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> Saudi Arabia has been the major blocker of a deal at the G-20 Well, who would have thought... But seriously, why do we (or rather, G-19) even listen to them?

• Donald 10y ago
  Because Saudi Arabia, with its massive supply and low costs of production, wields massive influence over the price of oil. And, as we've seen recently, are very willing to defend its market share against long-term (clean energy) and immediate threats (such as fracking.)
  • JBReefer 10y ago
    Does this make Saudi the bad guys?
    • mcv 10y ago
      Only because of this? Or also because they're a very oppressive theocracy that pushes an extremist version of Islam on other countries, whole some members of the royal family may be funding terrorism? It's really questionable why Iran is seen as bad guys while Saudi Arabia is not. Saudi Arabia is many times worse than Iran.
• adrenalinelol 10y ago
  Because the G-20 wants to remain the G-20 and not the G-19; you can't kick out a member every time you don't agree with their opinion, regardless of who wrong you may feel it is.
  • beambot 10y ago
    Why not? Aren't these types of alliances fluid and opportunistic?
    • adrenalinelol 10y ago
      I personally agree, I don't think we should give a rat ass what a regime like SA thinks. Part of the point of the GX/UN/WTO/<insert bureaucratic partnership organization here> is to slowly co-opt authoritarian regimes into a pro-market/business mindset with the belief that democratic reforms will slowly follow. For a quick shallow example (this is technically off-topic): China, for awhile looked like it was on a path to give it's citizens real agency in their political future, some attributed this to their embracing of a limited form of capitalism, but now that the economy is contracting, their freedoms are being reproached... The same logic was used in the lifting of sanctions against Iran, which hasn't stopped them from hanging gays from building cranes yet, but the hope is long-term it'll force the hardliners out of power.
  • reqctomaniac 10y ago
    Umm sure you can. G8 -> G7
• dangrossman 10y ago
  Warning, my layman's understanding: The United States maintains global hegemony, props up the value of its currency, and reduces the cost of imports for its citizens, in some significant part due to the "petrodollar". That's the agreements the US formed with oil producing nations like Saudi Arabia to only sell oil denominated in US dollars. Forcing all oil trade be done in USD requires nearly every nation carry large USD reserves, increasing demand for and the strength of the US dollar, increasing the currency's stability, and increasing other nations' reliance on relations with the US. A weaker Saudi Arabia, and a weaker oil market, is also a weaker US dollar, and weaker US power internationally. This pits environmental concerns against economic and political ones at a very high level. While the subsidies may be small enough that they're eventually dropped, this is my understanding of why the US maintains such close ties to S.A. even when our goals are not otherwise aligned.
  • toomuchtodo 10y ago
    Would you say that the United States disclosing the Saudi's amount of US treasury holdings is indicative of that support being walked back ever so slightly? http://www.bloomberg.com/news/articles/2016-05-16/u-s-discloses-saudi-arabia-s-treasuries-holdings-for-first-time http://www.bloomberg.com/news/articles/2016-05-16/u-s-disclo...
  • Retric 10y ago
    US taxes back up the US dollars as does debt in USD. Petrodollar does not mean much as dollars gained must be exchanged by them to purchase other goods.
  • enugu 10y ago
    Here's a good counterargument against reserve currency status as a positive thing and listing the negative effects. http://blog.mpettis.com/2016/05/the-titillating-and-terrifying-collapse-of-the-dollar-again/ http://blog.mpettis.com/2016/05/the-titillating-and-terrifyi.... It's a long article, start from 'The effects of reserve currency status' The positive effects like seignorage are outweighed by other effects. Japan discouraged an attempt by China to hold the yen. Similarly Europe and China have opposed purchase by foreign central banks. > It turns out that foreign investment is only good for an economy if it brings needed technological or managerial innovation, or if the recipient country has productive investment needs that cannot otherwise be funded. If neither of these two conditions hold, foreign investment must always lead either to a higher debt burden or to higher unemployment. Put differently, foreign investment must result in some combination of only three things: higher productive investment, a higher debt burden, or higher unemployment, and if it does not cause a rise in productive investment, it must cause one of the other two.
• ams6110 10y ago
  The subsidies are not really that big. For the USA, total subsidies of ~$20 billion (which are mostly things like tax deductions and exemptions, not direct payments) vs. energy market size of over $1 trillion. You could eliminate them to "feel good" but that's mostly what it would be.
  • labster 10y ago
    I'm sure that eliminating the subsidies would help coral to feel good. The 20G$ is only the direct cost. But what about the environmental cost? The social cost of concentrating wealth in the hands of rich companies? The loss of water resources to hydraulic fracturing? Or the lost benefits of not investing in something besides a dead-end energy technology? Seriously. The worst problem with economists is that they tend to confuse the cost of something with its price.
    • VLM 10y ago
      Oh my. AMS's point is that the market can't be moved more than a fraction of a percent if we yank subsidies. We could double our subsidies or 10x and it wouldn't matter, its just too small. Now in SA, to keep the population calm and quiet, they subsidize petrol to be (well) under 1 Riyal per liter. Last time I checked a riyal was about an american quarter. So the subsidies are so incredible in SA that gasoline is less than a buck per gallon. At least last time I checked. Now if we get rid of subsidies nothing will really change in the USA as the day to day noise level in prices and stuff is way higher than the tiny level we have. But if SA got rid of subsidies, I bet you could estimate the lifespan of the kingdom in hours. Minutes? It wouldn't last long. Its very much like people arguing about American foreign aid spending and Americans think that foreign aid spending is like 20% of the federal budget whereas reality is its more like 1% and almost all of that 1% is sent to Israel and "the rest of the world" gets like 0.01% of the federal budget in aid. Without subsidies the government in S.A. will fall.
      • toomuchtodo 10y ago
        > Without subsidies the government in S.A. will fall. Would you agree its not a matter of if, but when the failure occurs?
• gozur88 10y ago
  If you start kicking out the major subsidizers and then promulgate a policy against subsidies, what have you really accomplished?