Another explanation for Saudi extremism

[The bourgeois media has had some difficulty explaining the fact that 
a number of the WTC attackers were Saudi citizens. Eventually this 
was attributed to 'Wahabbism', the ultra-strict version of Islam that 
has the blessing of the royalty. However, this does not begin to 
explain why things were so quiet in Saudi Arabia prior to the most 
recent past. Perhaps this NY Times article from 2 years ago provides 
a more logical explanation.]

The New York Times, March 20, 1999, Saturday, Late Edition - Final 

For Ordinary Saudis, Days Of Oil and Roses Are Over 

By DOUGLAS JEHL  

JIDDA, Saudi Arabia-- Not long ago, most Saudis scorned greasy spoons 
like Abu Zeid's. 

With barrels of oil money, they preferred the glitz of American fast 
food or the cachet of French cuisine to the fluorescent lighting, 
Formica tabletops and cheap mashed beans of Abu Zeid's. But faced 
with a recession, soaring unemployment and declining incomes, Saudi 
Arabia is undergoing a transformation, and what once seemed 
inconceivable is slowly becoming routine. 

The Government, famous for free health and education programs and 
lavish military spending, and for never collecting a nickel's worth 
of taxes, has announced deep spending cuts concentrated in the 
military and security, even putting on hold a $1.7 billion arms deal. 

Further steps are possible, including eliminating longtime utility 
subsidies and even opening the long-closed kingdom, ever so slightly, 
to foreign tourists and American oil companies. 

Among ordinary Saudis, long the world's most voracious consumers, the 
change is visible among shoppers who are forsaking luxury goods and 
bellying up for dish of mashed beans at Abu Zeid's for 55 cents. 

"When you are hungry you will take anything to fill your stomach," 
said Ibrahim, 49, a retired air force officer and father of eight, 
including two unemployed sons, all of whom live at home. "And we are 
hungry now; we are in need." 

For more than two decades Saudi Arabia, with its vast oil reserves, 
successfully walled itself off from the world beyond. Even when oil 
prices dipped, its spending was sacrosanct. 

But the shock of the last year, in which oil prices slid 40 percent, 
has made clear to just about everyone that old habits must die -- a 
conclusion that has not come without anguish. 

"When the river dries out, where do the fishermen go?" asked Abdullah 
Dabbagh, chief adviser to the Saudi Chamber of Commerce and a member 
of the country's Majlis al-Shura, or consultative council. "If we dry 
out, where do we go?" 

Here in Jidda, the country's commercial center on the Red Sea, the 
grim moods are reflected on the faces of anxious merchants. 

"These are going to be hard times," said a luxury car salesman. He 
said car sales had fallen 50 percent since late last year. "Hopefully 
we can find a way to survive, because I can't imagine a dark future." 

In 1998 the country's oil income plunged by about 40 percent or $20 
billion, a result of the worldwide decline in prices. Having crept 
into surplus for two years running, the Saudi budget fell deeply back 
into the red, with a deficit of $13 billion, three times what had 
been predicted. It was the biggest deficit since the end of the 
Persian Gulf war of 1991. 

Oil prices have spurted recently under a Saudi plan to slash 
worldwide production. But to carry that off, the country has pledged 
to cut its own production by more than 5 percent, something that will 
limit its ability to recover lost income and will leave it with 
continuing deficits. The plan is expected to be considered on March 
23 at a meeting of the Organization of Petroleum Exporting Countries 
in Vienna. 

For now, though, Saudi Arabia is in recession, its first in six 
years. The economy is expected to shrink in real terms this year by 
about 2 percent -- the deepest decline since the mid-1980's. 

With mounting deficits, the national debt is soaring and the cost of 
interest alone consumes 15 percent of the budget. That has put 
pressure on the currency, the riyal, the value of which is pegged to 
the dollar. 

Last year the country's economic output per person -- or gross 
domestic production per capita -- sagged to an estimated $6,300 from 
more than $7,000 in 1997 and $16,700 in 1980, when oil prices were 
high and incomes peaked. Unemployment is rising, with an estimated 
100,000 young men every year entering a job market with little 
growth. 

"In the last year, our eyes have been opened to things we haven't 
seen before," said Said al-Shaikh, chief economist for the National 
Commercial Bank. "There is no doubt these are major challenges for 
Saudi Arabia. 

In many ways, everyday life in Saudi Arabia has not had the 
gold-plated vistas that immediately greet most foreign visitors: the 
new-model cars, high-end shops and wide, modern highways. 

Outside the big cities, shopping is still done at open-air markets, 
not air-conditioned malls, and what passes for entertainment might be 
a visit to a male-only drive-in featuring television programs, with 
old sets balanced on tabletops at the edge of the desert. 

Still, Saudis say, the effect of mounting economic troubles has 
become evident in the last year. Sharp cuts in agricultural subsidies 
have brought migrants to the desert outside the capital, Riyadh. In 
that city's outlying areas, young children can sometimes be seen 
peddling tissues at traffic lights, providing a glimpse of new 
poverty. 
  
Poor Saudis Knocking On Doors Seeking Food 

In cities like Taif, two hours northeast of Jidda, and Abha, in the 
country's mountainous south, residents say they have opened their 
doors to poor people knocking in search of food. Some 45 percent of 
all Saudis are 14 and under, and the fear is that the hard times 
might only get worse. 

"I'm really worried about my boys and my daughters," said Ibrahim, 
who like most ordinary Saudis willing to speak frankly about the 
country's economic difficulties would do so only on condition that 
his full name not be used. 

In cutting spending, the Saudis will allow many defense contracts to 
expire. They have also warned American and other defense contractors 
that they plan to stretch out hundreds of millions of dollars in 
payments that would otherwise have been due this year. 

Other big victims include the Saudi energy industry, particularly 
among contractors employed by the Government-owned oil company, Saudi 
Aramco, whose budget for exploration and construction has been 
virtually eliminated this year. 

At the same time, the Saudis have shown signs that they at last may 
be willing to embrace changes aimed at attracting new sources of 
income. 

Last fall, Crown Prince Abdullah, effectively the country's ruler 
because of King Fahd's poor health, cracked open a door closed since 
the 1970's by inviting American oil companies to propose how they 
might again play a role in the kingdom's energy industry. In the 
short term, diplomats say, any role offered to them is likely to be 
limited, but even that change would reflect a new openness to foreign 
investment. 
  
A New Industry: Foreign Tourism 

In the last 18 months the Government has also permitted foreign 
tourists to visit for the first time, an experiment that many 
entrepreneurs hope will help create a new industry. A main focus has 
been Asir Province in the south, where mountains soar to 10,000 feet 
and preparations have begun for a college of tourism to help serve an 
expected influx of visitors. 

Already, Saudis and residents of neighboring gulf countries -- lured 
by cool weather, Swiss-built cable cars and family-friendly amusement 
parks -- have become regular summertime visitors to the region, but 
the Saudi Government had never before issued tourist visas to other 
foreigners, in a determination to protect the country's strict 
Islamic culture. 

But even within the royal family, many are saying the Government 
should find a way to accommodate foreigners, particularly those who 
might pay top dollar to visit Saudi Arabia's unspoiled Red Sea reefs 
and its vast Empty Quarter desert. 

"I think the Government has been very cautious about the effect of 
hundreds of thousands of people from other cultures who would offend 
local people without even knowing about it," said Prince Bandar ibn 
Khalid, deputy chairman of Asir's tourism council. 

"What I suggest." he said, "is that we build enclaves on the Red Sea 
only for foreign and non-Muslim tourists, and within the enclave they 
can do anything they want. 

"As long as the people don't see the tourists except when they are 
dressed properly, that's fine. Of course, the religious people and 
the extremists won't like it, but they won't have to see it." 

In Asir, where tourism provides the only new jobs, local people say 
they are grateful for any new business they can get. 

"The more the better," said Mohammed al-Alkemi, 95, a merchant who 
wore a traditional silver dagger in his belt as he sold honey in the 
market in Abha, the regional capital. 

Of course, Saudi Arabia has announced austerity measures before, only 
to postpone them as economic prospects improved. 
  
A Job Program Makes Little Progress 

In what was to have been a first step toward eliminating costly 
Government subsidies, it doubled the price of gasoline in 1995 and 
announced a plan to install Saudis in jobs held by foreigners. 

But progress in carrying out the job program has been slow. With many 
Saudis unable or unwilling to take on difficult work at low pay, 
foreigners -- most of them other Arabs and South Asians -- still 
account for 67 percent of the Government work force, and they hold a 
staggering 95 percent of private jobs. 

The economic weakness now confronting the country may finally be 
driving home the message that change is unavoidable. 

A soaring level of debt driven upward by uncontrolled spending now 
amounts to $130 billion, equivalent to the country's total economic 
output, and the debt is expected to swell by another $14 billion this 
year. 

Officially, the Saudis have so far financed most of that debt at home 
-- only $7 billion is owed abroad -- but strains are beginning to 
show. 

With Saudi banks drawn to the limit, the Government has had to rely 
heavily on its pension funds and other sources, including Saudi 
Aramco, the Saudi oil company, which is officially autonomous but 
last year borrowed more than $4 billion from foreign banks and 
promptly transferred it to the treasury, Saudi bankers say. 

Because of the cash crunch, diplomats say, the Government postpones 
payments to Saudi contractors for as long as two months, then settles 
its debts in Saudi bonds instead of cash. 

A further indication of trouble came in January, when the Moody's 
Investors Service downgraded Saudi bonds to junk status in what it 
called a reaction to the size and growth of the Government's debt. 

Those developments have caught the eye of international speculators, 
who have put substantial pressure on the Saudi currency recently by 
betting that the Government will be unable to maintain its rate of 
3.75 riyals to the dollar. 

Bankers and economists say Saudi Arabia has enough foreign exchange 
to stave off such pressure. But the battle has cost the Saudis 
billions of dollars in foreign currency reserves, they say, and was 
almost certainly the reason for murky transaction late last year in 
which as much as $5 billion is believed to have been transferred to 
Saudi Arabia by the United Arab Emirates as part of a secret currency 
swap. 

Still, said Kevin Taecker, chief economist of the Saudi American Bank 
in Riyadh, a devaluation by next year is not out of the question. 

-- 
Louis Proyect, lnp3@panix.com on 10/14/2001

Marxism list: http://www.marxmail.org