Saudi king's largesse may not be enough

AFP , Friday 25 Feb 2011

King Abdullah's new measures to improve the minimum wages in Saudi Arabic might not be enough for young educated Saudis that call for real political reform

A crowd greets King Abdullah upon his arrival at Riyadh airport (Reuters)

King Abdullah's largesse in boosting benefits to keep his people happy may prove inadequate to halt the impact on Saudis of rising demands by populations in other countries in the region for greater participation in power, analysts say.

"The measures taken this week are on the right track toward addressing economic desires of Saudi citizens," said John Sfakianakis, chief economist at the Jeddah-based Banque Saudi Fransi (BSF).

"However the government will need to continue gauging popular sentiment as citizens across the region seek political reforms and development of civil society institutions," Sfakianakis wrote in a report.

After a three-month absence for medical treatment abroad, King Abdullah returned Wednesday to a radically transformed Middle East -- a region where a combination of young populations, high unemployment rates and demands for reform sparked a string of once-unimaginable revolts.

Shortly before his arrival, the monarch announced a package of social benefits worth an estimated $36 billion (26 billion euros), according to the BSF, mostly aimed at youth, civil servants and the unemployed.

But the expenditure will not dent the oil-rich kingdom's budget, which has a surplus of $450 billion and stands to benefit from current oil prices that have soared above $100 a barrel.

Experts say the package, which includes a 15 percent pay rise for state employees and an increase in funds for Saudi housing loans, is inextricably linked to the discontent of citizens across the Arab world.

"King Abdullah's move is one means to ameliorate the way national wealth is distributed," Beirut-based economist Samir Nasr told AFP.

"Bolstering the way wealth is distributed will reduce the impact ... and calm the situation," Nasr said.

Others, however, say the move may be insufficient to quell any discontent that could be brewing, as demands for a complete upheaval of political systems spread throughout the region.

London-based Saudi expert Mai Yamani notes that an emerging middle class in Saudi Arabia -- young, educated and more aware of their rights -- will likely not be happy with the king's approach.

"This is bribery," Yamani told AFP. "The king genuinely thinks that, as the 'father' of the nation, he can hand out money and jobs to his children, and they will be satisfied.

"From here on, that kind of system will no longer work," added Yamani, author of a book on Saudi Arabia's new generation.

She says the monarchy will soon have to face demands for a "real constitution" in the kingdom where parliament is appointed and not elected.

Despite warnings by a senior member of the Saudi royal family, Prince Talal bin Abdul-Aziz Al Saud, that "anything could happen" in the oil-rich country unless it speeded up reforms, the conservative, ageing monarchy has obstinately refused to license political parties.

Popular uprisings have toppled the regimes of two of the region's autocrats, Tunisia's Zine el Abidine Ben Ali and Hosni Mubarak of Egypt, a close ally of Riyadh.

The revolts have also spilled over into Saudi Arabia's neighbours -- Yemen and Bahrain.

Saudi Arabia controls one quarter of the world's oil reserves, but unemployment among the kingdom's youth stands at 10 percent and women are largely kept out of the work force.

And while a Facebook page is calling on Saudis to hit the streets for a "Day of Rage" on March 11, signs of budding discontent have yet to surface in Riyadh.

A report by consultancy group Capital Economics credits King Abdullah's fiscal boost with undercutting any political risks the oil-rich conservative kingdom might run.

"Saudi Arabia’s latest fiscal boost is important but not the only reason why the country is unlikely to face civil unrest soon," read the report.

"However, bringing some spending programmes forward, in particular those targeted at the poor, will definitely help lower the political risks."

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