Saudi king boosts economic benefits to citizens
CAIRO - Saudi Arabia on Wednesday nearly doubled a development fund that helps citizens buy homes, get married and start businesses, and it set up unemployment assistance for the first time as the oil-rich nation warily watches the unrest spreading around the Middle East.
The steps, reported by state television, were apparently aimed at shoring up popular support and fending off unrest that has spread to neighbouring Bahrain. They came as new signs of the undercurrent of discontent in the kingdom appeared to be bubbling to the surface.
A Facebook page calling for a "March 11 Revolution of Longing" in Saudi Arabia has begun attracting hundreds of viewers. A message posted on the page calls for "the ousting of the regime" and lists demands including allowing for the election of a ruler and members of the advisory assembly known as the Shura Council.
Saudi Arabia — where King Abdullah and thousands of royals are largely untouchable — has been mostly spared the unrest that is rippling through the Arab world. But Bahrain became the first nation in the oil-rich Gulf to experience the region's anti-government upheavals that are linked to poverty as well as demands for more political freedom.
Showing how deep the concern is, Abdullah ordered that 40 billion riyals ($10.7 billion) be pumped into the country's development fund, which provides interest-free loans to Saudis who want to build homes, get married or start small businesses.
Saudi officials are "pumping in huge amounts of money into areas where it will have an obvious trickle-down by addressing issues like housing shortages," said John Sfakianakis, chief economist for the Riyadh, Saudi Arabia-based Banque Saudi Fransi.
The measures are "looking at the credit facilities provided for low-income groups, and trying to alleviate the rising cost of living pressures for the active Saudi labour force, which is mostly in the public sector," he said.
The measures were ordered by the king even before he returned Wednesday to Saudi Arabia. The 86-year-old monarch was abroad for medical treatment in the United States and recuperation in Morocco.
Other measures included a 15 per cent cost of living adjustment for government workers, a year of unemployment assistance for youth and nearly doubling to 15 individuals the size of families that are eligible for state aid.
Also decreed was the writing off of debts of people who had borrowed from the development fund and later died, as well as a release of prisoners. Analysts said the prisoners to be released are likely debtors who were jailed after being unable to pay their dues.
Mass protests — at least partly rooted in the rampant poverty and corruption in the Arab world — are rewriting the region's political landscape, toppling autocracies and testing the strength of the monarchy in Bahrain.
Saudi Arabia, which sits atop the world's largest proven reserves of crude oil, has been working to diversify its economic base and to create new jobs for a rapidly growing population of youths, many of whom are chaffing under the harsh religious rules that keep the sexes largely segregated.
Analysts say youth unemployment is a major concern, and militants have been quick to capitalize on that disenfranchisement to widen their recruitment pool.
Unemployment in the kingdom is at 10 per cent — but among the 15-24 age group, it is almost 40 per cent, and about two-thirds of the country's population is below age 29.
The demographics are similar in much of the Arab world, and the disparity in income distribution in many of the countries, along with corruption and a sense among many of the youth that there are few opportunities, have helped stoke protests in the region.
So far, the protests have had mostly political repercussions. Their recent spread to Libya means a member of OPEC is now affected, while demonstrations in Yemen and Bahrain means they are on Saudi Arabia's doorstep.
In Jordan, a government official said the Cabinet has enacted laws to permit greater freedoms and price restraints. The decision late Tuesday came hours after the country's largest opposition group, the powerful Muslim Brotherhood, vowed to resume protests, accusing the government of failing to keep its promise of speedy reforms.
Analysts are skeptical that demonstrations will find much footing in the Gulf Arab states, where coffers are flush with oil revenue. Abdullah's announcement reflected the typical way in which the Gulf states have dealt with unease: by throwing money at the problem.
While that policy may be successful, the concerns of a contagion in those nations is worrying the global oil markets. The U.S. benchmark crude futures contract Wednesday climbed to fresh two-year highs amid the unrest in Libya, while its London-based counterpart, Brent, climbed by more than $1 per barrel to almost $107.
Investment bank Goldman Sachs said in a research report that the violent protests in Bahrain spotlight how the Gulf states are also vulnerable, noting that the unrest in the island nation and in Libya "increase the risks of major supply disruptions."
The Facebook page in Saudi Arabia offered a glimpse of the broader concerns in the population. Among the injustices it listed, the communique called for an independent judiciary, ensuring that security services work for the benefit of the people, the release of political prisoners and the right of freedom of expression and gathering.
It was not possible to determine how much support the page has within the kingdom, but such complaints have repeatedly surfaced before.
MSN.ca Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
Is it important to own a house?
Thanks for being one of the first people to vote. Results will be available soon. Check for results
- 77 %1. Yes, owning a home is an investment that will pay off.
- 2. No, I'd rather save my money and rent.
- 3. No, I can't afford to buy a home.
- 4. I don't know.