Recently, a confidential document belonging to the Royal Court of Saudi Arabia has been leaked to the press which suggests that the economic crisis in Saudi Arabia has been more serious than it was believed to be. In this highly confidential and urgent document which was in a letter from ‘King Salman’ to the Finance Ministry of Saudi Arabia Ibrahim bin Abdul Aziz, the king has urged Ibrahim to implement the austerity policies in the country and reduce the financial costs.
Considering this document with regard to the fact that Saudis have withdrawn 669 billion dollars from their deposits, one can have a deeper insight into the economic crisis that Saud regime is dealing with in present circumstances.
We may wonder what causes have created this crisis! What impacts will have this crisis on the domestic and general conditions of the ruling family in Saudi Arabia? Is there any way out of the quagmire the Saudi regime has trapped in?
Causes of the crisis:
Economic analysts believe that the current economic crisis in Saudi Arabia is caused by two main reasons:
The first reason is sharp decline in oil prices to the extent that over the past 12 months, the price of oil per barrel on the world market has dropped to half price, namely $ 50, an issue which has acted as a heavy blow to the economy of Saudi Arabia; a country whose economy essentially relies on oil revenues.
The second reason is Saudi regime’s aggression against Yemen. The war that Saudi Arabia has staged over the past six months and its high costs has broken the backbone of the Saudi Arabia’s economy, to the extent that the Saudi government has spent tens of billions of dollars to cover the costs of the war; Saudi Arabia has forced other Gulf countries to collaborate with Riyadh in the war against Yemen.
If one closely investigates the reasons for the economic crisis in Saudi Arabia, he can clearly find the origin of this crisis, i.e., the government of Saudi Arabia, to the extent that the Saudi regime’s hostile policies toward Iran and Russia encouraged this country to increase its oil production to reduce the oil prices in the world markets.
On the other hand, the aggression of the House of Saud against Yemen has doubled the problem and has forced the Saudi regime to allocate a major part of its budget to cover the costs of the war it has staged in Yemen.
Current economic situation of Saudi Arabia:
Economists have estimated that budget deficit of Saudi Arabia will run at 20 percent. The report of the International Monetary Fund had predicted, this year Saudi Arabia would experience the highest budget deficit over the last ten years, as the reserves of Saudi central bank compared to last year has dropped by 10 percent, equivalent to 70 billion dollars.
Results and Challenges
1. Eighteen-percent drop in stock market index of Saudi Arabia over the past three months; an issue that increases the probability of devaluation of the Rial of Saudi Arabia. Accordingly, it will reduce the living standards of Saudi citizens.
2. To carry out the orders of the Saudi King on implementing the austerity policies will affect the economic conditions of the country and the House of Saud will lose its last winning card in keeping its citizens silent, and this is where the protests against Arabia is likely to begin.
3. As the power and influence of Saudi Arabia in the region and the international arena have been based on oil-driven economy, now it loses its position in these two areas, and this means that all Saudi projects are bound to failure.
In such circumstances, we may wonder if the House of Saud has found a way out of the crisis whose persistence will certainly make way for the collapse of the House of Saud.
If the Saudi regime tends to defuse this crisis, it must give up its hostile policies, and stop the brutal war against the people of Yemen as soon as possible. It should also give up its hostile oil policies towards neighboring countries, especially the Islamic Republic of Iran; and finally it should reconsider its policies in granting support for terrorist groups in the region.