The Contradiction of Saudi-Style Austerity

(Financial Times-UK) Roula Khalaf - Saudi Arabia, the world's largest oil producer, this week delivered an unpleasant New Year surprise to its 22 million nationals. The kingdom, reeling from the collapse of oil prices, is embarking on a long-overdue economic transformation.< The government raised electricity rates for the largest consumers and ordered higher fuel and gas prices for everyone, as energy subsidies had been costing the treasury 13% of gross domestic product. Still, it will be austerity Saudi-style. Gasoline is still cheap. The policy of so-called "Saudization" - encouraging nationals to work and companies to employ them - has been in place since the 1990s. But for it to work, Saudis will need better skills; their education system, heavy on religious education and weak on analytical thinking, will have to change. Moreover, gender segregation laws mean that job openings for women are limited. In addition, at a time of belt-tightening, Saudi Arabia is leading a coalition fighting the war in Yemen, bankrolling rebels in Syria and sending money to prop up the Sisi regime in Egypt.

2016-01-04 00:00:00

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