Saudi Arabia

by liberal japonicus
Since the post which went off about Saudi Arabia disappeared over the blog event horizon, I'm making this a new post about this interesting article

http://www.independent.co.uk/news/world/middle-east/prince-mohammed-bin-salman-naive-arrogant-saudi-prince-is-playing-with-fire-a6804481.html

At the end of last year the BND, the German intelligence agency, published a remarkable one-and-a-half-page memo saying that Saudi Arabia had adopted “an impulsive policy of intervention”. It portrayed Saudi defence minister and Deputy Crown Prince Mohammed bin Salman – the powerful 29-year-old favourite son of the ageing King Salman, who is suffering from dementia – as a political gambler who is destabilising the Arab world through proxy wars in Yemen and Syria.

Wonder if Hartmut might have some insight from the vernacular press.

The article closes with this, which I think is pretty on target

Oil states are almost impossible to reform and it is usually unwise to try. Such states should also avoid war if they want to stay in business, because people may not rise up against their rulers but they are certainly not prepared to die for them.

2016 is shaping up to be a helluva year...

Comments

[Hartmut]

I remember that there was some protest because the BND was not authorised to publish that assessment and some criticism that it could be diplomatically harmful (I guess from the same quarters that don't like it when the Armenian genocide is mentioned by officilas because that would strin the German-Turkish relations).
The newspaper I read generally agreed with the assessment pointing to a general radicalisation since the 'new' king had taken over and discussed the likely future developments since the current king is also not expected to rule for long. Some potential heirs were seen as even more 'conservative' and not open to any form of pragmatism.
Today there was a page long op-ed on the current Saudi-Iranan conflict putting it into historical perspective. The conclusion was that unfortunately there is yet no alternative since the Saudis will not reform and toppling the regime would create an even worse situation and not just in the vicinity. In essence it is a 'too big to fail' argument seeing the value of the Saudis primarily as a counterweight to Iran that cannot be dispensed with at the moment despite the atrocious Saudi actions all over the region.
Two regional powers at loggerheads since 1979 both with strong external backing and both meddling (in a very bad way) in the policy all over the region.
The op-ed also talked at length about the reasons for the current situation and put quite a bit of blame on the US doorstep, in particular the catastrophic consequences of Cheney/Bush's excellent Iraq adventure. From the Saudi point of view (they originally supported Saddam against Iran but then shat their pants when he went into Kuwait) the mismanagement there (i.e. not installing and backing a new Sunni dictator sharing the Saudi interests in keeping the Shia safely suppressed) totally destabilized the former power equilibrium requiring strong Saudi counter reactions. That Obama began to normalize relations with Iran to even the slightest degree rang even more alarm bells. One could conclude that the Saudis see as their only option to pour oil into the fire in order to force the West to choose sides while Iran is still a pariah and Saudi oil still indispensable (and the Western relationship to Russia and China strained). On that they are in union with the Israeli leadership (iirc there were some disclosures about secret communications between the two concerning the sabotaging of the Iran nuclear deal).
I guess the Saudis hope that Obama's successor will return to the old ways of supporting 'stable' dicatorships however distasteful against the revolutionaries not in their pocket (preferring Hitler to Stalin on the Rhine to use the old saying).

[wj]

For anyone interested in more, the Economist has the transcript of an interview with deputy crown prince (and defense minister) Muhammad bin Salman. Plus, in the current edition, a leader (editorial) and a couple of articles on the subject.

The prince sounds, in places, like he seriously wants to move the Saudi economy away from its total dependence on oil. Of course, we've heard that before from others. And there are two serious problems with it.

First, there really isn't an alternative industry were the Saudis would seem to have a competitive advantage. Other than tourism to Mecca, of course. And that seems like a frail reed on which to base a national economy -- especially one where everybody is accustomed to being wealthy. Not to mention that their track record in managing the hajj is underwhelming, to say the least.

Second, the Saudi population has no experience, and no real training, when it comes running modern industry (manufacturing or service either one). Most jobs like that are now done by ex-pats. At most, a few Saudis have sinecures, sitting around doing nothing.

There are Saudi managers, generally with Western educations, who actually supervise. But no workers. It will take a massive (non-religious, fortunately) cultural change for them to be willing to do actual work. And a lot of years to gain the experience necessary to do most jobs beyond the most menial.

[Doctor Science]

Who posted this? Could you please sign it?

[Nigel]

there really isn't an alternative industry were the Saudis would seem to have a competitive advantage...

Ironically perhaps, solar power generation: they have some of the best insolation figures worldwide.
Of course, their location means there's little near term prospect of power export, unlike parts of North Africa, for example.

[liberal japonicus]

Hi Doc, sorry about that, just added my byline. guess it's been a while since I posted...

[wj]

Nigel, perhaps they could export to Israel. It's the only relatively developed economy close to.

Of course, Egypt will need a lot better (and more reliable) power supplies if they are to modernize. Not sure how much they could pay for power, especially initially. But the long-term opportunity would be there. And even early on, there would probably be businesses who would pay well for reliable power.

[DMC]

There actually is some move in SA toward solar and besides the insolation they have a lot of sandy "good for nothing" land where massive solar projects will have little negative ecologic impact in terms of species disdplaced or otherwise effected. A potential secondary industry would be delsalinization of sea water, currently an energy intensive endeavor and one with a ready and growing market. They've already got the massive capital reserves to undertake solarization on national level and where else are they going to find a gaurenteed growth investment that also addresses there own energy needs and that can potentially employ some significant percentage of their (~35%) young unemployed.

[Tony P.]

Are the Saudi rulers interested in employing their young people, or merely "employing" them? I mean:

You can "employ" people by giving them a title and a salary, to keep them docile and out of your hair.

Or you can employ people by giving them authority and responsibility to do practical things, in exchange for a salary.

If I were the philosopher-king of Saudi Arabia, I'd opt for the latter, and wait to see what those young people accomplish. If I were the Protector of the Faith and Keeper of the Holy Places, I might ask "What was option one again?"

--TP

[Nigel]

They've already got the massive capital reserves to undertake solarization...

The rate they're being depleted at the current oil price, not so massive at all.

Of course that could change, and yes, their vast areas of basically useless desert look pretty compelling.

One of the reasons I'm a long term optimist is that worldwide energy is going to get very cheap, which will do pretty good things for economic growth. The next decade or so could be a little hairy....

[wj]

their vast areas of basically useless desert look pretty compelling [for solar power]

Of course, the same situation largely applies to Egypt -- and they are better placed to actually use that power.

And then there's Libya, Algeria, and Morocco. Of whom, only Morocco looks to be on a path to anything like modernization. Indeed, Morocco might be a model for how a monarchy can move towards modernization (including politically) without abruptly destroying the fabric of its institutions in the process.

They've got a long way to go, but the track record so far looks good. Especially compared to the rest of the Middle East and North Africa. The question is, can the Saudis manage something similar? Maybe, although it's not the way I would bet.

[russell]

this is kind of OT, so forgive me, but is there any storage technology currently available that would make it feasible for places like Saudi Arabia et al to be exporters of solar-generated power?

Not transmission lines, but (for example) a portable storage battery of some kind.

Just asking...

[wj]

Battery technology is undergoing some rapid improvements. Pushed by, among other things, the needs of electric cars.

But at the moment it is nowhere near being able to allow you to put a bunch of batteries on a cargo ship and send the power a couple thousand miles. Certainly not economically.

[russell]

too bad, that. :(

[ral]

In the long run, probably solar power will be used to split water and hydrogen (pressurized or liquid) will be the storage medium. The energy density is quite a bit lower than crude oil, alas. On the plus side, when you burn hydrogen you get water not carbon dioxide.

[DMC]

The big energy storage breakthroughs look to be in high tech compressed air(think huge underground tanks), which is apparently extremely efficient and getting better and a biologically based system termed "flow batteries". As for transport, the neighbors of the Saudis would be ready buyers. The little Gulf emirates use a lot of electricity compared to their land mass. Ditto Israel. And remember that the Saudis are still making money on every barrel of oil they sell, just not as much as when it was $120 a barrel. Their production costs are less than $3 a barrel, so they can keep prices low long enough to destroy high cost producers like offshore, fracking. tar sands and arctic based oil. Really, they're doing us all a favor here, besides the cheap gas.