Saudi Arabia’s desperate moves to diversify its economy are failing almost for good due to a continued slump in global oil prices and the kingdom’s inability to do away with its heavy reliance on crude production, an analyst says.
Simon Constable, an economics and markets commentator writing for the Middle East Eye, said in his piece of opinion published on Tuesday that Saudi Arabia was operating at a snail’s pace in its wishful plans for economic reforms, a scheme which was once supposed to move it away from reliance on oil.
The analyst said the privatization of state-run companies, a major component of Saudi Arabia’s reform plan, had almost failed due to a lack of interest in the Saudi nationals to work in the private sector. That has been mainly due to a broader lack of skills among the public workforce, which is increasingly needed in industries. Constable said the failure was also due to the fact that private companies mostly pay less than the government, making people more disinterested in the jobs offered in the sector.
The privatization scheme has also been a bid to help boost employment in Saudi Arabia as the government seeks to replace oil with the private enterprise as the country’s engine of growth, said the analyst, adding, however, that the measure could hardly affect the surging unemployment rate in Saudi Arabia, which currently stands at 12.3 percent. The government plans to bring the figure down to 9 percent by 2020, an almost undeliverable target given the kingdom’s shrinking revenues from oil and the current pace of reforms, said the commentator.
The analysis said Saudi Arabia also needed to drastically revamp its education system to train more professional workforce for future jobs. It said the reform could be a daunting task as it would face political opposition and fierce resistance within the traditional system of teaching.
Saudi Arabia, the second big producer of oil in the world, began to feel the pressure on its oil income when international oil prices fell to below $40 in 2014. The kingdom had largely benefitted from a boom in the market, which saw the crude traded at triple digits near $140.
Deadly campaign against impoverished Yemen
The Saudi kingdom’s finances suffered more blows when the military started a costly and deadly campaign against Yemen.
The objective of the campaign was to crush the Houthi Ansarullah movement and bring back a government supported by the regime in Riyadh, which has failed to achieve its goal.
Saudis have reportedly spent hundreds of millions of dollars to fund the war against Yemen, while coffers also continue to be drained by Saudi-backed terrorists in Syria and Iraq.