Bani Saud hike of domestic energy prices will increase resentment, instability

Developing Just Leadership

Crescent International

Rabi' al-Awwal 16, 1437 2015-12-28

Daily News Analysis

by Crescent International

Among the many problems with dictatorships is that they cannot blame anyone else for their follies. This is what the Bani Saud are discovering. Their policy of over production has led to the collapse of global oil prices. This in turn has caused drastic fall in Saudi revenues forcing them to slash subsidies on essential commodities increasing resentment against the regime.

Riyadh, Crescent-online
Monday December 28, 2015, 23:21 EST

People in the Arabian Peninsula (aka ‘Saudi’ Arabia) are used to cheap gasoline prices. Under tumbling oil prices on world markets, thanks largely to the Saudi regime’s overproduction, gasoline prices will go up by 40 percent starting tomorrow morning (Tuesday December 29). While that still means gasoline will cost a mere $0.24 per litre, ‘Saudis’ are not used to such ‘price hikes’. The current price hike has been necessitated by the regime’s announcement of a $98 billion budget deficit today (December 28). This is the highest in the kingdom’s history. Subsidies for other commodities—electricity, water, diesel and kerosene—will also be slashed over the next five years.

The Bedouin-ruled (misruled?) kingdom has seen a sharp drop in revenues since mid-2014 because of falling oil prices. Dependent on oil for 90 percent of its income, the oil price collapse has seriously affected the kingdom. Saudi income for 2015 was 15 percent lower than projections and 42 percent less than in 2014. Revenues were estimated at $162 billion. This was also well below projections. Spending was put at $260 billion, according to finance ministry officials in Riyadh.

Slashing subsidies on basic items will not go down well with the people. They have few political rights, no freedoms—not even freedom of assembly—and cannot question the decisions of the king. In the past, discontent was bought off but now the financial crunch is going to severely restrict the regime’s ability to function effectively. The regime is mired in an unwinnable war in Yemen where although it has caused immense damage to infrastructure as well as the death of thousands of civilians, it has totally failed in its political and military objectives.

Instead, there are fears that the war on Yemen will lead to instability in the kingdom. Rumblings of discontent have also seeped out of the opaque inner circle where senior princes are greatly worried about the erratic decisions being made by Muhammad bin Salman, deputy crown prince, defence minster and son of the king. He reportedly makes all the decisions on behalf of his father who suffers from dementia. The young inexperienced deputy crown prince is also head of the country’s economic council as well as the king’s unofficial secretary determining access to the king (this is highly theoretical since the king does not remember what he said only a few minutes earlier).

Since Salman became king on January 23, 2015 upon the death of Abdullah, the kingdom has gone into greater turmoil. His wholesale dismissal of senior officials and putting almost all authority in the hands of his inexperienced son have caused great resentment. The follies have piled up. Now the removal of subsidies on essential commodities will cause further resentment against the ruling family of Najdi Bedouins. Some commentators have suggested 2016 may turn out to be the year this primitive family’s rule will end. If so, few would mourn the Bani Saud.


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