Saudi Arabia will not be able to buy stability forever with oil windfall. Reform must be embraced to satisfy the kingdom’s impatient youth
In terms of economic, political and cultural power, Saudi Arabia is by far the most influential country in the region. With the GCC’s biggest population, enormous oil wealth and huge development requirements, combined with a lack of transparency, the kingdom is both a land of opportunity and challenges.
As the world’s biggest oil producer with the capacity to swing the market, a stable Saudi Arabia is vital to the global economy. It is hardly surprising then, that with the political unrest spreading in the region, the attention of analysts, traders and politicians is firmly focussed on whether the uprisings will spread to the kingdom. King Abdullah bin Abdulaziz al-Saud has moved fast to announce a $36bn package of handouts to help improve the lot of young Saudis struggling to find jobs.
But despite its size, the economic package does not address the fundamental issues behind the protests across the region. Young Arabs want more rights, better prospects, an end to corruption and nepotism, and in Saudi Arabia, empowerment for women.
But in the kingdom, where the hand of the state is felt more firmly than elsewhere in the region, how Riyadh responds to any protests will be key. With so many conflicting interests – religious conservatives, social liberals, economic reformers, women’s rights activists and democracy campaigners – it is impossible to predict what form, if any, protests may take. But, whatever the outcome in the short term, the long-term challenge for Riyadh is that these issues are not going to disappear.
With nearly half the population aged 18 years or under, Riyadh needs to create jobs. It needs to embrace labour market reform and accelerate diversification.
Riyadh has taken many positive steps towards improving education and promoting new sectors of the economy. It has also managed its finances well and has a strong balance sheet. But the young population, watching uprisings in neighbouring states, want more.