need to equip their graduates with. Look at Ireland: there, the Expert Group on Future Skill Needs (EGFSN) identifies a broad range of abilities that future workforces need to ensure their employability in modern economies.
Saudi students sit their final high school exams in Jeddah in May 2015 (AFP)
These are the fundamental skills needed for entry-level employment, including literacy, numeracy and basic information and communication technology; then the people-centred skills such as communication. Finally, there are the conceptual and thinking skills such as research, analysis, problem-solving, planning, critical thinking and creative abilities.
But the Saudi education system hardly delivers the most basic skills of Arab literacy and numeracy, despite its astronomical budget, which was more than $53 billion in 2017 budget.
This is a ridiculous figure, given the poor outcomes, as is evident from the widespread unemployability of its graduates. As an opinion writer for Mideast Posts reported in 2012:
“Perhaps the most insidious problem, though, is that having been educated in a narrow field, these graduates have a tendency to view the world through the lenses crafted by that field of study... They’re ‘better educated’ in that they now hold degrees, but they are worse educated in that they know less of the world, of mankind, than almost any other field of study would produce. The only jobs they are competent to fill are those artificially created by government in the Commission for the Promotion of Virtue and Prevention of Vice.”
An OECD report in 2016 found that “the percentage of today's young people expected to obtain a master's or an equivalent degree during their lifetime is one of the lowest among OECD countries and partner economies with available data” and ranked Saudi 37 out of 38 OECD members and partner countries.
The problem is not even the limited number of graduates. Mohammad I Al-Hassan, vice president for educational and academic affairs at King Saud University, asked a decade ago: “Why, if many from our staff graduated from Yale, Harvard, and Stanford, don't they make any real breakthroughs? There is no tenure system here, and we don't spend money on research, so it is just not the right environment to promote originality.”
Little has changed since.
Analytical skills are transferable by their nature and unconstrained by specialisms such as law or economics. They allow every area of social existence to be scrutinised, leading to citizens capable of thinking independently beyond state propaganda. But the Saudi ruling family fears the emergence of such citizens – and the education system is carefully designed to hinder such empowerment.
Formal education in Saudi Arabia is intended to generate specific outcomes, functioning as a mind-control operation, with its overemphasis on the teachings of unconditional obedience to the rulers
Instead, formal education in Saudi Arabia is intended to generate specific outcomes, functioning as a mind-control operation, with its overemphasis on the teachings of unconditional obedience to the rulers - fiqh ta-at wali al-amr). It is a systematic 12-year-long brainwashing methodology designed to deliberately produce incapable citizens, unable to deviate their mindsets from what they like to call “the consensus of the nation” to unconditionally obey the king.
This lack of oversight and power concentration can only hinder real economic development. Think of the tech industry and the importance of constant innovation to develop new products and new markets. It's simply unachievable in the Saudi context, whose institutional deficiencies undermine any hope of a diversified economy.
Where is the money going?
One of the main causes of this government failure is lack of oversight. For instance, in 2014, Saudi Arabia announced what it called King Abdullah's Project to Reform the Public Education Sector; “a four-year plan worth more than 80 billion Saudi riyals ($21.33bn) to develop the country's education sector…”
Then Abdullah died in January 2015 and a new ruler ascended the throne. King Salman has since announced fresh strategies, which often override previous ones. But what happened to the education reform plans, one may ask, announced just one year before his inauguration? Or the massive budget dedicated to it?
King Salman bin Abdulaziz al-Saud in Jeddah in June 2017 (AFP/Saudi Royal Palace)
During the conference, Faisal gave huge numbers for every segment of the project - but it is unclear how those figures were arrived at and who would monitor how the money was to be spent.
In the absence of effective and independent oversight, and in light of the official approach to silence rights advocates, it is opaque as to how contracts were awarded or how these numbers were arrived at.
One might expect answers from Faisal, who is now the governor of Makkah Province. But no one has the power to call him to account: instead he was simply given a new post, leaving questions unanswered.
The ministry of education, under his management, received tremendous funding to supposedly reform the public education system. Yet the outcomes of the project were never delivered: by appointing him as the governor of Makkah, the government effectively granted him immunity from any potential fallout.
Ministers who were part of the strategy should attend open hearings, where they can be questioned by representatives of the public, rather than appointees of the governement such as the Shura Council
One might, perhaps, look to the Saudi anti-corruption commission, Nazaha, to examine what happened. It is supposed to have financial and political independence and to only be answerable to public representatives. But it is powerless, its members appointed by the government and without any clear authority.It has no power to investigate potential suspects or cases and is ultimately meaningless without full autonomy.
Instead it deludes the public into believing that the government is somehow serious about tackling corruption. Effectively this makes the commission, as it stands, part of the problem.
There needs to have been oversight of the 2014 plan. Ministers who were part of the strategy should attend open hearings, where they can be questioned by representatives of the public, rather than appointees of the government such as the Shura Council.
On the ground, teachers and students have seen little benefit, with many saying that the education projects have failed miserably. When the minister of education, Ahmed Aleissa, tweeted thanks for the government support for education, only to be roundly mocked and cursed.
The problem with quick fixes
Saudi Arabia, due to the nature of its political system, has always resorted to what it perceives as easy options.
For instance, the Ministry of Labour’s (MoL) programme, Nitaqat, forces the private sector to hire Saudi nationals. Private firms face severe consequences if they under-employ Saudis, amounting to an effective freeze on their businesses’ operations with the withdrawal of their licences.
audi agriculture needs more nationals involved in the sector, the government and experts believe (AFP)
This is a classic example of the government transferring the responsibility of its failures back to society. The unemployability of Saudi students is a direct result of the inadequate Saudi education system: they are even banned from joining private international schools that teach Western curricula in addition to Arabic and Islamic subjects.
There is no threat from these schools to Saudi’s Arabic and Islamic identity because they teach associated subjects: rather the problem, as perceived by the authorities, is political, the fear that these curricula will develop independent thinking among their students.
The result is a private sector paying the price for Riyadh's failure to strike a balance between the modern economic need for an adequately skilled workforce and centralised political interests.
It means that many businesses hire Saudi youth in non-existent jobs, where many are paid for literally doing nothing. Some only show up at the end of each month to collect their salaries, then disappear again.
The Saudi Public Investment Fund announced in August 2017 the Red Sea resort project, an international leisure destination on the western coast of the holy land (yes I meant to call it that).
A conservative and traditional society has been told that its government wants to create a resort where the rules of the land do not apply – including the segregation of the sexes and the "Islamic" dress code - just a few hundred kilometers from the most sacred sites in Islam.
In the brochure, it is claimed that the project will create 35,000 jobs and generate an annual income of SAR15b ($4b). But there is no mention of how much will be spent to achieve this – and so we cannot determine whether the project is good value for money or not.
Secondly, the project is an ethical and political problem; an enforced, top-bottom imposition of alien values.
It is not the outcome of a natural cultural evolution within society but a royal decision that, overnight, transmutes from strict, empty-headed, religious fanaticism. This is insulting to a significant proportion of Saudi society who have bought into official religious propaganda over the decades.
Let's talk about Saudi's future
One can only conclude that no real economic diversification is achievable under the current form of Saudi governance, let alone in a post-oil world. Riyadh’s failure to moderate its grip on power is simply incompatible with this objective.
Corruption over-inflates the cost of all projects and sucks in all surpluses. Political decentralisation and anti-corruption measures are the only way forward if the new government of Mohammed bin Salman is serious about real change.
It must be substituted with a system that delivers rationality and other thinking and conceptual skills: if not, then the government will face serious challenges in the years to come
But real change is only attainable through quality education and freedom of thought and expression. And the Saudi education system, as it stands, only adds to the unemployment rate in the country.
It must be substituted with a system that delivers rationality and other analytical and conceptual skills: if not, then the government will face serious challenges in the years to come.
Furthermore, the protection of freedom of thought and expression can, in the long term, provide a context for liberal changes in the country. This would create a framework for ideas to mutate and enable the emergence of a tolerant society.
It is for the common good to allow public dialogue to take place in advance and not to take society, as is happening now, by surprise.
- We are not sharing the identity of this author for his/her own safety.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.
طالب نائب رئيس الحكومة اليمنية الشرعية، وزير الخارجية، عبد الملك المخلافي، بالتحقيق، بقصف لمقاتلات التحالف العربي الذي تقوده السعودية والإمارات في اليمن، أصاب منزلاً سكنياً على الأقل، ونتج عنه سقوط 38 بشخصاً ين قتيل وجريح، أغلبهم من النساء والأطفال.
وقال المخلافي في تصريح على صفحته الشخصية على موقع "تويتر" إن "ما حدث اليوم في منطقة فج عطّان في العاصمة صنعاء، من قصف للطيران أصاب مدنيين يستوجب التحقيق من قبل التحالف وإعلان نتيجة التحقيق".
وجاء تصريح المخلافي، عقب ارتكاب طائرات التحالف، لمجزرة في العاصمة اليمنية فجر اليوم، حيث قصفت منزلاً على الأقل، في منطقة عطّان، جنوب غرب العاصمة، ما أدى إلى مقتل 16 مدنياً بينهم ثمانية أطفال وأربع نساء، بالإضافة إلى 22 جريحاً.
ولاقى القصف، إدانات واسعة من قبل اليمنيين، حيث دانت الناشطة اليمنية الحائزة على جائزة نوبل للسلام، توكل كرمان، "الجريمة بكل عبارات الإدانة والاستنكار".
وتعد المجزرة هي الثانية، خلال أيام، حيث كان العديد من الضحايا قد سقطوا باستهداف التحالف لفندق، شمال صنعاء، وطالبت الأمم المتحدة بتحقيق مستقل، فيما برر التحالف القصف بمعلومات عن وجود مسلحين من جماعة أنصار الله (الحوثيين) في المكان.
The Emiratis can intervene in the region's conflicts, install dictators, and arrange coups. They can apply maximum force. They will never, however, govern with consent By David Hearst Link
Future generations of historians will study the times we live in out of a particular, if morbid, curiosity.
They will puzzle over why it was that we left intact the banking system that created that the crash of 2008, an event that was to repeat itself on a bigger scale.
They will examine the melt down of social democracy and liberalism. They will ask themselves why Muslims were targeted in Europe and why terrorism was recast as a monopoly of Islam; they will study the speeches of ministers who saw Trojan horses where none existed.
We know what has died - the theory of liberal interventionism, after the military fiascos of Afghanistan, Iraq and Libya, but what replaces it?
A future Edward Gibbon, writing about the “Decline and Fall of the Western Empire,” will scrutinise other symptoms of malaise - the volatility of public opinion; the outbreak of identity politics, the application of incoherent tests of citizenship, the obsessive compulsive reliance on past heroics (Battle of Britain, Dunkirk); the anxiety about the future.
They will ponder the US withdrawal from the Middle East and the shrinking of Britain.
Much of this can be seen without the benefit of hindsight. To take just one line of inquiry, is there such a thing as British foreign policy? Can you define it ? Do we even have a foreign minister?
John Kerr, former head of the diplomatic service and former ambassador to the US and Brussels, does not seem to think we have. In an excoriating demolition of the current government this week, he shredded Boris Johnson for saying and doing nothing.
“Why are we silent while President Trump refuses to rule out military action against Venezuela? Or threatens trade measures against China? Or rages against the nuclear agreement with Iran which we helped to negotiate? Where do we stand on the Saudi/Qatari crisis? Are we still relaxed about the Saudis bombing cholera-struck Yemen?” Kerr wrote.
What indeed is the policy? We know what has died - the theory of liberal interventionism, after the military fiascos of Afghanistan, Iraq and Libya, but what replaces it? Does policy to Saudi Arabia merely consist of keeping tens of thousands of jobs going at BAE?
Back to the future
In practice, much of the traffic and influence runs the other way. No longer does Britain scour the world for raw materials, as China does today. It does the reverse. Britain sells its raw material - land prices in London - to emerging markets and former colonies. That is what the London Borough of Haringey has just done with the biggest urban redevelopment in Europe
For centuries, national politics were manipulated openly by colonial powers from their embassies in vast tracts of the world. British colonial policy in the Gulf consisted of replacing difficult sheikhs with docile ones. Now, however, this relationship is being reversed. Their ambassadors lecture us in the same way our ambassadors used to lecture them.
To Russian eyes, the claims of US security establishment that Moscow interfered in the US presidential elections carries a heavy irony
To Russian eyes, the claims of the US security establishment that Moscow interfered in the US presidential elections carries a heavy irony. What was post-Soviet Russian politics about if not for a doomed American attempt to mould Boris Yeltsin’s Russia in its image? That went on for a decade under the veil of democracy promotion and state building. When it failed, Washington even asked itself the question of how it had “lost” Russia.
Sensing the inner decay in Washington similar to the one which doomed the Soviet Union, the master tactician Vladimir Putin has reversed the trend. Like it or not, Putin’s former Russian ambassador to Washington, the gregarious Sergei Kislyak, became a political player in Washington.
Yousef Otaiba still is. Like Kislyak, Otaiba, as the UAE ambassador to the US, sees himself as a power player in his host nation. He can place uncritical encomiums to Mohammed bin Salman in the New York Times and the Washington Post. He can grab parts of Trump’s presidential schedule. He can arrange secret meetings with the president. He can poison the reputation of bin Salman’s rival cousin.
UAE Ambassador to the US Yousef Otaiba (AFP)
Otaiba sees the dimensions of his job as being very much bigger than merely representing a tiny Gulf state, the United Arab Emirates.
For one thing, he has spent most of his energy promoting a prince from another country, Mohammed bin Salman, the future Saudi king, whereas the Saudi embassy has been almost totally passive and out of the loop.
For another, Otaiba has huge ambition. It is to construct a plausible narrative in which his tiny state, through money and proxies, takes over the US role in the Middle East as America retreats to confront China in the Pacific.
Otaiba already thinks his master, Mohammed bin Zayed, has got control of Saudi Arabia with the rise of the young prince, the ideal ball of soft wax on which to imprint Emirati designs. That is being replicated in Yemen, where a split between the Houthis and the former dictator Ali Abdullah Saleh plays into Emirati hands.
They need this to happen in Libya, and they have already switched sides in Syria. The Arab world will soon be dominated by like-minded dictatorships.
The real threat
The words that Otaiba uses in his emails to cloak a future Emirati seaborne empire - the ports that stretch from the Persian Gulf to the Red Sea and the Suez Canal - are pure sham. He talks of a Middle East dominated by secular governments. He said to PBS’s Charlie Rose: “What we would like to see is more secular, stable, prosperous, empowered, strong governments.”
In reality, the Gulf’s absolute monarchies use Islam and imams to endorse dictatorship even more than political Islamists do. Bin Salman picked a very important night in the Islamic calendar to receive allegiance as the new crown prince, and of course it happened in Mecca. It was the 27th night of Ramadan, Laylat al-Qadr, the night of power when prayers are magnified in importance a thousand times.
In reality, the Gulf’s absolute monarchies use Islam and imams to endorse dictatorship even more than political Islamists do
Rival preachers are cast as terrorists - but not because their interpretation of Islam is more extreme. It's their moderation the Saudi clerics fear.
One of the objects of Emirati (and Israeli) ire comes in the form of an eminent Muslim Brotherhood scholar, Yousef al-Qaradawi, who lives in Doha. Qaradawi is no social liberal. He is not about to embrace homosexuality or Western feminism. But it is not those qualities that have put him on the Saudi terror list.
In May 2008, Qaradawi issued a fatwa permitting the building of churches in Muslim countries. He said it is allowed in Islam and Muslims have to respect and protect them.
Qaradawi has been attacked ever since for betraying sharia texts. In May 2008, Sheikh Abdallah bin Mani’, a member of the Committee of Senior Scholars, wrote that the building of churches should be considered an act of collaboration in committing sin and aggression.
He wrote: “Our Messenger was explicit in saying that there shall not be two religions in the Arabian Peninsula." He is quoted in the same narration as saying: “Remove them from the Arabian Peninsula ... There is no doubt that the states of the Arabian Peninsula are strong, well-placed and independent when it comes to internal affairs. Therefore, I consider allowing the existence of any temple that is not Islamic does indeed constitute a violation and a contradiction of the directive made by the Messenger of Allah peace be upon him.”
In March 2012, Abd al-Aziz Abdallah al-Sheikh, the chairman of the committee of senior scholars, and Saudi mufti took up the same theme. He was asked to rule on calls by the Kuwait’s parliament to demolish churches.
He replied: “Kuwait is part of the Arabian Peninsula where all churches should be demolished since approving the existence of those churches would amount to approving a religion other than Islam."
This Saudi ruling continues to this day. From the website of Saudi Sheikh Salih bin Fawzan al-Fawzan: “As for the Arabian Peninsula, it is not permissible in it to keep any churches or other temples because it is the source of the mission, the source of Islam.”
For how long will Washington swallow the argument that the Emiratis and Saudis are fighting terrorism?
In 2004, George Tenet, former CIA director, told the 9/11 commission of the time when they had to call off a suspected air strike against Osama bin Laden, because in his words “you might have wiped out half the royal family in the UAE in the process".
In Yemen, the UAE is continuing to use al-Qaeda proxies to undermine the Islah party in the besieged rebel stronghold of Taiz. A confidential UN report on Yemen by a panel of experts reporting to the UN Security Council highlighted the emergence of the Salafi anti-Houthi commander in Taiz, Sheikh Abu al-Abbas.
The report read: "Abu al-Abbas receives direct financial and material support from the UAE. His strategy in Taiz is to engage the Houthis as his primary target, whilst constraining al-Islah’s political and military influence. His direct engagement of the Houthis means that he has allowed the spread of AQAP [al-Qaeda in the Arabian Peninsula] elements within the city as a force multiplier."
What makes Qaradawi a threat to the ruling elites has nothing to do with Islam. It is the fact he provides an alternative reading and that the Muslim Brotherhood continues to have democratic legitimacy.
Look at what has just happened in local elections in Jordan, an autocracy which has tried really hard to split the Ikhwan, by closing their offices and setting up official sanctioned splinter groups. When you have free-ish elections, the MB continues to emerge as the biggest single party. If the Brotherhood were to give up the ghost, and Arab nationalists re-emerged, the same would happen to them.
That is what Otaiba and his like fear. It is called democracy. And that is why their plans are doomed. They can intervene, install dictators, and arrange coups. They can apply maximum force. They can never, however, govern with consent.
- David Hearst is editor-in-chief of Middle East Eye. He was chief foreign leader writer of The Guardian, former Associate Foreign Editor, European Editor, Moscow Bureau Chief, European Correspondent, and Ireland Correspondent. He joined The Guardian from The Scotsman, where he was education correspondent.