Challenges 2013

January 2, 2013

Patrick W. Ryan | SUSRIS

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The beginning of a new year has always been a good time to assess where one has been and where one is going. On New Year’s Day P.K. Abdul Ghafour, writing for Arab News, gave a lengthy recitation of achievements in Saudi Arabia ["The year the Kingdom took a giant leap"] in 2012 including progress in education, healthcare and the industrial sector, as well as the solid 6.8% growth rate in the economy. Yet many significant challenges remain both domestically and outside Saudi Arabia’s borders.

As we embark on a new year of our work as your chronicle of developments in Saudi Arabia and in the relationship with the United States we thought it appropriate to survey thought leaders and specialists to bring you their concerns and insights about the challenges that face Saudi leaders in 2013. They each provided three ideas, bullets, and concepts that formed the areas that they will be on watch for this coming year. We asked that they consider not only conventional wisdom but add their outside the box thoughts.

Among the responses to the survey was a longer, thoughtful assessment by Richard Wilson, President of the Washington, DC-based Saudi-US Trade Group. Many observers and specialists would agree there is no shortage of challenges in the inbox of leaders in Riyadh and Wilson’s analogy of a “supermarket” full of choices is apt.

Identifying challenges facing Saudi Arabia in 2013 is like shopping at a Wegmans or a Carrefours. They have every item you could think of and many more you never knew existed.

Just the geography section is chock-full of choices: Iran, Yemen, Syria, Egypt, Bahrain, Israel, West Bank, Gaza…

Wander over to the Arab Spring aisle just past the religious extremism end-cap near the special section featuring sectarian strife. And don’t forget the closest-Western ally greeter near the entrance. You know, the one whose mood is hard to discern from day to day.

This is not to make light of these challenges. Every one of them requires a deft policy touch on the part of Saudi leadership and any one of them could erupt in foreseen and unforeseen ways that could be massively disruptive.

However, these issues are largely external. The most consequential questions confronting Saudi Arabia in 2013 are internal.

Saudi Arabia must get its demographic challenge right. We’ve all seen the numbers, 60% of Saudis are under the age of 20. If the foundations necessary to accommodate this youth bulge are not put in place over the next five years, it may not matter if the neighbors are unruly.

For Saudi Arabia education, employment and economy are the primary challenges. Since they are entwined, success or failure in any one of them impacts the others.

Saudi Arabia is investing a quarter of its budget on education and training. It’s building colleges and universities at home and sending thousands of young Saudis abroad for schooling. It needs to ensure they are gaining employable skills but just as importantly, the Kingdom must make headway towards revamping its primary and secondary schools with updated curriculums and reduced emphasis on rote learning.

If employable graduates can be produced, adequate paying jobs are required. With its massive investment in economic cities and what appears to be a renewed commitment to Saudization the Kingdom is cribbing some Chinese directed-economy tactics. A sort of, ‘build it and they will come,’ approach.

For this to succeed, the economy will need to diversify and evolve. The government is already attempting to leverage its oil-based economy toward downstream added-value products and, ultimately, renewables and a more knowledge-based economy. The private-sector must continue to expand and capital markets be made more accessible.

All along the way critical choices will be required ranging from employment restrictions on women to rationalizing energy subsidies to refining aspects of the Nitaqat effort.

If Saudi Arabia can get its education-employment-economy trajectory on the right path in the next half-decade, its long-term prospects – even in an unsteady region – are terrifically enhanced.

What do you think are three challenges for Saudi Arabia to tackle in 2013?  Share your comments following this article on SUSRIS.com [Link].  – We thank all our correspondents for taking time to share their insights and perspectives.

Dr. Thuraya Arrayed
Senior Executive and Planning Advisor to Saudi ARAMCO, and columnist

  • Development

Education and training for employment, skill transfer and social reform

  • Growth

Economy, world and regional projects & JVs , GCC manpower cooperation and investment,

  • Politics

Leadership, security and regional cooperation

***

Omar Bahlaiwa
Secretary General, Committee for International Trade (CIT)

  • Atomic and Renewable Energy

The future of atomic and renewable energy in the Kingdom, and the partnerships that can be formed between both parties to develop an integrated system for this industry.

  • Infrastructure (Ports, Airports, Railways, Water Desalination, Electricity)

The challenges in developing infrastructure, and contributing to developing a clear strategy for it that extends to the year 2050, followed by developing an implementation plan, taking into account the use of clean energy given its clear great impact on all aspects of life in the Kingdom.

  • Industrial Clusters

Investing in the comparative advantages of the kingdom. Specifying areas of investment that are in line with those advantages in order to develop knowledge industries that will contribute to the prosperity of the Kingdom.

***

Dr. Isobel Coleman
Senior Fellow, The Council on Foreign Relations; Director of the Civil Society, Markets and Democracy Initiative

  • Education Reform

Despite significant investment in educational initiatives like Tatweer, Saudi Arabia has seen too little improvement in critical areas like math, science, and computer literacy over the past decade. On the international TIMSS test, Saudi Arabian 8th grade math scores have risen just slightly over the length of the project. Renewed attention to educational reform should be a priority for 2013.

  • Female employment

While women make up the majority of college graduates, many barriers to their employment still exist, especially in the private sector. Female unemployment rates are three to four times the rate of men. For the sake of the country’s long-term economic health, moving forward on the perennially divisive issue of female employment will be important in 2013.

  • Energy subsidies

Saudi Arabia spends about 10 percent of GDP to subsidize energy, and its per capita consumption of fossil fuels was the highest in the world last year. Demand, driven by energy-intensive desalinization and air-conditioning, is rising steeply. While the government made some motions toward subsidy reform in 2010, that was put on hold in the wake of the Arab uprisings. Subsidy reform should be back on the table in 2013.

***

Sir Sherard Cowper-Coles
Chairman of the Saudi-British Society; Her Majesty’s Ambassador to Saudi Arabia (2003-2006); Author, “Ever the Diplomat: Confessions of a Foreign Office Mandarin”

  • Coping with the consequences of continuing, perhaps worsening, instability across the Arab World.
  • Working with others in the international community to manage relations with Iran as rationally as possible.
  • Striking the right balance between reform and tradition at home.

***

Kathy Cuddihy
Author, “Anywhere But Saudi Arabia,” “Saudi Customs and Etiquette,” and “A-Z of Places and Things Saudi”

  • Education

A country’s best investment is the education of its people. Although the Saudi government built a nation from the ground up in record time, their neglect of a proper secular education system for boys and girls has been a serious shortfall. It is coming back to haunt them: 70% of the population is under the age of 30 and most of them are ill-prepared for serious careers. Many Saudis care about this important issue; they need support in loosening the tight grip of religious conservatives who fear losing their power. Bringing academic failings out in the open on a regular basis might inspire positive reaction.

  • Women’s Issues

I’d be remiss if I didn’t mention this issue. Women are now better educated than men because they work harder yet they continue to be sidelined. While many women are happy to remain in the home, wear a veil and not drive, most of the exploding younger generation is desperate to use their skills and make a contribution. Employing an army of foreign workers makes no sense when half the potential workforce is forbidden to enter the business world.

  • The ‘Other’ Side of Saudis

This is by no means an ‘important’ issue, just one of special concern to me. I’ve read many well-written books on various aspects of Saudi Arabia: the economy, politics, oil, religion, etc. Usually the picture they paint is accurate, but only from that perspective. No one ever gives the other side of the coin and presents the Saudi people as ordinary human beings. The world knows them by deeply demeaning and hateful labels. Where are the portraits of noble bedu, a population with unfailing hospitality, a passive people with a passion for the beauty of their language and a respect for their elders? Where are the stories of the men who work hard for their families and of the women who enjoy being the best homemakers they can be? I know bad news gets better coverage but there are a lot of good Saudis out there who would appreciate a break.

  • Succession

I’m sure most of your survey guests will suggest commentary on the Saudi succession. What are the implications for the Kingdom’s new generation of rulers? Who is best suited to bring the country forward?

***

David Hamod
President, National US-Arab Chamber of Commerce

Youth, youth, and youth . . .

***

Amgad Husein
Partner, SNR Denton, Riyadh

  • The Challenge of Israel

Israeli policies remain an obstacle to stability and peace in the region. This also impacts the wider Gulf generally and Saudi Arabia too.

  • Social Change

The multiple pressure points of the “youth bulge”, unemployment, social media dialogues, the so-called Arab Spring and related challenges are becoming of increasing concern and could cause 2013 to be a seminal year in social developments in the Kingdom. Many US companies in Saudi Arabia are facing a difficult situation in particular with the unpredictable manner of the way Saudization is applied. We all are for Saudization. However, the recent measures have shaken confidence so a balance is needed.

  • Global Energy Market Shifts

The expansion of hydrocarbon reserves in North America coupled with increasing domestic oil demand in Saudi Arabia will lead to changes in traditional relationships as economics and politics are altered to accommodate market transitions. How will renewables such as solar and also nuclear play a role?

***

Mark Katz
Professor of Government and Politics, George Mason University

  • Continuing Shi’a unrest in the Eastern Province plus the possibility of its being aided by Shi’a governments in Iran, Iraq, or both.
  • Possible disagreement within the royal family on how and when to change the succession from the aging sons of Ibn Saud to his grandsons.
  • The challenge of dealing with deteriorating security situations in neighboring countries such as Iraq, Yemen, and Bahrain–but also possibly Jordan and Oman.

***

Amr Khashoggi
Chairman & CEO, Amkest

The “Three ‘E’s”:

  • Education
  • Employment
  • Energy

The management of the job market will prove to be the most challenging because we have a young population (60% under the age of 20) and growing fast. They need jobs, and they need to have the necessary skills that map with the job requirement. For that we need to train and prepare them for that. Furthermore, the job creation and placement must cover women and persons with disability. This growing population is demanding electricity and water, which are depleting our finite resources at a fast pace, so we are changing the country from an oil producing nation to an energy producing nation. This is turning our attention to renewable and nuclear energy, an industry that will preserve our fossil fuels and allow us to export them at higher prices than selling them domestically at subsidised rates. This industry will create jobs for our youth.

***

Dr. David Long
U.S. Foreign Service Retired; Author of numerous books on the Middle East including: “The Government and Politics of the Middle East and North Africa,” “Gulf Security in the Twenty-First Century,” “Culture and Customs of Saudi Arabia,” “The US and Saudi Arabia: Ambivalent Allies,” and The “Kingdom of Saudi Arabia.”

  • Economic

There has been much discussion of the fact that the large numbers of expatriate workers in Saudi denied Saudis jobs. This is true, has been going on for years and is likely to continue to go. There are two the main reasons for young Saudis not being able to obtain jobs: 1) Young women who have a far greater work ethic than young men do not have access to jobs as a result of social tradition; 2) Saudi employers find that Saudi young men lack as strong work ethic to not have the productivity of expatriates who are willing to work harder for less wages.

  • Social

Traditional culture looks to elders as leaders of families, the private sector and the public sector which lowers the ability of younger people to gain real experience as middle-grade moving up to higher positions.

  • Governmental

The government has long sought to increase the proportion of Saudis in the work place, but have placed the responsibility on employers. There are no institutional means for young men in particular to gain a work ethic such as mandatory years in military or civil services.

***

Patrick W. Ryan
Editor-in-Chief, SUSRIS.com

  • The Challenge of Iran

The US Government has signaled March 2013 as a deadline for Tehran to cooperate in the nuclear program impasse. The pressure for military action after the deadline will increase and the consequences for Saudi Arabia and the US will be of great significance as will other aspects of Iranian expansion in the region.

  • Social Change

The multiple pressure points of the “youth bulge”, unemployment, social media dialogues, the so-called Arab Spring and related challenges are becoming of increasing concern and could cause 2013 to be a seminal year in social developments in the Kingdom.

  • Global Energy Market Shifts

The expansion of hydrocarbon reserves in North America coupled with increasing domestic oil demand in Saudi Arabia may lead to changes in traditional relationships as economics and politics are altered to accommodate market transitions.

***

Professor Jean Francois Seznec
Visiting Associate Professor, Center for Contemporary Arab Studies, Georgetown University

  • Power transition in Saudi Arabia

The coming change in leadership and generation in the Kingdom is of primary importance to the Kingdom and to the world. Perhaps a way to approach this is to evaluate how the legacy of King Abdullah will continue

  • The impact of the Syrian upheavals on the GCC

This of course directly relates to the tensions with Iran.

  • The change of economic focus of the GCC towards Asia

Does it have strategic implications for the US-Saudi relations?

***

Lucien Zeigler
Director of Research, Saudi-US Trade Group (SUSTG)

  • Renewable Energy and the Changing Saudi Energy Landscape

Saudi Arabia is pivoting toward renewable energy in part to curb domestic fossil fuel use and meet the growing demands of a new, energy-hungry populace. What are the opportunities and challenges facing the Saudi Government and private sector in becoming a global leader in green and renewable energy? Why has the Saudi government chosen this moment to make such large, strategic investments in renewables? Finally, where does nuclear technology fit in to Saudi Arabia’s plans?

  • The Great Saudi Water Challenge

Saudi Arabia is a dry place, with scarce water resources like many regions across the Middle East. What is Saudi Arabia’s strategy to secure its water future? Are big bets in desalination technology paying off? And, how has Jeddah city fared in curbing the threat posed by annual floods?

  • The Great Educator

King Abdullah of Saudi Arabia will be remembered for many things, chiefly for observers of the Kingdom as a moderate reformer. One of his greatest contributions to Saudi Arabia’s future has been his King Abdullah Scholarship Program, which has sent tens of thousands of Saudi students abroad for college and graduate school. As Saudi Arabia as a society modernizes, what are the greatest challenges domestically to the Saudi education system? What impact have graduates of the scholarship program had so far on the Saudi economy and private sector? Will the scholarship program continue to grow as domestic universities in Saudi Arabia (KAUST, etc.) gain in international reputation?

 

Tagged as: defense, economy, education, energy, foreign relations, inews, security, youth

{ 1 comment… read it below or add one }

Philo Grundy January 3, 2013 at 8:48 am

I agree with Mr. Khashoggi about his “Three Es”, that there are fundamental structural issues to work through, but there are many more challenges in the region, security challenges that will dominate the headlines in 2013. This will probably be the year of Iran-Syria and no one in the neighborhood will avoid being pulled into what is shaping up as a regional catastrophe.

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