Cash hand-outs can’t keep a lid on Saudi public discontent forever


By Abdel Bari Atwan – Alrai alyoum : –

It was no surprise nor coincidence that Saudi King Salman’s decision to order a 52 billion riyal (around $14 billion) hand-out to more than 1.2 million public employees and pensioners to compensate for inflation followed the outbreak of anti-government protests in dozens of Iranian towns and cities sparked by the rising cost of living.

This step was taken as a pre-emptive measure to spare Saudi Arabia similar protests, amid growing evidence in Saudi social media of rising public discontent over recent tax hikes and pay curbs and fears in ruling circles that it could trigger a comparable explosion. There are some similarities between the Iranian and Saudi cases.

In 2011, the late King Abdallah did much the same thing in a bid to safeguard the kingdom against the so-called ‘Arab Spring’ revolutions that broke out throughout the region. He ordered the urgent expenditure of $120 billion on public sector pay rises and bonuses, the cancellation of housing loans, and various other measures such as supporting youth programmes, assisting the unemployed and doubling the number of scholarships provided for students to study abroad. This succeeded in absorbing discontent, placating the Saudi public and forestalling significant protests.

The protests in Iran, which began in its second largest city Mashhad, were initially triggered by an increase in the price of eggs. But they quickly spread throughout the country, and escalated into demanding the resignation of President Hassan Rohani for failing to deliver on his promises to bring prosperity and combat poverty and corruption, and for spending billions of dollars in Lebanon, Syria, Yemen and the Gaza Strip rather than using them to benefit Iranians.

The same could well have happened in Saudi Arabia following the government’s decision to sharply increase fuel prices and introduce a new Value Added Tax from the start of the new year. This caused much anger among financially-squeezed Saudis, who widely aired their grievances and frustration at being unable to make ends meet on social media in critical posts and hash-tags.

It is too early to tell what effect the government’s measures will have on this public mood, but the immediate signs are that they were widely welcomed and managed to quell the wave of discontent. But that is only for the short term. The pay rises are not permanent but limited to only one year. They could be renewed at the end of 2018, but that would have implications for a budget already burdened with a deficit of SR200 billion ($53 billion), which will have swelled further as a result of the latest unplanned and hastily-ordered outlays.

Saudi leaders will certainly have been told by their network of domestic spies and informers that there is public unhappiness at the high cost of living, and also some aspects of the kingdom’s extremely costly foreign policy. This has entailed the expenditure of tens of billion dollars on wars in Syria and Yemen and on bankrolling regional allies (more than $30 billion to Egypt alone), not to mention the astronomical sums spent on wooing the Trump administration. The Saudi media have been hailing Iranian protestors for demanding and end to their government’s involvement in Syria, Yemen and Gaza, while disregarding the fact that their own government has spent tens of times as much as the Iranians on the very same conflicts (with the exception of supporting the Palestinian resistance in the Gaza Strip).

The SR52 billion earmarked for compensating Saudi citizens for high living costs remains a modest sum compared to the late King Abdallah’s 2011 hand-out. But he was in a more fortunate position. He could draw on the kingdom’s massive financial reserves, which amounted to more than $800 billion and were being replenished by record-high oil prices. Seven years on, the reserve has been hugely depleted, oil prices have plummeted and the budget is in massive deficit. The main cause of the current rise in living costs for Saudi citizens is government policies aimed at reducing that deficit, including the cutting of subsidies on fuel and essentials such as electricity and water, the imposition of VAT for the first time in the kingdom’s history, and big increases in fees for government services, the cost of travelling and other indirect taxes. The threat of protests will therefore persist – if not this year than in future years – unless its root causes are tackled, rather than merely its outward symptoms.

King Salman, who this month marks the start of his fourth year on the throne, has overseen some huge political, economic and military shake-ups. Two crown princes were deposed in turn, and the ruling family’s succession structure changed in favour of his immediate family. His son Muhammad was appointed crown prince, accumulated unprecedented powers in his hands and launched a number of dramatic initiatives. These include modernizing social changes – such as allowing women to drive and enter the job market – and a long-term economic ‘vision’ supposedly aimed at reducing dependence on oil income, which involves privatizing strategic state assets including the Saudi Aramco oil corporation. In the process, he has weakened key institutions that upheld the Saudi state – such as the ruling family and religious establishment – and also undermined the welfare state and the social contract it underpinned: under which Saudi citizens would, in exchange for being provided with prosperity and stability, leave the affairs of government to the ruling family and do not demand any legislative say or oversight.

Crown Prince Muhammad Bin-Salman has employed ‘shock’ tactics in implementing his policies, imposing his authority and getting rid of potential challengers such as senior princes Muhammad Bin-Nayef, Miteb Bin-Abdallah and Alwaleed Bin-Talal. That round of arrests caused him few real problems, which encouraged him to detain several more princes in addition to over 200 senior businessmen and former officials on charges of corruption.

But ‘day after’ symptoms are now beginning to show.

The ‘shock’ effect has begun to wear off, in the view of many observers both inside and outside the kingdom. The incarceration of princes and business leaders, which was initially welcomed among Saudi youth, has begun to have an adverse impact on the country’s reputation and standing, in both economic and political terms. The erratic and ill-considered nature of these decisions was illustrated when former finance minister Ibrahim Assaf, having been detained on charges of corruption, was suddenly freed and returned to his current job as minister of state as though nothing had happened. Western protests at the detention of figures such as Alwaleed Bin-Talal, Lebanese Prime Minister Saad al-Hariri and Jordanian tycoon Sabeeh al-Masri embarrassed the Saudi government, and underlined its poor judgement and recklessness.

Saturday’s announcement that eleven princes of the House of Saud were arrested on Thursday after staging a protest outside the royal palace in Riyadh and incarcerated in Ha’er Prison is a serious development. While details of the incident are unclear, it shows that there is serious disquiet within the ruling family or at least part of it. This could escalate uncontrollably unless a serious rethink occurs and careful measures are taken to contain it.

The Saudi authorities’ decision to urgently help citizens counter the effect of rising living costs is a positive move in itself. But its impact remains limited, and could rapidly dissipate unless quickly followed by other, more fundamental, steps and solutions. Chief among these are political reform, a genuine campaign against corruption, serious steps to involve citizens in the running of the country, and reconsideration of a range of domestic and foreign policies in a truly transparent manner.

In this regard, Saudi Arabia can – before it is too late — learn from the experiences of neighbouring states, not least Iran.