AhlulBayt News Agency - With the recent financial crisis that Riyadh has been trying to bury under the rug, spurred by its costly war on Yemen, it seems that money is burning a hole in Saudi’s political pocket.
A Reuters report has revealed that Saudi Arabia is seeking a bank loan of $6 billion to $8 billion in what would mark the first significant foreign borrowing by the regime for over a decade.
If true, this loan would highlight certain points pertaining to the Saudi economic crisis.
First, this economic strain, evident in the kingdom’s budget deficit which reached $100 billion in 2015, has an apparent role in Riyadh’s decision to negotiate with the Yemeni Ansarullah movement. Direct talks between Saudi Arabia and Ansarullah members began on Wednesday near the Saudi-Yemeni border.
“The talks focus on ways of ending the war and starting an immediate cease-fire,” Houthi spokesman Mohammed al-Shire’i said.
Observers say that what has driven the Saudis to the negotiating table is the deep impact of this war on its finances.
Yet, ending the war will not be enough to compensate for Saudi’s deficit. That’s why the US will most likely be the one to pay this loan, of course for the purpose of keeping oil prices low as a pressure tool against Iran.
However, in the face of these attempts Ali Shamkhani, the secretary of Iran's Supreme National Security Council, said recently that the “oil price war against Iran” will backfire on unnamed “certain states.”
"Certain states tried to curb Iran and the resistance. They created ISIL and helped reduce oil prices with oversupply. Just as the way the terrorist group of ISIL has turned against them, the oil price cut campaign will also backfire," FARS news agency quoted Shamkhani as saying at a national economic summit in Tehran.
Another notable point is that this report proves what Hezbollah Secretary General Sayyed Hasan Nasrallah said about the suspension of the Saudi military aid to Lebanon. While the Saudis claimed that Hezbollah’s actions were the reason behind the cut, Sayyed Nasrallah cited the Saudi economic crisis as the real motive.
Retracting the military aid can be seen as part of Riyadh’s reward and punishment strategy. Using its petrodollars to dictate its policies over other countries, the Saudi regime miscalculated when it announced its gift to Lebanon. It had been counting on the Lebanese government’s submissiveness to reap the political benefits of the dollars it sowed.
In the Saudi mental construct, money is exclusively equivalent to power. But logically, power gained easily would also be lost easily. Therefore, supporting Lebanon meant that the politically unstable country would have to side with Riyadh against any other party in any situation. In other words, it had expected to manipulate the Lebanese government with the grant as it would operate a puppet by pulling its strings.
However, when it failed in Beirut it succeeded elsewhere.
On the other hand, with a financial crisis at hand, Saudi’s main instrument in establishing foreign affairs: the petrodollar, would no longer be within reach. With this, the Saudi monarchy is deprived of the tool it has been using to adhere to countries in the region, thus leaving it politically bankrupt.
/129
source : Websites
Saturday
12 March 2016
11:20:02 AM
740498
With the recent financial crisis that Riyadh has been trying to bury under the rug, spurred by its costly war on Yemen, it seems that money is burning a hole in Saudi’s political pocket.