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Saudi Arabia and the GCC in a Post-Arab Awakening World
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Saudi Arabia and the GCC in a Post-Arab Awakening World


Saudi Arabia and the GCC was a brief presented by Nawaf Obaid at the Kennedy School of Government on April 9, 2012, to accompany a discussion of the Saudi perspective on the Arab Spring.

Saudi Arabia and the GCC was a brief presented by Nawaf Obaid at the Kennedy School of Government on April 9, 2012, to accompany a discussion of the Saudi perspective on the Arab Spring.

Published in News & Politics , Business , Travel
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  • 1. Saudi Arabia and the GCC in a Post-Arab Awakening World Kennedy School of Government Harvard University April 9th, 2012 Nawaf Obaid Senior Fellow King Faisal Center for Research & Islamic Studies
  • 2. Saudi Arabia Overview: 1•  Custodianship of Mecca and Medina, Islams two holiest sites.•  The leading country in the Arab world (Arabs comprise a vast majority of the inhabitants of the MENA region).•  One of the largest foreign aid programs in the world -- and by far the largest in the MENA region -- at $10 to $15 billion per year.•  Strong strategic partnerships with the US, China, the EU, and other countries.•  Sunni state in a world where Muslims are predominantly of this denomination. 1
  • 3. Saudi Arabia Overview: 2•  Largest petroleum producer and exporter.•  Largest oil reserves and most spare capacity.•  Preeminent financial and economic power in Middle East / North Africa (MENA) region.•  Nominal GDP grew 28% in 2011, according to data from the Central Department of Statistics.•  Largest stock market (50%+ of total regional market cap) and largest foreign reserves (~$650 billion) in MENA. 2
  • 4. Global Distribution of Sunni & Shia85%-90% Sunni 3
  • 5. Saudi Economic Overview•  With 2011 GDP of $577 billion, Saudi Arabia represents approximately 21% of total regional GDP and over 25% of the Arab world’s economic output.•  With nearly $650 billion in foreign reserves, the Kingdom is the third largest holder after China and Japan.•  Saudi Arabia continues to improve on international rankings of competitiveness.•  The Kingdom is the only MENA and Arab member state in the G20. Source: Saudi Arabian Monetary Agency (SAMA). 4
  • 6. Gross Domestic Product ($Billions)Source: IMF and internal estimates. 5
  • 7. Top Foreign Exchange Reserves ($Billion) Foreign Rank Country Reserves 1 China $3,181 2 Japan $1,295 3 Saudi Arabia $650 4 Norway $580 5 Russia $498 6 UAE $425 7 Singapore $404 8 Taiwan $385 9 Brazil $352 10 Switzerland $340 11 Kuwait $325 12 South Korea $311 13 India $308 14 Hong Kong $285 15 Germany $285Source: IMF and central banks of various countries. 6
  • 8. Massive Public Investments•  Saudi Arabia retains its place at the top of the active projects list, with 1,026 projects valued at more than $1 trillion underway in the Kingdom.•  $67 billion recently allocated for 500,000 new housing units.•  Massive public investments include housing, nationwide transport and utilities infrastructure, industrial bases, ports on both coasts, and renewable energy projects.•  In 2011, $6.72 billion was allocated to transportation and telecommunications projects, including 36,800km of new roads and four new airports.•  Infrastructure completed to accommodate more than six million pilgrims who visit Mecca and Medina every year. 7
  • 9. Saudi Energy Sector Overview•  Holds more than 20% of world’s proven oil reserves.•  Currently produces around 9.9 million barrels/day.•  The Kingdom has 90% of worlds spare production capacity at nearly 2.5 million barrels/day.•  The Kingdom is investing heavily in solar, nuclear and natural gas to meet domestic demand and to curtail rising domestic oil consumption.•  The Kingdom has created a 35,000 strong Facilities Security Force to protect oil fields and installations.•  The Kingdom is the most influential member and de facto leader of OPEC. Source: Saudi Aramco and internal research. 8
  • 10. Total Proven Oil Reserves (Billion Barrels - 2011)Source: EIA and internal estimates. 9
  • 11. Oil & Refined Products Exports (000 Barrels/Day – March, 2012) Saudi Arabia Russia UAE Kuwait Venezuela Nigeria Iraq Iran Canada Norway 0 1000 2000 3000 4000 5000 6000 7000 8000 9000Source: EIA and internal estimates. 10
  • 12. Poll: Saudi Arabian Respondents Confidence in Governmental Institutions*100 I trust it to a great extent I trust it to a medium extent90 I trust it to a limited extent I absolutely do not trust it80 I don’t know/ Declined to answer70 6060 54 54 485040 34 35 34 28 26 2830 25 23 22 2020 13 11 11 13 12 7 9 9 10 2 4 4 3 4 4 4 3 0 The government The judiciary The Shura Public Security The armed Civil society (the cabinet) (the courts) Council (the police) forces (the institutions army) associations, clubs, volunteer youth groups, etc.) Source: The Arab Reform Initiative. 11
  • 13. Poll: General Evaluation of the Government and its Institutions’ Performance 100 90 80 70 60 50 48 50 38 36 40 32 28 29 28 30 24 20 15 17 13 10 6 4 4 6 4 4 4 3 1 3 1 1 0 The Government The Shura Council The Judiciary The Police (Public security) Very Good Good Neither Good nor Bad Bad Very Bad I don’t know/ Declined to answerSource: The Arab Reform Initiative. 12
  • 14. Poll: Saudi Arabians Confidence that State is Undertaking Radical Reforms in its Institutions and Agencies 100 90 80 70 60 50 42 40 30 20 20 17 14 10 7 0 Definitely Yes Yes No Definitely Not I don’t know/ Declined to answer Source: The Arab Reform Initiative. 13
  • 15. The New Gulf Union•  The Arab Gulf Union Council (“Gulf Union”) will be a cooperative union to promote economic, political, and military coordination as well as mutual defense against external threats.•  Will include current Gulf Cooperation Council (GCC) members Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and the UAE, and potentially Jordan and Morocco.•  Modeled on the EU, the Union will have its “capital” in Riyadh with a decision-making body (modeled on the European Commission in Brussels) to replace the current GCC Secretariat.•  Transforming the GCC into a Union will not affect the sovereignty of any member country. 14
  • 16. The Proposed “Gulf Union” 15
  • 17. Timeline•  May 25, 1981 - The Gulf Cooperation Council is founded by Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.•  Nov 11, 1981 - A unified economic agreement is signed among the GCC states in Abu Dhabi.•  May 10, 2011 - GCC Summit in Riyadh - GCC is considering requests from Morocco and Jordan to join the organization.•  Sep 2011 - Ministers from Jordan and Morocco attend GCC meeting that puts forward a five-year economic plan for those countries.•  Dec 2011 - Riyadh Declaration announces: "Adoption of the initiative of the Custodian of the Two Holy Mosques to move beyond the stage of cooperation to the stage of union….”•  Feb 2012 – Expert’s panel met to discuss a Gulf Union.•  May 2012 – Bi-Annual heads of state meeting in Riyadh to adopt experts panel recommendation. 16
  • 18. GCC Population (Millions – 2010) 2.7 1.7 1.2 2.7 7.5 27.4 Saudi Arabia UAE Kuwait Oman Qatar BahrainSource: World Bank. 17
  • 19. GCC GDP ($Billions - 2011) 26 67 171 577 173 358 Saudi Arabia UAE Qatar Kuwait Oman BahrainSource: SAMA, IMF, and various central banks. 18
  • 20. GCC Oil Production (‘000/day – April 2012) 46 893 730 2,514 9,900 2,870 Saudi Arabia Kuwait UAE Oman Qatar BahrainSource: Joint Organizations Data Initiative (JODI). 19
  • 21. GCC Oil Exports (‘000/day – March 2012) 0 736 588 1,717 2,329 7,500 Saudi Arabia UAE Kuwait Oman Qatar BahrainSource: Joint Organizations Data Initiative (JODI). 20
  • 22. Stock Market Capitalization ($Bn – Mar 2012) 20.4 18.4 106.3 395.2 124.4 157.6 Saudi Arabia UAE Qatar Kuwait Bahrain OmanSource: Various regional stock exchanges. 21
  • 23. Foreign Reserves ($Billions – 2012) 20.3 13 9 325 650 425 Saudi Arabia UAE Kuwait Qatar Oman BahrainSource: IMF and central banks of various countries. 22
  • 24. GCC Military Spending ($Billions – 2010) Saudi Arabia UAE Oman Kuwait Qatar Bahrain 0 5 10 15 20 25 30 35 40 45 50Source: Adapted from the IISS, Military Balance, 2011; and the Jane’s Sentinel series. 23
  • 25. GCC Troop Totals (Armed Forces – ‘000) Saudi Arabia UAE Kuwait Oman Qatar Bahrain 0 50 100 150 200 250 300 350Source: Internal estimates and the IISS. 24
  • 26. Gulf Air Forces (High Quality Aircraft Only) Saudi Arabia UAE Kuwait Bahrain Oman Qatar 0 50 100 150 200 250 300 350Source: Adapted from the IISS, Military Balance, 2011; and the Jane’s Sentinel series. 25
  • 27. Saudi Arabia’s Key Role in Regional & International Stabilization•  As the world’s central banker of oil, Saudi Arabia has expanded production capacity to meet global demand and ensure the stability of energy markets.•  Main Arab state actively working to curtail the disruptive policies of Iran and Syria.•  The Kingdom is the regional leader of the stabilization camp versus those fomenting chaos in the MENA region.•  Saudi Arabia’s regional foreign aid program is geared to stabilizing fragile Arab and Muslim states. 26
  • 28. Saudi Foreign Assistance Program•  By far the largest and most comprehensive program in the region at $10 - $15 billion / year in direct foreign aid.•  An additional $4 - $5 billion in soft loans is made by the Saudi Development Fund (SDF) to specific projects in poor Muslim countries each year.•  The Kingdom is the largest single donor to Egypt, Lebanon, Jordan, Pakistan, Palestine, and other Muslim countries.•  It is among the top five foreign aid donors in the world (behind only the US, China, and Japan, and on par with leading EU countries). 27
  • 29. Nawaf ObaidNawaf Obaid is a Senior Fellow at the King Faisal Center for Islamic Studies & Research.Formerly he served as a strategic affairs adviser to HRH Prince Turki Al Faisal.He is the author of The Oil Kingdom at 100: Petroleum Policymaking in Saudi Arabia(Washington Institute for Near East Policy, 2000) and co-author, with AnthonyCordesman, of National Security in Saudi Arabia: Threats, Responses, and Challenges(Praeger/CSIS, 2005). He has been published extensively, including in The WashingtonPost, The New York Times, The Financial Times and Foreign Policy.From 1999 - 2000 he was a (Non-Resident) Research Fellow at the Washington Institutefor Near East Policy (WINEP) and from 2004 - 2007 he was a (Non-Resident) AdjunctFellow with the Arleigh A. Burke Chair in Strategy at the Center for Strategic &International Studies (CSIS) in Washington, DC.He holds a B.S.F.S. from Georgetown Universitys Walsh School of Foreign Service, anM.P.P from Harvard Universitys Kennedy School of Government, and has completeddoctoral courses at MITs Department of Political Science. He has received an M.Phil.(and will complete a D.Phil. in War Studies in 2012) from King’s College Department ofWar Studies. 28