Challenges abound but Saudi Arabia remains stable in troubled region

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Indeed, the current Saudi leader, King Abdullah, at age 87, has embarked on a massive education investment program. At a time when most retire with memories of the past, he’s looking toward the future. He always has, in fact. In 2005, the King announced a massive scholarship program, which so far has provided to more than 150,000 young Saudis the right to study abroad. This in itself is visionary and at the same time allows for the country to have a shot to a better future.


Saudi Arabia today has 25 universities, when only two decades ago a there were handful around. It is a profound accomplishment for a country that was comprised in the early 1970s of mostly illiterate, nomadic citizens to now place its young in the most prestigious of universities around the world. However, continuous skills improvement and education reform is necessary.

Job creation is a structural challenge. Admittedly it’s not an easy one but without higher wages and education, Saudi Arabia will depend on foreigners who comprise the brunt of the private sector. Unemployment benefits were announced as result of the Arab Spring and even if providing skills and training for those in search of jobs is at its infancy, it’s a start. A minimum public sector wage for Saudis was enacted. More Saudis are entering the private sector encouraged by the new labor initiatives. Youth unemployment is at a high 38 percent; yet comparatively, the country is doing well: Spain and Greece have surpassed 50 percent.

Policy makers and royals are aware of the challenges. According to the 2007 demographic census, 61 percent of all Saudi households own a house but most in need are young Saudis. Affordability is part of the problem as land is in the hands of few. The building of 500,000 housing units was announced a year ago, fresh credit was allocated to the housing credit authority, a ministry of housing was founded and the much-awaited mortgage law was passed. There are no quick fixes, however.

Poverty which was a forbidden word before 2003 is a recognized problem today. If, as some claim, 40 percent of Saudis live in poverty then eight million Saudis are a problem waiting to happen, making Egypt’s 25 percent poor pale comparison. Any figure is a good figure as long as it satisfies the discourse of crisis on Saudi Arabia. It should not be ignored that per capita income has more than doubled in the last decade and wealth is created even if imbalanced.

Domestic oil consumption is a serious challenge which has not been pushed under the carpet. The establishment of the KA-CARE mandated to work on the country’s renewable and nuclear (civilian) future is a true testament. To expect that Saudi Arabia will see that its role as the world’s swing oil producer diminishes so as to continue wasting its only real revenue resource is irrational. Economic reality would push Saudi Arabia to reform and change further as the alternative is compounded destruction.   

Plenty are those who made careers out of predicting who will be the royal successor. Many are those who claim that internal strife and divisions are mounting within the royal family. And just because historically, the Al Saud, have united, it doesn’t mean that it could happen again. However, the Al Saud are aware that they are set to lose more if divisions run deep and the ship is left without a competent captain.

Saudi society defined by multiple and overlapping identities of tribe and region is concerned about stability and jobs. King Abdullah and the royal family are not hated unlike Mubarak and his regime, prior to his demise. Contrary to other Arab regimes, the royal family has built deep ties with society. Nevertheless, the royals and their technocratic advisors need to remind themselves that hard-earned loyalty is retained by deeds and time is of the essence. But turmoil and mess is not imminent.              

Sfakianakis is chief economic advisor at the Ministry of Finance in Riyadh, Saudi Arabia. The views expressed here are his own and do not reflect those of the Kingdom of Saudi Arabia.

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