November 1, 1999
The Wisdom Fund

Saudis Squandered Income, May Sell Its Source

WASHINGTON, D.C. -- The Saudi government having squandered its oil wealth is considering selling off its source.

"When Saudi Arabia's ailing King Fahd went on holiday to Spain in July," writes David Hirst of Britain's Guardian Weekly, "eight aircraft, including five Boeing 747s and a giant Antonov cargo plane, bore him to Malaga from the royal terminal at Jeddah. With him went more than 400 retainers, ministers, 200 tonnes of luggage, 25 Rolls-Royces and limousines." Mr. Hirst gives details:

The king's favorite son, Abdul Aziz, has a $2.7 billion home. Royal retreats line the north coast of Jeddah mile after mile. The king has a peninsula for himself.

The 20,000 princes and princesses get a monthly stipend of $4,000 to $128,000. The monthly "expenses" of Prince Sultan may be as much as $20 million. Some estimate that 40 percent of national revenues flow to the royal family.

But the average Saudi hasn't done as well as the royals.

Per capita income has plunged from $15,700 in 1980, to $5700 today. While Saudi Arabia employs 6 million foreigners, 27 percent of Saudi males, and 95 percent of Saudi females are unemployed.

In 1982 Saudi Arabia had reserves of $170 billion. Today the national debt is almost that amount, and about 12 percent of the budget goes to servicing this debt.

Now it appears that Saudi Arabia is considering selling off its source of income by permitting foreign investment in exploration and production. It's as if unable to live off selling eggs, Saudi Arabia is considering selling the chickens.

A Stratfor analyst writes, "Foreign oil investment in Saudi Arabia is nothing new. The kingdom nationalized its oil industry 20 years ago and has periodically turned to foreign investments to compensate for its lack of funds and expertise. However, the country had never allowed foreign investment in the upstream oil sector. Upstream refers to exploration and production, while downstream includes refining and distribution."

Foreign oil companies prefer the exploration and production deals. U.S. oil firms Arco, Chevron, Conoco, Exxon, Mobil, Phillips Petroleum and Texaco have all submitted proposals to Saudi Arabia. Foreign companies including France's Elf Aquitaine and Total, Royal Dutch-Shell and Italy's ENI group have also expressed interest.

Says the Stratfor analyst, "Saudi Arabia first hinted at bringing in foreign upstream investment in September 1998 during a secret meeting attended by Crown Prince Abdullah, former President George Bush and CEOs from seven major oil companies." This October 16, U.S. Commerce Secretary William Daley called for Saudi Arabia to remove obstacles to foreign investment.

Permitting foreign investment in exploration and production raises the possibility that one day Saudi Arabia itself may be buying oil from a foreign company.

For the long term this is not likely to improve the condition of the average Saudi who has little voice in the affairs of government. Reducing the royal family's spending, unnecessary arms purchases and dependence on foreign workers, coupled with increasing job opportunities for Saudis may set Saudi Arabia on the road to economic recovery.

[For details read Said K. Aburish, The Rise, Corruption, and Coming Fall of the House of Saud]

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[Previously unseen photographs reveal how religious zealots obsessed with idolatory have colluded with developers to destroy Islam's diverse heritage.--Daniel Howden, "Shame of the House of Saud: Shadows over Mecca," Independent, April 19, 2006]

[HRW estimated that more than 9,000 had been held since al Qaeda launched a campaign in 2003, of whom probably between 2,000 and 4,000 were still detained, said Christoph Wilcke, the author of the report.

Few were ever charged or had access to lawyers, even if Saudi laws limit detention without trial to six months, with the intelligence agency ignoring court rulings ordering a release in some cases, HRW said, citing families of detainees or activists.--Chris Adams, "Saudi Arabia arrested thousands without trial - HRW," Christian Science Monitor, August 10, 2009]

Jerome Taylor, "Medina: Saudis take a bulldozer to Islam's history," independent.co.uk, October 26, 2012

Damian Thompson, "The Saudis are bulldozing Islam's heritage. Why the silence from the Muslim world?," independent.co.uk, November 2, 2012

David Usborne, "Redevelopment of Mecca: Bulldozers bear down on site of Mohamed's birth," independent.co.uk, February 20, 2014

[The dominant architectural site in the city is not the Sacred Mosque, where the Kaaba, the symbolic focus of Muslims everywhere, is. It is the obnoxious Makkah Royal Clock Tower hotel, which, at 1,972 feet, is among the world's tallest buildings. It is part of a mammoth development of skyscrapers that includes luxury shopping malls and hotels catering to the superrich.

Mecca . . . has been reduced to a monolithic religious entity where only one, ahistoric, literal interpretation of Islam is permitted, and where all other sects, outside of the Salafist brand of Saudi Islam, are regarded as false.--Ziauddin Sardar, "The Destruction of Mecca," nytimes.com, September 30, 2014]

Andrew Johnson, "Mecca under threat: Outrage at plan to destroy the 'birthplace' of the Prophet Mohamed and replace it with a new palace and luxury malls," independent.co.uk, November 12, 2014

[The Kingdom Tower comprises 252 floors of mixed market apartments, hotel rooms, and offices. It is an axiom that imperial societies build their greatest monuments just before they collapse--James H. Kunstler, "Saudi Arabia's Kingdom Tower -- The Pointless Hubris Of A Decadent Tyranny," zerohedge.com, April 5, 2015]

[The list of heritage crimes goes on, driven by state-endorsed Wahhabism, the hardline interpretation of Islam that perceives historical sites as encouraging sinful idolatry - which spawned the ideology that is now driving Isis's reign of destruction in Syria and Iraq. In Mecca and Medina, meanwhile, anything that relates to the prophet could be in the bulldozer's sights. The house of Khadijah, his first wife, was crushed to make way for public lavatories; the house of his companion Abu Bakr is now the site of a Hilton hotel; his grandson's house was flattened by the king's palace.--Oliver Wainright, "City in the sky: world's biggest hotel to open in Mecca," theguardian.com, May 22, 2015]

Antonia Blumberg, "Mecca Will Soon Be Home To The World's Largest Hotel," huffingtonpost.com, May 27, 2015

Ambrose Evans-Pritchard, "Saudi Arabia may go broke before the US oil industry buckles," telegraph.co.uk, August 5, 2015

Mustafa Hameed, "How Saudi Arabia's construction rampage is threatening Islam's holiest city," foreignpolicy.com, September 22, 2015

Nafeez Ahmed, "The Collapse of Saudi Arabia is Inevitable," middleeasteye.net, September 28, 2015