SAUDI ARABIA - New Economic Path

"Oil-reliant Saudi Arabia envisions a new economic path" PBS NewsHour 5/9/2016

Excerpt

SUMMARY:  As global oil prices drop, Saudi Arabia is struggling against its reliance on oil export revenues.  Over the weekend, the first signs emerged of an ambitious new plan to diversify the Saudi economy while maintaining power in the Middle East.  Hari Sreenivasan talks to Sarah Ladislaw of the Center for Strategic and International Studies and Simon Henderson of The Washington Institute for more.

HARI SREENIVASAN (NewsHour):  Saudi Arabia’s bold plan to diversify its economy by moving away from oil, while facing a rise in Iran’s influence in the region.

We examine the kingdom’s challenges with Simon Henderson, director of the Gulf and Energy Policy Program at the Washington Institute, and Sarah Ladislaw, a senior fellow at the Center for Strategic and International Studies, where she is director of its energy and national security program.

Sarah, let me start with you.

Oil prices have gone up in the last few days, maybe because of the fires in Canada.  But how big of an impact is the change in specifically oil or energy leadership in Saudi Arabia?

SARAH LADISLAW, Center for Strategic & International Studies:  Well, it’s pretty significant, especially if you take the long view of leadership on energy policy within Saudi Arabia.

I think both of the response that they had the response that they had to the oil — the sort of overcapacity in oil supply in the oil market in 2014, which have led to the period we are now, where you have sort of lower oil prices, was really the turning point for the way people viewed the role that Saudi Arabia was going to play in the markets.

I think what happened over the weekend was a much-anticipated leadership shift that falls in line with that broader message of, you know, we’re going to play a new and different role in the oil market.  We have a new sort of economic diversification strategy.  And now we’re going to have both the institutional structure and sort of the leadership to lead that.

HARI SREENIVASAN:  Simon Henderson, how much of this has to do with a power grab or power struggle or shuffle inside Saudi Arabia, the deputy crown prince, Mohammed Bin Salman, putting his fingerprint on things?

SIMON HENDERSON, The Washington Institute:  Well, he’s certainly putting his fingerprint on things.

This is a young man, 30 years old.  And he has risen from nowhere, or mostly nowhere.  But he is the son of the king, King Salman, and so when King Salman came to the throne last year, since then, this young man has had a meteoric rise.

And he appears to have a vision, an economic vision.  He’s announced a grand plan for vision 2030, which is a much less of a role for oil.  And I suspect also he’s got a vision for himself, that he wants to be the next king of Saudi Arabia.