Saudi Paupers and Afghan Needs
Shouldn’t oil-rich Saudi Arabia lead the financing effort to rebuild Afghanistan?
January 21, 2002
If there was ever an historic moment for wealthy Saudi Arabia to do something for the cause of Muslim solidarity, that moment is clearly now. But so far, the world has not been stunned by major aid announcements coming from the Saudis.
A key reason for Saudi stinginess is that alarms are sounding over the country’s finances. The Saudi budget deficit for 2001 hit $7 billion (more than ten percent of state revenues). And the total debt burden is likely to top $180 billion by the end of 2002.
Oil production cutbacks — undertaken to try and shore up the oil price — signal that no relief is coming from the oil sector, which provides over 90 percent of Saudi Arabia’s revenues.
And the new agreement with the five other members of the Gulf Cooperation Council — a grouping of Gulf states designed to enhance regional cooperation — won’t help either. The council, which also includes Kuwait, Qatar, Bahrain, Oman and the United Arab Emirates, has a laudable economic purpose, namely to set up a free trade zone. The new agreement, however, will slash future government revenues presently obtained through charging import duties.
After promising only three months ago that there would be no budget deficit this year, the Saudi government has a big hole where its credibility used to be. The problem is less financial than political — and demographic.
Twenty years ago, there were 7 million Saudis with an average income per head of $25,000 a year. There are now 14 million Saudis with a per capita annual income of just under $10,000 a year. This slide spells trouble.
And it leaves very little money even for the presumably richest of the Arab countries to support Afghans in their dire need. All of that must leave a stale taste in the mouth not just of destitute Afghanis, but of the world community at large.
After all, private Saudi foundations have funded some of the Al-Quaeda network of destruction. It would be nice to see that private Saudi wealth — still phenomenal despite poorer public finances — used to sow the seeds of construction, and not destruction.
Senior Director of the Global Business Policy Council Martin Walker is the Senior Director of the Global Business Policy Council, a private think-tank for CEOs founded by the A T Kearney business consultancy. He is also a syndicated columnist and Editor-in-Chief Emeritus of United Press International. Previously, in his 25 years as a journalist with […]