Saudi Arabia steps up spending

27 June 2011

Saudi Arabia follows domestic spree with regional aid for countries unsettled by Arab uprisings. Riyadh’s plan to gain regional influence will not stop political pressures at home

Since the beginning of the year, Saudi Arabia has announced a series of aggressive spending plans. The $130bn it is spending domestically, coupled with strong messages that protests would not be tolerated, was clearly designed to keep its citizens off the streets.

The money Riyadh is spending regionally is a smaller amount and its purpose less clear. There is $4bn for Egypt, $400m for Jordan, and up to $10bn each for Bahrain and Oman. Unlike aid from Western donors, there are few strings attached promoting reform.

Over the next few years, financial support to nations such as Egypt, Bahrain and Yemen will probably grow as they struggle to appease their populations and return to stability. What Riyadh wants in return will also become clearer. Part of what it wants is simply the return to the uneasy stability typical of the past decade in the Middle East. It is also keen to ensure that waning US influence and political instability do not leave the door open to Iranian meddling. Signs of a rapprochement between Egypt and Iran are deeply worrying for Riyadh. As are hints that Iran has been stoking the Bahrain situation and supporting Shia rebels in Yemen.

There has been large anti-Western sentiment in the Arab uprisings, particularly in Egypt and Tunisia, both seen as champions of Western-style reforms. That will make it easy for them to choose donors such as Saudi Arabia and Qatar over the IMF or World Bank. Potentially, Saudi influence around the region will grow.

But Riyadh faces its own challenges to maintain stability. Increasing demands for more freedom and the ailing health of top royals have left the conservative-minded Interior Minister Prince Naif bin Abdulaziz al-Saud largely in charge.

He may succeed in expanding Riyadh’s regional sway and countering Iranian influence, but that does not ensure a return to stability. For that, the region needs faster and more evenly distributed economic growth, which is as necessary in Saudi Arabia as it is in Egypt.

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