Adonis Diaries

Posts Tagged ‘oil boom

Well-to-do young Saudis to work for money? About time

Young Saudis discover that they have to work for money

In pressed white robes and clutching crisp résumés, young Saudi men packed a massive hall at a university in the capital city this month to wait in long lines to pitch themselves to employers.

It was one of three job fairs in Riyadh in two weeks, and the high attendance was fueled in part by fear among the younger generation of what a future of cheap oil will mean in a country where oil is everything.

For decades, the royal family has used the kingdom’s immense oil wealth to lavish benefits on its people, including free education and medical care, generous energy subsidies and well-paid (and often undemanding) government jobs.

And No one paid taxes, and if political rights were not part of the equation, that was fine with most people.

But the drop in oil prices to below $30 a barrel from more than $100 a barrel in June 2014 means that the old math no longer works.

Low oil prices have knocked a chunk out of the government budget and now pose a threat to the unwritten social contract that has long underpinned life in the kingdom, the Arab world’s largest economy and a key American ally.

Bechara Choucair and Georges Azzi shared this link
Saudi Arabia has survived oil shocks before, but now 70 percent of its citizens are under 30, and they face a harder future than their parents.
nytimes.com|By Ben Hubbard

The shift is already echoing through the economy, with government projects delayed, spending limits imposed on ministries and high-level discussions about measures long considered impossible, like imposing taxes and selling shares of Saudi Aramco, the state-run oil giant that is estimated to be the world’s most valuable company.

(Today, Saudi Arabia cancelled out $4 billion aid to Lebanon, promised 3 years ago. It did prevent Saudi Arabia of purchasing this year over $30 billion in new weapons from the US, England and France)

The proposal announced on Tuesday by the oil ministers of Saudi Arabia, Russia, Qatar and Venezuela to freeze output levels is one attempt to stabilize world oil prices, but it remained uncertain how effective it would be if other countries, like Iran and Iraq, declined to follow suit.

For younger Saudis — 70% of the population is under 30 — the oil shock has meant a lowering of expectations as they face the likelihood that they will have to work harder than their parents, enjoy less job security and receive fewer perks.

“For the older generation, it was easier,” said Abdulrahman Alkhelaifi, 20, during a break from his job at McDonald’s. “They’d get out of university and get a government job. Now you need an advanced degree.”

 Of his generation, he said, “The weight is on our necks.”

It is hard to overstate the importance of oil in the development of modern Saudi Arabia.

In decades, it rocketed a poor, mostly rural country to affluence, with most of its 21 million citizens now living in cities festooned with skyscrapers and streets filled with S.U.V.s.

Oil wealth also allowed the ruling Al Saud family to maintain its grip on power, wield clout abroad through checkbook diplomacy and invest billions of dollars in promoting an austere interpretation of Islam around the world.

The oil boom over the past decade helped all of this, and was good for Saudis at home. Household incomes rose, and the number of men and women pursuing higher education multiplied.

But the fat years left the economy poorly structured, economists say: 90 percent of government revenues are from oil; 70 percent of working Saudis are employed by the government; and even the private sector remains heavily dependent on government spending. (like most high-tech companies in the USA depend on the military and the government)

Nor did advances in education create a large professional class or inculcate a culture of hard work.

Most of the country’s engineers and health care workers are foreign, and many government employees vacate their offices midafternoon, or earlier.

But with oil revenues crashing and the numbers of young people reaching the work force growing by the day, those jobs have become harder to get as the government cuts costs and pushes Saudis toward the private sector, where job security and salaries are lower on average.

“There is an issue with the sustainability of the economic model in Saudi Arabia, and the oil price can be seen as a wake-up call,” said Fahad Alturki, chief economist at Jadwa Investment in Riyadh.

Saudi Arabia still has room to maneuver, he said, thanks to large cash reserves, low public debt and lots of new infrastructure that can aid economic growth.

But the generational differences are clear.

One woman who recently earned a Ph.D. in a medicine-related field in the United States said that her father had been tracked into the military, where he got training abroad, free housing, medical care and schooling for his children. When her mother finished her degree in Arabic, she immediately got a job near her house — and a cash bonus from the state, just for graduating.

Their daughter has struggled to find work, despite being better educated and fluent in English. Her husband, also educated in the United States, is also unemployed, and they live with her family.

“My parents had great opportunities,” she said, requesting anonymity so as not to hinder her job search. “They provided well and we had a comfortable life, so I always thought it would be the same for us.”

These economic stresses come at a time of chaos in the Middle East and of generational change in the royal family.

Spearheading economic policy is Prince Mohammed bin Salman, whose father, King Salman, passed over older and more experienced princes to put the 30-year-old in charge of many of the country’s most important affairs, stirring private anger among some other royals.

Prince Mohammed, who is also the defense minister and second in line to the throne, has launched a costly war in Yemen and talks about radical changes to the economy, like raising fuel prices, imposing taxes on undeveloped land and some consumer goods, and privatizing state-run companies.

But details on implementation are scarce, causing uncertainty over many issues like what it will cost to fill a gas tank or power a factory in five years. That has made it hard for businesses to plan for the future, which further undermines the sputtering economy.

At the same time, Saudis are not accustomed to the government taking bold, fast action.

Change tends to be introduced incrementally. That cultural trait is now complicating the need to move fast to meet the economic and demographic challenges.

A Saudi executive in the construction industry said that change was needed, but that moving too fast could hurt businesses.

“It has to be done and I am with it, but you can’t change decades’ worth of problems in a few years,” he said, speaking on the condition of anonymity so as not to jeopardize his business interests. “No way.”

Economists say that at least 250,000 young Saudis enter the job market every year, and that making them effective members of the work force is a major challenge.

The glut of graduates was clear at the job fair, where most applicants had come from large public universities that often fail to give students the language and technical skills employers want.

Most of those interviewed had never had a job before and said their fathers worked for the government. While some thought private companies offered better experience, many wanted the perks of a government job.

“It’s a good experience, but there is no rest and no job security,” said Ali al-Ariyani, 24, who worked at a private hospital and wanted a change. “The days are long and you can’t even go out to smoke.”

At a separate location for women, many applicants complained that their degrees had not given them the skills, like fluency with computers, that employers want. One group of women had earned degrees in microbiology only to learn that they lacked the required licenses for hospital jobs.

“Our main issue is that our university did not prepare us for the job market,” said Khuloud al-Khateeb, 23, adding that many hospitals preferred to hire foreigners for lower salaries.

In recent years, the government has pushed for greater Saudi employment, penalizing companies with few Saudi employees. Many employers hate the program, saying it forces them to swell their payrolls with people who contribute little.

Even companies that have hired lots of Saudis have often had to rely on significant social engineering to get them working.

Saudis made up one-third of the crew at a Riyadh McDonald’s on a recent morning, manning the drive-up window and cash register and making fries.

“Is this spicy?” one yelled to a colleague. “One large fries, please!”

While they do the same work as foreigners, they earn much more. Salaries for foreign crew start at $320 a month, while Saudis get $1,460, part of which is subsidized by the government.

The company also gives Saudis more flexibility and has created fast-track programs to move them into management.

Four Saudi workers gathered in a break room said they liked their jobs but worried that they would not be as successful as their fathers, all of whom worked for the government.

They knew the government had less money to employ citizens, which meant their generation would have to work harder.

“The government is good, but our generation is spoiled,” said Ahmed Mohammed, 21. “Everyone wants a government job.”

His colleagues agreed. “Everyone wants to sit at home and get paid,” Mr. Alkhelaifi said.

Sheikha al-Dosary contributed reporting.

Note: It is to be reminded that this a new dynasty taking over and other section of the princes and princesses will be reaping whatever the sovereign fund has accumulated.

How Neoliberal expatriate Contractor Class is managing the contracted national debt in Lebanon?

How neoliberalism is applied in your country?

Neoliberalism is not a difficult concept to comprehand: Just observe its applications and consequences on your survival instinct.

The best way to understand neolibralism in the western developed nations is to witness how developing States are applying it.

Particularly, new small States recognized in the UN that were under direct mandated powers for many decades, and now are appeasing their former “masters” in order to enrich the oligarchy ruling class these under-developped “nations” are sustaining.

How neoliberalism is applied in Lebanon?

Together with the governor of the Central Bank and the Prime Minister, the minister of Finance is a crucial player in the management of government debt.

From 1992, late Rafik Hariri PM, and later the Hariri clan hoarded the control of these three institutions.

The policy adopted in 1993 pegged the Lebanese currency to the US dollar. What that means?

The State borrows on behalf of the government large sums of loans that are not needed to finance the deficit.

The borrowing mechanism is basically a political decision to get the State tightly linked to outside multinational financial institutions… Institutions that the ruling class has invested in and wants to generate quick profit in this globalization era… at the expense of the people they claim to work for their benefit…

This scheme drove up the demand for the Lebanese currency, raised the interest rates on government debt, and high interest returns for depositors (reaching 30% at determined periods as the Future Movement spread the words among its elite class to deposit) and the new expatriate Contractor wealthy class of billionnaires…

Leading the country into a dept trap.

A debt ever increasing ($60 bn) and absorbing a third of the government budget, every year since 1992.

Servicing the interest of the debt has one purpose: Keeping the new neoliberal Contractors class in control of the management of the financial and economic institutions.

The main benefiaciaries were commercial banks and their wealthy depositors: Lebanon financial and economic elite classes (new expatriate contractors, warlords, oligarchic politicians…) have the necessary savings to invest in government debt instruments.

The notion of neoliberalism is that, as long as the government maintains the confidence of the elite classes in the soundness of the financial policy, the situation can remain in control, precariously in control, and relying mainly on foreign support for the policy.

The IMF working paper from 2008 mentions that the continuous rollover of Lebanon debt depends on an “implicit guarantor” from donors and international financial institutions.

And who is the main donor guarantor? It is Saudi Arabia absolute wahhabi monarchy.

This Saudi Kingdom

1.  Bought up Lebanon government bonds when investors refused to buy the bonds

2. It provided the largest chunk of concessionary loans at Paris 2 donor conference in 2002, and Paris 3 in 2007

3. It transfered One $bn to the central bank during Israel preemptive war in June 2006.

Consequently, the governor of the central bank, PM and finance minister must satisfy Saudi Arabia confidence!

The Hariri clan main objective was to deepen neoliberal economic “reforms”.

Former Fouad Seniora PM reiterated the neoliberal program, including privatization of State-controlled entities, welfare “reforms“, politically aimed at curtailing patronage opportunities of political rivals to the Future Movement…

However, Seniora could not pull off his wishes of abolishing the Council of the South (a Box of money controlled by Parliament chairman and worlord Nabih Berri) or the Central Fund for the Displaced “sandouk al mouhajjareen” (controlled by the Druze warlord Walid Jumblatt)

For over two decades, the Hariri clan attached a dozen public institutions to the Prime Minister, controlled the municipality of Beirut, extendit building permits to its elites and the foreign investors and dropping any resistrictions when convenient, assigning public contracts to the “Future Elite contractors” and entrepreneurs at manyfold the proper cost, extending their hold on Solidere for 75 years, never accounting for the bids on Sukleen which collect waste in Beirut at $100 per ton while costing $30 in Zahle for example…

The current “national debt” has skyrocketed to reach $70 bn, even after 2 decades of paying high interest rates. In addition to funding the warlord “reconstruction chests”, part of the loans were used to paying the tribute to the Syrian oligarchy, since lebanon was under Syria mandated power till 2005.

Mind you that Syria, after 2001, began a neoliberal policy for its oligarchic elite class, and privatizing new public institutions such as the mobile telecommunication and oil extraction and grandiose Real Estates development in Aleppo, Homs and Damascus…

Note 1: The oil boom increased the number of Lebanese workers in the Arab Gulf Emirates and Saudi Arabia within a decade from just 50,000 in 1970 to well over 210,000 in 1980, or one third of Lebanon work force.

Note 2: Post inspired from two chapters written by Fabrice Balanche and Hannes Baumann in the book “Lebanon after the Cedar Revolution

Note 3: A wealthy international neoliberal club requires from its members to extract profit from their own country, as a proof of allegiance to global neoliberalism, in order to facilitate the infusion of unwarrented loans to their corresponding State.

Have you witnessed that almost all current prime ministers, finance ministers and governors of central banks in Europe, the USA and many other countries were “employees” at the IMF, the World Bank , World Commerce institutions and international financial corporations?

Note 4: Basically, the expatriate billionnaire contractors initially got the blessing of the former civil war warlords (Nabih Berri, Walid Jumblatt, Samir Jagea… supported by Syria, Saudi Arabia and the US neoliberal financial institutions) who were brought back to power, and then managed their financial porfolio and financed the election campaigns as political allies…


adonis49

adonis49

adonis49

July 2020
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
2728293031  

Blog Stats

  • 1,398,184 hits

Enter your email address to subscribe to this blog and receive notifications of new posts by email.adonisbouh@gmail.com

Join 745 other followers

%d bloggers like this: