Released November 1, 1999
The Wisdom Fund, P. O. Box 2723, Arlington, VA 22202
Web site: http://www.twf.org -- Press Contact: Enver Masud
Saudis Squandered Income, May Sell It's Source
WASHINGTON, D.C. -- The Saudi government having
squandered its oil wealth is considering selling off its
source.
"When Saudi Arabia's ailing King Fahd went on holiday to
Spain in July," writes David Hirst of Britain's Guardian
Weekly, "eight aircraft, including five Boeing 747s and
a giant Antonov cargo plane, bore him to Malaga from the
royal terminal at Jeddah. With him went more than 400
retainers, ministers, 200 tonnes of luggage, 25
Rolls-Royces and limousines."
The king's favorite son, Abdul Aziz, has a $2.7 billion
home. Royal retreats line the north coast of Jeddah mile
after mile. The king has a peninsula for himself.
The 20,000 princes and princesses get a monthly stipend
of $4,000 to $128,000. The monthly "expenses" of Prince
Sultan may be as much as $20 million. Some estimate that
40 percent of national revenues flow to the royal
family.
But the average Saudi hasn't done as well as the royals.
Per capita income has plunged from $15,700 in 1980, to
$5700 today. While Saudi Arabia employs 6 million
foreigners, 16 million Saudi males, and 95 percent of
Saudi females are unemployed.
In 1982 Saudi Arabia had reserves of $170 billion. Today
the national debt is almost that amount, and about 12
percent of the budget goes to servicing this debt.
Now it appears that Saudi Arabia is considering selling
off its source of income by permitting foreign
investment in exploration and production.
A Stratfor analyst writes, "Foreign oil investment in
Saudi Arabia is nothing new. The kingdom nationalized
its oil industry 20 years ago and has periodically
turned to foreign investments to compensate for its lack
of funds and expertise. However, the country had never
allowed foreign investment in the upstream oil sector.
Upstream refers to exploration and production, while
downstream includes refining and distribution."
Foreign oil companies prefer the exploration and
production deals. U.S. oil firms Arco, Chevron, Conoco,
Exxon, Mobil, Phillips Petroleum and Texaco have all
submitted proposals to Saudi Arabia. Foreign companies
including France's Elf Aquitaine and Total, Royal
Dutch Shell and Italy's ENI group have also expressed
interest.
Says the Stratfor analyst, "Saudi Arabia first hinted at
bringing in foreign upstream investment in September
1998 during a secret meeting attended by Crown Prince
Abdullah, former President George Bush and CEOs from
seven major oil companies."
Permitting foreign investment in exploration and
production raises the possibility that one day Saudi
Arabia itself may be buying oil from a foreign company.
For the long term this is not likely to improve the
condition of the average Saudi who has little voice in
the affairs of government. Reducing the royal family's
spending, unnecessary arms purchases and dependence on
foreign workers, coupled with increasing job
opportunities for Saudis may.
Copyright © 1999 The Wisdom Fund - All Rights Reserved.
Provided that it is not edited, and author name,
organization, and URL are included, this article may be
printed in newspapers and magazines, and e-mailed to
others.
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