Saudi Arabia: Oil, the youth and a fund for future generations (Arab News, 30/12/2012)

It’s the annual-budget season in Saudi Arabia. This is the time of year when every extra zero means a lot to everyone, for the government is the mother and caretaker of the people. The budget, in itself, is nothing but a project that outlines the hopes – but not guarantees – for the forthcoming year based on anticipated oil revenues. Gulf countries rely on oil, and even their other sources of revenue are indirectly linked to this sector, including petrochemical products like fertilizers and plastics, not to mention labour and services charges.

That is why King Abdullah prayed that Saudi Arabia’s oil resources enjoy a long life, namely because this is the country’s main source of revenue. In just one week, Saudi Arabia’s oil production equals the entire revenue of a country like Jordan which sells small amounts of phosphate and trains its citizens to work as teachers and engineers abroad so that they can bring revenues back into the country. It is even better when an oil or gas producing country’s citizens do not exceed the 300,000 mark as is the case with Qatar. In just one day, Qatari revenues may equal the revenues of a country like Bahrain over an entire year. Whilst in the past, Bahrain was the richest Gulf state when pearls were its main source of revenue. That’s life!

This is why oil-producing countries have greater responsibilities, for they have no excuse when one of their citizens has no job, or when a citizen is sick but cannot get treatment, or when a citizen lacks insurance or does not feel safe in his home. It is the government’s duty to provide citizens with these services. When officials are upset at being criticized, they forget that it is their job to serve the people and the budget is how a government expresses its plans to serve the people.

The duty of countries with strong revenues, like oil-producing countries, is not just to cater to the daily needs of their citizens, but also to ensure their future for the coming 100 years. It is their duty to preserve the country’s wealth and environment, and guarantee a better future for the youth and children. Here, I disagree with those who launched the so-called “Future Generations’ Fund” initiative, even though I agree with the objectives it aims to achieve. It is not true that money is the guarantor for a better future for the coming generations and there are examples of countries that pursued this approach but which ultimately ended in failure. Some might recall Kuwait’s Future Generations’ Fund and how it epitomized a vision for the future. In this fund, the Kuwaiti government allocated part of the country’s revenue to future generations. However following the Iraqi invasion of Kuwait, this money completely disappeared and nobody knows what happened to the revenue of Kuwait’s future generations, which had been invested in Europe.

That is why I think it is wise that the Saudi financial system – which is criticized for being conservative and refusing to purchase companies or take economic risks – is wise in this regard, because governments do not have the right to take risks when it comes to public funds. People are more important than money and oil, for they are the true capital of any prosperous country. Complex road systems, huge factories, and skyscrapers can all – in the blink of an eye – disappear whether as a result of war or a new technology replacing oil. A well-qualified and educated people represent the “oil” that will never run out, no matter what disasters take place.

Our governments – which are blessed with money and oil – have to invest in their people. They have to improve the general standard of education, which unfortunately is still not at the requisite level, as well as train graduates and enhance the skills of employees in both the private and public sectors. This is the real future generations’ fund that can never be mismanaged, embezzled or vaporised by a financial crisis. This is the future generations’ fund that cannot be usurped by a foreign power during a conflict or war. What King Abdullah did by encouraging approximately 150,000 Saudi youth to study abroad at universities across the world represents the true future generations’ fund. This is something that can provide guarantees for Saudi Arabia that not even its oil resources or sovereign wealth funds can.

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