As the country's 87-year-old monarch returned home from the US and Morocco where he underwent back surgery last week, his government attempted to anticipate potential unrest across Saudi Arabia by announcing an unprecedented economic package that included interest-free home loans, unemployment assistance and tranches of debt write-offs.
Bloomberg February 23, commented, "The total cost was estimated at 135 billion Saudi riyals ($36 billion), but this was not largesse. Saudi Arabia clearly wants no part of the revolts and bloodshed sweeping the already unsettled Arab world."
Saudi officials were desperately "pumping in huge amounts of money into areas where it will have an obvious trickle-down by addressing issues like housing shortages," according to John Sfakianakis, chief economist for the Riyadh, Saudi Arabia-based Banque Saudi Fransi.
The most significant element of the cash injection--prominently aired across state-controlled television--was the 40 billion riyals ($10.7 billion) fund to provide interest-free loans for Saudis to buy or build homes. There is currently an 18-year waiting list to qualify for a loan.
Another 15 billion riyals ($4 billion) was proposed to be put into the General Housing Authority's budget, while the Saudi Credit & Savings Bank was to get 30 billion riyals ($8 billion) in capital. The bank provides loans for marriage and setting up a business, among other things, and is supported by the Saudi government.
The online Sharq Arabic language newspaper "has learned from sources close to the Royal Court that government employees will get a 30 percent increase in their wages along with a three-month salary to mark the return of His Majesty the Custodian of the Two Holy Shrines."
Other measures included a 15 percent cost of living adjustment for government workers, a year of unemployment assistance for youth and nearly doubling to 15 individuals the size of families that are eligible for state aid. The economic proposals also moot the write-off of the debts of people who had borrowed from the development fund and subsequently died.
There are no available government figures in Saudi Arabia that provide a national income breakdown, but some analysts estimate that there are over 450,000 jobless in the country--a figure believed by others to be deceptive when unstable employment is factored in. Among the 15 to 24 age group, unemployment in Saudi Arabia is reported to be almost 40 percent.
The country's population is almost 26 million, of which 5.5 million are non-Saudis, mainly low paid migrant workers.
The low cost of living adjustment and high inflation, which stood at about 5.3 per cent in January, and the spiraling cost of housing are exacerbating social tensions.
Former Egyptian President Hosni Mubarak also offered "economic sweeteners"in the first days of the protests in Egypt, but was ousted shortly thereafter. Other neighbouring nations, such as Jordan and Yemen, have looked to boost subsidies. Jordan is reviving a government body that ensures the prices of basic commodities are brought down artificially, but to little avail in terms of damping down protests.
A Facebook page calling for a "March 11 Revolution of Longing" in Saudi Arabia has attracted hundreds of viewers. A message posted on the page calls for "the ousting of the regime" and lists demands including allowing the election of a ruler and members of the advisory assembly known as the Shura Council.
The unrest in Bahrain, a Gulf Cooperation Council member state, and now Libya raises deep concerns for the global oil market since those nations are key OPEC members. Saudi Arabia sits atop the world's largest proven reserves of conventional crude.
A disruption in crude supplies from the Gulf would make the current, two-year-high levels of over $100 per barrel, appear cheap. Oil prices have already spiked way in excess of this figure because of Libya's unrest.
Investment bank Goldman Sachs said in a research report that the Bahrain protests spotlight how the Gulf States are also vulnerable, noting that the unrest in the island nation and in Libya "increase the risks of major supply disruptions."
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