Saudi Arabia, home to the world’s largest reserves of cheap-to-drill oil, describes itself as a painstaking economic planner. It plots to keep current oil prices stable even while diversifying for harder economic days ahead. These practices have, among other things, resulted in the accumulation of $700 billion in official foreign reserves.
This self-depiction has always aroused suspicion since outsiders typically see little more than what the Saudis wish them to. But now a 14-page screed by one of the nation’s most prominent billionaire princes suggests internal dissent on whether the kingdom is planning painstakingly enough. Alwaleed bin Talal, a jet-setting nephew of King Abdullah who owns stakes in Apple, Citigroup and Twitter, says that Saudi Arabia faces a dire threat.
The main trouble, Alwaleed tweeted on July 27, is a flood of new petroleum reserves on to the global market, particularly shale oil from the US. These fresh supplies are eroding demand for Saudi petroleum and, since the country relies on oil exports for 92% of the state budget, will trigger a crisis unless the government acts post-haste.
“It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately,” Alwaleed wrote in one of three letters that he posted with the tweet.
The letters, addressed to a variety of Saudi dignitaries including the king, are all dated in April and May. One can only speculate as to why Alwaleed made the highly unusual public release, but it may be that he felt his message was not heard. If so, it may be because his assertions diverge so much from the official Saudi message. On May 10, for example, Saudi oil minister Ali Naimi (one of the recipients of the letters), told a Washington audience that shale oil is “great news” for the US, and no threat to his own country.
There could not be a more stark contrast in news: the Saudis officially claim that they are building a gigantic array of solar panels that by 2020 will produce 24 gigawatts of power, and all but eliminate the need to burn oil for electricity. (Saudi currently burns 550,000 barrels a day of oil for its own needs, worth billions of dollars a year in potential export earnings.)
But Prince Alwaleed says that is not nearly enough. “Everybody knows that the policy of the western countries, led by the United States, is to decrease dependence on oil,” he wrote in green ink at the bottom of one letter. Because of that policy, he said,
The global dependence on OPEC’s petroleum and specifically the production of Saudi Arabia is in continuous and clear decline.
If the past is a teacher, Saudi leaders will either ignore or publicly dismiss Alwaleed’s assertions. But Twitter is popular with businesspeople in the Gulf as a forum that bypasses the straitjacketed mainstream press. Turning to it looks like an attempt by Alwaleed to bring direct pressure from public opinion to bear on the Saudi elite.