Transparency can be a double edged sword...

Arabian Business reports (here) that Prince Alwaleed's personal accounts and wealth are to be published in the weekly magazine this week. While this sort of transparency is welcome in a country more often characterised by opacity (especially with regards to the assets of the royal family), it could be a double edged sword:

a) With structural economic conditions in Saudi Arabia already plagued by a demographic problem that does not seem to have a solution (namely high youth unemployment with high rates of population growth), such disclosures of what will perceived to be obscene amounts of wealth will only highlight inequality and possibly breed resentment amongst locals. Alwaleed's wealth can only be at best a small proxy of the total wealth of the Royal family.

b) This will also raise questions about legitmacy. While I have not done substantial research on this issue (mainly because such research is impossible when no readily available data exists), the divide between actual "personal" wealth and the wealth derived due to the Al Saud's de facto private ownership of national resources is a fuzzy one. Personal wealth and national wealth are effectively interchangeable for the Royal family. This can only breed more resentment.

Fortunately for Alwaleed, it is being published in an English language weekly, largely inaccessible to the masses.

One event, contrasting headlines

The following three headlines appeared on the websites of the Financial Times, the New York Times and the Washington Post respectively on the same day (16th May 2008):

Saudis to boost oil output after US pressure (http://www.ft.com/cms/s/0/be0d6daa-2347-11dd-b214-000077b07658.html)

Bush Rebuffed on Oil Plea in Saudi Arabia (http://www.nytimes.com/2008/05/17/world/middleeast/17prexy.html?hp)

Saudis Reject Bush's Call to Increase Oil Output (http://www.washingtonpost.com/wp-dyn/content/article/2008/05/16/AR2008051601111.html?hpid=topnews)

So, was Bush applying aggressive 'pressure', was he making a helpless 'plea' or was he simply making a 'call'? Did the Saudis agree to increase oil output as the FT states, or did they reject it, as NYT and WP state?

Update:
The headlines have changed...The NY Times headline now reads " Saudis Rebuff Bush, Politely, on Pumping More Oil", and the Washington Post reads "Saudis to Increase Oil Output by Roughly 300,000 Barrels a Day". Interesting.

A tale of three cities...

The Financial Times reviews the architectural ambitions of three Guld cities: Abu Dhabi, Dubai and Doha. Part 1 on Abu Dhabi is here: http://www.ft.com/cms/s/0/cd4c088e-2046-11dd-80b4-000077b07658.html

Is it a case of 'build it and hope they will come'? Interestingly enough, the sand at the Emirates Palace hotel was imported (yes, even sand can be imported into the desert).

The rise of the Gulf

This week's The Economist has a cover story on "The rise of the Gulf" (click here), which presents a good overview of the issues associated with the economic boom.

GCC Chartbook

I'd highly recommend anyone interested to take a look at Deutsche Bank's "GCC Chartbook: A visual essay" - a really good guide to the economic state of the GCC.

Money can't buy happiness...

The old adage is true - money can't buy happiness (at least in the GCC). A survey by Maktoob research (here) suggests that Omanis are the happiest people in the Gulf. Interestingly enough, they are also the poorest in terms of GDP per capita. In fact, it turns out that the simple relationship between GDP Per capita and Happiness in the Gulf is relatively flat, and, if anything, slightly negative. The policy implication of this is not, however, that countries should aim to decrease their GDP! But it does highlight that consideration should be given to the environmental and social effects of rapid economic change. For your convenience I've produced a chart of the results below:

Sources:
Happiness: Maktoob Research
GDP data: CIA World factbook

Update: Some people are wondering about the more general relationship between income and happiness - here it is, from the world values survey (click on chart to enlarge):

A shift in Saudi oil policy?

A letter in today's FT points out what the author calls a new 'aggressive' shift in Saudi oil policy in limiting new oil production capacity from becoming operational, and are shifting market perception towards the idea of Saudi oil supply being limited. Interestingly, the author points out that the Saudis are encouraging the idea of new supplies from the 'oil sands':

"Conceding to oilsands suggests an inability to produce enough to prevent investment in this competing source, and perhaps also a recognition that having this expensive alternative as the price-setting mechanism in the long-term oil market is a positive development for prices."

To the extent that 'oil sands' would raise the international price of oil in a world with growing demand - this seems to be a valid point.

The Saudi's 'aggressive shift', however, only looks 'aggressive' when compared with the author's benchmark of 13m b/d capacity. Against a benchmark capacity of 10-10.3 m b/d, as some analysts estimate, the Saudis would look more dovish.

Update: King Abdullah's increasingly publicised comment "I keep no secret from you that when there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'" (quoted by Reuters) is stirring up quite a bit of reaction - here is a list of comments and reactions made by various analysts. Expect this "quiet bombshell" of a quote - supposedly indicating Saudi unwillingness to help ease oil prices and complicity in creating a recessionary environment in the west - to be the subject of political rhetoric in the US presidential race if (when?) the price of oil goes past the $125-130 mark. The hawks in Washington will find this easy to brandish about as 'evidence' if Saudi Arabia becomes an issue in the presidential campaign (which will probably be the case if incriminating evidence is found as part of ongoing probes into BAE's dodgy arms deals with the Saudis).

The comment, incidentally, was made by King Abdullah during a meeting with the interior minister, and has actually been misquoted. The link to the original story by the Saudi Press Agency (SPA) - which Reteurs cite as the source of the comment - is here. The acutal quote, from the original story, is as follows:

"I do not hide when new discoveries were found, I told them, let them remain in the ground for our children and grandchildren who need them."

There was no "with grace from God" in the original quote, it seems to have been penciled in by the Reuters journalist.