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The $2 Trillion Project to Get Saudi Arabia’s Economy Off Oil (bloomberg.com)
186 points by phodo on April 21, 2016 | hide | past | favorite | 133 comments



Actually, this report should be celebrated but for the completely different reasons that this wannabe boy king could be the last in House of Saud to rule the bulk of the Arabian Peninsula.

Usually when an inexperienced, reckless and spoiled brat succeeds in a corrupt and undemocratic political system, it's likely the final chapter of that system because the new power holder/grabber would wreck the house beyond repair thinking that he's instituting reforms when he's really undoing all the hard work done by his tyrannical but savvy predecessors to keep things together.

Kudos to Mohammad Salman and I wish him all luck in his endeavor and that he outperforms the likes of Mohammad Reza Pahlavi or King Farook of Egypt in destroying monarchy in their respective lands.

Also, it's very intriguing that there was not a single political item on his "reformist" agenda and yet Bloomberg managed to portray him as some kind of a visionary man that will emancipate women by finally granting them the right to own and drive cars as in other neighboring reactionary countries like Qatar, and restructuring the economy away from fluctuating oil revenues to another rent-seeking investment banking venture to finance the lavish lifestyle of their family, House of Saud.

I guess those IB fees and pending privatization deals do make wonders to Bloomberg's editorial policy. Money talks, bullshit walks indeed.


It's difficult to see it that way because being young or old is not really the criteria for the Saudi leaders. It's the opposite for this man, because the education is the biggest factor. The previous king hasn't even completed high school, and he was just... way too simple and knew nothing about politics. This guy got a bachelor's degree in politics and he's already received super positively in Saudi Arabia from both the religious and non-religious, especially because they have already seen a lot of positive changes done by him in the past few years.


> it's likely the final chapter of that system because the new power holder/grabber would wreck the house beyond repair thinking that he's instituting reforms when he's really undoing all the hard work done by his tyrannical but savvy predecessors to keep things together.

This. For example, every post-Stalin U.S.S.R leader. The watering down started with Kruschev [1] and culminated in Glasnost. What followed was the period of humiliation, poverty and looting at "the end of history" ie the 90's.

This is key to understanding the popularity of Putin.


Come on, don't be so harsh, the poor guy only has one wife!


Here's something I never thought I'd see in my lifetime: "The men spoke for an hour about the de facto alliance of Israel and Saudi Arabia..."

I went through the article, hoping to discover how the prince got his education.

* "His father is an avid reader, and he liked to assign his children one book per week, and then quiz them to see who’d read it."

* "His mother, through her staff, organized DAILY extracurricular courses and field trips and brought in INTELLECTUALS for three-hour discussions."

'

His mother's practice of matching intellectuals with her kids supports John Holt's theories of proper child education.


While they talk a sharp game of Western education, do not be fooled. I am continually shocked when I meet someone who was educated at Cambridge, but he (and she!) tell me that a women's status in Saudi Arabia is right. Or that a barbaric punishment is proper and correct as it is written in the Quran.

Many of the Saudis who would take a different opinion on women's rights etc, do not live in KSA.


> I am continually shocked when I meet someone who was educated at Cambridge, but he (and she!) tell me that a women's status in Saudi Arabia is right. Or that a barbaric punishment is proper and correct as it is written in the Quran.

Here in this country we had some guys that went to Yale and managed to get control of the government and felt they had the right to torture people in secret prison camps.

Happens I guess.


There is barely any information other than the two sentences you quote about how the Prince was educated.


True. I'm of the opinion that creating the love of reading (learning) could be more important than schooling. From the article, you'll get the sense that the prince could think outside the established ways of doing things in the government. I'd wager that his father's reading exercises caused this.

'I have never let my schooling interfere with my education.' -Mark Twain

"Education is what remains after one has forgotten what one has learned in school." - Albert Einstein

As for his mother's actions, I believe children who are exposed to more adults (especially experts), grow up to be quite confident and unencumbered by their age or perceived inexperience.

From my view, those who put the prince in trouble with the previous king were less annoyed by the changes than the fact that a 26 year old BOY (prince) was causing changes.


The only other information I noticed while reading was his law education.

In 2007, Prince Mohammed graduated fourth in his class from King Saud University with a bachelor’s degree in law


> Prince Mohammad holds a bachelor degree in law from King Saud University.

https://en.wikipedia.org/wiki/Mohammad_bin_Salman_Al_Saud



The Royal family can diversify, but the Saudi people still have little to offer the world economy after such a long dependence.

http://atlas.cid.harvard.edu/explore/tree_map/export/sau/all...


Planet Money has an excellent episode on this topic from a few weeks ago: http://www.npr.org/sections/money/2016/02/03/465476188/episo...


Thank you for mentioning this podcast. It's amazing!


Planet Money is one of the only podcasts I can just let run through all the episodes and still enjoy them all.


tl;dr: They plan to launch the world's largest sovereign wealth fund ($2 trillion in assets) via an IPO for 5% of Aramco, and diversify into nonpetroleum assets.

I guess this signals interesting times ahead for tech, biotech, and clean energy entrepreneurs in S.A.


I certainly wouldn't want to live in Saudi Arabia. And I wouldn't recommend any one else to relocate there, especially women.


It will fail. Money will be embezzled, it will be captured by power brokers, contracts will be given to OUR people. Even if the prince is sincere.

Look at the corruption that EU projects have ...


Also, real estate.


This article has be to read next to the articles about SA and 9/11, and Obama veto. This is pure bullshit. SA have the same system of the Catholic Church and the European kingdoms during middle age, they protect each other.


Saudi Arabia's problems are an indication that Islam is a bigger problem for Muslims themselves than it is for anyone else.

Innovation and technology just doesn't thrive in an illiberal society.


Back in the day, Islamic society actually made many great notable scientific discoveries:

https://en.wikipedia.org/wiki/Science_in_the_medieval_Islami...


Yes, unfortunately those days are long gone.


Islam only dates back to 610 with one person. So, I am not sure how 'Islamic' the area was around 900-1000.

After all, Christianity to a long time to become central in Europe. In 300 they where only something like 10% of the Roman population. Not to mention looking very different from 'Modern' Christianity.


That doesn't really have much to do with islam, though.


No, it doesn't. It's the way those who think of themselves as Muslims think of what they call Islam. The issues of Islam holding Muslims back in terms of freedom, prosperity and progress just currently seem to be more problematic in that religion compared to others.

I believe these things can and will change. For one thing, many, if not most Muslims will cease to believe/practice as strongly as they do now, and for another, I do believe that devout Muslims are able to modernize their interpretations.


It does have everything to do with Islam. It teaches intolerance. Remember that Islam is not just the book, it is the people that practice it.


This crosses into religious flamewar, which is not allowed here. We ban accounts that comment like this.


If it helps most other religions have been just as bad at one time or another, Christianity, Judaism, etc... I instead prefer to pray to the Flying Spaguetti Monster. I beg you Spaguetti Monster, protect me from the wrath of dang!


> ..Islam. It teaches intolerance

It could be said of the salafi sect of Islam that rules/controls Saudi Arab. But Islamic practices are as varied as any other religion. Unfortunately the percentage of conservative Muslims could be higher, than perhaps other religions (or practices), which managed to evolve. But I dare say, a lot of the stagnation is due to the geo politics of the region (or simply Oil economy and vested interests of US). Which wanted just strong allies, which could ensure stability and flow of Oil at cheap enough prices.

> Remember that Islam is not just the book, it is the people that practice it.

But even within Islamic cultures its so varied, if you look at people in Saudi Arabia, to those in Iran, to those in Turkey, to those in India/Pakistan, to those in Indonesia.

So lets look at history of Iran, which under the 1st Shah brought in lot of modernity. And was about to settle into a British like monarchy, when Mossadegh was democratically elected in 1952, and 2nd Shah was playing a retired monarch's role. Unfortunately Mossadegh was too ambitious and wanted to nationalize Iran's oil, and CIA and MI contrived to plan a coup and forced Shah 2nd to come back. Which later on resulted in 79 Islamic revolution.

So that single incident set Iran back by perhaps 50 years, in terms of reforms and modernity.

So some facts (like your terse and singular classification) may actually be not so, but be a lot layered and complex .


Thank you. Of course you are right. It is all very complex and western powers have a lot of fault of what is happening right now. Unfortunately those guys will never be punished and instead we, the populations of the world are left yo suffer the consequences. Even I knew going into Iraq and Libia would leave those countries worse off.


Religion generally seems to bring forward intolerance. I wouldn't single out Muslims in that regard. The very idea of "my god is right/more powerful/more existing than yours" is, in a way, intolerant.

It also feels to me that Islamic society is lagging behind Christianity in a few regards, so some of what we may now perceive as bad or even evil traits may just vanish over time anyway.


the majority of modern science was created in european illiberal societies.


This family has been the cause of so much destruction and pain in the region and beyond. What do they do? Export Wahabism to a lot of Muslim countries, and that is the mother of Taliban, ISIS and many other terror groups.


Was a recent article about how the government used to employ nearly everybody on good wages, now with the demise of government jobs and the reality that the golden pay day from oil is not infinite and more volatile in today's economic and environmental awareness climate. The need to invest in alternative industries is paramount. The country has invested lots into education and with that many highly qualified people who have no goverment jobs find the public sector in that country very spartan. The drive to change that and produce TAX revenue outside of oil is the key factor here. Sure the country has other issues, but they are totaly diferent topics and some may see this as PR spin, but isn't any goverment touched or provate company annoucement PR one way or another.

Way I see it is a step in the right direction for the country and a good move, let us not lambaste it upon other area's and surely some praise for the good moves as well as lambasting the bad moves should be equally viewed. This is a good move, nothing to do with other issues and if anything only touches those other issues in a way that helps address them at the core.

After all people without money and jobs are people with time to ponder alternative avenues of life choices with some seeing them as the only way, that is how many get drawn down the darker paths of life. This helps prevent that.

Another way to view this is - what harm can come from this initiative and with that I have nothing to add. So it is a good thing.


I actually think this is good news for them. Aside from the self-promotion and the dick-size contest that is typical of the region's princes, laying money for investments away from oil is going to force them to change. They can't really expect free trade without also free flow of people, and ideas. For a society that essentially keeps its citizens in the infantile stage this will be quite a shock. Bringing the relative openness of dubai to SA sounds quite revolutionary for their standards.


It is hilarious that rather than let women drive, the Saudis are building a billion dollar rail system to get around the problem.

Now fathers will teach their daughters, oh you don't have to drive (or even be allowed to ride a bicycle) because you can just take the train.


Relevant joke: A young Saudi prince studying abroad receives a call from his father asking him if everything is alright. He tells his dad that he is feeling ashamed that everyday he goes to college in his brand new Lamborghini while all the other students take the train. His father replies: "I understand your shame son, take this 50 million dollars and buy yourself a train".


> you can just take the train. .. but only if the train has separate coaches for women!


Most interesting thing I saw was apparently even multi billionaires still end up with several remotes on their table. That's just sad.


The article mixes up the plans to diversify from oil production with all the talk about helping the worse-off. These are two separate issues, and changing one won't magically help the other.

Right now, Saudi has a huge income from oil. If they divest well, they could have a huge income from investments. In either case, the lot of the poor in Saudi Arabia doesn't change. Unless they change how they allocate the money, the rich will get richer and the poor will get poorer.


It is sort of linked. The working class and middle class will have a better access to meaningful and diverse jobs in diversified free economy compared to a rent seeking one. It will also be in the state's best interest to educate more people for these kinds of jobs in order to grow the economy and keep them off welfare, crime, and violent opposition.


The current global trend is for the rich to get much richer and the poor to get slightly richer. This is a simple factual metric. It is unprecedented in history and continues despite the narrative of liberalism that the poor are getting poorer.


They could start by ending domestic oil subsidies. Saudi Arabia uses a huge amount of oil and people pay a fraction of the real cost at the pump. http://www.economist.com/blogs/freeexchange/2012/04/oil


the open court yard looks nice with arbian themed decoration.. Look closer and there is a f-ing lazy boy recliner in front of the TV.. LOL it's like a college apartment...


I see them collapsing before they get better. They are pretending to be stronger and more important than they actually are. Their army is corrupted and can be beaten by ragtag rebels from Yemen.

The only thing aside from oil that they have is Mecca and Hajj.


> only thing aside from oil

Do they need anything more than oil? Many here pretend to be ready to crusade to save SA women, or install democracy or anything, but are they willing to impose a trade embargo to SA? Obvious answer is no.


I don't think I would suggest trade embargo, seems that US lost ability to talk, embargo is only way we can give feedback.

We don't really need their oil that much. We could mend relationships with Venezuela which is closer (again, mend,not make a coup) and most of our production is local anyway with fracking being popular. So it is not like we don't have any choice.

I am disqusted with SA, over many things.

Also, to be clear, as someone who is not politician, I am just suggestion options, I wouldn't presume I know exactly what US government should do, but this can give you idea where I am coming from.


I've always hoped the Saudis would take all their money and make the peninsula green.

https://goo.gl/maps/8XXa4zSxHAL2 They've already got this massive farming operation in the middle of the desert. With 2 trillion they could desalinate so much water. Pricing is something like 1000 gallons of seawater for a few dollars, $2 trillion could desalinate a millionth of the ocean.


surely, saudi arabia is already working partly as an investment in activities other than oil. Do we have a measure of how well those investments have worked so far ?

i mean, investing requires skill, and you can get burned if you're not really smart and knowledgeable and agile. All things in which many states ( not just oil states) are not very famous for.


Saudi Arabia recently signed a licensed-production deal with Antonov of Ukraine. The first batch of transport aircraft will go to the air force but it's a huge step for a country that has traditionally outsourced everything to do with aviation.


I thought Arabs are really good at investing money. The tall buildings in Dubai and Saudi Arabia had Arab investors.


I can't tell if this is sarcastic or not.

I live in the Gulf right now, and hang out with investment professionals occasionally. The prevailing opinion appears to be that local investors are shrewd at a tactical level, but terrible at long term planning because of a tendency to go after flashy, high risk/high return prestige projects.

There is also the distinct lack of local sophistication: almost all investors are reliant on non-local agents for due diligence and investment lead generation. I guarantee that this is going to come back to bite them down the road: incentives need to be aligned, and right now, they simply aren't.


> Almost all investors are reliant on non-local agents for due diligence and investment lead generation.

Is this for deals happening outside the Gulf (i.e. buying London or NYC property), or for all kinds of transactions, even within the Gulf?


If you look at the staff of the various SWFs, they're mostly western citizens. There are various Arabization programs afoot, but the dearth of local talent to manage these massive pools of cash means that most of these programs are DOA. For the forseeable future, they'll be reliant on western/foreign expertise and talent to get most foreign deals done.

I suspect that the same thinking that causes them to hire cheap migrant labor to build out their infrastructure operates at a higher form where finance is concerned.

It'll be interesting to see where these programs go over the next few years.


I seriously thought that Arabs were good at investment, especially in real estate. For example, the Saudi Binladin Group.


There's more than one asset class, and real estate isn't always the best one.


Especially in an unstable region


Can someone explain to me how the sale of 5% of Aramco will yield $2T? Certainly they don't believe Aramco is worth $40T?


Wikipedia says there are an estimated 268 billion barrels in Saudi Aramco's proven oil reserves, with maybe 90 billion more undiscovered. It produces somewhere between 3 and 4 billion barrels annually. If a barrel of oil is worth about $50, then the total value of Aramco is about $18 trillion. We can put a discount on that for time, but you might also want to consider that oil will get more difficult to pump out of the ground and price should increase faster than inflation. CPI is pegged to the price of oil, so all this stuff gets complicated.


You need to measure how much profit they'll make from the oil, not the revenue it will generate.


SA has the highest profit margin of any oil exporter.


Still, he's got a point. They are very mysterious about what their margins are.


Mind you, that estimate has remained unchanged since the late 80s, even though about 100 billion barrels have been extracted since then. OPEC quotas are based on a country's reserves. Take with a lot of salt.


The problem with that valuation is the fact that the IPO shares won't have any rights to the oil reserves. The devil is in the details. I'm sure most people buying stock think that they're buying part of SA's riches, but you're really only buying into the poorly run service company that extracts it.


Here's some interesting info...

"Based simply on its oil reserves and using a conservative valuation of roughly $10 per barrel, Aramco could be worth more than $2.5 trillion." [0]

Then:

- $45/barrel (current price) --> roughly $11.25 trillion

- $100/barrel --> $22.5 trillion

etc

Thing is, where will the barrel price go? Any major or minor [1] event can move the price up or down.

[0] http://www.bloomberg.com/news/articles/2016-01-07/too-big-to...

[1] http://www.telegraph.co.uk/finance/newsbysector/energy/oilan...


The Aramco IPO doesn't include any reserves. Those remain 100% sovereign. You're just buying into the services company.


Thanks for downvoting something 100% true? It's trivial to Google the source, but here you are. Straight from the CEO's mouth to print. http://www.wsj.com/articles/potential-saudi-aramco-ipo-wont-...


What's odd is that they are talking about selling the stake when oil prices are near record lows. The other worrying point is that if Saudi is selling their oil production, why on earth would you want to be a buyer?


Planet Money says they are estimated to be worth $4T total [1]

[1] http://www.npr.org/sections/money/2016/02/03/465476188/episo...


Their sovereign wealth fund is currently sitting at $700M. The Aramco IPO will hardly be the only contributor on the way to $2T.


Aramco represents more than half of Saudi Arabia's GDP, and at best they should be able to net $0.5T by selling 5%.

How do they find another $1.5T? $700M is 0.05% of that.


Typo in the parent - their Sovereign Wealth fund has assets of ~$700 billion. Though they've been using it heavily to prop up state spending with the collapse in the oil price and war in Yemen.


This is either a typo or an English-American collision. The SA wealth fund is sitting on 0.7 trillion dollars.



TLDR: Saudi Arabia wants to turn itself into a hedge fund to be less dependent on oil.

What could possibly go wrong?


Skimmed through it, saved it for later reading. It's pretty interesting to see such drastic plans for change in SA. As an Arab Muslim, I truly hope they follow through. It could push several other oil-dependent countries in the region to follow suit.


Definitely. Oil wells are drying up, because "demand." So it's sure a good time to evaluate. If SA should be thinking of change on that front, others shouldn't waste any more time in following suit. Good stuff


Is it difficult for Saudi to adopt/customize https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...


PR? [edit] SA have been in the press lately for another reason. [Saudi Threat to Sell U.S. Assets Could Hurt, but Mostly the Saudis](http://www.nytimes.com/2016/04/20/business/international/sau...)

Is there another side to their story? [The Real House of Saud](https://www.youtube.com/watch?v=TmSRWXCosxc) Abby Martin, (formerly with RT) conducts an expose.


PR fluff piece. He's working 16 hours a day to make the world a better place? Gosh, what a saint ... I wonder how much the Saudi-Arabia's PR agency had to pay to get it into a mainstream publication. See also: http://www.paulgraham.com/submarine.html

No meaningful questions of 'marginal' topics like the pointless the Yemen war, the support of ISIS and other unsavoury organisations. And exactly why does the interview accept him has head of state at all? Why should the House of Saud govern, and not be replaced by a democracy?


A toppled government in a fundamentalist region suffering economic fallout from the falling global demand for oil does nota democracy fuel. While I agree with everyone that sees SA as a terror-governed state, perhaps you've been around for some portion of the past 50 or so years and have witnessed what Western-exported democracy looks like in the Middle East right now.

SA's problems are plenty, but it shares the entire region's SPOF economy. Tackling that shouldn't be dismissed because we don't like the government. Suffering the hardest happens to the least of people, so making the transition to a post-oil economy as smooth as possible - House of Saud in tact - still prevents an incredible amount of suffering.


I agree with you in many ways, and have been critical of military means that were marketed as "bringing democracy". Irak, Libya, and Syria come to mind as terrifying recent examples. Incidentally the House of Saud supported the military actions in all three cases.

But yhere is a world of difference between a journalist asking critical questions, and bombing a country.

It's a journalist's task to ask autocratic rulers critical questions. The Bloomberg piece does not do this, instead raving "how comfortable meeting him was".

The target audience of this piece is the US population. The house of Saud invests a great deal of money in misleading the US population, so as to ensure that the US continues its support of the status quo, which is highly convenient for the House of Saud, but a disaster for just about anybody else. See e.g. https://www.washingtonpost.com/news/powerpost/wp/2016/04/20/...

The question how to engineer a peaceful transition away from the House of Saud to a meaningful democracy (or even a more enlightened dictatorship such as Dubai), is a deep and complex one, and I don't purport to have an answer. But it's good to understand how autocratic rulers such as the House of Saud manipulate public opinion.


>It's a journalist's task to ask autocratic rulers critical questions.

Not always, unless you are doing a hit piece. Sometimes it is also a task to simply gather information on a subject that people know very little about. Sometimes the process of gathering info is so sensitive that you don't want to do anything to influence the observations you make like cause discomfort and create moments of silence.

There were some important revelations in this article. It shows the leadership is trying to make changes. It highlights the stakes involved. It shows the geopolitical map of Saudi Arabia. That is not fluff.


> "It's a journalist's task to ask autocratic rulers critical questions." Yes in theory.. Look at it from a "who benefits and how, POV" and this puff piece makes sense. Oil's been bearish for a remarkable length of time.

It's in Bloomberg's best interests to make the ME look less like a one-trick pony so general market consensus goes up (any volatility = TV going off mute + viewership retention & people going to their Bloomberg terminals, etc).

It's in the journo's best interests because he gets '8 exclusive unprecedented hours' upping his profile so his executive editor will choose him for the next interview with Bill Gross or whomever.

It's in the House of Saud's best interest for a wide variety of reasons. Everyone's got to get their pound (Franc, greenback, yen, ruble, or .. )

W/r/t having a nation with a PR/lobby in the US - I guarantee you every nation with a GDP of eh maybe half a trillion will have one. Look at the registered employee list of K-street firms and their clientele.

The closest thing you'll get to 'hard hitting questions' (and I'm not talking hit-pieces, I'm talking about Kronkite and Murrow) is the BBC Newshour (Lyse Ducette and Owen Bennet Jones -- though Americans find it dry, I couldn't love their coverage more, although it's a bit of a family love-affair), PBS Newshour (basically everyone on their staff), and to some extent Shane & Sooresh's VICE which has retained some of the best producers and on-the-ground coverage I've seen in recent news.


> Oil's been bearish for a remarkable length of time.

Yes, and it's largely because of Saudi Arabia:

"Saudi Arabia has maintained a high level of oil production despite the slump in crude oil prices, arguing it needs to protect its market share in an economy in flux because of the glut of U.S. oil."

http://www.upi.com/Business_News/Energy-Industry/2015/07/13/...


> I guarantee you every nation with a GDP of eh maybe half a trillion will have one. Look at the registered employee list of K-street firms and their clientele.

Case in point: Here[1] is an article that spends a considerable chunk talking about how Norway pours money into Brookings Institution and Center for Global Development and others to influence US policy.

"The country has committed at least $24 million to an array of Washington think tanks over the past four years, according to a tally by The Times, transforming these nonprofits into a powerful but largely hidden arm of the Norway Foreign Affairs Ministry. "

Lobbying the US government is basically essential for any foreign power because of the outsize influence the US has on the world.

[1] http://www.nytimes.com/2014/09/07/us/politics/foreign-powers...


I agree with this. The piece itself is super fluffy.

That said, I can understand, to a degree "comfort" netting him, etc. It is a head of state, but more importantly, the whole government/ruling family is quite mysterious. You have no idea how practical his ideas will be, especially at that scale.

Still, though, you're right. Any amount of serious journalism here would have been welcome.


Now you're just getting your facts wrong. Saudi Arabia most certainly did not support the second Iraq war. They went along with it but were mortified when the US essentially handed it over to Iranian control/influence.

I am not a lover the SA regime, but it's important that one's lack of geopolitical knowledge doesn't spread more misinformation.


Yes, you are right. Sorry. Alas, I can't edit my original message any more.


> It's a journalist's task to ask autocratic rulers critical questions.

No it's not. It is, as a whole, the job of journalism to do that, but not necessarily a specific journalist's job.

A journalist's job is to tell the truth, not necessarily the whole truth. There is often quite a bit of value in getting the perspective of a single person or entity on a specific subject without attempting to add full and complete context.


> perhaps you've been around for some portion of the past 50 or so years and have witnessed what Western-exported democracy looks like in the Middle East right now.

Does it occur to you that the problem here is that Western-exported democracies aren't democracies, but instead puppet states? This has little resemblance to a real democracy founded by members of its own nation with their own cultural values.

There's a big difference between invading Saudi Arabia and setting up a banana republic, and journalism that criticizes the Saudis for their authoritarianism.

> Tackling that shouldn't be dismissed because we don't like the government.

No one is doing that. We can accurately describe all of Saudi Arabia's issues, including their authoritarian rulers.


There's a related blog post here (also many other insightful posts):

https://geopoliticsmadesuper.com/2016/04/20/why-saudi-arabia...

In short: liberal democracy requires liberal elites to be present and not vastly outnumbered. Without this condition fulfilled what you get after a revolution is what you had before despotism: tribalism and sectarianism, permanent civil war and the likes.


Sure, we should definitely just give up and accept that there just aren't enough liberal elites in Saudi Arabia, so they won't ever be able to handle democracy. /sarcasm

It's an entirely Western colonist idea that poor people in developing countries can't handle democracy and therefore have to accept dictatorships (which just happen to align with Western interests).


> It's an entirely Western colonist idea that poor people in developing countries can't handle democracy and therefore have to accept dictatorships (which just happen to align with Western interests).

Look, no one is able to "handle democracy" before being prepared for this. Isn't this obvious? Even the Tsar Peter the Great, who wanted to modernize Russia, went and for a couple of years studied technical skills in Holland (IIRC - I may be wrong on all the details here...) instead of simply saying "let's make our shipyards modern! now!".

I never said that the societies in the Middle East can't ever do democracy. I just said that if they tried right now the results wouldn't be pretty. Give them another two or three decades of successive education and liberalization and they will be able to build a modern, well-functioning democracy overnight!


liberal democracy requires liberal elites to be present and not vastly outnumbered.

If the elites are not vastly outnumbered, they kind of aren't elite anymore, they're just normal people.


I mean liberal elites vs. conservative elites, not elites vs normal people, obviously :)


> Does it occur to you that the problem here is that Western-exported democracies aren't democracies, but instead puppet states?

I think the relationship between the West and western-supported regimes is a lot more complicated.


I question your implicit presumption that democracy has to be western-exported, and that the Saudi government must be toppled by outsiders to change (although I am doubtful of internal forces yielding any such change any time soon).


>Western-exported democracy

By democracy, you mean dictatorship, right? The Shah and Saddam were both supported by Western oil, industrial, and finance interests and were hardly "democratic".


Reposting an open challenge to the HN community from a week ago:

Someone should make a plugin that counts the number of times a brand is mentioned in an "article" and uses ML/crowdsources votes to show a "sponsored content" or "submarine" score. Even if there is some interesting point to be made, I hate being manipulated into reading longform ads.

Additionally I would love to see an investigation by "straight" or freelance journalists into the world of PR/submarines that includes the going rates for pieces like this, getting on the front cover of a magazine like Bloomberg business week, etc.

As to the substance of the article: want to move off oil? You're going to need to start taxing your citizens. Now that will be an interesting transition to watch.


> Why should the House of Saud govern, and not be replaced by a democracy?

How would that fix any of the issues that SA is facing right now?


Well fundamentally, its main reason for backwards laws (e.g. non-equality for women) is that the House of Saud derives its legitimacy from a rather orthodox religious sect, in exchange for enforcing said orthodox sect's backwards religious rules.

Switching to a democracy would mean nobody need pander to the Wahhabi sect.


That assumes the people wouldn't vote for an orthodox religious government. I'm almost certain, for quite a while, they would.

See: http://clarionproject.org/analysis/islamists-using-democracy...


Sure. That's exactly what happened in e.g. Egypt /s it didn't.

We have to face the reality here; if the "religious sect" is so powerful that it can challenge the absulotist monarch, then it's definitely powerful enough to play divide-and-conquer with different democratic parties.


I don't know. The population of Arabia is probably best placed to discuss this. (Note that calling it "Saudi Arabia" implicitly accepts the rule of the House of Saud.)

Understanding the mechanisms the House of Saud uses to stay in power is probably a small first step in the transition to something better.


Well, its a story of one man working within constraints of a certain political system. Irrespective of your overall judgement of that system, the story conveys information about the direction this man claims to want to take inside the system. It's not a fluff piece in that sense.

Those down voting: it's valuable information to know what people like that guy are thinking. You can put as much or as little weight on that information as you want but the optimal weight is unlikely to be zero


About journalists asking why shouldn't Saudi Arabia have a democracy, this is an interesting interview:

https://amp.twimg.com/v/f72f7279-f0e4-4953-9549-d2243b49a20b


Oh yes, because democracy worked so well for Muslim countries in an US and EU sponsored experiments across Muslim world...

Not all countries can handle democracy, its not a magic cure.


What you are saying is factually true yet you are downvoted. You are in good company, galileo must've been downvoted a lot too.

The truth is that you cannot bring democracy overnight to a place and expect it to stick. It seems that the people of said country have to fight for it tooth and nail before it sticks.


Relevant: https://www.washingtonpost.com/news/powerpost/wp/2016/04/20/... ("The Saudi government and its affiliates have spent millions of dollars on U.S. law, lobby and public relations firms to raise the country’s visibility in the United States and before the United Nations at a crucial time.")


"Why should the House of Saud govern, and not be replaced by a democracy?"

That is a very, very naive question tho, don't you think?


Mandela: Why should we have apartheid, and not equality?

eric001: That is a very, very naive question tho, don't you think?


Democracy is sown via stability. Stability is sown via dictatorship.

Sometimes it takes a dictator to bring about democracy, simply because he dictates it that way.


You know the answer ?


if he'd knew, he wouldn't ask.


> He's working 16 hours a day to make the world a better place?

Might be paid propaganda, but it looked like the guy was much more worried about Saudi Arabia's future than making "the World" a better place. That self-interest looks pretty credible to me.


Do you know how well all the other attempts at installing democracies have gone in middle eastern countries? Iran, Syria, Iraq, Libya and so on... It's insanity to think that this time we could do it better.


How about letting the people take the lead in changing the system. It won't be what other countries would like to see, but it will probably be a lot better than the experiments you mention.


It's impossible to do that without favouring one side or another. You could say that 'the people' did take the lead when choosing the rulers of Saudi Arabia or any other country. It just so happens that some people had more money / weapons / power than the others. Is there a way to make things fairer? Well, you could try taking the money / weapons / power from different groups, but then you're making a choice and favouring certain groups to the detriment of others.


That's not how it happened at all. The Kingdom of Saudi Arabia, as a unified state, can be traced to the Treaty of Darin of 1915 between the United Kingdom and Abdul-Aziz Al Saud (aka 'Ibn Saud'). In the treaty, the UK agreed to protect the sovereignty of the House of Saud, and in return Ibn Saud agreed not to attack British protectorates in the Middle East and to support Britain against the Ottoman Empire.

This treaty (and the subsequent Treaty of Jeddah in 1927) legitimized their control over their territory and allowed Ibn Saud to go on to create the Kingdom of Saudi Arabia in 1932.

The Arab people had no part in the creation of the Saudi state. It was created by conquest combined with the support of foreign powers (the United Kingdom).

https://en.wikipedia.org/wiki/Ibn_Saud https://en.wikipedia.org/wiki/Treaty_of_Darin


It won't happen overnight and it won't happen in all countries in the short term.

However, Al-Saud family was heavily financed and armed by the British during 1900 onwards. People's allegiences were divided among the Sharif of Mecca Hussain bin Ali, the House of Rashid, the Ottomans, and the Al Saud-Wahhabi alliance. It is not hard to imagine that these forces would have evolved in different ways during industrialization, post-Colonial and Cold War times.

Besides, there have been external forces at play to further or curtail the direction Saudi affairs are going in during the times of King Saud and King Faisal respectively. So it is not as if the people have necessarily chosen the kingdom system of Saudi Arabia while the West has installed democracies.

While not democratic, I think Sharif Hussain of Macca, the Ottomans, and to a lesser extent King Faisal of the Al-Saud would have moved things towards a more representative system. King Faisal's efforts brought women's education to Saudi Arabia and added a little (if only a trickle) to scientific education in some countries in Africa and Asia through student financial aid programs.

So there are various contradictory forces at play locally and globally and nothing stays constant.


Yeah Faisal was relatively "progressive" compared to his peers in the royal family but his successor Khaled was relatively weak and Juhayman Al-Otaibi[1] incident in 1979 freaked the hell out of House of Saud and forced them to run back into the arms of the Wahabis for the fear of losing legitimacy and rule to those then ascending Islamic radicals with their more "puritanical" rhetoric.

[1]: https://en.wikipedia.org/wiki/Grand_Mosque_seizure


> pointless the Yemen war, the support of ISIS and other unsavoury organisations

Not pointless if you follow the politics of the region. Those are all done for breaking Iran's expanding sphere of terror.


> PR fluff piece.

That's what I thought when I saw the bloomberg cover. I wonder if he paid the article or bloomberg really cares if SA does this or that.


> Why should the House of Saud govern, and not be replaced by a democracy?

By whom, you?


Saudi Arabia using its massive funding to build tech cities have nothing to do with it's foreign policy.


Why should there be a democracy why not be replaced by X?


What does he mean by: “We don’t care about oil prices—$30 or $70, they are all the same to us,”


$2 trillion / 28 million population = $71k per person.


Heh, with this money it could work for some time


Assuming the dollar remains strong. Oil is the single commodity which drives the greatest amount of demand for the dollar. So, in theory, a drop in demand for oil could signal a drop in demand, and thus value, of the dollar.




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