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Saudi Arabia

Page history last edited by Brian D Butler 12 years, 1 month ago

 


 

 

Saudi Arabia

 

Saudi Arabia is a monarchy.  Saudi Arabia is the birthplace of Islam and home to Islam's two holiest shrines in Mecca and Medina. 

 

Interesting:   "If you are not a Muslim, you may not enter Saudi Arabia without an invitation and you may not leave without an exit permit. Visitors to Saudi Arabia are subject to the same rigorous Islamic law as Saudis. It is not uncommon for Westerners to be imprisoned for possessing illegal substances such as alcohol, pornography, pork or narcotics. Thieves still have their hands amputated and capital crimes are punished by public beheadings."

 

Students Resources:

 

 

Saudi Arabia's Stability

Supplement your syllabus with the latest Council Special Report, Saudi Arabia in the New Middle East, by F. Gregory Gause III. Have your students explore Gause's analysis of Saudi Arabia's present state of stability, potential sources of future unrest, and U.S.-Saudi relations. Download the Report »

 

 

 

 

 

News:

 

Saudi Arabia’s central bank lowered its key interest rate for the second time in a month and loosened reserve levels at commercial banks in an effort to encourage lending and boost liquidity. The kingdom’s main stockmarket index has fallen by about 60% since the start of the year, and oil prices have declined swiftly from their peak of more than $147 a barrel in mid-July to around $50 now.

 

 

Oil and budget:

 

With oil prices nudging $140 a barrel, Saudi Arabia stands to receive a windfall this year of up to $400 billion, double what it earned from selling oil last year.

 

Will Saudi Arabia do anything to help bring down the oil prices?  What is their motivation?  Remember the Oil crisis 1973 led directly to the oil price slump thereafter.    The Arab boycott called in 1973 to protest against Western backing for Israel tripled oil prices. But it also prompted oil exploration in tricky places such as the North Sea and conservation measures that reduced demand. The result was a long-term slump in crude prices and a drop in the Saudis' market share.

 

How much oil do they have?

 

The kingdom has a fifth of known reserves. It supplies an eighth of the world's oil and remains, crucially, the only producer with at least some spare capacity. A huge investment plan under way should raise its capacity from 11.3m barrels a day in 2007 to 12.5m by next year.

 

 

Saudi Integration in the world economy:

 

If oil prices cause a global slowdown, the Saudis could loose billions.  Not just from the potential plummet of oil prices, but also more directly from the loss of value from overseas holdings.  A sharp global slowdown would slash the value of the kingdom's hundreds of billions of dollars in overseas holdings.

 

Currency - pegged to the Dollar (for now)

 

Many economists argued that Saudi Arabia would need to appreciate their currency (and break the dollar peg) because of the risk of inflation.  But, with the recent appreciation of the dollar, and the fall of oil prices, that pressure has fallen slightly.  Saudi government economists hesitate to break that peg because (1) it would increase investor uncertainty (unlikely), (2) because it would shrink the governments value of their budget surplus (and have less money to buy companies with), and (3) they say that doing so would not fix the inflation problem, anyways.

 

The problem is that inorder to keep the currency low, the government has artifically kept interest rates low...which has fueled an investment boom, and has resulted in inflation, and wage hikes.

 

Unlikely to revalue currency

 

Based on cultural history, it is unlikely that leaders in Saudi Arabia will seccum to pressures from poor imigrant workers (who are hurt the most by spiraling inflation).  They value stability, and wouldnt want to risk investor shock,

 

 

 

Rivals with Iran

 

Iran, the revolutionary Shia state that the conservative Sunni Saudis view as their main rival for regional influence

 

Cultural Issues: (Geert Hofstede Analysis)

 

see link here

 

 

Ethnic and Religious Tensions:

 

90% of Saudis are Sunni (Muslim).  The remaining 10% are Shiite.  The trouble is that 10% of 28 million is 2.8 million people that are treated like second class citizens. 

 

 

Work stops for Prayer

 

Muslims pray 5 times per day.... 2 or three of them will fall in the middle of the work day:

 

Muslims observe the formal prayers at the following times:

Fajr (pre-dawn): This prayer starts off the day with the remembrance of God; it is performed before sunrise.

Dhuhr (noon): After the day's work has begun, one breaks shortly after noon to again remember God and seek His guidance.

'Asr (afternoon): In the late afternoon, people are usually busy wrapping up the day's work, getting kids home from school, etc. It is an important time to take a few minutes to remember God and the greater meaning of our lives.

Maghrib (sunset): Just after the sun goes down, Muslims remember God again as the day begins to come to a close.

'Isha (evening): Before retiring for the night, Muslims again take time to remember God's presence, guidance, mercy, and forgiveness.

 

 

 

 

Economy

 

The country remains a leading producer of oil and natural gas and holds approximately 25% of the world's proven oil reserves. The government continues to pursue economic reform and diversification, particularly since Saudi Arabia's accession to the WTO in December 2005, and promotes foreign investment in the kingdom.

 

 

 

 

US Military & Saudi Arabia:

 

Following Iraq's invasion of Kuwait in 1990, Saudi Arabia accepted the Kuwaiti royal family and 400,000 refugees while allowing Western and Arab troops to deploy on its soil for the liberation of Kuwait the following year. The continuing presence of foreign troops on Saudi soil after the liberation of Kuwait became a source of tension between the royal family and the public until all operational US troops left the country in 2003.

 

 

 

Image:Saudi Arabia map.png

 

 

 

 

Legal System (biased against foreigners)

 

Investors and expatriates working in the kingdom continue to question the efficacy and impartiality of Saudi courts. Many businessmen complain that the workings of the commercial courts are slow and opaque; others suggest that the courts routinely favour Saudi parties, particularly those with connections to theruling elite, in disputes with foreign firms or individuals.

 

 

Immigration:

 

A Saudi approach to immigration has three characteristics: large numbers, permanence, and lack of political rights.

 

The trouble is that foreigners are considered a "lower class" than Saudis (Sunni's not Shiites).  With a massive population of Egyptians, Indians and others doing most of the "dirty work", thats how Saudi Arabia operates.

 

The kingdom remains heavily reliant on foreign labour to fill many skilled and unskilled jobs throughout the economy. Official central-bank estimates released in 2005 (the most recently released official statistics) put the expatriate workforce at 55% of the total, with some 91% of these foreigners working in the private sector.  The  actual figures are probably much higher since many unskilled and semi-skilled expatriate workers, which are drawn largely from South Asia, are not properly registered.

 

In Saudi Arabia 35 percent of the population are immigrant workers. Expatriate workers account for 61 percent of the total workforce of Oman, 83 percent in Kuwait and 91 percent in the United Arab Emirates. In the UAE migrant workers are prohibited from bringing their family members into the country with them unless they earn at least 3,000 Dirhams a month (US$816), but most of these workers are employed in menial, low paid jobs and struggle to earn a third of that amount. The UAE and some other Arab countries have also passed legislation barring immigrants from owning any property, no matter how long they have lived in the country.

 

The government imposes quotas on the number of expatriates that any  firm can employ (varying by sector and by size of firm) as part of its efforts to "Saudiise" the workforce.  (so, they are cutting back on foreigners in an attempt to deal with unemployment and social issues at home).  Efforts to increase employment among Saudi nationals continue; they include a mixture of employment quotas for Saudi nationals, bans on the employment of foreigners in specific sectors and jobs.   In 2006, there was a new law that stated "that Saudi nationals make up at least 75% of a companys workforce unless the labour minister has granted an exemption".

 

The trouble is, that Saudi's will not work as cheaply as foreigners, so, for example to hire a Saudi teacher ...you have to pay more.  The result:  upward pressure on inflation

 

 

Saudi Arabia, like its Gulf neighbours, has a highly segmented labour market, almost akin to having two different labour forces. Saudi nationals, predominantly men, make up over 90% of public-sector employees and also work as entrepreneurs and in various (mainly white-collar) positions in the private sector. The immigrant labour force, however, accounts for close to 90% of private-sector employment and consequently for close to 80% of all employment.

 

 

read more about immigration in the Middle East and Arab States

 

 

 

 

Women issue:

 

Saudi Arabia has ban on women driving, and the lack of public transport, also presents a barrier to women taking entry level jobs.

 

 

Geography

 

Riyadh:  serves as the administrative and financial centre for distributing the oil wealth extracted from Eastern Province

 

 

Tourism?

 

no. not unless your Muslim

 

No free movement:  "Foreign residents travelling anywhere within the kingdom must carry travel letters issued by employers and authenticated by the immigration authorities or a Chamber of Commerce office."

 

 

 

General Data

 

 

 

Population:
Definition Field Listing Rank Order
28,161,417
note: includes 5,576,076 non-nationals (July 2008 est.)
Age structure:
Definition Field Listing
0-14 years: 38.1% (male 5,469,641/female 5,258,508)
15-64 years: 59.5% (male 9,467,325/female 7,284,077)
65 years and over: 2.4% (male 355,173/female 326,693) (2008 est.)
Median age:
Definition Field Listing
total: 21.5 years
male: 22.9 years
female: 19.7 years (2008 est.)
Population growth rate:
Definition Field Listing
1.945% (2008 est.)

 

 

 

 

 

 

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