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Sunday, October 2

Al Saud and Syria

I'm going to take a shot in the fog. Within a matter of weeks if not days Saudi Arabia's defense chief, Prince Mohammad bin Salman Al Saud, will pull or greatly downgrade support for the kingdom's proxy army in Syria. 

I base this guess on the emerging realities about the combat situation in Aleppo and four reports I've read in the past week that indicate the kingdom's sharp economic downturn, and the fallout from such within Saudi Arabia, are worse than has been generally understood up to this point. The bottom line is that Russia's entry into the fray skyrocketed the costs to the Saudis of trying to overthrow Assad and transformed what seemed to be a done deal last year into an open-ended conflict.   

Beyond that observation I won't argue for my guess given its short time frame. Either we hear a scream and thud from somewhere in the fog very soon or we don't.  

Here are the reports:

9/11 Bill Crashes Saudi Stock Exchange, Bond Market Ambitions by Nick Cunningham; Sept 28, OilPrice

The collapse of Saudi Arabia is inevitable by Nafeez Ahmed; Sept 28, Middle East Eye

Saudi Arabia is showing signs of financial strain as its relationship with the US sours by Patrick Cockburn; Sept 27; the Independent

OPEC agrees modest oil output curbs in first deal since 2008 by Rania El GamalAlex Lawler and Vladimir Soldatkin; Sept 29, Reuters

I want to highlight certain passages from the Reuters report:
Saudi oil revenue has halved over the past two years, forcing Riyadh to liquidate billions of dollars of overseas assets every month to pay bills and cut domestic fuel and utility subsidies last year.
"The Iranians have lived with a very tough macro backdrop for many years..." said Raza Agha, chief Middle East economist at investment bank VTB Capital. "So a sustained drop in oil prices has a more difficult social impact on Saudi."
Agha's remark indicates that one of the worst aspects of Al Saud's economic problems and the 'austerities' imposed as a result is that the Saudi Man in the Street isn't used to them. Patrick Cockburn notes:
... now cuts are extending to the public sector workers who are Saudi citizens, 70 per cent of whom work for the government. So far the austerity is limited, with lower bonuses and overtime payments and a 20 per cent reduction in the salaries of ministers, though those close to political power are unlikely to be in actual need.
That may not sound like much in the way of austerities to people used to belt-tightening during an economic downturn, but such things aren't supposed to happen in the kingdom.

As to the Saudis' planned bond offerings (see Cunningham's report), it turns out that the "9/11 Bill" is a lot messier in its implications than even the financial pundits predicted. Yesterday RT carried a report headlined, Navy widow first to sue Saudi Arabia over 9/11, hundreds more set to follow.

It doesn't look to me as if the Saudi lobbyists are going to be able to make this disappear anytime soon. And the longer it stays in the public eye, the deeper investigative journalists who specialized in studying the 9/11 attack are going to dig. Nafeez Ahmed is a well-known example of such.

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