World suspicious of Saudi economic plans: Commentator

Press TV has interviewed Naseer al-Omari, an author and political commentator, about Moody’s Investors Service once again cutting Saudi Arabia’s credit rating along with those of Bahrain and Oman.

The following is a rough transcription of the interview.

Press TV: Let’s jump right in and give us your assessment of the new ratings issued by Moody’s.

Omari: Well the Saudi economy is going into a new era. The new vision for Saudi Arabia is very ambitious. The reality is it requires transforming the Saudi economy in a structural way that is not easy to accomplish. There is no other country that has attempted to restructure and re-organize its economy in 15 years, an economy that is dependent on oil in 91 percent of its total value. So no wonder the international community is suspicious of these plans.

Given the fact that there is no transparency in Saudi Arabia it is hard for these international institutions and the World Bank to trust what is being said because there is no transparency, there is no democracy, there is no rule of law, in fact the legal system is very unclear and there are no checks and balances. No wonder the world is suspicious of the Saudi plans to restructure themselves.  

Press TV: Well Moody’s and a number of other rating agencies have foreseen future shocks for the Saudi kingdom. With Saudi Arabia and of course the countries in the Persian Gulf region which Saudi Arabia has a lot of influence in, do you think that we will be seeing the returning to a normal, the level of output of oil, with what is being foreseen for the future of Saudi Arabia’s economy?

Omari: Well, we understand that there is a glut in the oil production. It is said that there are about two million barrels of oil being pumped into the market that are above and beyond what the market can consume.

On the other hand we have a foreign policy that is based on keeping the oil prices down and the firing of the Saudi oil minister, the outgoing oil minister came as a result of what is reported to be his attempt to reduce and to reach an agreement with Russia and Iran to limit the oil output.

So now we have a foreign policy that is based on keeping the prices down by pumping a lot of oil. On the other hand to restructure the economy you need to make sure that your population which is used to a lifestyle that is dependent on government subsidies, you need to keep them happy with the dictatorial regime. So there are a lot of variables that do not add up and I am not surprised that the international banking community is looking at all these plans with suspicion.

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