Oh boy! The Saudi Royal family is offering up $36 billion to its poor and middle class to fend off unrest and $400 billion over the next 3 years.
The first red flag is they’re going to give pay increases to help fight inflation. Giving people more money to spend -causes- inflation.
That $400 billion has to come from somewhere. The Saudis either will have to unload some investments or stop investing in things they would have. Total oil revenue is around $150 billion a year and they import about $85 billion in goods. The reproduction rate of its population exceeds the growth of the economy, so the GDP per person is plummeting. The population is about 20 million plus 5 million foreign workers. So the bribe works out to about $7k per person per year.
Offering money to not demand freedom may work, but more likely will be seen as weakness.
Either that, or they borrow like crazy. Theoretically there should be a limit to that but as the United States has shown… that’s not necessarily the case, or we haven’t hit that limit– yet.
Islamic law prohibits paying or charging interest which makes it complicated to borrow money. The external “debt” of Saudi Arabia is about 20% of its annual GDP. As has been pointed out, the United States has just arrived at 100%.
That being said, because their GDP is not diversified and they’re dependent on labor from other countries (mostly Pakistan) to do even most of the basic things, they’re very vulnerable to instability in the future. The GDP per person is about 25% of the United States.
Saudi’s Royal family giving Their money to the middle class and poor, while their middle class is probably richer than our wealthy class here,. The billions that they are sharing is more likley than not, money given originally buy the U.S. And their plan sounds a lot like Michelle Obama’s share a piece of the pie plan. If it wasnt for the U.S. to show them how to drill for oil there wouldnt be a Dubi either.
Beck this morning made the point that the middle class in Saudi Arabia does nothing – all work is done by their foreign workforce. I’d heard that from other people who have been there.
But this is all based on the King’s premise that money is the issue. I think the powers behind these revolutions (Iran) really want Islamic fundamentalism entrenched there. Especially in the country where the holy cities are located.
Since the people seem to be energized to revolt by the theme of overthrowing the monarchy, then those same powers (Iran) can “fix” it afterward.
So the question remains – who do we thank? Jimmy Carter for Iran, or Barry Osama for Saudi Arabia?