Dividend Cripples Saudi Aramco(oilprice.com)
oilprice.com
Dividend Cripples Saudi Aramco
https://oilprice.com/Energy/Energy-General/Huge-Dividend-Cripples-Worlds-Largest-Oil-Company.html
194 comments
From the leaked diplomatic cables.
“Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide,”
“More needs to be done since Saudi Arabia remains a critical financial support base for al-Qaeda, the Taliban, LeT, and other terrorist groups, including Hamas, which probably raise millions of dollars annually from Saudi sources.”
It's fertile ground for raising money to support terrorism not because a few bad apples support but because it enjoys broad support. Although data is somewhat scarce a survey in 2003 found that 53% supported Bin Laden for example.
https://icct.nl/app/uploads/2017/02/ICCT-Schmid-Muslim-Opini... Page 18
Which is probably why for example US made weapons have found their way via Saudi Arabia to al-Qaeda and ISIS linked groups.
https://www.aljazeera.com/news/2019/2/5/saudi-arabia-uae-gav...
Basically the bad apples are in fact somewhere between a majority and a near majority and they control the country.
“Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide,”
“More needs to be done since Saudi Arabia remains a critical financial support base for al-Qaeda, the Taliban, LeT, and other terrorist groups, including Hamas, which probably raise millions of dollars annually from Saudi sources.”
It's fertile ground for raising money to support terrorism not because a few bad apples support but because it enjoys broad support. Although data is somewhat scarce a survey in 2003 found that 53% supported Bin Laden for example.
https://icct.nl/app/uploads/2017/02/ICCT-Schmid-Muslim-Opini... Page 18
Which is probably why for example US made weapons have found their way via Saudi Arabia to al-Qaeda and ISIS linked groups.
https://www.aljazeera.com/news/2019/2/5/saudi-arabia-uae-gav...
Basically the bad apples are in fact somewhere between a majority and a near majority and they control the country.
> Which is probably why for example US made weapons have found their way via Saudi Arabia to al-Qaeda and ISIS linked groups.
To be fair. The US does a whole lot of that itself. The US even helped to transport al-Qaeda troupes from Lybia to Syria.
The DoD and CIA both had massive programs to push weapons into Syria, much of them ended up in Al Nusra and ISIS hands.
This is also not new, the US used extremist groups in the 90s under Clinton in the balkan and to support the Chechens.
To be fair. The US does a whole lot of that itself. The US even helped to transport al-Qaeda troupes from Lybia to Syria.
The DoD and CIA both had massive programs to push weapons into Syria, much of them ended up in Al Nusra and ISIS hands.
This is also not new, the US used extremist groups in the 90s under Clinton in the balkan and to support the Chechens.
I don't really get how there is on one hand only a few bad apples but also kidnapping a child is business as usual within their society?
Oh, I want to clarify something as that's a delicate thing. With "business as usual", I did not meant stuff like child trafficking was going on, far from it.
I meant to allude to the abusive work/life relationships that develop in a place like that, where people are isolated and there's no real supervision from competent authorities.
It was like living in a big replica of a Stanford prison experiment, I plan to write about it sometime as it showed me plenty of things about how humans could behave when certain circumstances are met.
I meant to allude to the abusive work/life relationships that develop in a place like that, where people are isolated and there's no real supervision from competent authorities.
It was like living in a big replica of a Stanford prison experiment, I plan to write about it sometime as it showed me plenty of things about how humans could behave when certain circumstances are met.
This is a good read on the topic (the author has been on a few podcasts also)
https://www.amazon.com/Kidnap-Inside-Business-Anja-Shortland...
TLDR: Its basically an efficient market in some countries, most people have kidnap insurance even though they dont know it (as their employer isnt allowed to diclose this insurance), the insurers know the criminals going rate, and can cut off their entire business if they break the "rules"
https://www.amazon.com/Kidnap-Inside-Business-Anja-Shortland...
TLDR: Its basically an efficient market in some countries, most people have kidnap insurance even though they dont know it (as their employer isnt allowed to diclose this insurance), the insurers know the criminals going rate, and can cut off their entire business if they break the "rules"
Saudi Arabia has 60,000 slaves [0]. Their society is about 150 years behind the developed world. Once the world moves past fossil fuels, I expect Saudi Arabia to degenerate back into poverty. Their leaders are too ignorant or selfish to invest the country's wealth for long-term prosperity.
Saudi Arabia could become a well-functioning oligarchy like Singapore. Unfortunately, the Saudi government has only offered investment and cheap office space and done little else.
They should invest in:
1. Education for Saudi people: scholarships to study abroad, funding to open branches of foreign universities in Saudi Arabia, funding for many new international primary & secondary schools.
2. Brain drain: Education & scholarships for foreigners, good immigration processes with paths to citizenship, and equal rights for immigrants.
3. Healthy environment for business: Effective & fair legal system, good work visa processes, and effective worker protections.
USA (my country) protects and supports the corrupt Saudi government. Therefore, USA bears some of the blame for the squandering of Saudi Arabia's natural resources. Many Saudi people, including the late Osama bin Laden, hate USA for this.
[0] https://www.globalslaveryindex.org/2018/data/country-data/sa...
Saudi Arabia could become a well-functioning oligarchy like Singapore. Unfortunately, the Saudi government has only offered investment and cheap office space and done little else.
They should invest in:
1. Education for Saudi people: scholarships to study abroad, funding to open branches of foreign universities in Saudi Arabia, funding for many new international primary & secondary schools.
2. Brain drain: Education & scholarships for foreigners, good immigration processes with paths to citizenship, and equal rights for immigrants.
3. Healthy environment for business: Effective & fair legal system, good work visa processes, and effective worker protections.
USA (my country) protects and supports the corrupt Saudi government. Therefore, USA bears some of the blame for the squandering of Saudi Arabia's natural resources. Many Saudi people, including the late Osama bin Laden, hate USA for this.
[0] https://www.globalslaveryindex.org/2018/data/country-data/sa...
You kind of left us hanging there...
How did you recover your daughter if the state doesn't care?
How did you recover your daughter if the state doesn't care?
Called my embassy (even though they told me not to, LOL).
When things started to blow out, they realized it was not worth the trouble and they sent us back home. I have to say that we were never injured or anything like that, but still, ... wtf.
Moral of the story: ALWAYS call your embassy first.
When things started to blow out, they realized it was not worth the trouble and they sent us back home. I have to say that we were never injured or anything like that, but still, ... wtf.
Moral of the story: ALWAYS call your embassy first.
Two Americans and an Australian carried it out? This seems like a wild newsworthy story.
Also: become Liam Neeson upset.
>If you are looking for ransom, I can tell you I don't have money. But what I do have are a very particular set of skills, skills I have acquired over a very long career, skills that make me a nightmare for people like you. If you let my daughter go now, that'll be the end of it. I will not look for you.
> The kidnapping was carried away by an Australian professor and a couple American guys working there,
Did charges ever get filed against the kidnappers? Like back in the US?
And was the professor reported to their university?
Did charges ever get filed against the kidnappers? Like back in the US?
And was the professor reported to their university?
Looks like a relevant law might be "18 U.S.C. §1203":
* https://www.law.cornell.edu/uscode/text/18/1203
* https://www.justice.gov/archives/jm/criminal-resource-manual...
This seems to fit American-citizens holding your daughter, with threat to continue doing so, in order to compel you to do something (like sign a contract).
* https://www.law.cornell.edu/uscode/text/18/1203
* https://www.justice.gov/archives/jm/criminal-resource-manual...
This seems to fit American-citizens holding your daughter, with threat to continue doing so, in order to compel you to do something (like sign a contract).
[deleted]
KAUST was pushed hard as an option while I was at MIT, very curious as to how well the instruments were maintained for research, since it seemed like they bought anything asked for (if you have any stories :)).
Oh, I can write a book about all of the things I saw there!
Send me an email (check profile) and we can chat for sure.
Send me an email (check profile) and we can chat for sure.
Please do a podcast series. A great example of a successful one is about the fiasco of building a Berlin airport. If you don’t want to produce yourself maybe reach out to a podcast studio. I’d looove to listen to your stories :)
That would be very nice.
I'm actually collecting stories about academic abuse from all around the world. The plan is to launch a website with all stories together to get more exposure.
This sort of abuse (not to the degree of what I suffered, but) is quite common within academy, this needs to stop, and the people who perform it/enable it need to be ousted from their positions.
I'm actually collecting stories about academic abuse from all around the world. The plan is to launch a website with all stories together to get more exposure.
This sort of abuse (not to the degree of what I suffered, but) is quite common within academy, this needs to stop, and the people who perform it/enable it need to be ousted from their positions.
Can you share a reference to the Berlin airport story? I have read about it, but am interested in listening to some accounts as well :) My heart still lives in Germany…
That is absolutely terrifying glad you are both safe and were able to leave.
are you or your daughter US Citizens? What did the Department of State say about that?
American Dad has 2 episodes dedicated to showing that Saudi Arabia is the worst place in the world. Your story just reinforces that idea.
iratewizard(2)
Straight from the most trusted source of news & opinion in the investment world – oilprice.com.
Aramco's dividend basically entirely goes to the Saudi government, which owns 98.5% of the company. It is still comfortably the largest oil company in the world, and is investing hundreds of billions in operations over the next few years. Here's a much more objective status report on the company – https://www.bloomberg.com/news/articles/2021-07-07/saudi-ara....
Aramco's dividend basically entirely goes to the Saudi government, which owns 98.5% of the company. It is still comfortably the largest oil company in the world, and is investing hundreds of billions in operations over the next few years. Here's a much more objective status report on the company – https://www.bloomberg.com/news/articles/2021-07-07/saudi-ara....
Somehow the writing style was bothering me and I couldn't quite put my finger on it. It was reading like a long-form Reddit rant more so than an actual article.
Bloomberg one seems more based in facts on the ground.
-------
That being said: the opinionated writing style of "oilprice.com" is still helpful at possibly explaining why these assets are being sold. But facts matter and should come first: the news event (Armaco deciding to sell more assets) should be presented objectively at some point before introducing an opinion about it.
Bloomberg one seems more based in facts on the ground.
-------
That being said: the opinionated writing style of "oilprice.com" is still helpful at possibly explaining why these assets are being sold. But facts matter and should come first: the news event (Armaco deciding to sell more assets) should be presented objectively at some point before introducing an opinion about it.
> This took the total capital spending down from around US$40 billion to around US$25 billion. Further reports stated that even this US$25 billion figure was reduced by another US$5 billion, taking the total capital spending in the year from US$25 billion to US$20 billion. However, every second of every day of every month of every year - whatever Aramco does, whatever it sells, whatever it cancels, whatever it cuts back, however many people it sacks – the meter keeps on running, adding US$205 million every day
Notice the convenient change of units between billions and millions there which makes this seem much worse than it actually is. I also didn't realize Oilprice's bias, but seeing that change of units certainly warned me.
Notice the convenient change of units between billions and millions there which makes this seem much worse than it actually is. I also didn't realize Oilprice's bias, but seeing that change of units certainly warned me.
Well it goes from billion/year to million/day, which is actually closer to billion/year than billion/day. It's also a more natural way of writing it than $0.205 billion. I doubt they indented people to miss the change in units and assume aramco was losing $205 billion per day.
The dividend "millions" are per day. The capital spending "billions" are per year. We'd already repeatedly been told that the dividends were 75 billion per year.
What would you have preferred, US$0.205 billion every day?
Yeah, and they were implying Saudi Aramco was in trouble because they only place they could place debt was in the Islamic Finance market. (I felt this implied they get terrible price for their debt there, or there's very limited liquidity) but then a couple sentences later, it's say their debt offerings were over-subscribed by a factor of 10. So why is that so bad?
Good catch too on your point that Saudi themselves are receiving the bulk of the dividends....
I did look at aramco share price the other day and it's been very flat after recovering from last march. Strange considering in the meantime oil has double/tripled in price and equity markets have roofed.
Good catch too on your point that Saudi themselves are receiving the bulk of the dividends....
I did look at aramco share price the other day and it's been very flat after recovering from last march. Strange considering in the meantime oil has double/tripled in price and equity markets have roofed.
What is the separation between the Saudi government and MbS. Is it essentially the same and is it the case of MbS monetizing Aramco at the expense of the investors?
> What is the separation between the Saudi government and MbS
Nothing. The KSA is an absolute monarchy. L’etat, c’est il.
Nothing. The KSA is an absolute monarchy. L’etat, c’est il.
I’m on shaky ground correcting French, but I think that should be “c’est lui.” Moi, toi, lui,…
You are correct. To expand a bit:
French pronouns have four possible cases: as the subject, direct object, or indirect object of a verb, or not an argument of a verb at all. The declensions are:
je/me/me/moi
nous (colloquial: “on”)/nous/nous/nous
tu/te/te/toi
vous/vous/vous/vous
il/le/lui/lui
elle/la/lui/elle
ils/les/leur/eux
elles/les/leur/elles
In this example, the pronoun is not the argument of a verb, so the fourth case is used (moi, lui, etc.)
French pronouns have four possible cases: as the subject, direct object, or indirect object of a verb, or not an argument of a verb at all. The declensions are:
je/me/me/moi
nous (colloquial: “on”)/nous/nous/nous
tu/te/te/toi
vous/vous/vous/vous
il/le/lui/lui
elle/la/lui/elle
ils/les/leur/eux
elles/les/leur/elles
In this example, the pronoun is not the argument of a verb, so the fourth case is used (moi, lui, etc.)
So it really is just a way for them to suck out the cash flow of Aramco and leave nothing but a husk for external investors?
Yes. Absent further evidence, this article is crap. It fails to incorporate the family-state-corporate nexus unique to Aramco.
Doesn't the portion of the dividend paid to themselves represent the amount they intend to spend on public services? I'm not sure it's correct to regard it as meaningless.
Sure, they could reduce government spending, or they could reduce the dividend, and reduce spending more, but in any case, the size of the dividend relative to cash flow or profits still says something about sustainability of the present course.
The KSA, after all, can't issue debt in its own currency, can it?
Sure, they could reduce government spending, or they could reduce the dividend, and reduce spending more, but in any case, the size of the dividend relative to cash flow or profits still says something about sustainability of the present course.
The KSA, after all, can't issue debt in its own currency, can it?
I think the point is simply if the dividend is paid to themselves then short of corruption or mismanagement they can always pump back that money into the company when needed.
Say you have a household budget, and you have separate "accounts" for different purposes.
If you pay money "to yourself" for groceries, sure, you can always take it back, but you still have to feed your family.
Writing down that your budget for groceries is $0 (or less than whatever is needed) doesn't give you additional freedom.
If you pay money "to yourself" for groceries, sure, you can always take it back, but you still have to feed your family.
Writing down that your budget for groceries is $0 (or less than whatever is needed) doesn't give you additional freedom.
[deleted]
This is the key comment. The article hardly stresses this point. The company is a vital contributor to Saudi finances.
And Bloomberg is heavily biased towards the financial industry…anything that will lead to fat fees for the banks is good. Like an huge IPO.
Always best to have both sides presented…thanks for the link.
Always best to have both sides presented…thanks for the link.
Surely the stakeholders that are paid this dividend remain overwhelmingly Saudi (government) interests. So they made up this dividend to loot the place. I'm sure they had other ways of looting prior. What's the big difference?
From the article at least - the pre-agreed dividend (a thing I had no idea existed) is so onerous on the company that it can't keep up with payments. So the company is being forced to sell off long term investments and assets for a quick buck just to cover the dividend it's agreed to pay.
It's like saying: "Hey, I've got an ice cream stand that I make 50$ of a week and has capital assets worth 200$. I wonder if I contractually agreed to donate 75$ worth of value every week - would that work well for me?"
It's like saying: "Hey, I've got an ice cream stand that I make 50$ of a week and has capital assets worth 200$. I wonder if I contractually agreed to donate 75$ worth of value every week - would that work well for me?"
[deleted]
That’s just rehashing what’s in the article. GP is not asking why the dividend is bad for the company.
I wonder if there is something else going on, as this sounds like an awfully good way to cover up a sinking ship, yet still take money out for the stakeholders.
In 5 years time when the company is bankrupt they can just come out and say the IPO was a bad idea, while the main stakeholders are sitting nicely in their gold plated Lamborghini's [0].
[0] I made that up, but turns out it is actually a thing: https://m.economictimes.com/nation-world/strange-things-saud...
In 5 years time when the company is bankrupt they can just come out and say the IPO was a bad idea, while the main stakeholders are sitting nicely in their gold plated Lamborghini's [0].
[0] I made that up, but turns out it is actually a thing: https://m.economictimes.com/nation-world/strange-things-saud...
I think generally the looting is done at the top and then drip fed down: a Prince loots 100m and keeps 20 and passed 80 down to lessor and lessor people. That maintains their loyalty to that Prince. In roughly the same people get a dividend direct from SA, they don't have to keep coming and asking their particular prince or supporting his other efforts etc.
This seems like it cuts out a lot of the middle men and just leaves MBS and the recipient...
Also, as in understand it, a lot of people were basically forced to buy shares whether they wanted to or not (or lose favour). A big dividend semi reverses that. It's like forcing someone to pay a big fine then, majestically giving half back to show you're a beneficent and merciful king.
This seems like it cuts out a lot of the middle men and just leaves MBS and the recipient...
Also, as in understand it, a lot of people were basically forced to buy shares whether they wanted to or not (or lose favour). A big dividend semi reverses that. It's like forcing someone to pay a big fine then, majestically giving half back to show you're a beneficent and merciful king.
I found the dividend situation confusing too. On Google finance the dividend yield is 4%. Afaik, only 10% of the stock is not being held by the saudi government. Assuming 2T market cap, the dividend obligation is 8B$ to shareholders. But the article indicates an order of magnitude higher dividend obligation. Are there dividend obligations above and beyond what's visible in Google finance?
I believe a greater dividend has been promised than what is current, and the large figures are including the stock held by the government.
People are like "oh, they're just paying it to themselves".
Well, sure, they don't have to write down the dividend they pay to themselves, but that doesn't change the spending that presumably is allocated from the dividend.
One motivation for formalizing things that you don't have to is that then you have better excuses for not doing certain things.
While they made up the dividend, it wouldn't make "looting the place" more sustainable to get rid of it.
Formalizing the "looting" does highlight its unsustainability and seems like a reasonable reason to write an article to me.
Well, sure, they don't have to write down the dividend they pay to themselves, but that doesn't change the spending that presumably is allocated from the dividend.
One motivation for formalizing things that you don't have to is that then you have better excuses for not doing certain things.
While they made up the dividend, it wouldn't make "looting the place" more sustainable to get rid of it.
Formalizing the "looting" does highlight its unsustainability and seems like a reasonable reason to write an article to me.
Seems like the critical missing piece of information is Aramco's annual profits.
"Saudi Aramco profit of $49 billion in 2020 is down from $88.2 billion in 2019 and $111.1 billion in 2018."
https://apnews.com/article/dubai-saudi-arabia-united-arab-em...
...so if 2020 was an off year due to the pandemic, then the $75 billion/yr dividend probably isn't going to bankrupt them in the short term.
"Saudi Aramco profit of $49 billion in 2020 is down from $88.2 billion in 2019 and $111.1 billion in 2018."
https://apnews.com/article/dubai-saudi-arabia-united-arab-em...
...so if 2020 was an off year due to the pandemic, then the $75 billion/yr dividend probably isn't going to bankrupt them in the short term.
With electric cars an inevitability, and natural gas outperforming oil; seems MBS is squeezing every cent out of Aramco while it is still worth something.
I'm curious if the house of Saud could survive Aramco collapsing though. For everything terrible you feel about them - they are constantly shoveling a whole boatload of value into a decent chunk of their population. If Aramco falls I think Saudi Arabia might find a lot of people that were happy to look the other way while they were being paid suddenly asking a lot of questions about national policies.
The average Saudi does not live as comfortable a life compared to the 100k or so members of the Al Saud family and their cronies.
You're right about the latter part though. An Aramco failure is going to be a significant dent on MBS' domestic perception.
You're right about the latter part though. An Aramco failure is going to be a significant dent on MBS' domestic perception.
> The average Saudi does not live as comfortable a life compared to the 100k or so members of the Al Saud family and their cronies.
Sure, but even the average Saudi has a substantially higher QOL due to Aramco than their peers in most other nations. Nowhere else in the region has a comparable HDI.
Sure, but even the average Saudi has a substantially higher QOL due to Aramco than their peers in most other nations. Nowhere else in the region has a comparable HDI.
> Sure, but even the average Saudi has a substantially higher QOL due to Aramco than their peers in most other nations. Nowhere else in the region has a comparable HDI.
Looking at the list of countries in the Middle East, it looks like Oman, Bahrain, Cyprus, Kuwait, UAE, Israel and Qatar have a similar or greater HDI than the KSA. (Though combined, they have about a similar population as KSA alone.)
Looking at the list of countries in the Middle East, it looks like Oman, Bahrain, Cyprus, Kuwait, UAE, Israel and Qatar have a similar or greater HDI than the KSA. (Though combined, they have about a similar population as KSA alone.)
Considering Cyprus has a gigantic DMZ down the middle of it (in several places) I'm quite surprised it made that list.
If you're worried as the original poster was about the impact of inevitable global decarbonization on national economies, I have bad news for you about Oman, Bahrain, Kuwait, the UAE, and Qatar.
The UAE and Qatar seem fine, although their sovereign fund will be in stagnation and will be under pressure to maintain their returns.
Bahrain, Oman and Kuwait are whole different problems altogether. Bahrain is Sunni-ruled with Shia majority population, so once KSA weakens, expect to see some revolts soon. On the other hand, the UAE will step up its game and intervene in Bahrain should such a situation arise (ironically, Bahrain was going to join the UAE back in 1971, but backed away because they were richer and wanted to be the capital).
Kuwait and Oman are already falling to xenophobic pressure. They have begun expelling expats from jobs and looking for inward hiring, but this has had a net negative effect on their economies.
Bahrain, Oman and Kuwait are whole different problems altogether. Bahrain is Sunni-ruled with Shia majority population, so once KSA weakens, expect to see some revolts soon. On the other hand, the UAE will step up its game and intervene in Bahrain should such a situation arise (ironically, Bahrain was going to join the UAE back in 1971, but backed away because they were richer and wanted to be the capital).
Kuwait and Oman are already falling to xenophobic pressure. They have begun expelling expats from jobs and looking for inward hiring, but this has had a net negative effect on their economies.
You're comparing against a pretty gilded group there.
Perusing wiki, it looks like Saudi Arabia is a G20 economy with a population of 34 million people, yet only 3.1 million native Saudis are members of the labor force, the private sector labor force is 90% non-Saudi, and still only 12% of Saudis live below the local poverty line.
If I'm reading that right, 88% being above the threshold for poverty with only 9% workforce participation for native Saudis seems pretty noteworthy.
Perusing wiki, it looks like Saudi Arabia is a G20 economy with a population of 34 million people, yet only 3.1 million native Saudis are members of the labor force, the private sector labor force is 90% non-Saudi, and still only 12% of Saudis live below the local poverty line.
If I'm reading that right, 88% being above the threshold for poverty with only 9% workforce participation for native Saudis seems pretty noteworthy.
Last time I read anything about that from a heretic economist it sounded like the oil industry has priced out most other core businesses.
Difficulty their population has also grown 5X in 50 years. Which is not good considering they have little else going on economic other than oil.
Difficulty their population has also grown 5X in 50 years. Which is not good considering they have little else going on economic other than oil.
Yea, I agree. I'd clarify that "A decent chunk" above is meant to specifically refer to the politically powerful part of Saudi Arabia. Basically, the keys to power - so very few women and none of the poor folk.
Actually, I don't know how true this is. Saudi Arabia has an enormous welfare state - both officially with many subsidies, and and hoc "grants" that you can get off your local royal family representative for one off emergency expenses etc.
In many ways this is what is bankrupting the country, much more than the rampant corruption (which is still enormous, but pales into comparison with public spending).
The population of Saudi is absolutely exploding - nearly doubling every 20 years. It has a very young population with poor job opportunities, in a very energy intensive place to house people (AC demands and lack of fresh water).
This had led to completely unsustainable public spending. The revenue from oil is enormous but it's not growing in line with population and welfare spending. And the Saudi royal family know the people will turn quickly against them if the welfare tap is turned off.
They are in a really tricky position. While the royal family is outrageously wealthy, the country itself over the past decade is getting pretty broke. And with such population growth every year it becomes harder and harder to keep up.
I imagine this is why MBS is trying to push economic reform so much, almost at all costs, because he knows the game is up. But it is going to be very difficult to turn this quite literal oil tanker around.
In many ways this is what is bankrupting the country, much more than the rampant corruption (which is still enormous, but pales into comparison with public spending).
The population of Saudi is absolutely exploding - nearly doubling every 20 years. It has a very young population with poor job opportunities, in a very energy intensive place to house people (AC demands and lack of fresh water).
This had led to completely unsustainable public spending. The revenue from oil is enormous but it's not growing in line with population and welfare spending. And the Saudi royal family know the people will turn quickly against them if the welfare tap is turned off.
They are in a really tricky position. While the royal family is outrageously wealthy, the country itself over the past decade is getting pretty broke. And with such population growth every year it becomes harder and harder to keep up.
I imagine this is why MBS is trying to push economic reform so much, almost at all costs, because he knows the game is up. But it is going to be very difficult to turn this quite literal oil tanker around.
You are correct. I always thought that the Saudis were practicing a form of UBI, just without the lable.
They only added a 5% VAT in 2018 and just this year bumped it to 15% on a "temporary" basis.
Both fuel and electricity costs have increased and new payments exist for government services.
Saudi is trying to regear the economy and social safety nets away from oil dependency while they still have the income from oil dependency and that is the mission statement of Saudi Aramco today. Looking at actions of the company or the country any other way will cause distortions.
They only added a 5% VAT in 2018 and just this year bumped it to 15% on a "temporary" basis.
Both fuel and electricity costs have increased and new payments exist for government services.
Saudi is trying to regear the economy and social safety nets away from oil dependency while they still have the income from oil dependency and that is the mission statement of Saudi Aramco today. Looking at actions of the company or the country any other way will cause distortions.
It's not Saudi Arabia, but the quote from another Arab state,
> My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel
> My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel
I think this about sums it up. Seems SA has spent its money instead of investing it wisely, and the next generations will be worse off because of it. Norway serves as a counter example of what they could have done instead, but maybe the Norwegians had the luxury of being a democracy that didn't have a need to bribe the citizens to stave off revolution. Being a dictatorship is always a hard place to be.
It would definitely be challenging. This situation is not unique to Saudi and has actually been defined in political theory as the situation of being a “Rentier state”:
https://en.m.wikipedia.org/wiki/Rentier_state
https://en.m.wikipedia.org/wiki/Rentier_state
Electric cars or not, the Saudi wells are likely running lower than advertised. They have been pumping sea water into well to force oil out of others for decades. This is what you do to extend the life of an oilfield. SA has a long history of keeping exact reserve sizes muddled to appear more powerful. Also Russian gas has only accelerated in recent years, their prime competitor.
> Also Russian gas has only accelerated in recent years, their prime competitor.
Russia also achieved its major goal in Syria - maintaining Assad [Shia] regime (part of the Shia belt from Lebanon to Iran) thus preventing [Sunni] SA from building pipeline toward Europe which would have been a significant hit for Russian interests. Without such pipeline - if i remember correctly SA was recently trying to bring some stuff to Poland by sea at cheap prices, yet with no big success so far while Russia is nearing the completion of the Baltic sea floor pipeline directly to Germany. And at the same time US - SA's large market - is running a large fracking of its own and even explores the options of exporting that natural gas, and thus SA seems to start feeling a bit of squeeze, at least when it comes to natural gas. With "greenification" and electrification of economy the natural gas is the near- and mid-term future of our civilization when it comes to fossil fuels, and SA hasn't yet been as successful as they would like in securing the desired top spot in that future.
Russia also achieved its major goal in Syria - maintaining Assad [Shia] regime (part of the Shia belt from Lebanon to Iran) thus preventing [Sunni] SA from building pipeline toward Europe which would have been a significant hit for Russian interests. Without such pipeline - if i remember correctly SA was recently trying to bring some stuff to Poland by sea at cheap prices, yet with no big success so far while Russia is nearing the completion of the Baltic sea floor pipeline directly to Germany. And at the same time US - SA's large market - is running a large fracking of its own and even explores the options of exporting that natural gas, and thus SA seems to start feeling a bit of squeeze, at least when it comes to natural gas. With "greenification" and electrification of economy the natural gas is the near- and mid-term future of our civilization when it comes to fossil fuels, and SA hasn't yet been as successful as they would like in securing the desired top spot in that future.
How is natural gas a competitor to oil? I know of nothing that can be powered by both. Natural gas is way more competitive in electric generation, but oil is not commonly used for that if there are other alternatives. These are two very different markets.
The US and fracking have been the major competitor to the Saudis lately.
The US and fracking have been the major competitor to the Saudis lately.
>> How is natural gas a competitor to oil?
Domestic heating?
Domestic heating?
Are there domestic heating systems that can work on both oil and gas?
I've never encountered that, and it's pretty important in Canada where I live.
I've only ever seen gas or electric here.
I've never encountered that, and it's pretty important in Canada where I live.
I've only ever seen gas or electric here.
Not using same devices, but the same application.
Oil-fired boiler was pretty common heating in UK when I was a kid. Not sure if it is still.
Oil-fired boiler was pretty common heating in UK when I was a kid. Not sure if it is still.
It’s but a matter of positioning, IIRC BP has this slogan “beyond petroleum” and my guess is that MBS is not the most sensitive human, but rather one of those “impose your will at any cost” golden children who think they actually earned their status, etc, so I’m gonna chalk this up to incompetence meets ostentatious for 100 points, Alex
> children who think they actually earned their status
His objective achievements in that area are more than most people could claim. You think it's easy winning a power struggle?
His objective achievements in that area are more than most people could claim. You think it's easy winning a power struggle?
I don't think it's easy winning a power struggle. But I do think winning a power struggle counter-selects for many traits that make it very hard to create a well functioning economy.
In 'Designing a fighter' to win a power struggle, I'd take: ruthlessness, sudden betrayal, and a willingness to use violence.
Yet economies and cultures that tend to succeed value investment, rule of law, cooperation, learning, property rights, and finding win-win arrangement.
The original article was about how a forced dividend is cutting necessary investment, which does not seem wise, but very much seems like the act of a powerful monarch who doesn't understand what underlies long-term success.
In 'Designing a fighter' to win a power struggle, I'd take: ruthlessness, sudden betrayal, and a willingness to use violence.
Yet economies and cultures that tend to succeed value investment, rule of law, cooperation, learning, property rights, and finding win-win arrangement.
The original article was about how a forced dividend is cutting necessary investment, which does not seem wise, but very much seems like the act of a powerful monarch who doesn't understand what underlies long-term success.
> Saudi Arabia now has no alternative but to continue to sell off assets (the equivalent of selling the family silver, and this can only be done once), sell more bonds (taking on more debt and the interest on this form of Saudi debt is going up with every such sale), and cancel projects (which are crucial to the long-term success of Aramco)
The article starts off with an especially history-ignorant premise. Of course Saudi Arabia has an alternative. The Middle East has a long history of nationalization as it pertains to oil resources.
This is the House of Saud we're talking about. MBS is unwilling to nationalize the small private ownership of Aramco? Ha I say. I say, ha ha. Double ha. Ha ha ha ha. It's almost guaranteed that at some point in the future Saudi Arabia will re-nationalize Aramco in one manner or another.
You see, Saudi Arabia is in a demographic death spiral. Not due to de-population as in some countries, rather, the exact opposite problem. Their population is exploding higher, without an economy to match. The single most important number as it pertains to Saudi Arabia, is barrels of oil produced per capita (however you want to formulate that, whether daily or annually). That overwhelmingly determines the standard of living of the people of Saudi Arabia, and ultimately dictates the stability of the House of Saud. So how is that number looking? In 1980 Saudi oil production was up near 10m barrels per day, with a population of 9.7 million - so almost one person per barrel of oil per day. A remarkable ratio for sure. Circa year 2000 oil production was 9.x million barrels per day, with a population then up to 20.7 million, so by that point it's down to less than half a barrel of oil per day per person; a halving in 20 years. During the pandemic time frame (ie another 20 years later)? 8 to 9 million barrels per day, and now their population is up to 35 million, so now it's down to ~1/4 of a barrel of oil produced per day per person, another halving in roughly 20 years. (Even if you pop that up to 10m barrels per day again in the next few years, their population is heading to 40m regardless, so 1/4 one way or another.)
Implosion. It's very obvious what's going to happen to Saudi Arabia.
They're adding 500k-700k people per year, with no economy to support any of those people. For the average citizen of Saudi Arabia, every person added to the population tally reduces the standard of living of the rest. At this point every ten years they're adding a population equal to 2/3 of where they were at in 1980, with zero additional oil production to match.
Chaos and violent instability is coming for Saudi Arabia, you can bet Aramco is eventually getting nationalized again, whatever the reputation consequences.
The article starts off with an especially history-ignorant premise. Of course Saudi Arabia has an alternative. The Middle East has a long history of nationalization as it pertains to oil resources.
This is the House of Saud we're talking about. MBS is unwilling to nationalize the small private ownership of Aramco? Ha I say. I say, ha ha. Double ha. Ha ha ha ha. It's almost guaranteed that at some point in the future Saudi Arabia will re-nationalize Aramco in one manner or another.
You see, Saudi Arabia is in a demographic death spiral. Not due to de-population as in some countries, rather, the exact opposite problem. Their population is exploding higher, without an economy to match. The single most important number as it pertains to Saudi Arabia, is barrels of oil produced per capita (however you want to formulate that, whether daily or annually). That overwhelmingly determines the standard of living of the people of Saudi Arabia, and ultimately dictates the stability of the House of Saud. So how is that number looking? In 1980 Saudi oil production was up near 10m barrels per day, with a population of 9.7 million - so almost one person per barrel of oil per day. A remarkable ratio for sure. Circa year 2000 oil production was 9.x million barrels per day, with a population then up to 20.7 million, so by that point it's down to less than half a barrel of oil per day per person; a halving in 20 years. During the pandemic time frame (ie another 20 years later)? 8 to 9 million barrels per day, and now their population is up to 35 million, so now it's down to ~1/4 of a barrel of oil produced per day per person, another halving in roughly 20 years. (Even if you pop that up to 10m barrels per day again in the next few years, their population is heading to 40m regardless, so 1/4 one way or another.)
Implosion. It's very obvious what's going to happen to Saudi Arabia.
They're adding 500k-700k people per year, with no economy to support any of those people. For the average citizen of Saudi Arabia, every person added to the population tally reduces the standard of living of the rest. At this point every ten years they're adding a population equal to 2/3 of where they were at in 1980, with zero additional oil production to match.
Chaos and violent instability is coming for Saudi Arabia, you can bet Aramco is eventually getting nationalized again, whatever the reputation consequences.
> The single most important number as it pertains to Saudi Arabia, is barrels of oil produced per capita
Wouldn't the important number be the barrels of oil exported per capita rather than produced?
Which actually makes things even worse, because the exploding population means an increasing amount of the oil production is consumed internally - this page suggests less than 60% of production is now exported (2016 data):
https://www.worldometers.info/oil/saudi-arabia-oil/
and the graph here (when switched to max date range) shows the dramatic increase in consumption over time, albeit with some slight falloff more recently:
https://www.ceicdata.com/en/indicator/saudi-arabia/oil-consu...
Wouldn't the important number be the barrels of oil exported per capita rather than produced?
Which actually makes things even worse, because the exploding population means an increasing amount of the oil production is consumed internally - this page suggests less than 60% of production is now exported (2016 data):
https://www.worldometers.info/oil/saudi-arabia-oil/
and the graph here (when switched to max date range) shows the dramatic increase in consumption over time, albeit with some slight falloff more recently:
https://www.ceicdata.com/en/indicator/saudi-arabia/oil-consu...
Thanks for this comment. It was very insightful.
It's interesting that they keep finding™ more® oil* but have never increased their output.
It's interesting that they keep finding™ more® oil* but have never increased their output.
Shouldn't we account for both inflation and oil prices changes during the period as well? In any case, it's a fascinating hypothesis.
What would stop Saudi Aramco from stopping all dividends and unilaterally write off its own debt?
I am curious about that as well since the article mentions
> The most desperate of these was the pledge to guarantee a dividend payment to shareholders in Aramco of US$18.75 billion every single quarter of every single year – a total of US$75 billion every single year.
I've never heard of a contractually binding agreement to drive yourself into bankruptcy via an overly generous dividend. From this FT article[1] it does sound like it's pretty voluntary though
> Mr Nasser told reporters that “our intention is to pay $75bn, subject to board approval and depending on market conditions”. Minority shareholders, who own 1.5 per cent of the company, will be “protected” for the next five years and given priority payments, he said.
1. https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4...
> The most desperate of these was the pledge to guarantee a dividend payment to shareholders in Aramco of US$18.75 billion every single quarter of every single year – a total of US$75 billion every single year.
I've never heard of a contractually binding agreement to drive yourself into bankruptcy via an overly generous dividend. From this FT article[1] it does sound like it's pretty voluntary though
> Mr Nasser told reporters that “our intention is to pay $75bn, subject to board approval and depending on market conditions”. Minority shareholders, who own 1.5 per cent of the company, will be “protected” for the next five years and given priority payments, he said.
1. https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4...
> What would stop Saudi Aramco from stopping all dividends and unilaterally write off its own debt?
Nothing. Argentina defaults on its debt every Christmas, and its bonds still get bought. Aramco’s are a non-sovereign corporate’s equity dividends, where most of the shares are owned by the Saudi government and royal family.
Nothing. Argentina defaults on its debt every Christmas, and its bonds still get bought. Aramco’s are a non-sovereign corporate’s equity dividends, where most of the shares are owned by the Saudi government and royal family.
>Nothing. Argentina defaults on its debt every Christmas, and its bonds still get bought
wtf? Every christmas every year?
wtf? Every christmas every year?
"Merry Christmas, investors! The best gifts come in tiny, tiny boxes..."
Why Christmas? That just seems mean.
Why Christmas? That just seems mean.
Being mean depends on which side of the equation you stand.
Debt write off could be seen as a gift to the country.
Debt write off could be seen as a gift to the country.
Only if you have no other options.
Cultural values that would mean MBS and the House of Saud loses face and honor. (And future access to money)
If this causes the collapse of the Saudi monarchy this will be a good thing.
I never understood why Americans consider Iran the enemy and Saudi Arabia the friend. Iran is a democracy, they appear to have legit elections, while Saudi is an absolute monarchy. Iranian women enjoy way better equality compared to Saudi Arabian women. As a software developer in the US I have even come across Iranian-born women software engineers. Iranians seem more modern in ever way. Citizens of both countries seem to hate America, but ordinary Iranian citizens never did a 911-style attack on the US. Is it because of historical reasons that Saudis are the friend and Iranians the enemy?
>Citizens of both countries seem to hate America, but ordinary Iranian citizens never did a 911-style attack on the US. Is it because of historical reasons that Saudis are the friend and Iranians the enemy?
The real quick spark notes are:
Iran tried to socialize their Oil Production as they believed that Irani's deserved more than 10% of the profit generated instead of just paying Britain forever. In response the CIA did a coup d'état and there's been instability ever since.
Naturally the US aligned itself with it's own oil company in the region (California-Arabian Standard Oil, which is now the Aramco) given that it had just made an enemy of Iran. I think a pretty weird quirk of history is that if you squint hard enough Aramco is technically a Silicon Valley startup, with beginnings in San Francisco that was one of the largest IPOs of 2020.
The real quick spark notes are:
Iran tried to socialize their Oil Production as they believed that Irani's deserved more than 10% of the profit generated instead of just paying Britain forever. In response the CIA did a coup d'état and there's been instability ever since.
Naturally the US aligned itself with it's own oil company in the region (California-Arabian Standard Oil, which is now the Aramco) given that it had just made an enemy of Iran. I think a pretty weird quirk of history is that if you squint hard enough Aramco is technically a Silicon Valley startup, with beginnings in San Francisco that was one of the largest IPOs of 2020.
Imagine this: In England, the Queen decides to dissolve the parliament - which she has the absolute right to do. Boris says "No, I'm the boss now". The USA sends in some aid for the Queen and helps get Boris out of there, so the Queen can re-set up a new government.
Did the Queen/US commit a coup d'etat? Or did Boris commit the coup and try to become a dictator by not stepping down when legally required to?
That is exactly what happened in Iran, if you replace "Queen" with "Shah" and "Boris" with "Mossadegh".
Did the Queen/US commit a coup d'etat? Or did Boris commit the coup and try to become a dictator by not stepping down when legally required to?
That is exactly what happened in Iran, if you replace "Queen" with "Shah" and "Boris" with "Mossadegh".
>The USA sends in some aid for the Queen ... That is exactly what happened in Iran
This seem disingenuous as you completely remove the motivations of the actors. You forgot the part where the US bribes the queen to dissolve the parliament so that Boris doesn't nationalize British Petroleum. That's a HUGE detail that you are handwaving away.
So yes, if the US bribed the queen to dissolve parliament because the people of UK democratically decided to nationalize BP, that would be a very bad thing even though the queen "has the absolute right to do" so.
This seem disingenuous as you completely remove the motivations of the actors. You forgot the part where the US bribes the queen to dissolve the parliament so that Boris doesn't nationalize British Petroleum. That's a HUGE detail that you are handwaving away.
So yes, if the US bribed the queen to dissolve parliament because the people of UK democratically decided to nationalize BP, that would be a very bad thing even though the queen "has the absolute right to do" so.
> You forgot the part where the US bribes the queen to dissolve the parliament so that Boris doesn't nationalize British Petroleum
Also the part where the CIA pays for and stages a coup attempt just so that it can use it as a pretext to use other forces that it is also paying to suppress the armed uprising on behalf of the Queen, with the resulting security situation being the public pretext used for the disillusion of parliament.
Also the part where the CIA pays for and stages a coup attempt just so that it can use it as a pretext to use other forces that it is also paying to suppress the armed uprising on behalf of the Queen, with the resulting security situation being the public pretext used for the disillusion of parliament.
Also don't forget US-trained and provided for oppression campaign which radicalizes opposition and ends up in revolution and ultimately the heavily religious shift.
> In England, the Queen decides to dissolve the parliament - which she has the absolute right to do
No, she doesn't, at least by what appears to be the dominant constitutional theory (not having a simple written Constitution makes this...less clear than one might want it to be.) The Crown does, sure, but the particular category of Crown powers this falls into is that it is validly exercised by the Queen/King-in-Council; that is, by and with the advice and consent of the Privy Council, not unilaterally.
> Did the Queen/US commit a coup d'etat?
Yes.
No, she doesn't, at least by what appears to be the dominant constitutional theory (not having a simple written Constitution makes this...less clear than one might want it to be.) The Crown does, sure, but the particular category of Crown powers this falls into is that it is validly exercised by the Queen/King-in-Council; that is, by and with the advice and consent of the Privy Council, not unilaterally.
> Did the Queen/US commit a coup d'etat?
Yes.
I don't know what answer you are expecting, but realistically(?) speaking, the world will absolutely lose their mind if America installs its favorite leader on the UK. That kind of shit is what superpowers do onto countries like Iran or Afghanistan, not in Western Europe.
That's not the point of his example...
> I think a pretty weird quirk of history is that if you squint hard enough Aramco is technically a Silicon Valley startup, with beginnings in San Francisco that was one of the largest IPOs of 2020.
It looks like the company that became Aramco was Chevron, which was a result of Standard Oil's break up. So not sure I'd call it a startup. But if I squint even harder, and I consider their investment to simply be VC money, then it sorta makes sense, but if I squinted any harder my eyes would be fully closed. Am I missing something?
It looks like the company that became Aramco was Chevron, which was a result of Standard Oil's break up. So not sure I'd call it a startup. But if I squint even harder, and I consider their investment to simply be VC money, then it sorta makes sense, but if I squinted any harder my eyes would be fully closed. Am I missing something?
>Am I missing something?
Nope you aren't, it's already a pretty wild stretch of the imagination; it's just a fun anecdote.
Nope you aren't, it's already a pretty wild stretch of the imagination; it's just a fun anecdote.
God, I wish the US could ally itself with modern-day Iran.
But yes, it's entirely historical reasons. America used to actually be allied with Iran back when it was a monarchy; and this in particular is a good chunk of the reason why the two countries hate each other. The CIA in particular tried to fuck over the country and it backfired, hard. So Iran decided, instead of allying itself with the first (America) or second (USSR) world, they'd become a theocratic democracy. Once we successfully pissed off Iran; our backup solution was to ally with Saudi Arabia and Israel. Yes, the same Saudi Arabia that had just embargoed the US for being too pro-Israel a few years prior. Geopolitics is weird.
(One thing I do want to point out is that you may be measuring the gender equality of an entire country by the gender equality of it's computer programming staff. This is a mistake: those properties are inversely proportional. Iran sends more women computer programmers abroad because it's so gender unequal. In contrast, very gender-equal countries tend to produce fewer women computer programmers. Iran isn't a bastion of feminism, it's just not as bad as it's neighboring countries. In terms of gender equality, Iran is more of an Alabama than a Sweden.)
But yes, it's entirely historical reasons. America used to actually be allied with Iran back when it was a monarchy; and this in particular is a good chunk of the reason why the two countries hate each other. The CIA in particular tried to fuck over the country and it backfired, hard. So Iran decided, instead of allying itself with the first (America) or second (USSR) world, they'd become a theocratic democracy. Once we successfully pissed off Iran; our backup solution was to ally with Saudi Arabia and Israel. Yes, the same Saudi Arabia that had just embargoed the US for being too pro-Israel a few years prior. Geopolitics is weird.
(One thing I do want to point out is that you may be measuring the gender equality of an entire country by the gender equality of it's computer programming staff. This is a mistake: those properties are inversely proportional. Iran sends more women computer programmers abroad because it's so gender unequal. In contrast, very gender-equal countries tend to produce fewer women computer programmers. Iran isn't a bastion of feminism, it's just not as bad as it's neighboring countries. In terms of gender equality, Iran is more of an Alabama than a Sweden.)
I'd encourage you to read more objective sources about the history of modern Iran rather than ones which chalk it up to "America/CIA bad". Religious fanatics were already taking over the country in the 1920s, long before America had any interest in the region.
I'm telling this from an American perspective. The Middle East is the poster child of the harms of religious nationalism; but that's not a uniquely Iranian problem. Nor does religious nationalism or fundamentalism uniquely imperil normalizing relations with a country - Saudi Arabia has an arguably stronger movement of fundamentalists and religions nationalists, and we still allied with them.
The grandparent asked for "Why does America support Saudi Arabia when Iran is more in line with American values", and in that particular case the answer is almost entirely "CIA Bad", possibly with a dash of "right wingers use other countries' right wingers as an excuse to hate those countries".
The grandparent asked for "Why does America support Saudi Arabia when Iran is more in line with American values", and in that particular case the answer is almost entirely "CIA Bad", possibly with a dash of "right wingers use other countries' right wingers as an excuse to hate those countries".
> Citizens of both countries seem to hate America
Absolutely not. Middle and upper class Iranians absolutely love America.
Never been to Saudi but I doubt their people hate America as well.
(I agree with the rest of your comment though)
Source: Iranian
Absolutely not. Middle and upper class Iranians absolutely love America.
Never been to Saudi but I doubt their people hate America as well.
(I agree with the rest of your comment though)
Source: Iranian
"Middle and upper class Iranians absolutely love America."
So, as a generalization for most of the country, his statement is correct. Unless you dismiss the lower classes as disposable riffraff as the Shah did.
So, as a generalization for most of the country, his statement is correct. Unless you dismiss the lower classes as disposable riffraff as the Shah did.
His statement is not correct.
First, a massive portion of the population (middle and upper class) are also considerable and they _dont_ hate America.
Second, the working class doesn't hate America. I was born and grown up in Iran and I've never seen _anyone_ actually having strong negative feelings towards the US. I don't think Iranian working class thinks about US as much as Americans are lead to believe.
First, a massive portion of the population (middle and upper class) are also considerable and they _dont_ hate America.
Second, the working class doesn't hate America. I was born and grown up in Iran and I've never seen _anyone_ actually having strong negative feelings towards the US. I don't think Iranian working class thinks about US as much as Americans are lead to believe.
Summary
Look, I happen to have a very high opinion of Iranians and Iranian society. I think you are one of the most sophisticated people in the world (though, note, sophisticated and sophism share the same root ;). I think the Ayatollahs have, in many ways, perverted Iranian society (in others ways ensured it's independence). But your statement is too simple, too lacking in nuance. It is, frankly, dangerous (but I'll defend your right to share them with my life!) in the same way that statements about Iraqi's perception of America were 20 years ago.
Long Version:
"I was born and grown up in Iran "
I figured, but I didn't want to bring it up; if you're going to talk about "lived experiences" then it's fair that I ask you what your social class you belong to in Iran. Were you the son/daughter of an engineer? Or were you the child of a manual laborer? Did you grow up in Tehran, or Shiraz? Or did you grow up in a small village in the middle of nowhere? Did you have foreign DVDs when you grew up?
More succinctly, did your class make or was it depicted in "Children of Heaven"? (deserved the Oscar, btw. It was brilliant)
"First, a massive portion of the population (middle and upper class) are also considerable"
Well, doesn't that implies that the Ayatollahs did well by Iran? In the times of the Shah the middle class was proportionally small, certainly not large enough to make OP's comment wrong. (The answer is no, the Ayatollahs were a disaster and Iran's middle class, even if it numbers in the millions, is still a small fraction of the total population)
" and they _dont_ hate America."
OK, here I'll concede you're probably partially right but only because "America" is very ill defined. How can someone "hate" Akron OH? You can despise them, but hate? Ohioans are the nicest people I've met in the world (lived experience from growing up in four continents)! But, typically, when ppl talk about hating "America" they are referring to DC and DC's policies.
Look, I happen to have a very high opinion of Iranians and Iranian society. I think you are one of the most sophisticated people in the world (though, note, sophisticated and sophism share the same root ;). I think the Ayatollahs have, in many ways, perverted Iranian society (in others ways ensured it's independence). But your statement is too simple, too lacking in nuance. It is, frankly, dangerous (but I'll defend your right to share them with my life!) in the same way that statements about Iraqi's perception of America were 20 years ago.
Long Version:
"I was born and grown up in Iran "
I figured, but I didn't want to bring it up; if you're going to talk about "lived experiences" then it's fair that I ask you what your social class you belong to in Iran. Were you the son/daughter of an engineer? Or were you the child of a manual laborer? Did you grow up in Tehran, or Shiraz? Or did you grow up in a small village in the middle of nowhere? Did you have foreign DVDs when you grew up?
More succinctly, did your class make or was it depicted in "Children of Heaven"? (deserved the Oscar, btw. It was brilliant)
"First, a massive portion of the population (middle and upper class) are also considerable"
Well, doesn't that implies that the Ayatollahs did well by Iran? In the times of the Shah the middle class was proportionally small, certainly not large enough to make OP's comment wrong. (The answer is no, the Ayatollahs were a disaster and Iran's middle class, even if it numbers in the millions, is still a small fraction of the total population)
" and they _dont_ hate America."
OK, here I'll concede you're probably partially right but only because "America" is very ill defined. How can someone "hate" Akron OH? You can despise them, but hate? Ohioans are the nicest people I've met in the world (lived experience from growing up in four continents)! But, typically, when ppl talk about hating "America" they are referring to DC and DC's policies.
I like this conversation, wish we could talk in person.
> Look, I happen to have a very high opinion of Iranians and Iranian society. I think you are one of the most sophisticated people in the world
Thank you. I don't have such high opinion we're quite average, but thanks.
You are absolutely right that my observations are only a tiny fraction and quite subjective. But that doesn't mean they can be fully dismissed.
Go to youtube and search for Americans or European's impressions of Iran when they visited. Some of them are at very rural parts [0], and yet, they are so warmly welcomed. And don't be fooled. Iranians can be horrible people. Just see how we treat Afghans. It's pretty damn embarrassing. But to Americans, I've never heard a single bad experience from a European/American in Iran.
From reading your posts, I'm pretty much sure we're on the same page. Except that it implies that you think Iranian working class do hate america, whatever that means, and that doesn't seem aligned from what I experienced or from what I've heard from other people's experiences.
[0] https://www.youtube.com/watch?v=_2LEgowbzSc This is a great example of a visitor going through "children of heaven" class of Iran. There are countless examples of this.
> Look, I happen to have a very high opinion of Iranians and Iranian society. I think you are one of the most sophisticated people in the world
Thank you. I don't have such high opinion we're quite average, but thanks.
You are absolutely right that my observations are only a tiny fraction and quite subjective. But that doesn't mean they can be fully dismissed.
Go to youtube and search for Americans or European's impressions of Iran when they visited. Some of them are at very rural parts [0], and yet, they are so warmly welcomed. And don't be fooled. Iranians can be horrible people. Just see how we treat Afghans. It's pretty damn embarrassing. But to Americans, I've never heard a single bad experience from a European/American in Iran.
From reading your posts, I'm pretty much sure we're on the same page. Except that it implies that you think Iranian working class do hate america, whatever that means, and that doesn't seem aligned from what I experienced or from what I've heard from other people's experiences.
[0] https://www.youtube.com/watch?v=_2LEgowbzSc This is a great example of a visitor going through "children of heaven" class of Iran. There are countless examples of this.
> they appear to have legit elections
You might want to research this point more deeply.
You might want to research this point more deeply.
The elections are legit, but you need to be vetted to be allowed to run and the position you gain is not all that powerful.
The 'legit elections' or the 'they [...] have' part?
The Saudis support US oil interest by for example selling their oil only in dollars and buying US weapons which props up our military industrial complex. This is why the US govt likes them and much of what Americans learn about the middle east is heavily influenced by what the govt puts out.
It’s part of an agreement between Nikon and King Faisal. The US commits to protecting the al Saud family (note: not the country, but it’s kleptocracy), in exchange the Saudis commit to holding their money in the US.
It seems Iran may have taken a page out of MBS’s kidnapping dissident journalists playbook: https://www.nytimes.com/2021/07/13/nyregion/iran-masih-aline...
Valid point indeed.
A big problem point for US with Iran : the latter's issue with Israel.
A big problem point for US with Iran : the latter's issue with Israel.
Israel actually supported Iran during Iran-Iraq war. The US at that point was supporting Iraq.
It is really only once Iraq was defeated, that Israel turned hard against Iran. Israel is simply always against the biggest potential power in the middle east.
Iran has multiple times put these things up for negotiation but the US has systematically refused such attempts.
It is really only once Iraq was defeated, that Israel turned hard against Iran. Israel is simply always against the biggest potential power in the middle east.
Iran has multiple times put these things up for negotiation but the US has systematically refused such attempts.
Iran is at best a theocracy masquerading as a democracy. The Ayatollah is a dictator for life and approves any 'democratic' candidates. As for why Iran is an enemy it's mostly to do with the hostage crisis, an act of international barbarism. Under the Shah US-Iran relations were actually quite good. The second thing is the idea of destabilizing other countries in the region through exporting the 'islamic revolution'.
https://www.nytimes.com/2017/05/17/world/middleeast/iran-pre...
https://www.nytimes.com/2017/05/17/world/middleeast/iran-pre...
Yep, no matter how monstrous your human rights record is, no matter how big of a kleptocracy your government is, the US will be your ally as long as you give the US suzerain authority and play ball with US corporations. There's no end to the human rights abuses the US will overlook if you're willing to play ball.
Iran is in the doghouse because they nationalized their oil, same as Venezuela. Cuba under the US-backed Batista dictatorship makes the current communist regime there look like a country run by Mister Rogers, but Batista played ball so it was an ally.
International relations in general are characterized by an amoral state of anarchy, there is no right and wrong, only suzerains and clients.
Iran is in the doghouse because they nationalized their oil, same as Venezuela. Cuba under the US-backed Batista dictatorship makes the current communist regime there look like a country run by Mister Rogers, but Batista played ball so it was an ally.
International relations in general are characterized by an amoral state of anarchy, there is no right and wrong, only suzerains and clients.
Is bankruptcy an option that this autocratic regime would take for their company or would it be too detrimental to the image of mbs?
What happens if they just decide to stop paying international debt/bond holders? Is that even an option?
What happens if they just decide to stop paying international debt/bond holders? Is that even an option?
The old adage goes:
"If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."
So perhaps somewhat conversely:
"If the Saudis owe you $1 billion and decide not to pay you, that's your problem."
"If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."
So perhaps somewhat conversely:
"If the Saudis owe you $1 billion and decide not to pay you, that's your problem."
Argentina did. Several times I think. It actually turned into an interesting legal issue (if you find the technicalities of these things interesting, at least) because of the language used in the settlement.
https://en.m.wikipedia.org/wiki/Argentine_debt_restructuring
https://en.m.wikipedia.org/wiki/Argentine_debt_restructuring
Oh it's an option. Just one that would preclude receiving anymore foreign investment for the next several decades.
"Aramco’s debt to equity increased from minus 5 percent in early 2020 to plus 23 percent in March this year, where company’s own cap was 15 percent."
And it went IPO in Dec 2019.
And it went IPO in Dec 2019.
> In other words, each and every year, Aramco has to pay out around three times the entire amount that it received for the entire IPO.
But actually, 95% of this dividend goes back to the Saudi government, right? So the real figure above is 0.15 times the entire amount that it received for the entire IPO.
But actually, 95% of this dividend goes back to the Saudi government, right? So the real figure above is 0.15 times the entire amount that it received for the entire IPO.
>But actually, 95% of this dividend goes back to the Saudi government, right?
Tearing up a budget doesn't create more to spend. Making a budget doesn't result in less to spend.
Tearing up a budget doesn't create more to spend. Making a budget doesn't result in less to spend.
Saudi Arabia will not exist anything like it’s current form within 20 years.
How many outstanding shares? Are all shares entitled to the dividend?
According to an FT article I found[1] while digging up information about how mandatory the dividend is - it looks like minority shareholders are being given preference in receiving the dividend. Which makes a lot of sense if this was more of a PR stunt and less an effort to pull a bunch of company value into MBS's personal bank account.
1. https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4...
1. https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4...
Oh no!
Anyway.
Anyway.
[deleted]
This might be controversial, but MBS sounds like a horrible, horrible person. Yes, he presents a civilized face to the West, and he's "progressive", but just look at the Khashoggi murder for example. But people seem to be blind to this very dark side of the Saudi leadership. He lets women drive. So that means he's an open minded liberal. What about every other country in the world where women have been allowed to drive since forever? I think it's hard to fix an institution that's corrupt at the top.
> But people seem to be blind to this very dark side of the Saudi leadership. He lets women drive. So that means he's an open minded liberal. What about every other country in the world where women have been allowed to drive since forever?
It's not by accident. After some increased scrutiny after 9/11, the Gulf oil states, Saudi being the most prominent, largely left the general public's awareness.
Meanwhile, they started heavily investing in and marketing themselves as a technologically forward societies.
They paid for many academics worldwide handsomely to move their research to satellite universities in the region, getting a foothold among intellectual elites.
They created world class luxury airlines promoted by the most expensive western celebrity endorsements, gaining a foothold among upwardly mobile international travelers.
This re-branding culminated with the much publicized, elaborate and warm Saudi reception of the previous US administration in the country, and the 2018 publishing of "The New Kingdom" magazine by the publisher of the National Enquirer (https://www.insider.com/inside-the-american-media-magazine-t...), which was Saudi-royal-family propaganda targeted at common Americans in the grocery checkout aisle.
This had the effect of normalizing the image of these regimes among the general public while papering over their history of repression of human rights at home and financing of religious and ethnic conflicts abroad.
It's not by accident. After some increased scrutiny after 9/11, the Gulf oil states, Saudi being the most prominent, largely left the general public's awareness.
Meanwhile, they started heavily investing in and marketing themselves as a technologically forward societies.
They paid for many academics worldwide handsomely to move their research to satellite universities in the region, getting a foothold among intellectual elites.
They created world class luxury airlines promoted by the most expensive western celebrity endorsements, gaining a foothold among upwardly mobile international travelers.
This re-branding culminated with the much publicized, elaborate and warm Saudi reception of the previous US administration in the country, and the 2018 publishing of "The New Kingdom" magazine by the publisher of the National Enquirer (https://www.insider.com/inside-the-american-media-magazine-t...), which was Saudi-royal-family propaganda targeted at common Americans in the grocery checkout aisle.
This had the effect of normalizing the image of these regimes among the general public while papering over their history of repression of human rights at home and financing of religious and ethnic conflicts abroad.
good list - also add big direct investment in the US smart phone ecosystem, therefore Board level and Angel'ish activities too
Sly injection of American politics by the above poster and entirely bullshit. Biden’s administration has embraced Saudi Arabia just as much. In fact, if you actually look at history, you will see that the US has embraced Saudi Arabia for many decades (since at least the 80s). This is by BOTH parties.
Secretary of State visit
https://www.wsws.org/en/articles/2021/07/09/saud-j09.html
Brother of MBS visits and meets with Secretary of Defense
https://www.al-monitor.com/originals/2021/07/saudi-arabias-p...
Secretary of State visit
https://www.wsws.org/en/articles/2021/07/09/saud-j09.html
Brother of MBS visits and meets with Secretary of Defense
https://www.al-monitor.com/originals/2021/07/saudi-arabias-p...
> Biden’s administration has embraced Saudi Arabia just as much. In fact, if you actually look at history, you will see that the US has embraced Saudi Arabia for many decades (since at least the 80s). This is by BOTH parties.
Absolutely. It's required that any US administration be at the table with the gulf oil states - that's just realpolitik. Better to be there than not.
However the Republican party has been far more closely wedded to petroleum interests, especially those that provide oil infrastructure services to the Gulf states, in both policy and rhetoric. Don't you remember "drill baby drill", which while marketed as being about energy independence was anything but, because the price of oil is a global commodity, not something that the US has the capacity to change.
Democrats were at one time too, but then they lost most of their political power in petroleum industry focused parts of the US. Perhaps Rep. Charlie Wilson of Texas was among the last of such Democrats.
Most Democrats have now cast their lot with post petroleum aligned policies, technologies, and industries - look no further than the politically clearly aligned battle around fuel economy standards or the Keystone XL pipeline.
Absolutely. It's required that any US administration be at the table with the gulf oil states - that's just realpolitik. Better to be there than not.
However the Republican party has been far more closely wedded to petroleum interests, especially those that provide oil infrastructure services to the Gulf states, in both policy and rhetoric. Don't you remember "drill baby drill", which while marketed as being about energy independence was anything but, because the price of oil is a global commodity, not something that the US has the capacity to change.
Democrats were at one time too, but then they lost most of their political power in petroleum industry focused parts of the US. Perhaps Rep. Charlie Wilson of Texas was among the last of such Democrats.
Most Democrats have now cast their lot with post petroleum aligned policies, technologies, and industries - look no further than the politically clearly aligned battle around fuel economy standards or the Keystone XL pipeline.
Fair enough. The distinction is the gulf oil states where both the parties are aligned versus the American petroleum interests which are more closely aligned with the Republicans.
Look who voted for the 2003 invasion of Iraq. It wasn’t just Republicans. Interesting which Democrats voted for it.
Biden, Schumer, Clinton
https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...
Biden, Schumer, Clinton
https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...
>Sly injection of American politics by the above poster
Why just list those three Senators when 29 Democrats voted YEA? Sly injection indeed.
Why just list those three Senators when 29 Democrats voted YEA? Sly injection indeed.
I don’t believe that is controversial. Most western governments that have cared to look into it have concluded that he was behind the Khashoggi murder. And what can you call a de-facto head of state who orders a journalist murdered in another country for writing unflattering articles, if not a horrible person?
There was also the kidnapping and shakedown of Prince Alwaleed who used to be a familiar face in the news but disappeared for several years after the alleged kidnapping.
From what I pieced together on Wikipedia it seems like a number of Saudi princes were kidnapped a few years back and forced to pay billions but I don't know all the details or what happened exactly.
The company is mostly owned by the Saudi government but I guess that means, really, the Crown Prince and it seems he's very active in management despite not being on the board or listed as an executive.
From what I pieced together on Wikipedia it seems like a number of Saudi princes were kidnapped a few years back and forced to pay billions but I don't know all the details or what happened exactly.
The company is mostly owned by the Saudi government but I guess that means, really, the Crown Prince and it seems he's very active in management despite not being on the board or listed as an executive.
I remember that. MBS had a huge number of princes and other high-level officials arrested and locked up in the local Hilton. It was called the most expensive prison in the world. I understand they were tortured etc. while they were held there. To be released, from bogus charges of "corruption" they had to pay enormous ransoms. Basically, the government needed quick cash and MBS wanted to consolidate his position a bit more.
> and he's "progressive"
I know comments like this are frowned upon on HN, but I must:
lol
I get what you're saying, and I agree with your points. This bit just got me. The Khashoggi murder alone tells us all we need to know about MBS.
I know comments like this are frowned upon on HN, but I must:
lol
I get what you're saying, and I agree with your points. This bit just got me. The Khashoggi murder alone tells us all we need to know about MBS.
He runs a slave state - there's no being good, except by comparison to other slavers.
MBS is the next generation Saddam Hussein. Just wait and see.
The controversial part is that we don't promote horrible people and their wrongdoings. Everyone who reads international and regional media knows what MBS is.
MBS was accepted by the previous administration because Jared Kushner was convinced he was key to a Palestinian-Israeli peace treaty. That gave Erdogan leverage over the US, when he kept pounding the media drum with the footage he had of the Khashoggi murder. He used that to get the US to abandon the Syrian Kurds.
We haven't yet seen if the new administration will view MBS the same way, but I doubt it. We've had two populist presidents in a row lose European control because they thought they knew better than their advisors about the Middle East. (Obama's version was surrendering Crimea to Putin so that Putin would give him an out for his Syrian "red line" blunder).
This administration seems more boring and professional, like the staff have taken over the government for 4 years. So I don't think they have any misunderstanding of who MBS is and what value he does and doesn't provide.
We haven't yet seen if the new administration will view MBS the same way, but I doubt it. We've had two populist presidents in a row lose European control because they thought they knew better than their advisors about the Middle East. (Obama's version was surrendering Crimea to Putin so that Putin would give him an out for his Syrian "red line" blunder).
This administration seems more boring and professional, like the staff have taken over the government for 4 years. So I don't think they have any misunderstanding of who MBS is and what value he does and doesn't provide.
"MBS was accepted by the previous administration ..."
I would like to paint Trump as the only bad apple, but the Saudis have likely paid off every American President in the last 40 years with a flood of shadow money. He was accepted by the previous administration because Trump got a healthy dose of that shadow money (there's a half-dozen on the front page of google search results alone).
There's a half dozen stories about this for Trump. Here's one for Obama:
https://www.denverpost.com/2019/10/29/middleman-helped-saudi...
We now know the inauguration fund is a big shadow slush fund for presidents. So is the presidential library, and the usual post-term speech circuit and "consulting".
These people and power structures exist because of concentrated oil wealth, and we should move towards alternative energy and BEVs to bankrupt these corrupt regimes and the corruption they exert on our country.
I would like to paint Trump as the only bad apple, but the Saudis have likely paid off every American President in the last 40 years with a flood of shadow money. He was accepted by the previous administration because Trump got a healthy dose of that shadow money (there's a half-dozen on the front page of google search results alone).
There's a half dozen stories about this for Trump. Here's one for Obama:
https://www.denverpost.com/2019/10/29/middleman-helped-saudi...
We now know the inauguration fund is a big shadow slush fund for presidents. So is the presidential library, and the usual post-term speech circuit and "consulting".
These people and power structures exist because of concentrated oil wealth, and we should move towards alternative energy and BEVs to bankrupt these corrupt regimes and the corruption they exert on our country.
> (Obama's version was surrendering Crimea to Putin so that Putin would give him an out for his Syrian "red line" blunder).
What approach would you have taken to prevent Vladimir Putin from taking back Crimea? It’s a majority Russian area where they hold a long term naval base lease. The peninsula in question was gifted to Ukraine by the USSR in 1954.
Also keep in mind the fact that Russia has nuclear weapons, and any direct military conflict with Russia has the potential to go nuclear.
How do you proceed to prevent Russia from annexing Crimea?
What approach would you have taken to prevent Vladimir Putin from taking back Crimea? It’s a majority Russian area where they hold a long term naval base lease. The peninsula in question was gifted to Ukraine by the USSR in 1954.
Also keep in mind the fact that Russia has nuclear weapons, and any direct military conflict with Russia has the potential to go nuclear.
How do you proceed to prevent Russia from annexing Crimea?
No one gets to run a middle eastern country without assassinating a substantial number of people each year. The US certainly kills its fair share as well.
My impression is that MBS wants to take Saudi into the 21 century. That seems very overdue and a good thing. He probably wants it because it will make his country richer and stronger, and perhaps be able to beat back his strategic enemy Iran. But it should also make life in The Kingdom saner and more humane for the people.
My impression is that MBS wants to take Saudi into the 21 century. That seems very overdue and a good thing. He probably wants it because it will make his country richer and stronger, and perhaps be able to beat back his strategic enemy Iran. But it should also make life in The Kingdom saner and more humane for the people.
Your impressions are wrong. Like them or not, the reason behind the culture war is not to bring modernity but to centralize power. Look at how much evil is enabled by American hedonism and you will understand.
jsbdk(4)
[deleted]
Please stop speaking negatively about Americas man. He’s doing good for things for bro-colonialism dude. Those dictatorships are good for business and America’s business is business.
neo-colonialism*
vmception(2)
I lived there for four years (at KAUST), I am deeply familiar with the country and its people. The Saudis are nice and well-intended, but a few bad apples spoil the bunch.
I left after my 4yo daughter was kidnapped(!) when I refused to sign some papers regarding my work situation. I am not making this up. The kidnapping was carried away by an Australian professor and a couple American guys working there, but when I tried to look for help I was horrified that this seemed to be business as usual and no one even batted an eye, no jurisdiction. Fortunately, we are safe now and doing better than ever, but, what a story.
Until they fix many of these things it will be very hard for them to establish a thriving economy.