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Last updated on April 18, 2014 at 7:15 EDT

Saudi poor watch volatile stock market from sidelines

June 14, 2006

By Andrew Hammond

RIYADH — The stock market rose. The stock market fell. But Migbil al-Anezi was only concerned about the lack of water and electricity in his shanty Nadhim district on the outskirts of Saudi Arabia’s capital Riyadh.

While half of the country’s 17 million Saudis have been counting their losses following the bourse’s crash earlier this year after a spectacular rise in 2005, others only hope for more largesse from a state awash with cash thanks to record oil prices.

“There are no services,” Migbil says dismissively, preparing cardamom-flavored coffee inside the wooden hut he calls home. “And I wouldn’t dare ask in case they force us off the land … There’s talk of putting a recreational facility here.”

While soaring oil prices have given the world’s biggest oil exporter record revenues, many Saudis still find themselves living on the margin despite promises of reform and a more equitable distribution of wealth.

Migbil says he moved to this scrub land six months ago because of rising rents in the city’s formal neighborhoods, putting a strain on the 2,000 riyals ($533) he earns a month as a driver for the Ministry of Agriculture.

“There’s no water so I go around mosques or shops to take from their taps, and running the air cooler needs too much water in summer so I’ve sent the children to relatives,” he says, embarrassed to entertain guests in such meager surroundings.

As he speaks, the engineer who installed the generator-powered air cooler passes by to check on the progress of the rickety contraption. “I put 50,000 riyals in the stock market,” the visitor confesses, “but now it’s all gone.”

“What do I want with the bourse?” responds an incredulous Migbil, who has to provide for six children including a hospitalized daughter with kidney trouble.

“KING OF THE POOR”

Before he ascended the throne last year, King Abdullah had warned of the threat of growing poverty and unemployment while visiting a poor district in 2002.

But there are still no statistics on how many Saudis actually struggle to make ends meet and the topic remains taboo in a kingdom fabled for its tremendous wealth.

“There is a problem of figures. Maybe there’s been a slight fall in the number of poor, but we must remember that five years ago no one even wanted to recognize this issue,” said Turki Fadak, an analyst with the Saudi Economic Association.

Though the rise in world oil prices has offered a certain reprieve, the authorities still fear that an underclass who perceive they are left out of the kingdom’s development drive could provide recruits for al Qaeda, which launched a violent campaign to topple the monarchy in 2003.

Last month, the king — whom Forbes magazine says is worth $21 billion — promised cheap housing. He also cut fuel prices, in a move which drew praise from the underclass and confirmed the political sway the question of poverty now carries.

“The rich don’t feel it, but for the poor this fuel cut really makes a difference. It was a great idea and I thank him (the king) for it,” says Hussein al-Walda, another squatter in Nadhim, sitting cross-legged in a makeshift tent.

Like Migbil, he says the stock market means nothing to him.

“I see it on television, but what capital do I have to put in there?” he said. “We’ve got scorpions and snakes here, and in the winter it gets really cold. Two years ago we had hailstones as big as this coffee cup.”

FESTERING RESENTMENT?

Ali Sadek, an economist who used to work with the Arab Monetary Fund in the United Arab Emirates, said low-income Saudis were a festering problem for the kingdom with consequences that are hard to predict.

“There is no reason to have poor people in a rich country like Saudi Arabia,” he said. “If there are poor in a country and they see conspicuous consumption, they are resentful of other people as well as the government because they should be doing something to help them.”

Although the kingdom is striving to diversify its oil-based economy, the private sector is failing to provide jobs. Unemployment is officially put at between 6 to 12 percent, and most Saudis long for government jobs and state hand-outs.

A decade-old drive of “Saudization,” intended to replace over 6 million foreign workers with Saudi nationals, has failed to produce major results and the government plans to bring even more Asian labor to fuel its industrial expansion.

“It’s not a matter of just giving people food. The state has to train them to really earn their income,” Sadek said. “Nobody really knows when the oil boom will change, so it’s better for the government to create projects that will give jobs to the segments of the population who are unemployed and unskilled.”


Source: reuters