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Saudi king offers billions in 'gifts' to citizens

Saudi Arabia's King Abdullah ordered billions poured into a development fund that helps Saudis buy homes, get married and start businesses, state TV reported.
Image: Saudis wave and cheer to welcome the convoy of the King Abdullah of Saudi Arabia as he passes them from the Airport and through the streets of Riyadh
Saudis wave and cheer to welcome the convoy of the King Abdullah of Saudi Arabia as he passes them from the airport and through the streets of Riyadh, Saudi Arabia, on Wednesday. King Abdullah returns from a three-month absence for back surgery in New York and convalescence in Morocco.Hassan Ammar / AP
/ Source: news services

Saudi Arabia's King Abdullah on Wednesday ordered billions poured into a development fund that helps Saudis buy homes, get married and start businesses, state TV reported, as the oil-rich nation warily watches the unrest spreading around the Middle East.

The step appeared aimed at shoring up popular support among the 18 million Saudis and fending off unrest that has spread to neighboring Bahrain, the first nation in the oil-rich Gulf to experience the region's anti-government upheaval. Much of the unrest is linked to poverty as well as demands for more political freedom.

Abdullah returned home to the world's biggest oil exporter after three months abroad for medical treatment on Wednesday, unveiling the package estimated to be worth $35 billion.


Showing just how deep the concern is, the king of the world's biggest oil exporter ordered the economic measures — estimated to be worth $35 billion — even before his plane touched down on Saudi soil Wednesday. Abdullah was returning after a three-month absence for medical treatment in the United States and recuperation in Morocco.

Saudi officials are "pumping in huge amounts of money into areas where it will have an obvious trickle-down by addressing issues like housing shortages," said John Sfakianakis, chief economist for the Riyadh, Saudi Arabia-based Banque Saudi Fransi.

The measures are "looking at the credit facilities provided for low-income groups, and trying to alleviate the rising cost of living pressures for the active Saudi labor force, which is mostly in the public sector," he said.

Development, employment assistance Topping the list of new measures, Abdullah ordered that 40 billion riyals ($10.7 billion) be pumped into the country's development fund, boosting a budget originally set at 47 billion riyals this fiscal year. The fund provides interest-free loans to Saudis who want to build homes, get married or start small businesses.

Other measures included a 15 percent cost of living adjustment for government workers, a year of unemployment assistance for youth and nearly doubling to 15 individuals the size of families that are eligible for state aid.

Also decreed was the writing off of debts of people who had borrowed from the development fund and later died, as well as a release of prisoners. Analysts said the prisoners to be released are likely debtors who were jailed after being unable to pay their dues.

Hundreds of men in white robes performed a traditional Bedouin sword dance on carpets laid out at Riyadh airport as they prepared to greet the monarch, thought to be 87.

Television reporters wore scarves in the colors of the Saudi flag in coverage termed "the joy of a nation" in celebration of the king, who was standing when he first descended from his plane before taking to a wheelchair.

Analysts do not expect unrest like in Egypt or Tunisia since the Gulf Arab state sits on more than $400 billion in net foreign assets, but they say Riyadh must address social pressures such as high youth unemployment and housing problems.

Political stability in the top OPEC producer is of global concern as Saudi Arabia controls more than a fifth of oil reserves, is a major holder of dollar assets and a vital regional U.S. ally.

The measures did not include political reforms in the absolute monarchy, such as elections to municipal councils demanded by liberals and opposition groups. The Gulf Arab state has no elected parliament or political parties and does not tolerate public dissent.

'We want rights, not gifts'"I think it's good but we need to see more reforms like municipal elections and better regulation. Financial benefits work only if officials can be held responsible," said a Saudi political analyst, who declined to be named.

Saudis were critical of the announcement on Twitter. "We want rights, not gifts," said Fahad Aldhafeeri in one typical tweet.

Hundreds of people have backed a Facebook campaign calling for a "day of rage" on March 11 to demand an elected ruler, greater freedom for women and release of political prisoners.

Mass protests — at least partly rooted in the rampant poverty and corruption in the Arab world — are rewriting the region's political landscape, toppling autocracies and testing the strength of the monarchy in Bahrain.

Saudi Arabia, which sits atop the world's largest proven reserves of crude oil, has been working to diversify its economic base and to create new jobs for a rapidly growing population of youths, many of whom are chaffing under the harsh religious rules that keep the sexes largely segregated.

Analysts say youth unemployment is a major concern in the kingdom, and militants have been quick to capitalize on that disenfranchisement to widen their recruitment pool.

Unemployment in the kingdom is at 10 percent. But unemployment among the 15 to 24 age group is almost 40 percent, and about two-thirds of the country's population is below the age of 29.

The population algorithm is similar in much of the Arab world, and the disparity in income distribution in many of the countries, along with the corruption and a sense among many of the youth that there are few opportunities, have helped stoke the protests in the region.

Protests on Saudi Arabia's doorstep
So far, the protests have had mostly political repercussions. But its spread to Libya means it has now affected an OPEC member while the unrest in Yemen and Bahrain puts the demonstrations on Saudi Arabia's doorstep.

Analysts are skeptical that the such demonstrations will find much footing in the Gulf Arab states, where coffers are flush with oil revenues. Abdullah's announcement reflected the typical way in which the Gulf states have dealt with unease: Throw money at the problem.

While that policy may be successful, the concerns of a contagion in those nations is stoking worries in the global oil markets. The U.S. benchmark crude futures contract on Wednesday climbed to fresh two-year highs amid the unrest in Libya, while its London-based counterpart, Brent, climbed by over $1 per barrel to almost $107.

Investment bank Goldman Sachs said in a research report that the recent violent protests in Bahrain spotlight how the Gulf states are also vulnerable, noting that the unrest in the island nation and in Libya "increase the risks of major supply disruptions."

The Facebook page in Saudi Arabia offered a glimpse of the broader concerns in the population. Among the injustices it listed, the communique called for an independent judiciary, ensuring that security services work for the benefit of the people, the release of political prisoners and the right of freedom of expression and gathering.

It was not possible to determine how much support the page has within the kingdom, but such complaints have repeatedly surfaced before.

Abdullah traveled to the United States in November for surgery to a herniated disk which caused blood accumulation around the spine. He has been recuperating in Morocco for the past four weeks.

During his absence, Abdullah's slightly younger half-brother Crown Prince Sultan was in charge, but doubts remain over his health as he was abroad for much of the past two years for illness.

Bahrain's King Hamad bin Isa was among the princes thronging the Tarmac when Abdullah arrived. King Hamad this week promised dialogue and released political prisoners in an effort to mollify protesters, mainly from the majority Shiite Muslim community, who are demanding democratic reform.

Saudi Arabia and Western countries see Bahrain's Sunni monarchy as a bulwark against the rising regional influence of non-Arab Shiite power Iran. The U.S. Fifth Fleet is stationed in the island state.