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Fri 18 Mar 2011 02:42 PM

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Saudi king announces $91bn in handouts

King Abdullah sets new minimum wage of $800 per month for all Saudi employees

Saudi king announces $91bn in handouts
Saudi Arabias King Abdullah. (Getty Images)

Saudi King Abdullah offered $91 billion in handouts on Friday and boosted his security and religious police forces, opting for a mixture of carrot and stick to stave off unrest rocking the Arab world.

The rare televised address to the nation was devoid of any concessions on political rights in a country where the public square is dominated by the Saudi royal family, political parties are banned and there is no elected parliament.

There was no word either on a much-anticipated reshuffle of a cabinet where the main posts are held by senior Saudi princes, some of whom have been in the job for over four decades.

"I was seriously disappointed to be honest. The least we expect is to establish a constitutional monarchy and freeing (political) prisoners," said Mohammed al-Qahtani, a prominent reformist. "Is this going to be enough for the people? I don't think so."

The ageing king appeared to thank Saudis for not having taken to the streets in large numbers as pro-democracy protests sweep the Middle East and the conservative Gulf Arab region.

"I am so proud of you. Words are not enough to describe you," he said, addressing Saudis. "You are the safety valve of this nation and you struck at that which is wrong with the truth and at treachery with loyalty ..."

Almost no Saudis in major cities answered a Facebook call for protests on March 11, in the face of a massive security presence around the country, but minority Shi'ites have staged a number of street marches in the Eastern Province, where most of Saudi Arabia's oil fields are located.

Some Saudis reacted by taking to the streets of central Riyadh

in cars, waving flags and beeping horns.

"We are happy because the king has spent money on us, that's

enough for us," said Mohammed al-Mutairi, a navy official in his

car on a main Riyadh thoroughfare.

John Sfakianakis, chief economist at Banque Saudi Fransi, put the total value of Friday's handouts at SR340bn ($91bn) but only a small amount would be spent soon.

After a brief speech, state television announced a series of decrees outlining a boost in welfare benefits, a minimum wage of SR3,000 ($800) for state employees, bonuses for public sector workers and students, and a drive to build new housing.

The numbers announced were large: SR250bn ($66.7bn) would be spent on 500,000 housing units and SR16bn ($4.3bn) on more medical facilities. This follows a $37bn package announced last month in an initial move to ease social tensions.

"Only about a quarter will be spent this year as housing projects take time, so Saudi Arabia can still post a budget surplus of around 20 billion riyals in 2011," Sfakianakis said.

The king ordered the creation of 60,000 security jobs within the interior ministry, promised more money for the religious police and, in a sign Saudi's ruling Sunni elite will tolerate no dissent, said the media must respect the Sunni clerics, who oversee the application of Sharia law in the Islamic state.

Abdullah said new branches would be built around the country of the religious body headed by Grand Sheikh Abdul-Aziz Al al-Sheikh that is responsible for issuing official religious opinions, or fatwas. The decree said the move was part of efforts to promote "moderation" and fight extremism.

He also announced a new commission for combatting corruption, in a further effort to assuage the concerns of ordinary Saudis about government in the country without conceding them a role in decision-making.

There was a strong focus on increasing benefits for the unemployed and measures to monitor job creation as well as increasing minimum wage," said Monica Malik, chief economist at EFG-Hermes. "Perhaps the focus at the moment is to get some regional calm and then focus on other areas."

King Abdullah last month announced an economic package worth an estimated $37 billion in an initial move to ease social tensions. Friday's measures are significantly more costly, with plans for a building spree set to cost $66.7bn alone.

Gulf Arab leaders are struggling to hold back an Internet-era generation of Arabs who appear less inclined to accept arguments appealing to religion and tradition to explain why ordinary citizens should be shut out of decision-making.

The decrees suggested the king was embracing increasingly conservative policies. Many comments on social media network Twitter were sceptical. "The bet for the future: the police and the preachers," wrote Mohammed Alahmari.

Riyadh sent 1,000 troops to Bahrain this week to help contain pro-democracy protests led by majority Shi'ite Muslims that the Sunni monarchy broke up by force on Wednesday.

Saudi Arabia fears the influence of non-Arab Shi'ite power Iran, which complained to the United Nations over the crackdown.

With more than $400bn in foreign reserves, Saudi Arabia is in a more comfortable position than many neighbours to alleviate social pressures such as high youth unemployment.

Some Saudis reacted positively to the decrees.

"King Abdullah's speech is perfect in timing and in content. His words are genuine," said Turad Elamri, a political analyst. "The decrees were what Saudis were waiting for."

"I'm a proud saudi citizen today," said Shereen Basfar in Jeddah. "My king's speech was genuine and from the heart."

But it was not clear if financial measures and boosting the security apparatus will silence critics within the kingdom.

Reformers had been hoping for a move towards democracy such as new elections to municipal councils, or even elections to the Shura Council -- an advisory body of appointees.

The kingdom has been slow to carry out reform promises in the conservative state since Abdullah came to power in 2005. Diplomats say the king faces opposition to political openings from some senior princes and clerics.

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Raad 9 years ago

Thanks King abdullah we all love you and wish the best for you

Chris J 9 years ago

This is a great initiative to keep people off the streets, but if you really wish to do this, your Highness, then it would be better to empower your people with jobs. Why is it that you have to have foreigners in many roles. Having worked with a company that employed over 500 foreign truck drivers (yes this is illegal but we just paid the fines as someone had to move the product), we could not recruit any Saudi's as required by your laws. My business had very few Saudis working in the factory. We would have hired all the Saudis that we could, but advertisements and word of mouth did not work. As a Saudi employer, we were prepared for 100% Saudisation and yet struggled with 23%. By giving money to your people Sir, you are simply perpetuating the cycle where your people do not want to work, and as they do not work, the risk to your great country unfortunately grows.

Business Man 9 years ago

Who cares if the locals work or not? As long as they dont start wanting any political responsibility.

Mac 9 years ago

Money is not problem solver but problem creator so by giving away money may keep the things under carpet for a while but in long run this is not going to help the country and people

ID 9 years ago

Saudi Arabia is a great country. The king has an added responsibility of being the custodian of the two holy mosques. This distinguishes Saudi Arabia from rest of the gulf countries. Saudi Arabia is as developed as any democratic country. There are equal opportunities for all saudis irrespective of their religious sect. Though saudi nationals demand some political & social reforms they should be patient and sensible enough not to coincide their needs with the MENA turmoil. Otherwise it will complicate situtations. Best approach is for MENA tensions to settle down and then move towards systematic reforms. I urge all saudis to be united behind the generous King and his royal family and support him in his decisions. Lastly, the type of government a country is having is immaterial. Be it monarchy or democracy. India, the largest democracy in the world also has the world's most corrupt government in power.
Domocracy is not the solution.

Roshii 9 years ago

I think this is true, in many respects the King is keeping his people happy but what about social problems and women’s rights over there ?