International Saudi Arabia austerity drive. Triples V.A.T. Stops monthly payments to locals.

[MicroBrew]

Tripling Value Added Tax, that is a huge increase in a short time. From 5% to 15%

Saudi Arabia will also stop monthly stipends to citizens.

-
When I was in the UAE, the locals were supported by the State from cradle to grave with government subsidies and monthly payments. Part of the reason for these payments is to keep the locals content and refrain from trying to overthrow the monarchy. These oil rich Gulf nations are welfare states. They give money to buy houses, interest free loans, free medical , generous pensions, money for each kid, money for the groom if he marries a local Arab. Both Saudi and UAE even fully fund their citizens to go abroad and study , and give them monthly stipends to comfortably live abroad.

So this austerity measurs by Saudi Arabia is a big deal, because locals are generally used to a relatively cushy life. Except if you Shia, in which case you don't get anywhere as much State assistance even though most of Saudi's oil is in the Shia regions.

Saudi was attempting to destroy American shale oil producers and stick it to Russia, so they saturated the market with crude. Add in Wuhan Virus and the economic slump, and you get a Saudi Arabia that is financially bruised.

The poor working class expats, especially the laborers are going to suffer the most.

By the way, isn't tax haram in Islam !

https://www.france24.com/en/20200511-saudi-triples-vat-halts-govt-handouts-in-austerity-drive

 

[TUFNewb]

Time has almost run out for oil dependent nations. This pandemic is just a little sneak peek of what is to come.

 

[Strychnine]

Wow! This just goes to show what happens if you stop using oil.

Time for some Saudi citizens to invest heavily in bootstraps.

 

[Fanu]

2 things I am interested in:

1) In what direction will oil exporting middle eastern countries shift their economies? Dubai had the foresight to attract foreign investments to its country but even those are now drying up, and Saudi is kinda late with its NEOM mega-city

2) How will local populace handle not receiving free money from the government (to keep quiet and keep supporting royal families)? - I presume governments will go back in direction of using religion to control the populace (rolling back any human rights progress and giving more say to the clergy when it comes to state affairs)

 

[Oceanmachine]

Tripling Value Added Tax, that is a huge increase in a short time. From 5% to 15%

Saudi Arabia will also stop monthly stipends to citizens.

-
When I was in the UAE, the locals were supported by the State from cradle to grave with government subsidies and monthly payments. Part of the reason for these payments is to keep the locals content and refrain from trying to overthrow the monarchy. These oil rich Gulf nations are welfare states. They give money to buy houses, interest free loans, free medical , generous pensions, money for each kid, money for the groom if he marries a local Arab. Both Saudi and UAE even fully fund their citizens to go abroad and study , and give them monthly stipends to comfortably live abroad.

So this austerity measurs by Saudi Arabia is a big deal, because locals are generally used to a relatively cushy life. Except if you Shia, in which case you don't get anywhere as much State assistance even though most of Saudi's oil is in the Shia regions.

Saudi was attempting to destroy American shale oil producers and stick it to Russia, so they saturated the market with crude. Add in Wuhan Virus and the economic slump, and you get a Saudi Arabia that is financially bruised.

The poor working class expats, especially the laborers are going to suffer the most.

By the way, isn't tax haram in Islam !

https://www.france24.com/en/20200511-saudi-triples-vat-halts-govt-handouts-in-austerity-drive

Yes this is good news. Corona chaos can be used to increase pressure against China and Saudi which is much needed. Though now the momentum is for the foreeseeable future against China which is more dangerous. Again I think the Saudi´s will be handled after Iran whenever that is. Saudi´s losing to Russian´s in this oil game is good for the US. Saudi´s need a much higher barrel of oil price for the budget to balance and a much larger share of their economy is tied to oil exports, in addition to revenue and gdp.

The good news for Saudi´s is they have an ally in the US executive branch and they have hundrends of billions in a Soverign wealth fund and in forex reserves. I would hope they start depleting these, which is an upside to low oil should it continue (hopefully). Even if much of shale fails (which I hope) major US companies have enough share and wealth and reserves they will survive and would benefit from the pain inflicted on the Saudi economy.

 

[hiphopnazi]

By the way, isn't tax haram in Islam !

I think you mean interest.

 

[MicroBrew]

I think you mean interest.

Yeah I made a mistake. It is interest that is haram.

 

[Renard]

The Saudi economy is a one-trick pony, it's 50% of their GDP and 90% of revenue. When oil crashes - and it will as new energy technologies are developed in the next decades - they're toast. They've been trying to diversify their economy for when that comes, but it's not something you can do overnight.

 

[Strychnine]

The Saudi economy is a one-trick pony, it's 50% of their GDP and 90% of revenue. When oil crashes - and it will as new energy technologies are developed in the next decades - they're toast. They've been trying to diversify their economy for when that comes, but it's not something you can do overnight.

I believe in Elon Musk.

Go Tesla Go!

For those that are interested, @PEB has an amazing Electric cars/alternative fuels/technology here...

https://forums.sherdog.com/threads/official-electric-car-thread-part-5.4000751/

 

[Billy no mates]

Cue 'Rock the Casbah' .

 

[Fox by the Sea]

good
fuck em

 

[Bald1]

They've been trying to diversify their economy for when that comes, but it's not something you can do overnight.

Especially when you can't actually do anything. Nevermind getting it done over night. If not for foreign workers paid by oil, these Beverly Hillbillies could barely manage to wipe their own asses.

 

[ocfightfan]

Shit is about to get real.

Tripling Value Added Tax, that is a huge increase in a short time. From 5% to 15%

Saudi Arabia will also stop monthly stipends to citizens.

-
When I was in the UAE, the locals were supported by the State from cradle to grave with government subsidies and monthly payments. Part of the reason for these payments is to keep the locals content and refrain from trying to overthrow the monarchy. These oil rich Gulf nations are welfare states. They give money to buy houses, interest free loans, free medical , generous pensions, money for each kid, money for the groom if he marries a local Arab. Both Saudi and UAE even fully fund their citizens to go abroad and study , and give them monthly stipends to comfortably live abroad.

So this austerity measurs by Saudi Arabia is a big deal, because locals are generally used to a relatively cushy life. Except if you Shia, in which case you don't get anywhere as much State assistance even though most of Saudi's oil is in the Shia regions.

Saudi was attempting to destroy American shale oil producers and stick it to Russia, so they saturated the market with crude. Add in Wuhan Virus and the economic slump, and you get a Saudi Arabia that is financially bruised.

The poor working class expats, especially the laborers are going to suffer the most.

By the way, isn't tax haram in Islam !

https://www.france24.com/en/20200511-saudi-triples-vat-halts-govt-handouts-in-austerity-drive

No, usary (lending with interest) is haram. Taxation is just fine, especially the jizya tax on Christians and Jews which could be up to 50%.

 

[vapor&dust]

I smell an Islamic revolution on the horizon. They'll be going back to surviving on camel milk and dates in no time.

 

[EndlessCritic]

Govt handouts? If America had those we'd call them freedom dividends.

 

[Fluffernutter]

- bottom heavy population pyramid.

- huge wealth gaps based upon tribe you were born into.

- large number of unemployed in their 20s and 30s.

- constant beating of war drums to whip the citizenry into allegiance to the crown.

- handouts start going away.

- increase in taxes.

- drop in white collar expats that have gone home when they realize the money isn't worth it (and wasn't as good as it was in the past)

- drop in oil prices to well below the "keeping everything afloat" price.


So, Arab Spring 2.0 in the streets of Riyadh, Jeddah, or Demamm?

 

[ElKarlo]

2 things I am interested in:

1) In what direction will oil exporting middle eastern countries shift their economies? Dubai had the foresight to attract foreign investments to its country but even those are now drying up, and Saudi is kinda late with its NEOM mega-city

2) How will local populace handle not receiving free money from the government (to keep quiet and keep supporting royal families)? - I presume governments will go back in direction of using religion to control the populace (rolling back any human rights progress and giving more say to the clergy when it comes to state affairs)

The UAE is small enough that banking and what not will carry it. SA has far too much population and none of them have any real skills. Unless they import Ethiopians and use them to start, say a garment industry. Then SA has nothing. It should have been investing in other industries decades ago. They are trying but it's far too little too late imho

 

[MicroBrew]

The UAE is small enough that banking and what not will carry it. SA has far too much population and none of them have any real skills. Unless they import Ethiopians and use them to start, say a garment industry. Then SA has nothing. It should have been investing in other industries decades ago. They are trying but it's far too little too late imho

The problem with Saudis, and the wider GCC, is that all the locals want to be Chiefs and no one wants to be Indians. This is a problem when they are either not qualified to be Chiefs or there aren't enough Chief positions. All those GCC countries have government laws mandating companies hire a certan number of locals and all positions that can staffed by a local must be. So companies hire locals to sit around and collect fat paychecks while expats do the work. These nationalization schemes have been around atleast since the 80s and 90s, but they have met with tempered success.

One Saudi employer complained to a Western journalist (Max Rodenbeck) "I want to hire Saudis, but why would I hire someone who I know won't show up, won't care, and can't be fired."
https://en.wikipedia.org/wiki/Saudization

Saudis, Emiratis, Kuwaitis and Qataris are least receptive of taking service jobs or non mangerial / non-white collar jobs. Omanis and Bahrainis are more amneable to taking lower status jobs than the other 4 GCC nationals.

 

[Fluffernutter]

The problem with Saudis, and the wider GCC, is that all the locals want to be Chiefs and no one wants to be Indians. This is a problem when they are either not qualified to be Chiefs or there aren't enough Chief positions. All those GCC countries have government laws mandating companies hire a certan number of locals and all positions that can staffed by a local must be. So companies hire locals to sit around and collect fat paychecks while expats do the work. These nationalization schemes have been around atleast since the 80s and 90s, but they have met with tempered success.

One Saudi employer complained to a Western journalist (Max Rodenbeck) "I want to hire Saudis, but why would I hire someone who I know won't show up, won't care, and can't be fired."
https://en.wikipedia.org/wiki/Saudization

Saudis, Emiratis, Kuwaitis and Qataris are least receptive of taking service jobs or non mangerial / non-white collar jobs. Omanis and Bahrainis are more amneable to taking lower status jobs than the other 4 GCC nationals.

I remember a few years ago when the entire GCC was supposed to roll out the VAT on the exact same day.

Then, Qatar said "Whoa, we aren't ready. You all go first and we will catch up later."

I assumed it was just a ploy to get expats to leave the other GCC countries to work in Doha.

 

[Strategery]

No, usary (lending with interest) is haram. Taxation is just fine

That’s not what usary is, and usary is illegal in all of the civilized world.