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Young Saudis See Cushy Jobs Vanish Along with Nation’s Oil Wealth

72 points by el_benhameen 11y ago

n0us 11y ago
> 70% of the population is under 30 I don't see this ending well, there is no way this leads to a sustainable balanced system.
- eudox 11y ago
  It gets worse, >90 percent of government revenues are from oil; 70 percent of working Saudis are employed by the government I don't think they've worked out the problem of stable succession either, given that every change in King has been from a brother to another[0], rather than to a son. [0]: https://en.wikipedia.org/wiki/King_of_Saudi_Arabia#Kings_of_Saudi_Arabia_.281932.E2.80.93present.29 https://en.wikipedia.org/wiki/King_of_Saudi_Arabia#Kings_of_...
  - objclxt 11y ago
    Succession is especially complicated since the King may take any number of wives, meaning there are a lot of brothers in line.
    - pmalynin 11y ago
      2006 decree makes it such that next King is elected by a counsel of Princes.
  - n0us 11y ago
    The Cost of Rights http://www.amazon.com/The-Cost-Rights-Liberty-Depends/dp/0393320332 http://www.amazon.com/The-Cost-Rights-Liberty-Depends/dp/039... is an interesting read on this topic. It basically talks about how taxes are necessary and these movements to eliminate taxes completely are completely off base. I would argue that a sufficiently extreme distribution of wealth makes democracy impossible and the "rights" that the Saudis afford their people are not "rights" at all in any meaningful sense but rather just a way of placating people so they can hold onto control of the oil.
  - airplane 11y ago
    A possible fix is to start investing, but it may be too late. If I remember correctly I think investing for profit is a gray area in Islam, but Kuwait did it and if I remember correctly they use to have more returns from their investments then they did on oil and paid every citizen a base salary from it (until Saddam invaded and they had to cash out).
    - digi_owl 11y ago
      Best i recall, there is some issues with lending and interest. After all ol' Muhammad was a merchant by trade...
      - simplect 11y ago
        Trade and investing is permissible in Islam. However interest and derivative financial instruments are strictly prohibited for various reasons, one of which is trying to avoid "renters' economy.
  - madengr 11y ago
    Brother, son, it's all the same with inbreeding to maintain Saudi Royal heredity.
- yongjik 11y ago
  Could someone explain why this is a problem? When 25% of Japan is over 65, nobody says it's good.
  - SilasX 11y ago
    Good question. I think the logic is that the most dangerous demographic is twenty something males. If a revolution or riot will happen, it will happen when this group is unhappy. So if they dominate the population in times of severe economic trouble, it's a recipe for big change.
  - Kluny 11y ago
    Just cause of the imbalance, I guess. Same problem everywhere in the middle east - you have all these young, smart, energetic people who want to start families and careers, but there are no opportunities available to them. So they get mad and occasionally violent. And I don't blame them, either.
    - digi_owl 11y ago
      Never mind the strong religious undercurrent. The whole situation brings to mind the 30 year war...
  - WhoBeI 11y ago
    You want a nice even spread to make sure that one generation of workers can train, and in some way pay, for the other. The worse your education system the more dependent on the older generation you are. In Japan I think the problem is a slow rate of birth. So the fear is that the percentage of the population above 65 will increase until it breaks the economy.
    - induscreep 11y ago
      From what I know, all the blue collar labor is imported, and the Saudis don't work that much (or at all?). So, there is no worry of generations of workers getting trained etc.
  - 11y ago
- adventured 11y ago
  Saudi Arabia's population growth curve has been staggering. 1960-1980: 4m to 10m people 1980-2015: 10m to 30m people 650% increase in 55 years. UAE 11000%, Kuwait 1250%, Oman 570%, Qatar 4800% and Jordan 680% have seen similarly massive increases. (UAE is difficult to calculate due to political changes, either way it's a lot) Syria 410%, Yemen 400%, Iraq 360%, Pakistan 300%, and Iran 250% have boomed to a slightly lesser extent as well. Population growth by comparison over that time: Australia 135%, Canada 100%, US 77%, France 47%, Japan 38%, UK 23%, Italy 20%, Germany 10% Kenya 450%, Sudan 420%, Tanzania 400%, DR Congo 350%, Ethiopia 330%, Somalia 290%, Nigeria 280%, South Africa 210%, Egypt 200% Malaysia 280%, Philippines 275%, Bangladesh 200%, Nepal 200%, Indonesia 185%, India 180%, Vietnam 165%, Myanmar 165%, Thailand 150%, China 100%, South Korea 100% Venezuela 300%, Ecuador 250%, Mexico 220%, Dominican Republic 215%, Peru 200%, Colombia 200%, Brazil 175%, Argentina 105%, Cuba 60%
chris_wot 11y ago
Man, if this is happening right now whilst the world demand for oil is high, what's going to happen to them when demand is lessened due to new technology?
- orionblastar 11y ago
  When oil demand is low, they have to get into a new market like renewable energy. Solar, wind, water turbine, geothermic etc. They have to invent the IP, and sell the equipment, and use it in their own nation to sell the electricity or batteries for money. It takes a different business plan than oil, but they have to adapt to it sooner or later.
  - pkaye 11y ago
    It is difficult to export electricity, (renewable or not) due to transmission infrastructure costs and losses.
    - justinclift 11y ago
      Wouldn't reducing the transmission losses be worth them putting serious R&D effort/$$$ into?
      - chris_wot 11y ago
        Transmission lines to the USA from Saudi Arabia - is that even feasible?
        justinclift 11y ago
        Technically... probably possible. Feasible... that would be the R&D required. :D Undersea cables are run for comms. So, super-massive-XXL sized superconductor versions of that...? ;)
jorgecurio 11y ago
it's like seeing the same situation in all developing nations but not as bad as Saudi Arabia. We no longer have any guarantees that our parents had. We no longer have the resources or lack of debt from our previous generation of careless expenditure. In lot of ways millenials are fucked, but looks like more so for countries that put all their eggs in one basket.
- mathgeek 11y ago
  > In lot of ways millenials are fucked I often wonder just how bad the current generations will have it when compared to other recent generations. Will it be worse than those generations who lost so many and so much to WWI and WWII? Hard to tell except eventually in retrospect, but interesting to ponder.
- deleted 11y ago
  [deleted]
- WhoBeI 11y ago
  “It’s only on the brink that people find the will to change. Only at the precipice do we evolve.”
  - dcroley 11y ago
    Read in John Cleese's voice.
- HillRat 11y ago
  There's a modern Sa'udi proverb that I think sums up their situation: "My father rode a camel; I drive a car; my son flies an airplane; my grandson will ride a camel." Nobody can match a Gulf Arab for sheer fatalism.
  - gaelian 11y ago
    Sounds like a commandeered/re-jigged version of a quote attributed to Râshid bin Sa`îd Âl Makṫûm[1]: "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel." So it would appear that amongst their other concerns, the Saudis also need to start producing their own fatalistic proverbs, rather than importing them from Dubai. [1] https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum
melling 11y ago
Sounds like it was an interesting social experiment with all that money over several decades. "70 percent of working Saudis are employed by the government; and even the private sector remains heavily dependent on government spending."
kawsper 11y ago
Planet Money did a recent podcast about the situation http://www.npr.org/sections/money/2016/02/03/465476188/episode-681-the-oil-kingdom http://www.npr.org/sections/money/2016/02/03/465476188/episo...
molecule 11y ago
This seems like a non-sequitur. A Saudi crisis due to cheap oil, but cheap oil is a result of increased Saudi oil production, to squash American and other shale extractors…?
- mathgeek 11y ago
  Cheap oil is the result of many factors. America and other new production is one of them. Saudi response to that price drop led to further price drops. It's looking more and more like the Saudi plan will end up backfiring, as they can only bankroll the losses for so long.
  - revelation 11y ago
    And of course the losses cause just more oil production, as they turned OPEC into a zero-sum game where nobody trusts anybody else. No good stopping your production and eating the massive, massive loss when your "partner" will ramp up and get your share.
- iofj 11y ago
  The problem is that during the shale boom and immediately after, technological progress has been such that a lot of the shale infrastructure is not necessary to maintain output for, say, another 10 years or so. Rigs have gone down by 60-70%, oil production has gone down by ~4%. However even that pathetic 4% is not necessarily the result of rigs closing, as several oil storage facilities are quite literally full. There are a number of reports of oil rigs offering tankers full of crude free to anyone who'll come and get them. I'd bet we're going to find that a lot of crude has gotten dumped somewhere soon. None of that is counted in that statistic that's dropped by 4%. Here's why : suppose you are a massively indebted oil producer, like all US oil producers are, and prices duck beneath your cost to produce. This does not delay loan repayments and/or interest repayments. What do you do ? Well, there's 2 things you can do: 1) You stop pumping. This stops cashflow and makes your situation obvious beyond any doubt. It also will immediately remove all control over the company by management and shareholders as bankruptcy proceedings begin. 2) You keep pumping. You stop paying suppliers ("delay" paying them is the polite term). You keep cashflow going. You're paying off most of your loans at the moment, because what's dragging you into the red is loan repayments. Bankruptcy proceedings will be delayed. In many cases the banks and your suppliers won't have many alternatives. And so a lot of these companies are faced with a choice between "death now" and "death soon". In such cases you can bet "death soon" is going to be the more popular choice. That means insolvent companies will keep pumping up crude and selling it until their cashflow gets to the point the whole thing locks up.
esaym 11y ago
Perhaps this will spell the end of the Saudi drift scene [1][2], which is ridiculous anyway. [1]https://en.wikipedia.org/wiki/Tafheet https://en.wikipedia.org/wiki/Tafheet [2]https://youtu.be/6yPIBKOQnTI https://youtu.be/6yPIBKOQnTI
dexwiz 11y ago
Even without oil prices dropping, Saudi Arabia's days are numbered. No one knows exactly how much oil they have left, but they have been pumping seawater into the ground for years now. This doesn't signal that their oil is drying it up, but it is less plentiful than before. Any country that relies on natural resources for its wealth will suffer when those resources dry up and are not replaced with some form of productions. When was the last time you bought something made in Saudi Arabia? The USA made Saudi Arabia via Ibn Saud, and it will unmake it via Iran. The sanctions were lifted on Iran, because the USA saw the writing on the wall years ago about Saudi Arabia drying up. It needs to reposition itself as an ally of the next major middle eastern oil producer. Not only does Iran have oil, but it has some of the largest natural gas deposits in the world. [1] After years of conflict, and a proxy war in Yemen, Iran is likely to do anything to ruin Saudi Arabian. This means any power over production that Saudi Arabia used to wield via OPEC will be nullified once Iran is developed by Big Oil. Its an end of an era. The war in Yemen keeps aggression pointed outward, but as soon as the populace tires and the payoffs stop coming it will turn inward. Another government will be recast as tyrants and despots, and the world will watch it fall. [1] https://en.wikipedia.org/wiki/List_of_natural_gas_fields https://en.wikipedia.org/wiki/List_of_natural_gas_fields
- madengr 11y ago
  I bought a package of dates that were grown in SA, but have seen nothing else.
  - steve19 11y ago
    Saudi has many potential exports. They have massive non-oil mineral resources they can exploit when they choose to do so. They have fertilizer, water and sun in unlimited quantities (cheap energy + salt water = fresh water). They could feed the world if they wanted to. For example the largest vertically integrated dairy corporation in the world is in Saudi Arabia. They have the ability to green the desert and they are doing this right now. They are also gearing up for future war (and not just in the headline making military acquisitions reporters get all excited about, I mean the boring nuts and bolts you need to sustain massive prolonged military campaigns) It's easy for the mainstream and financial media to make fun of the Kingdom. They are not going anywhere anytime soon. If anything, the oil price is going to be a wake up call that forces them to diversify faster than they were already doing so.
freewizard 11y ago
I agree with how The Atlantic took this topic step further[1], which was posted on HN earlier[2]. [1] http://www.theatlantic.com/international/archive/2016/02/saudi-arabia-collapse/463212/ http://www.theatlantic.com/international/archive/2016/02/sau... [2] https://news.ycombinator.com/item?id=11143588 https://news.ycombinator.com/item?id=11143588
fitzwatermellow 11y ago
With the NYT, WSJ, Brookings, Economist and virtually every prognosticator of the punditry classes forecasting dark times for the Kingdom, I'm sensing a crowded trade and beginning to look for contrarian, optimistic predictions...
- honksillet 11y ago
  Indeed.
- theparanoid 11y ago
  Good luck. I know of many many Iranian programmers. Never seen a Saudi.
  - m_sahaf 11y ago
    Saudi programmer here. I can count 4 immediate cousins who are programmers, from the top of my head; not to mention a number of my high school classmates, a few friends from college, and others that I've met here and there. The webdev team at my previous job was all Saudis; there were even girls in the team. Absence of evidence is not an evidence of absence.
mrottenkolber 11y ago
Saudi Arabia is a medieval country. They have far greater problems than vanishing jobs and a one-sided economy. Its really a disgrace to humankind. Revolution now, please. https://en.wikipedia.org/wiki/Human_rights_in_Saudi_Arabia https://en.wikipedia.org/wiki/Human_rights_in_Saudi_Arabia
- mrottenkolber 11y ago
  Oh right and its an ally of the western world... Unacceptable.
  - digi_owl 11y ago
    Frankly the cold war was basically just a continuation of the great game, with some of the players changing seats. "History may not repeated, but it sure do rhyme."
- ArkyBeagle 11y ago
  There's been revolution in the larger region. Iraq, Syria, Libya. I know, but still - bear with me. The French assisted in the American Reovlution... It's not going that well.
  - mrottenkolber 11y ago
    When I say revolution I usually don't mean a violent uprising. While historically speaking that is what it means, I do not think future “revolutions” will be fought with violence. The times when you could behead a bunch of monarchs and set up a republic are over: as soon as a vacuum of power is created, other regimes take advantage and use the chaos to their advantage using all means available. International law has demonstrably failed to protect the people from the big nations. I bet on a revolution in the minds fought with civil disobedience.
- Bluestrike2 11y ago
  Revolution in Saudi Arabia probably won't turn out the way we'd prefer it to. If anything, there's a very good chance you'd wind up with something even more draconian. Not that the current situation is any better, of course; the Saudis abrogated any possibility for real reform on this front years ago.
arcticgeek 11y ago
Sounds like Alaska in the near future.
Bluestrike2 11y ago
Economically and socially, Saudi Arabia is a mess. And it's not going to get better in the long run, even if oil prices rebound and they feel some degree of a respite. Technology is changing, and oil isn't going to be sufficient for the Saudis to keep the lid on things domestically. When most countries industrialize, they go through significant social and economic changes. Saudi Arabia got to skip a lot of those changes, and the end result is that they're ill-prepared for when their reserves have dried up. Their non-oil sectors are practically non-existent, with very little non-petro industry in the country at all. They've got huge social stratification problems, and they have to deal with religious opposition to modernization and diversification (for fear of westernization). They've spent the 37 years since the Grand Mosque seizure radically empowering the extreme religious conservatives and bankrolling Wahhabi expansion overseas. It helped them avoid additional internal conflict by exporting their problem children, but when the money dries up, the devil's bargain is going to come to an end with it. The reforms the Saudis need to make are too great, and they'd disrupt too many aspects of their economy at once. And that's before you include the religious opposition into the mix. Had they started years ago, and attempted to curtail some of the religious conservative's power early on, they might have been able to ride things out. As it is now, it's going to be a very bloody crash in every sense of the word.
kamaal 11y ago
Inevitable. But hardly surprising. I(I'm from India) have some cousins working there to make a living. From everything I've heard, I get a feeling there is hardly any effort to build anything. No universties, and even those that exist run at the expense of people from other countries. There is crazy dole out of free cash, start from the king to the citizen. The royal family from what I've heard literally wants everything government. The main king Ibn Saud had some I guess 10's of wives, from whom he fathered 100's of children, who now have reproduced to 1000's of grandchildren. Since not every one can be a king, you have to distribute government positions among the progeny of Ibn Saud, to keep people from dissenting and getting too ambitious to disrupt the line of succession. Apart from that from what I've heard, they also award prime contract, licenses and projects to their own family. So basically every thing stays and is designed to benefit only one family. All this in a major tribal society, with heavy influence of the clerics. So they closely intermarry their own with the clerics and powerful tribes. Its basically a syndicate. But they also realize that they can't do this forever. So they keep throwing some token pennies at their people. Basically building a welfare state. There is no attempt to build self capabilities of any kind. They've tried and failed with a policy called 'Saudization'. To reduce the dependence on foreign nationals, they've tried everything. But people have so much dependence on free cash, they hardly feel the need to work. Lack of productivity(putting it mildly) among Saudi nationals or even a lack of desire to work, has been a source of jokes for decades. Here is a hint to people in US. Look at a nation where there is "Universal Basic Income", or all those freebies and welfare benefit your guys ask for. Do you want your country, which is an example for remainder of the world for progress to turn into a nation like this?
- Gustomaximus 11y ago
  > Here is a hint to people in US. Look at a nation where there is "Universal Basic Income", or all those freebies and welfare benefit your guys ask for. Do you want your country, which is an example for remainder of the world for progress to turn into a nation like this? Firstly I having UBI does not make 'a nation like this'. There are a bunch of other variable like religion and tribalism that separate western to Middle Eastern nations. Secondly, what wrong with humans producing 'low output' if the UBI is sustainable? The problem in SA is the oil is running out. IF UBI is built from automation and efficiency its an entirely different story. Thirdly UBI is, as it says in the name, is a 'basic income'. People then work for privileges to afford nicer cars, holidays etc which is likely IMO that a high proportion will. In the case of SA, this is not UBI, it is/was high paid salaries for jobs that dont really exist. 2 very different things.
jstalin 11y ago
Saudi Arabia is one giant welfare state of ISIS sympathizers where they have had no incentive to innovate.

72 points by el_benhameen 11y ago

n0us 11y ago

> 70% of the population is under 30 I don't see this ending well, there is no way this leads to a sustainable balanced system.

eudox 11y ago
It gets worse, >90 percent of government revenues are from oil; 70 percent of working Saudis are employed by the government I don't think they've worked out the problem of stable succession either, given that every change in King has been from a brother to another[0], rather than to a son. [0]: https://en.wikipedia.org/wiki/King_of_Saudi_Arabia#Kings_of_Saudi_Arabia_.281932.E2.80.93present.29 https://en.wikipedia.org/wiki/King_of_Saudi_Arabia#Kings_of_...
- objclxt 11y ago
  Succession is especially complicated since the King may take any number of wives, meaning there are a lot of brothers in line.
  - pmalynin 11y ago
    2006 decree makes it such that next King is elected by a counsel of Princes.
- n0us 11y ago
  The Cost of Rights http://www.amazon.com/The-Cost-Rights-Liberty-Depends/dp/0393320332 http://www.amazon.com/The-Cost-Rights-Liberty-Depends/dp/039... is an interesting read on this topic. It basically talks about how taxes are necessary and these movements to eliminate taxes completely are completely off base. I would argue that a sufficiently extreme distribution of wealth makes democracy impossible and the "rights" that the Saudis afford their people are not "rights" at all in any meaningful sense but rather just a way of placating people so they can hold onto control of the oil.
- airplane 11y ago
  A possible fix is to start investing, but it may be too late. If I remember correctly I think investing for profit is a gray area in Islam, but Kuwait did it and if I remember correctly they use to have more returns from their investments then they did on oil and paid every citizen a base salary from it (until Saddam invaded and they had to cash out).
  - digi_owl 11y ago
    Best i recall, there is some issues with lending and interest. After all ol' Muhammad was a merchant by trade...
    - simplect 11y ago
      Trade and investing is permissible in Islam. However interest and derivative financial instruments are strictly prohibited for various reasons, one of which is trying to avoid "renters' economy.
- madengr 11y ago
  Brother, son, it's all the same with inbreeding to maintain Saudi Royal heredity.
yongjik 11y ago
Could someone explain why this is a problem? When 25% of Japan is over 65, nobody says it's good.
- SilasX 11y ago
  Good question. I think the logic is that the most dangerous demographic is twenty something males. If a revolution or riot will happen, it will happen when this group is unhappy. So if they dominate the population in times of severe economic trouble, it's a recipe for big change.
- Kluny 11y ago
  Just cause of the imbalance, I guess. Same problem everywhere in the middle east - you have all these young, smart, energetic people who want to start families and careers, but there are no opportunities available to them. So they get mad and occasionally violent. And I don't blame them, either.
  - digi_owl 11y ago
    Never mind the strong religious undercurrent. The whole situation brings to mind the 30 year war...
- WhoBeI 11y ago
  You want a nice even spread to make sure that one generation of workers can train, and in some way pay, for the other. The worse your education system the more dependent on the older generation you are. In Japan I think the problem is a slow rate of birth. So the fear is that the percentage of the population above 65 will increase until it breaks the economy.
  - induscreep 11y ago
    From what I know, all the blue collar labor is imported, and the Saudis don't work that much (or at all?). So, there is no worry of generations of workers getting trained etc.
- 11y ago
adventured 11y ago
Saudi Arabia's population growth curve has been staggering. 1960-1980: 4m to 10m people 1980-2015: 10m to 30m people 650% increase in 55 years. UAE 11000%, Kuwait 1250%, Oman 570%, Qatar 4800% and Jordan 680% have seen similarly massive increases. (UAE is difficult to calculate due to political changes, either way it's a lot) Syria 410%, Yemen 400%, Iraq 360%, Pakistan 300%, and Iran 250% have boomed to a slightly lesser extent as well. Population growth by comparison over that time: Australia 135%, Canada 100%, US 77%, France 47%, Japan 38%, UK 23%, Italy 20%, Germany 10% Kenya 450%, Sudan 420%, Tanzania 400%, DR Congo 350%, Ethiopia 330%, Somalia 290%, Nigeria 280%, South Africa 210%, Egypt 200% Malaysia 280%, Philippines 275%, Bangladesh 200%, Nepal 200%, Indonesia 185%, India 180%, Vietnam 165%, Myanmar 165%, Thailand 150%, China 100%, South Korea 100% Venezuela 300%, Ecuador 250%, Mexico 220%, Dominican Republic 215%, Peru 200%, Colombia 200%, Brazil 175%, Argentina 105%, Cuba 60%

chris_wot 11y ago

Man, if this is happening right now whilst the world demand for oil is high, what's going to happen to them when demand is lessened due to new technology?

orionblastar 11y ago
When oil demand is low, they have to get into a new market like renewable energy. Solar, wind, water turbine, geothermic etc. They have to invent the IP, and sell the equipment, and use it in their own nation to sell the electricity or batteries for money. It takes a different business plan than oil, but they have to adapt to it sooner or later.
- pkaye 11y ago
  It is difficult to export electricity, (renewable or not) due to transmission infrastructure costs and losses.
  - justinclift 11y ago
    Wouldn't reducing the transmission losses be worth them putting serious R&D effort/$$$ into?
    - chris_wot 11y ago
      Transmission lines to the USA from Saudi Arabia - is that even feasible?
      - justinclift 11y ago
        Technically... probably possible. Feasible... that would be the R&D required. :D Undersea cables are run for comms. So, super-massive-XXL sized superconductor versions of that...? ;)

jorgecurio 11y ago

it's like seeing the same situation in all developing nations but not as bad as Saudi Arabia. We no longer have any guarantees that our parents had. We no longer have the resources or lack of debt from our previous generation of careless expenditure. In lot of ways millenials are fucked, but looks like more so for countries that put all their eggs in one basket.

mathgeek 11y ago
> In lot of ways millenials are fucked I often wonder just how bad the current generations will have it when compared to other recent generations. Will it be worse than those generations who lost so many and so much to WWI and WWII? Hard to tell except eventually in retrospect, but interesting to ponder.
deleted 11y ago
[deleted]
WhoBeI 11y ago
“It’s only on the brink that people find the will to change. Only at the precipice do we evolve.”
- dcroley 11y ago
  Read in John Cleese's voice.
HillRat 11y ago
There's a modern Sa'udi proverb that I think sums up their situation: "My father rode a camel; I drive a car; my son flies an airplane; my grandson will ride a camel." Nobody can match a Gulf Arab for sheer fatalism.
- gaelian 11y ago
  Sounds like a commandeered/re-jigged version of a quote attributed to Râshid bin Sa`îd Âl Makṫûm[1]: "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel." So it would appear that amongst their other concerns, the Saudis also need to start producing their own fatalistic proverbs, rather than importing them from Dubai. [1] https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum

melling 11y ago

Sounds like it was an interesting social experiment with all that money over several decades. "70 percent of working Saudis are employed by the government; and even the private sector remains heavily dependent on government spending."

kawsper 11y ago

Planet Money did a recent podcast about the situation http://www.npr.org/sections/money/2016/02/03/465476188/episode-681-the-oil-kingdom http://www.npr.org/sections/money/2016/02/03/465476188/episo...

molecule 11y ago

This seems like a non-sequitur. A Saudi crisis due to cheap oil, but cheap oil is a result of increased Saudi oil production, to squash American and other shale extractors…?

mathgeek 11y ago
Cheap oil is the result of many factors. America and other new production is one of them. Saudi response to that price drop led to further price drops. It's looking more and more like the Saudi plan will end up backfiring, as they can only bankroll the losses for so long.
- revelation 11y ago
  And of course the losses cause just more oil production, as they turned OPEC into a zero-sum game where nobody trusts anybody else. No good stopping your production and eating the massive, massive loss when your "partner" will ramp up and get your share.
iofj 11y ago
The problem is that during the shale boom and immediately after, technological progress has been such that a lot of the shale infrastructure is not necessary to maintain output for, say, another 10 years or so. Rigs have gone down by 60-70%, oil production has gone down by ~4%. However even that pathetic 4% is not necessarily the result of rigs closing, as several oil storage facilities are quite literally full. There are a number of reports of oil rigs offering tankers full of crude free to anyone who'll come and get them. I'd bet we're going to find that a lot of crude has gotten dumped somewhere soon. None of that is counted in that statistic that's dropped by 4%. Here's why : suppose you are a massively indebted oil producer, like all US oil producers are, and prices duck beneath your cost to produce. This does not delay loan repayments and/or interest repayments. What do you do ? Well, there's 2 things you can do: 1) You stop pumping. This stops cashflow and makes your situation obvious beyond any doubt. It also will immediately remove all control over the company by management and shareholders as bankruptcy proceedings begin. 2) You keep pumping. You stop paying suppliers ("delay" paying them is the polite term). You keep cashflow going. You're paying off most of your loans at the moment, because what's dragging you into the red is loan repayments. Bankruptcy proceedings will be delayed. In many cases the banks and your suppliers won't have many alternatives. And so a lot of these companies are faced with a choice between "death now" and "death soon". In such cases you can bet "death soon" is going to be the more popular choice. That means insolvent companies will keep pumping up crude and selling it until their cashflow gets to the point the whole thing locks up.

esaym 11y ago

Perhaps this will spell the end of the Saudi drift scene [1][2], which is ridiculous anyway. [1]https://en.wikipedia.org/wiki/Tafheet https://en.wikipedia.org/wiki/Tafheet [2]https://youtu.be/6yPIBKOQnTI https://youtu.be/6yPIBKOQnTI

dexwiz 11y ago

Even without oil prices dropping, Saudi Arabia's days are numbered. No one knows exactly how much oil they have left, but they have been pumping seawater into the ground for years now. This doesn't signal that their oil is drying it up, but it is less plentiful than before. Any country that relies on natural resources for its wealth will suffer when those resources dry up and are not replaced with some form of productions. When was the last time you bought something made in Saudi Arabia? The USA made Saudi Arabia via Ibn Saud, and it will unmake it via Iran. The sanctions were lifted on Iran, because the USA saw the writing on the wall years ago about Saudi Arabia drying up. It needs to reposition itself as an ally of the next major middle eastern oil producer. Not only does Iran have oil, but it has some of the largest natural gas deposits in the world. [1] After years of conflict, and a proxy war in Yemen, Iran is likely to do anything to ruin Saudi Arabian. This means any power over production that Saudi Arabia used to wield via OPEC will be nullified once Iran is developed by Big Oil. Its an end of an era. The war in Yemen keeps aggression pointed outward, but as soon as the populace tires and the payoffs stop coming it will turn inward. Another government will be recast as tyrants and despots, and the world will watch it fall. [1] https://en.wikipedia.org/wiki/List_of_natural_gas_fields https://en.wikipedia.org/wiki/List_of_natural_gas_fields

madengr 11y ago
I bought a package of dates that were grown in SA, but have seen nothing else.
- steve19 11y ago
  Saudi has many potential exports. They have massive non-oil mineral resources they can exploit when they choose to do so. They have fertilizer, water and sun in unlimited quantities (cheap energy + salt water = fresh water). They could feed the world if they wanted to. For example the largest vertically integrated dairy corporation in the world is in Saudi Arabia. They have the ability to green the desert and they are doing this right now. They are also gearing up for future war (and not just in the headline making military acquisitions reporters get all excited about, I mean the boring nuts and bolts you need to sustain massive prolonged military campaigns) It's easy for the mainstream and financial media to make fun of the Kingdom. They are not going anywhere anytime soon. If anything, the oil price is going to be a wake up call that forces them to diversify faster than they were already doing so.

freewizard 11y ago

I agree with how The Atlantic took this topic step further[1], which was posted on HN earlier[2]. [1] http://www.theatlantic.com/international/archive/2016/02/saudi-arabia-collapse/463212/ http://www.theatlantic.com/international/archive/2016/02/sau... [2] https://news.ycombinator.com/item?id=11143588 https://news.ycombinator.com/item?id=11143588

fitzwatermellow 11y ago

With the NYT, WSJ, Brookings, Economist and virtually every prognosticator of the punditry classes forecasting dark times for the Kingdom, I'm sensing a crowded trade and beginning to look for contrarian, optimistic predictions...

honksillet 11y ago
Indeed.
theparanoid 11y ago
Good luck. I know of many many Iranian programmers. Never seen a Saudi.
- m_sahaf 11y ago
  Saudi programmer here. I can count 4 immediate cousins who are programmers, from the top of my head; not to mention a number of my high school classmates, a few friends from college, and others that I've met here and there. The webdev team at my previous job was all Saudis; there were even girls in the team. Absence of evidence is not an evidence of absence.

mrottenkolber 11y ago

Saudi Arabia is a medieval country. They have far greater problems than vanishing jobs and a one-sided economy. Its really a disgrace to humankind. Revolution now, please. https://en.wikipedia.org/wiki/Human_rights_in_Saudi_Arabia https://en.wikipedia.org/wiki/Human_rights_in_Saudi_Arabia

mrottenkolber 11y ago
Oh right and its an ally of the western world... Unacceptable.
- digi_owl 11y ago
  Frankly the cold war was basically just a continuation of the great game, with some of the players changing seats. "History may not repeated, but it sure do rhyme."
ArkyBeagle 11y ago
There's been revolution in the larger region. Iraq, Syria, Libya. I know, but still - bear with me. The French assisted in the American Reovlution... It's not going that well.
- mrottenkolber 11y ago
  When I say revolution I usually don't mean a violent uprising. While historically speaking that is what it means, I do not think future “revolutions” will be fought with violence. The times when you could behead a bunch of monarchs and set up a republic are over: as soon as a vacuum of power is created, other regimes take advantage and use the chaos to their advantage using all means available. International law has demonstrably failed to protect the people from the big nations. I bet on a revolution in the minds fought with civil disobedience.
Bluestrike2 11y ago
Revolution in Saudi Arabia probably won't turn out the way we'd prefer it to. If anything, there's a very good chance you'd wind up with something even more draconian. Not that the current situation is any better, of course; the Saudis abrogated any possibility for real reform on this front years ago.

arcticgeek 11y ago

Sounds like Alaska in the near future.

Bluestrike2 11y ago

Economically and socially, Saudi Arabia is a mess. And it's not going to get better in the long run, even if oil prices rebound and they feel some degree of a respite. Technology is changing, and oil isn't going to be sufficient for the Saudis to keep the lid on things domestically. When most countries industrialize, they go through significant social and economic changes. Saudi Arabia got to skip a lot of those changes, and the end result is that they're ill-prepared for when their reserves have dried up. Their non-oil sectors are practically non-existent, with very little non-petro industry in the country at all. They've got huge social stratification problems, and they have to deal with religious opposition to modernization and diversification (for fear of westernization). They've spent the 37 years since the Grand Mosque seizure radically empowering the extreme religious conservatives and bankrolling Wahhabi expansion overseas. It helped them avoid additional internal conflict by exporting their problem children, but when the money dries up, the devil's bargain is going to come to an end with it. The reforms the Saudis need to make are too great, and they'd disrupt too many aspects of their economy at once. And that's before you include the religious opposition into the mix. Had they started years ago, and attempted to curtail some of the religious conservative's power early on, they might have been able to ride things out. As it is now, it's going to be a very bloody crash in every sense of the word.

kamaal 11y ago

Inevitable. But hardly surprising. I(I'm from India) have some cousins working there to make a living. From everything I've heard, I get a feeling there is hardly any effort to build anything. No universties, and even those that exist run at the expense of people from other countries. There is crazy dole out of free cash, start from the king to the citizen. The royal family from what I've heard literally wants everything government. The main king Ibn Saud had some I guess 10's of wives, from whom he fathered 100's of children, who now have reproduced to 1000's of grandchildren. Since not every one can be a king, you have to distribute government positions among the progeny of Ibn Saud, to keep people from dissenting and getting too ambitious to disrupt the line of succession. Apart from that from what I've heard, they also award prime contract, licenses and projects to their own family. So basically every thing stays and is designed to benefit only one family. All this in a major tribal society, with heavy influence of the clerics. So they closely intermarry their own with the clerics and powerful tribes. Its basically a syndicate. But they also realize that they can't do this forever. So they keep throwing some token pennies at their people. Basically building a welfare state. There is no attempt to build self capabilities of any kind. They've tried and failed with a policy called 'Saudization'. To reduce the dependence on foreign nationals, they've tried everything. But people have so much dependence on free cash, they hardly feel the need to work. Lack of productivity(putting it mildly) among Saudi nationals or even a lack of desire to work, has been a source of jokes for decades. Here is a hint to people in US. Look at a nation where there is "Universal Basic Income", or all those freebies and welfare benefit your guys ask for. Do you want your country, which is an example for remainder of the world for progress to turn into a nation like this?

Gustomaximus 11y ago
> Here is a hint to people in US. Look at a nation where there is "Universal Basic Income", or all those freebies and welfare benefit your guys ask for. Do you want your country, which is an example for remainder of the world for progress to turn into a nation like this? Firstly I having UBI does not make 'a nation like this'. There are a bunch of other variable like religion and tribalism that separate western to Middle Eastern nations. Secondly, what wrong with humans producing 'low output' if the UBI is sustainable? The problem in SA is the oil is running out. IF UBI is built from automation and efficiency its an entirely different story. Thirdly UBI is, as it says in the name, is a 'basic income'. People then work for privileges to afford nicer cars, holidays etc which is likely IMO that a high proportion will. In the case of SA, this is not UBI, it is/was high paid salaries for jobs that dont really exist. 2 very different things.

jstalin 11y ago

Saudi Arabia is one giant welfare state of ISIS sympathizers where they have had no incentive to innovate.