Friday, March 04, 2011

Welfare princes

In America we have welfare queens. In Saudi Arabia they have welfare princes. Reuters has taken a look at U.S. State Department cables obtained by Wikileaks.

The November 1996 cable -- entitled "Saudi Royal Wealth: Where do they get all that money?" -- provides an extraordinarily detailed picture of how the royal patronage system works. It's the sort of overview that would have been useful required reading for years in the U.S. State department.

It begins with a line that could come from a fairytale: "Saudi princes and princesses, of whom there are thousands, are known for the stories of their fabulous wealth -- and tendency to squander it."

The most common mechanism for distributing Saudi Arabia's wealth to the royal family is the formal, budgeted system of monthly stipends that members of the Al Saud family receive, according to the cable. Managed by the Ministry of Finance's "Office of Decisions and Rules," which acts like a kind of welfare office for Saudi royalty, the royal stipends in the mid-1990s ran from about $800 a month for "the lowliest member of the most remote branch of the family" to $200,000-$270,000 a month for one of the surviving sons of Abdul-Aziz Ibn Saud, the founder of modern Saudi Arabia.
The above the table welfare is just the beginning. Read it all.

One of those scheme is what we call "turning them loose on the local economy":
Royals kept the money flowing by sponsoring the residence permits of foreign workers and then requiring them to pay a monthly "fee" of between $30 and $150. "It is common for a prince to sponsor a hundred or more foreigners," the 1996 cable says.
These foreign workers compete with citizens for jobs. For every member of the House of Saud, and there are many given the royal welfare incentives to procreate, there many more Saudis who are poor by western standards.

Turning foreign workers loose on the economy to find a job and pay you an annual fee is common in other GCC countries.

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Anonymous Rosalind said...

Quite helpful piece of writing, thanks so much for this post.

12:45 PM  

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