2/23/2011

Does the Saudi Policy of giving out Large Amounts of Money to Quell Unrest Make Sense in the Long Run?

This seems like a pretty short sighted policy to me (see the Financial Times here). Giving out this much money not only gives people an incentive to threaten revolt, but it also creates bad incentives for the behavior that is being forgiven (e.g., forgiving those in debt).

King Abdullah of Saudi Arabia announced financial support measures, worth an estimated SR135bn ($36bn), in a bid to avert the kind of popular unrest that has toppled leaders across the region and is now closing in on Libya’s Muammer Gaddafi.

The measures include a 15 per cent salary rise for public employees to offset inflation, reprieves for imprisoned debtors, and financial aid for students and the unemployed.

Saudi Arabia’s ruling family has thus far been spared the type of popular discontent that has toppled presidents in Tunisia and Egypt and brought Libya to the brink of civil war.

The announcement of the Saudi relief measures coincided with King Abdullah’s return to the country after three months. He had been abroad for medical treatment. Among those on hand to greet him was King Hamid bin Isa al-Khalifa of neighbouring Bahrain, which is struggling to contain a surging opposition movement. . . .

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Blogger Martin G. Schalz said...

Whether or not the policy of payouts will work in the long run is a function of Saudi society itself.

The fear of Arab rulers in Africa, and Southwest Asia is duly noted, but I suppose that individual states may have dissimilar cultures as far as reactions to their respective governments are concerned.

Within that framework one can expect some aberrations in how the whole area reacts to the unrest in said area. Perhaps King Abdullah may be viewed as a more beneficent ruler than his contemporaries in the region. Maybe not.

Mubarak, Qaddafi, and those of that ilk, have been enriching themselves at the expense of their people for a long time now, and it seems that is part of the driving force behind the unrest.

History has shown us time and again that 'baby booms' have resulted in political and cultural upheavals irregardless of national identity. As to what affect throwing money at the problem will accomplish, well, that remains to be seen...

2/25/2011 2:18 PM  

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