This is the piece I referenced in class about how the current economic conditions in Saudi Arabia (especially the low price of oil) have lead to unease and less opportunities for young people.
http://www.nytimes.com/2016/02/17/world/middleeast/young-saudis-see-cushy-jobs-vanish-along-with-nations-oil-wealth.html?_r=0
Ah, it must be so horrible to have to work for a living! Seriously though, I think Saudi Arabia is diversifying its economy much to slowly and I can see a future powder keg there...
ReplyDeleteThe OPEC cartel is playing a very tricky game, they don't know the results of. Anyone claiming to know where the price of a barrel is going is taking a random guess. There are so many factors that will determine the future supply and demand to the extent that no one can accurately estimate the future prices. Hence, the conflicting oil price forecasts we keep seeing.
ReplyDeleteSaudi Arabia is a medium rentier states, and surprisingly many people live in poverty, some estimates put it at 1 out of 4 (http://www.theguardian.com/world/2013/jan/01/saudi-arabia-riyadh-poverty-inequality). The oil bust can be strong trigger in the GCC especially with already vulnerable countries (think Saudi, Kuwait, Bahrain). A complete collapse of those regimes does not seem as a far fetched thought anymore. The youth bulge is incredible, and the corruption is unimaginable!
It's already taking too long, I don't think any of the OPEC members saw this coming this hard, they expected prices to drive out shale competitors much faster! Budgetary cuts on subsidiaries are daily news in the GCC. The populations are already reacting, a few days ago the government of Kuwait decided to cut some subsidies on health care, they took that back a day later because of the reaction they witnessed.
ReplyDelete