Saudis: Give Us Money if You Cut Back on Oil

[[R_H]]

Scared petro-bucks might dry up, the Kingdom wants financial help

The Saudis, those nice folks who were charging us $147 a barrel just over a year ago, now say they'll need economic aid if the world keeps cutting back on oil consumption.

The United Nations is currently holding climate talks in Bangkok, where Saudi Arabia, suddenly spooked at the idea the world might need less of their No. 1 export, is privately demanding that oil-producing nations get special financial assistance if a new climate pact calls for big cuts in the use of fossil fuels.

That campaign comes despite an International Energy Agency report released this week showing that OPEC revenues would still increase $23 trillion between 2008 and 2030 — a fourfold increase compared to the period from 1985 to 2007 — if countries agree to significantly slash emissions and thereby cut their use of oil. That is the limit most countries agree is needed to avoid the worst impacts of climate change.

The head of the Saudi delegation Mohammad S. Al Sabban dismissed the IEA figures as “biased” and said OPEC's own calculations showed that Saudi Arabia would lose $19 billion a year starting in 2012 under a new climate pact. The region would lose much more, he said.

“We are among the economically vulnerable countries,” Al Sabban told The Associated Press on the sidelines of the talks ahead of negotiations in Copenhagen in December for a treaty to replace the Kyoto Protocol, which expires in 2012. “This is very serious for us.”

Saudis ask for aid if world cuts dependence on oil

BANGKOK – There are plenty of needy countries at the U.N. climate talks in Bangkok that make the case they need financial assistance to adapt to the impacts of global warming. Then there are the Saudis.

Saudi Arabia has led a quiet campaign during these and other negotiations — demanding behind closed doors that oil-producing nations get special financial assistance if a new climate pact calls for substantial reductions in the use of fossil fuels.

That campaign comes despite an International Energy Agency report released this week showing that OPEC revenues would still increase $23 trillion between 2008 and 2030 — a fourfold increase compared to the period from 1985 to 2007 — if countries agree to significantly slash emissions and thereby cut their use of oil. That is the limit most countries agree is needed to avoid the worst impacts of climate change.

The head of the Saudi delegation Mohammad S. Al Sabban dismissed the IEA figures as "biased" and said OPEC's own calculations showed that Saudi Arabia would lose $19 billion a year starting in 2012 under a new climate pact. The region would lose much more, he said.

"We are among the economically vulnerable countries," Al Sabban told The Associated Press on the sidelines of the talks ahead of negotiations in Copenhagen in December for a treaty to replace the Kyoto Protocol, which expires in 2012.

"This is very serious for us," he continued. "We are in the process of diversifying our economy but this will take a long time. We don't have too many resources."

Saudi Arabia, which sits atop the world's largest proven oil reserves, is seeing economic growth slide because of fallout from the global meltdown, but experts still expect the country, flush with cash from oil's earlier price spike last year, to be better able than other nations to cope with the current crisis.

Al Sabban accused Western nations of pursuing an agenda against oil producers, under the guise of protecting the planet.

"Many politicians in the Western world think these climate change negotiations and the new agreement will provide them with a golden opportunity to reduce their dependence on imported oil," Al Sabban said. "That means you will transfer the burden to developing countries, especially to those highly dependent on the exploitation of oil."

Al Sabban said his country wanted a new deal and was not impeding progress in talks as some activists have claimed.

An Arab environmental group IndyACT and the environmental group Germanwatch released a report Thursday accusing Saudi Arabia of blocking key elements of the negotiations. Among their tactics, the groups said, was slowing negotiations by insisting that the economic woes of oil producers be included in the text.

"Despite the variability in the region, the current Arab position is mainly focused around protecting the oil trade rather than saving the planet form the adverse impacts of climate change," said Wael Hmaidan, the executive director of IndyACT.

Most countries have agreed that any new pact should include provisions to avoid temperature increases of more than 3.6 degrees Fahrenheit (2 degrees Celsius) above preindustrial levels — the threshold at which most scientists say serious climate change will ensue.

That would require emissions cuts from industrial countries of 25 to 40 percent below 1990 levels by 2020, far above the 15 to 23 percent cuts rich countries have offered so far. It would also require developing countries to scale back their emissions.

Both rich and poor countries are counting on a transition to a low carbon economy as a key component of meeting their reductions, a move that would require them to away from fossil fuels and toward renewables like solar, wind and hydro power.

"This is very serious for us," he continued. "We are in the process of diversifying our economy but this will take a long time. We don't have too many resources."

What a bunch of arrogant dumbasses.

[Julhelm]

Fuck them.

[SCRawl]

"This is very serious for us," he continued. "We are in the process of diversifying our economy but this will take a long time. We don't have too many resources."

Well, to be fair, they don't have many resources. Just one or two really, really big ones.

Anyways, to the main thrust of the OP: financial aid for Saudia Arabia? It doesn't pass the giggle test.

[Thanas]

I'd be okay with development aid for them if their countries weren't such freaking theocratic holes run by fat incompetents who squander their money on pleasure instead of investing it wisely.

[salm]

Is there a reason why they didn´t start diversifying their economy decades ago, like Dubai for example? I imagine they could attract a whole bunch of tourists if they removed the ridiculous ban on non muslims in makkah.

[Shroom Man 777]

Then again, would it be in anyone's interests if these freaking theocratic holes end up descending into Third World levels of poverty? It might make the whole situation in the ME worse, with many of these oil-subsidized nations actually having big militaries we might end up seeing them invade smaller nations for their oil supplies, ala Iraq and Kuwait or something. Even without that, a poverty-stricken theoretic fuckhole is no doubt worse than a decadently fucking rich theocratic fuckhole.

But I agree, fuck them. They've leeched off the societies and governments of the world for their ill-gotten gains, it's bout time they're left high and dry.

[PeZook]

Are you guys forgetting that even if the West cuts back on oil usage, it will still actually need a whole shitload of oil?

Sure, it's ironic that a country where every single prince lives in a giant palace whines about needing financial aid - but going "fuck them" has the potential of backfiring horribly. Like it or not, OPEC holds everyone by the balls and will continue to do so for the foreseeable future.

[CaiusWickersham]

Local Ohio energy monopoly is trying something similar: distribute energy efficient bulbs to customers, then charge customers for the bulbs, distribution costs AND the difference in the electrical bill from use of the bulbs.
Funny if weren't true

[Vaporous]

The bit from Syriana about laughing while the people of the middle east go back to herding camels jumps to mind here.

[MKSheppard]

Like it or not, OPEC holds everyone by the balls and will continue to do so for the foreseeable future.

Only as long as the West continues to coddle them. There's always the old fashioned colonialism option -- kill the natives and take their oil; or as I saw it in a tee-shirt in a surplus store in the 1980s:

"Nuke them until they glow in the dark, then shoot them in the dark and take their oil"

and on the back it had a skeleton in arab headdress laying on a sand dune as a mushroom cloud rose in the background.

More seriously, imagine the Chinese reaction to an OPEC oil embargo on them. They'd take it as a declaration of war and break people and things.

[[R_H]]

Then again, would it be in anyone's interests if these freaking theocratic holes end up descending into Third World levels of poverty? It might make the whole situation in the ME worse, with many of these oil-subsidized nations actually having big militaries we might end up seeing them invade smaller nations for their oil supplies, ala Iraq and Kuwait or something. Even without that, a poverty-stricken theoretic fuckhole is no doubt worse than a decadently fucking rich theocratic fuckhole.

I'd say a poor theocratic shit hole is better than a well-off/rich one, because they'd have less money do cause trouble with. No/less money for Wahhabists and other fun activities like that. The Saudi military is pretty dependant on contractors (ie foreigners) for all the unglamourous stuff, and with less money they'd have to downsize their military and paramilitary.

[Guardsman Bass]

I'm not particularly sympathetic to the Saudi government here. They've had decades of mostly high oil prices in which to try both getting their population growth (which is enormous) under control, as well as diversifying their economy using all the money they've got (although to be fair, that much oil income means that the Saudi currency would rise pretty quickly without fixing it, hurting any exports). That they haven't really done so while some of their oil-rich neighbors (like the UAE) have only hurts any credibility to their argument.

[Gramzamber]

So a banana republic is crying because it's bananas aren't worth very much anymore.
Maybe they should've learned to diversify their economy and not be a third-rate oppressive dictatorship while they were still swimming in oil money eh? Suck it down, morons.

[White Haven]

Check me on this, but didn't they have a viable economy back before oil cracked 40 dollars a barrel? And now we're expected to believe that suddenly falling demand while oil is more than double that is going to suddenly put them below the waterline?

[PeZook]

More seriously, imagine the Chinese reaction to an OPEC oil embargo on them. They'd take it as a declaration of war and break people and things.

I meant that letting Saudi Arabia descend into anarchy and chaos will be a bad thing for the West, hence why we should probably do something constructive, rather than just going "well, fuck them and let them rot".

Getting rid of the assholes in charge is what comes to mind first, but that's not gonna happen.

[Sidewinder]

More seriously, imagine the Chinese reaction to an OPEC oil embargo on them. They'd take it as a declaration of war and break people and things.

If Arab members of OPEC decide to place an oil embargo on China, it's more likely to start an "OPEC Civil War" as non-Arab members split from the organization. This is not as absurd as it seems.

President Hugo Chavez of Venezuela has signed a series of energy co-operation deals with China.

He said oil exports from Venezuela to China could rise threefold by 2012, to one million barrels a day.

Venezuela, one of the world's largest oil producers, is seeking new markets to reduce its dependency on exports to the United States.

In 2006 China was Iran’s biggest trade partner and the trade ties between the two countries reached $14.5 billion and it is forecast to reach $20 billion in the current year. If the trade ties reach this rate it would show that trade ties between the two countries has expanded 200 times since the Iranian revolution.

Importing oil from Iran constitutes about two-thirds of China’s trade with Iran.

China exports machinery to Iran; for example most of the machinery used in the Tehran metro, such as rail and electricity facilities have been provided by China. Many of the machinery used in power plants such as the ones in Arak and Karun have been bought from China.

The world's second-largest energy consumer, China now imports about 28% of its oil and gas from sub-Saharan Africa, compared with about 15% for the U.S. Washington is hoping to boost that figure--to lessen dependence on the Persian Gulf--which puts it in a head-on battle with China. In the past few years China's leading energy companies (Sinopec, China National Petroleum Corp., and CNOOC) have inked oil contracts from Equatorial Guinea to Algeria to Angola. Chinese President Hu Jintao's African trips have included pocket-sized Gabon, whose 1.4 million people could fit into a corner of Shanghai but which has more than two billion barrels of oil reserves. When China's Foreign Minister, Li Zhaoxing, toured the region in January, he spent several days in Nigeria. "We haven't been totally invaded by China yet, but it will come," says Iheanyi Ohiaeri, head of business development for Nigeria's National Petroleum Corp. "I get calls and e-mails daily from Beijing, from people looking to buy oil."

The calls are being answered, in part because African governments view China as a more cooperative partner than the West. China has refused to back regular Western rebukes of African corruption and human-rights abuses and last year used its permanent seat on the UN Security Council to block genocide charges against Sudan--source of about 7% of China's oil--for the massacres in Darfur. "The U.S. will talk to you about governance, about efficiency, about security, about the environment," says Mustafa Bello, head of the Nigerian Investment Promotion Commission, who has visited China seven times. "The Chinese just ask, 'How do we procure this license?'"

<snip>

China has also agreed to sell armaments to Nigeria--$251 million worth of Chinese fighter jets, financed by China's Exim Bank--and satellite technology provided by defense contractor Norinco. "If China wanted to go out and develop Europe, it would be impossible," says Dai Adi, a Chinese journalist in Lagos who moved from Beijing in 2001. "But here they can."

In Lagos, where 15 million people live, a Chinese company last year built a crimson-walled replica of the Forbidden City. It towers over a hardscrabble neighborhood, its fortress walls enclosing a Chinese-imports emporium selling cheap textiles and plastic sandals. Since 2003, China has become the largest importer of Nigeria's cassava crop, the staple for millions of farmers.

In short, Iran and Nigeria- maybe Venezuela- may find themselves in a Mexican standoff if they try to use an "oil weapon" against China.

[Stargate Nerd]

Economic diversification isn't as easy as it may seem. There are some genuine problems that arise when a country is sitting on a very important resource. It's even worse if the resource is discovered in an area that was very underdeveloped before the big find, like Saudi Arabia.

http://en.wikipedia.org/wiki/Resource_curse

[Guardsman Bass]

Oh, I know. There's also the risk of an economy catching the Dutch Disease. But, they weren't the only society in that region heavily dependent on oil exports, at least at first. One of the reasons why I'm not really sympathetic is because there were other societies, like the UAE, that were heavily dependent on oil exports but who managed to heavily diversify their economies in spite of that. So it's clearly possible.

[Master of Ossus]

The Saudis have been genuinely trying to diversify their economy for decades, but they fundamentally went about it in the wrong way in subsidizing everything under the sun, even when it had little realistic hope of proving viable in a subsidy-free world. I have a bit of sympathy for them because they have no natural resources outside of oil, but realistically it's not the international world's responsibility to ensure full-employment in other countries, and a big part of their problem is their poor education system which is driven partly by their unwillingness to give up Islamic theocracy in favor of development like Dubai, Qatar, Bahrain and, to a lesser extent, Kuwait and the UAE.

[Guardsman Bass]

a big part of their problem is their poor education system which is driven partly by their unwillingness to give up Islamic theocracy in favor of development like Dubai, Qatar, Bahrain and, to a lesser extent, Kuwait and the UAE.

The Saudi monarchy got stuck in that when they did their devil's bargain with the extremely conservative wahhabist religious establishment, giving them control over public morals and schooling in exchange for them not opposing the monarchy. They can't really get rid of it at this point without heavily undermining their own rule.

[Simon_Jester]

More seriously, imagine the Chinese reaction to an OPEC oil embargo on them. They'd take it as a declaration of war and break people and things.

I meant that letting Saudi Arabia descend into anarchy and chaos will be a bad thing for the West, hence why we should probably do something constructive, rather than just going "well, fuck them and let them rot".
Getting rid of the assholes in charge is what comes to mind first, but that's not gonna happen.

Since Saudi Arabia's oil dollars are a major source of funding for Sunni fundamentalists in much of the Islamic world, I'm not so sure that letting the House of Saud rot wouldn't be a net gain for the cause of civilization.

The Saudi monarchy got stuck in that when they did their devil's bargain with the extremely conservative wahhabist religious establishment, giving them control over public morals and schooling in exchange for them not opposing the monarchy. They can't really get rid of it at this point without heavily undermining their own rule.

Though, to be fair, they made that deal long before it became obvious that it was a bad idea. The House of Saud has been allied with the Wahhabis since the time of Frederick the Great, and it honestly worked for them in the local context of giving them power in Arabia. They were committed to fundamentalism long before they found out they were sitting on the world's biggest oil deposits.

[Guardsman Bass]

Though, to be fair, they made that deal long before it became obvious that it was a bad idea. The House of Saud has been allied with the Wahhabis since the time of Frederick the Great, and it honestly worked for them in the local context of giving them power in Arabia. They were committed to fundamentalism long before they found out they were sitting on the world's biggest oil deposits.

That's true, but they more or less re-affirmed it heavily in the twentieth century, when the Wahhabists were getting after them for things like "too much western influence" and letting the Shiites in the eastern province live mostly unmolested.

[Stargate Nerd]

Oh, I know. There's also the risk of an economy catching the Dutch Disease. But, they weren't the only society in that region heavily dependent on oil exports, at least at first. One of the reasons why I'm not really sympathetic is because there were other societies, like the UAE, that were heavily dependent on oil exports but who managed to heavily diversify their economies in spite of that. So it's clearly possible.

I disagree that UAE is a good example of what Saudi Arabia could have done. Dubai never had too much oil to begin with which is why they tried to become the Middle East's business center. But look at where they are now, while Abu Dhabi is relatively comfortable solely because they have much more oil.