On Saudi Arabia: Its People, Past, Religion, Fault Lines - and Future (26 page)

A visit to a large Riyadh department store, Al Haram, underscores this dearth of Saudi employees in the retail industry. The store, a cut above Western megastores like Wal-Mart but still offering moderate prices, has 150 employees, only 25 of whom are Saudi. All the Saudis are either cashiers or managers. The store manager, Ali al Qahtani, a Saudi, insists that even if a Saudi asked to work in sales (and none has, in his five years at the store), he would not permit it. “
I would put him at reception or cashier,” he says, “because Saudi society wouldn’t accept a Saudi sales person.” Indeed, a Saudi intellectual who lives in the kingdom but travels often to Europe and the United States recounts his embarrassment at
being served by a Saudi waiter in a restaurant. “It is beginning to happen now,” he says of the rare Saudi who takes a menial service job. “But I didn’t know what to do, it was so embarrassing.”

In 2006 the government unveiled a plan to allow Saudi women to work in lingerie shops, where women must buy intimate apparel from foreign males, generally from India, Bangladesh, or the Philippines. This idea quickly ran afoul of the cultural prohibition against mixing genders in the workplace. Women standing behind the counter to sell lingerie would mix with both male sales personnel and with Saudi men who might seek to buy lingerie, or so postulated the religious scholars supported by many conservative Saudis. Thus the plan was abandoned. For inexplicable reasons, Saudi women standing in front of the counter buying lingerie from men is somehow religiously acceptable. (Saudi society sees foreign men more as furnishings than as real men who might tempt Saudi women.)

Six years later, the government finally set a January 2012 deadline banning male salesclerks in lingerie shops. This came only after a royal decree was issued making lingerie shops a women-only working environment, guaranteeing that female and male sales clerks would not be mixing, and after the Ministry of Labor threatened to close lingerie shops employing males. Some 28,000 women quickly applied for these sales jobs according to the Ministry of Labor. Change comes very slowly in Saudi and, as is often the case, only after the king’s involvement.

In 2011 when poor women were hired as cashiers in the large supermarket chain Panda, once again religious opposition surfaced. This time, however, a campaign was launched on Facebook to
support
Panda’s hiring women. Within months, the grand mufti issued a fatwa banning women cashiers. “
It is not permitted for a Muslim woman to work in a mixed environment with men who are not related to them, and women should look for jobs that do not lead to them interacting with men which might cause attraction from both sides,” the fatwa said. The fact that religious police feel free
to threaten female workers whose employment is promoted by government policy is clear evidence of the absence of rule of law and of a country at war with itself, in which the Al Saud rulers are too insecure to enforce their own decisions.

If microeconomic change is difficult, implementing grand plans across the broader economy is even harder. For all the good intentions of the often Western-educated economists producing the five-year plans, the economy on paper bears little more resemblance to the real one than did the Gosplans to the old Soviet Union. The real economy is a bewildering (at least to outsiders) combination of a feudal fealty system and a more modern political patronage one. At every level in every sphere of activity, Saudis maneuver through life manipulating individual privileges, favors, obligations, and connections. By the same token, the government bureaucracy is a maze of overlapping or conflicting power centers under the patronage of various royal princes with their own priorities and agendas to pursue and dependents to satisfy.

Almost all economic decisions are made by the regime in Riyadh, including decisions on where to locate megadevelopment projects, hospitals, and universities, regardless of the priorities of local provinces. Because the regime has prevented the emergence of any independent organizations such as labor unions or interest groups of any kind, the regime is able to make these decisions with little input from society, but paradoxically, it is then constrained in its ability to execute them. In the absence of such associations, over the decades informal networks have grown throughout the bureaucracy that prevent efficient execution of decisions. Various princely, bureaucratic, and business interests compete for advantage, sometimes simply by blocking or at least stalling government decisions they can’t change.
The state has “fundamentally reoriented Saudi society, making it dependent and at the same time fragmenting it,” writes Steffen Hertog, an expert on Saudi economy at the London School of Economics, explaining this gulf between government pronouncements and actual economic achievements.

The Saudi economy is neither a free market nor an effectively managed one. Most Saudis have no concept of openly
competing for education or jobs or, for that matter, marriage partners. Everything is negotiated and arranged. Similarly, most businesses of any size are so dependent on government contracts and on regulated and protected markets that genuine competition is a rarity here too. On the other hand, the layers of bureaucratic control hardly produce an efficient planned economy. Business and government, wealth and power, are inextricably intertwined. The result, however, bears no resemblance to the
chaebol
system of South Korea, where the intertwining of government and big business has produced focused and dynamic economic growth and the twelfth largest economy in the world.

A rare Saudi with initiative—for example, an educated young man seeking to start a small business—has to complete innumerable applications and documents at multiple layers of multiple ministries, which invariably requires seeking favors from various patronage networks and accumulating obligations along the way, most probably including having to hire less-than-competent dependents of his patrons. Then, for any business of any size, government contracts, not private competition, are the financial lifeblood. So this means more patrons, more favors, and more obligations. Not surprisingly, Saudi businesses that can compete outside the protected Saudi market are few. Similarly, only rare Saudis are willing to leave the protective networks of their homeland to seek competitive careers abroad. (While many attend foreign universities, most return home with their degrees to seek government employment.)

When government programs fail Saudis, their recourse invariably is patronage. For instance, buying a home in the kingdom is virtually impossible, even for upper-middle-class people, given the exorbitant price of land and the dearth of home financing. (Islam forbids charging interest on loans.) To resolve the housing problem for members of the armed forces and the National Guard, on which the royal family depends for its protection, both King Abdullah (who until recently headed the National Guard) and the late Crown Prince Sultan (who also served as minister of defense) both provided heavily subsidized or free housing to the military. It
is yet another form of patronage available to some, but not a general solution to the critical housing problem facing most Saudis.

While the government claims that 60 percent of Saudis own a home, informed private estimates put that number at more like 30 percent. The government’s Real Estate Development Fund (REDF) dominates the housing market, providing 81 percent of all loans for housing.
But the estimated waiting period to secure an REDF loan is
eighteen
years, due to pent-up demand. As part of King Abdullah’s effort in 2011 to ensure that regional unrest didn’t engulf Saudi Arabia, the government raised the maximum loan from 300,000 to 500,000 Saudi riyals, but the average price for a small free-standing home in Riyadh is 1.23 million Saudi riyals (about $328,000), leaving a huge gap for the buyer to fund. Since most state and private-sector employees earn less than 8,000 Saudi riyals a month (or $25,000 a year), housing is simply out of their reach.
Lower-income Saudis can’t turn to older homes to solve their problem, because almost no secondary market in housing exists in the kingdom. Construction is so shoddy that homes rarely last more than thirty years.

As revolutionary winds swept through the region, King Abdullah announced the government would spend 250 billion Saudi riyals to construct half a million homes for Saudis, and he created a new Ministry of Housing, yet another example of creating new bureaucracies to solve old problems. But the exorbitant cost of land, the low wages, and the difficulty in procuring mortgages almost guarantees continuing housing shortages and rising complaints from middle-class and young Saudis priced out of homeownership.

In sum, the Saudi economy, like Saudi society, is ossified and becoming more so. Its many webs of patronage and multiple layers of bureaucracy evolved over the years to accomplish some purpose or another, but rather than enable, they increasingly disable Saudi citizens in their daily lives. To buy stability, the regime slathers on more money, smothering private initiative and private enterprise, thus further diminishing
the living standards of Saudis and increasing their anger, which then necessitates another dose of money. And so the cycle repeats itself. The Saudi system is inflexible and, to many, impenetrable. Saudis spend too much of their lives seeking favors, begging permissions, and facing innumerable frustrations. The arteries of the body politic are clogged, and no one, not even a well-meaning and supposedly absolute monarch, can unclog them.

This Saudi system, where personal loyalties once upon a time lent subtlety and suppleness to everyday life, over the years has become rigid and thus brittle. The old system of loyalties no longer is suited to the demands of a growing population or the requirements of an economy that must expand to create jobs. The new bureaucratic structures superimposed upon the old networks are blocking rather than facilitating progress. Saudis are frustrated and fearful that whatever they get from the various networks of patronage is less valuable than what others are getting. To the extent that information, whether fact or rumor, spreads through the tame press and untamed Internet, more transparency simply produces more envy and anger.

An ossified system can give the appearance of great stability. The Soviet Union in its final decades, for all its shortcomings, was seen as nothing if not stable. The widespread assumption was that its leadership was in firm control. In the end, the system proved to be brittle. The geriatric leadership that commanded communism, for all its purported power, proved incapable of making its own system function. Its leaders could pull the levers of power, but nothing much moved. By the time Mikhail Gorbachev arrived and began trying to salvage the system with some modest reforms, it was too late, and the hollow structure imploded.

The Saudi rulers still have time to unclog the arteries, and they surely have plenty of money for stents and surgeries—but is there a daring doctor among them who can perform the necessary life-saving operations? All indications so far are no. Just as Soviet power passed from an old Brezhnev to an infirm Andropov to a doddering Chernenko, the Saudi
royal family continues to pass the crown from one aged son of its founder to the next. The line of succession leads to more old men in their eighties. The youngest of the surviving sons already is in his late sixties, and he is more than a dozen living brothers down the royal line. King Abdullah seems aware of some of the problems facing the kingdom and surely desires to reform the system enough to save Al Saud rule. But even his sincere, albeit far from sweeping, reform efforts of the past decade have brought only limited changes to the economy, the role of women, the control of the religious establishment, and the behavior of his royal relatives—all too many of whom continue to view the country’s land and oil revenue as theirs, not that of Saudi citizens.

The halting progress of King Abdullah’s modest reforms, while impressive by past Saudi standards, is a sobering reminder of how difficult economic and political change in the kingdom will be, even if the royal family can select a ruler with the vision and longevity to launch and sustain a serious reform program. King Abdullah has brought a measure of glasnost, or candor, about social problems, but not yet perestroika, which would require structural economic reform and some opening of the closed political system. Encouraging and educating the population to depend more on its own initiative and less on the government risks unleashing forces that the regime fears it may not be able to contain. Yet if substantive reform might threaten the regime, so surely will the absence of significant reform. The dilemma for the regime, in a nutshell, is picking which poison to swallow.

I
f Saudi Arabia’s middle class is frustrated by a dysfunctional economy that isn’t creating jobs, by a declining standard of living, and by diminished opportunities for their children, another group of Saudis would see such concerns as luxuries. They are the Saudi poor. They live in impoverished rural villages or, more often, in the slums scattered through the industrial wastelands on the fringes of big cities. They are largely invisible, not just to visitors but even to most other Saudis.

All societies have economic disparities, but in no other does the contrast between the very rich—the princes and their powerful business partners—stand in such glaring contrast to the very poor.

Surprising as it may seem in a land of bountiful black gold, shiny new skyscrapers, and a first-world standard of living, fully 40 percent of Saudi families live on less than 3,000 Saudi riyals (about $850) a month. The very poor, some 19 percent of Saudis, live on less than 1,800 Saudi riyals ($480) a month, according to a 2003 survey by the Ministry of Social Affairs.
As the Saudi population has exploded over the past thirty years, with a birthrate of 4.8 percent in 1970 and an
average family size of 6.6, the number of those living in poverty continues to rise. (As education has increased, the birthrate has fallen sharply in the past decade, to 2.4 percent in 2010.)