Arabian Business Weekly Update August 7, 2005

But King Fahd’s death is unlikely to prompt any major policy shift. THE DEATH of an absolute monarch will always be tumultuous, especially when that ruler holds power over one of the world’s richest countries and causes ripples across the entire globe when he takes a decision.

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By  Richard Agnew Published  August 7, 2005

Worrying times for Saudi|~||~||~|But King Fahd’s death is unlikely to prompt any major policy shift. THE DEATH of an absolute monarch will always be tumultuous, especially when that ruler holds power over one of the world’s richest countries and causes ripples across the entire globe when he takes a decision. World leaders will have been looking on with some concern as news broke of King Fahd’s death last Monday, and how it would impact their interests in oil and security. All eyes will also be on how the new King Abdullah deals with the complicated politics of the Saudi royal family, and what his succession ushers in any significant policy shifts. But in the short term, the handover will probably have little impact, politically or economically. The new king has been the country’s de facto ruler for a decade, due to King Fahd’s poor health. As with King Fahd, he has so far sought to strike a balance between the interests of reformers and conservatives. Economically, the stability of oil supply will continue to form the bedrock of Saudi foreign policy, so its interests will largely remain aligned with those of the West. Crude oil prices jumped a little upon the news of King Fahd’s death, but there was no major swing. Rather than worrying about change, though, their concern should be that the events of the past week disguise an ongoing need for reform in the kingdom. The smoothness of the succession does not detract from the scale of the problems that have to be tackled in Saudi. The economy is faring well. But political change has been painfully slow — the local councils voted for by Saudi men earlier this year have yet to be set up. Much more needs to be done to reduce unemployment and give young Saudis a stake in the system. You only need to look at history to see the problems that can be caused when an affluent and intelligent middle class are excluded politically. ||**||No way out|~||~||~|TENSIONS between Iran and the West rose last week as the Islamic Republic threatened to resume its nuclear programme and its new hardline president, Mahmoud Ahmadinejad, was confirmed in office. Some US hawks say that should Iran resume enriching uranium in earnest, the only viable response would be a military attack. But the reality is it would be inconceivable for the US to pull that off. In many ways Iran is the biggest winner from the US-led invasion of Iraq. With Saddam gone, Iran is rid of its sworn enemy and is asserting increasing influence there. The chaos that has followed the invasion, and the resultant global backlash, has left Washington with neither the support, nor the manpower to aggressively intervene in Iran’s affairs. The reality is that it’s only a matter of time before Iran develops that bomb, and whether it likes it or not, the West is just going to have to get used that fact. ||**||Get connected|~||~||~|LAST week it was again revealed that web traffic in the Gulf had been affected by the breakdown of overseas telecoms links. This was due to a cut submarine cable outside the country, operated by one of the few international telecoms companies that recognised the value of laying connections to the Middle East to exploit its booming economy. This is happening way too often. Businesses rely on the internet and they can’t afford downtime. Often the cause is simple, and avoidable: a ship dropping anchor in the wrong place or cables being snagged in fishing boat’s nets. Local telcos are investing in projects that will provide more links beyond the region and provide backup when cables are dislodged. But surely there’s a case for a better system of control and enforcement that would stop these mistakes once and for all. ||**||

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