Saudi Arabia is spending $10 billion a month in foreign exchange reserves to pay the bills and has been forced to borrow money on the international financial market. Two weeks ago the International Monetary Fund's (IMF) regional director, Masood Ahmed, warned Riyadh that the country would deplete its financial reserves in five years unless it drastically cut its budget.
But the Kingdom can't do that.
When the Arab Spring broke out in 2011, Saudi Arabia headed it off by pumping $130 billion into the economy, raising wages, improving services and providing jobs for its growing population. Saudi Arabia has one of the youngest populations in the Middle East, a lot of it unemployed and much of it poorly educated. Some 25 percent of the population lives in poverty. Money keeps the lid on, but for how long, even with the heavy-handed repression that characterizes Saudi political life?
In March, the Kingdom intervened in Yemen, launching an air war, a naval blockade, and partial ground campaign on the pretense that Iran was behind the civil war, a conclusion not even the Americans agree with.
Again, the Saudis miscalculated, even though one of its major allies, Pakistan, warned Riyadh that it was headed for trouble. In part, the Kingdom's hubris was fed by the illusion that U.S. support would make it a short war -- the Americans are arming the Saudis, supplying them with bombing targets, backing up the naval blockade, and refueling their warplanes in mid-air.
But six months down the line the conflict has turned into a stalemate. The war has killed 5,000 people, including 500 children, flattened cities, and alienated much of the local population. It has also generated a food and medical crisis, as well as creating opportunities for the IS and Al-Qaeda to seize territory in Southern Yemen. Efforts by the UN to investigate the possibility of war crimes were blocked by Saudi Arabia and the U.S.
As the Saudis are finding out, war is a very expensive business, a burden the Saudis could meet under normal circumstances, but not when the price of the Kingdom's only commodity, oil, is plummeting.
Nor is Yemen the only war that the Saudis are involved with. Riyadh, along with other Gulf monarchies, including Qatar and the United Arab Emirates, are underwriting many of the groups trying to overthrow Syria's Bashar al-Assad. When anti-government demonstrations broke out in 2011, the Saudis -- along with the Americans and the Turks -- calculated that Assad could be toppled in a few months.
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