Preparing for the post-oil era: Saudi Arabia plans trillion … – Reuters

oil production in Saudi Arabia

A gas flame above the Khurais oilfield, about 160 km from the riad. The UK wants to be prepared when the oil and gas production is dry again

(Photo: AP).

San Francisco The oil price shock runs deep. But not this time among motorists in Europe or America, but in the oil-producing states in the Gulf region. After a crash in crude oil prices above 100 dollars per barrel up to 30 dollars a rush with which the function is to be reduced from the “black gold” is increasing. Saudi Arabia will not be less than two trillion dollars (which are $ 2 trillion) into a government fund, which is expected to buy anywhere in the world. That explained the Deputy Crown Prince Mohammed bin Salman in an interview with Bloomberg. That would be enough money to the shares of Apple, alphabet (Google), Microsoft and Berkshire Hathaway to buy together and then would still play money left over.

As a kind of start-up financing plans the Saudi royal family up to five percent of the state bringing oil company Saudi Aramco to the stock exchange, which then transferred to the Fund and to be transformed into a gigantic Industrieholdung. According to Bin Salman the PIF (Public Investment Fund) already holds shares in the Saudi Basic Industries Corp, the second largest chemical company in the world, or the National Commercial Bank, the largest financial house of Saudi Arabia. The fund currently look to “two ways” in the financial industry, the 30-year-old deputy crown prince, but he did not name names. “Within 20 years,” he predicts, “we will no longer depend primarily on oil.” Already in 2020, the share of foreign investments in sovereign funds is 50 percent, now it is five percent. Investments in Korea and Russia are also on the agenda.

The regional power Saudi Arabia

• Thanks to its huge oil reserves, Saudi Arabia is the richest country in the Arab world. The conservative Islamic kingdom has about 16 percent of the world’s proven oil reserves and is the largest exporter of the commodity. The money from the revenue uses Riyadh in order to purchase using checkbook diplomacy influence. So based Saudi Arabia about billions the regime of Egyptian President Abdel Fattah al-Sisi.

• Among the Arab countries, the Gulf monarchy is not only the largest economy, but by far the most influential regional power. So Riad dominated the Arab League and the Gulf Cooperation Council (GCC). In mid-December announced Deputy Crown Prince Mohammed Bin Salman also the establishment of an “Islamic military alliance” to include 34 predominantly Muslim countries.
  

• Because of the oil reserves and the Saudi influence over the region, the west regarded the country as an important strategic partner. The situation in the ruled by the dynasty of Saud monarchy is also comparatively stable. The Arab riots survived Saudi Arabia without major disruptions.
  

• In the conflict with the Shiite rivals Iran, however, has become more aggressive foreign policy of the Sunni kingdom since the appointment of King Salman a year ago. Guided by Saudi Arabia Alliance flying air attacks against Shiite Houthi rebels in the civil war Yemen. Moreover, Riad supported Syrian rebels to overthrow rulers Bashar Assad.

Saudi Arabia is not the first state Super investor, currently, for example, China one of the largest buyers of businesses, real estate and commodities worldwide. But the Gulf state is certainly the one with the most money in the war chest.
However, the Saudi leadership makes its citizens also clear that times have become harder since the collapse of oil prices. Therefore one must restructure the economy and re-abolish waste. The end of 2015 the prices for gasoline and electricity were raised in the country, which, however, still has more symbolic character. Still, even the monarchy itself will lead by example. The escalating government spending, which had constituted up to 40 percent of the state budget, had already been in 2015 reduced to around twelve percent.

scientists such as Paul Sullivan of Georgetown University in Washington, but are skeptical about plans As. “You can not order as a four-course menu economic reforms,” ​​he told Bloomberg. “In any case, more needs to be done to increase only the investments abroad.” How much will to real social reforms in the conservative country actually is, however, is completely unclear.