The writer recently returned to the United States after living in Saudi Arabia for several years. This first of three articles draws on contacts with the government and the royal family. The Saudi capital is cloaked in the twilight of the waning oil boom.
Behind the walls of the palatial homes of the nonroyal rich and in the apartments of the new middle class, there lurks a disquiet that is alien to anything the House of Saud has ever experienced.
To be sure, Saudi Arabia sits on the world's biggest known oil reserves, holds an estimated $100 billion in foreign reserves, and can expect profits from petrochemical complexes at Jubayl and Yanbu that are coming on line. But until the world oil glut ends and the economy can be diversified, the royal family is faced with placating the middle class.
There was little overt political opposition to the al-Sauds during the golden '70s. With the kingdom's average yearly income in excess of $51 billion (in 1980 dollars) between 1974 and 1980, the rulers found it easy to meet the economic needs of the population.
The politically astute King Faisal, the nation's guru of development strategy, perceived that changes in the political system would have to come when it became obvious how much money was descending on Saudi Arabia.
But, still smarting from a revolt by liberal princes demanding constitutional government in the early 1960s and from political opposition in the Saudi Air Force, which surfaced in 1969, Faisal decided not to broaden the base of political participation. Instead, the people would be given a big chunk of the oil revenues to placate them.
Religious leaders were kept happy with enforcement of religious laws and financial support of the religious establishment. Small farmers got seed, money for tractors, and subsidized grain for their livestock.
The Bedouins were left to live in their tents if they chose. They were relieved of having to remain totally nomadic by government-funded water trucks and feed for their herds of camels and sheep and a booming market for their produce.
Middle-class and upper-class families made phenomenal sums of money as agents for foreign companies doing business in Saudi Arabia. Most of this business was connected with the huge construction projects that funneled money from government development projects into the pockets of Saudis via foreign contractors.
Almost any Saudi business could make a profit with a business loan advanced by the government, laws protecting locally owned business from foreign competition, and no taxes to pay. One Western manager of a Saudi firm says that a company with any ambition could expect, during the boom, to realize profits of at least 30 percent. That has become the basic level of expectation for many.
Almost everyone expected the level of prosperity to continue based on the assumption that government spending would go on as it had in the past. That was before the oil glut began to squeeze the golden goose.
What few Saudis, inside or outside government, anticipated was the severity of the loss of income because of the oil glut or the downward pressures it would place on government spending.
The missing element in the political success story of the House of Saud is the question of how much the policies of development have changed society. Today, sons of nomadic camel herders are carrying briefcases, living in houses, and eating imported food purchased at the A & P. The covered shopping malls, whose windows are laden with luxury goods from around the world, give a new dimension to the phenomenon of ``rising expectations.''
The House of Saud clearly recognizes the shift in expectations and the political dangers in steep budget cuts. For even though oil revenues are falling, it is increasing government expenditures. Since budget year 1979-80, the government's public budget actually has risen from 185.8 billion riyals ($55 billion) to 260 billion riyals ($73 billion) while revenues have dropped from 261.5 billion riyals to 214.1 billion riyals. The budget has consequently gone from having a surplus of 25.8 billion riyals in 1979-80 to an estimated deficit of 45.9 billion riyals for 1984-85.
But the middle class is beginning to see reality. In contrast to the 1970s, students returning home from foreign schools in the 1980s are finding that, unlike their older brothers, they are not rocketing into high-level government jobs.
A young Saudi graduate from an American college, class of 1984, stood at a bus stop recently on Riyadh's Baatha Street clutching his school records, expressing relief that he had found a middle-level government job as an engineer. Businessmen are facing the hard reality of having to live with profits in the range of 10 percent, if they can stay in business at all.
The increasing level of grumbling in the middle class arouses fear but not action in the royal family. Following the uprising of religious fundamentalists in Mecca in November 1979, then-Crown Prince Fahd announced that some sort of consultative council would be formed to broaden the base of the political system. It was a conspicuous overture not to the religious fundamentalists but to the middle class.
The financial strains of the House of Saud's checkbook monarchy are growing, and that promise of participation in government has yet to be fulfilled.
Next: King Fahd's image at home