January 24th, 2011
02:31 PM GMT
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Riyadh:  The home to the world’s largest oil reserves and the largest economy in the Middle East seems far removed from the populist youth revolt in Tunis, but government and business leaders in the region are keeping a watchful eye on the events in North Africa.

The fifth annual Global Competitiveness Forum in Riyadh, intentionally positioned just before Davos, is an excellent opportunity to take the pulse of the wealthier Gulf States and those who have an interest in seeing off the domino effect which has touched Algeria, Jordan, Egypt and Yemen.

The GCF is the “sand” component of what has built a reputation for being the “sand to snow” week, where about 100 participants go to both, including the chief executives from Rio Tinto, Alcoa and top cabinet members of the Kingdom.

While Saudi Arabia, Kuwait and the UAE have ample surpluses to dole out food and wage subsidies to calm nerves from the protests in the region, they are mindful that in an era of social media and rapid file sharing, they don’t want to take chances.

There are two keys issues at play in the Middle East - one which is a regional phenomenon, the other a global one.  The Middle East continues to witness some of the fastest growth rates in the world, which can be a net positive (young workforce) if managed correctly, a monstrous challenge (high unemployment) if not.  The latter at this stage is dominating the debate.

“The Tunisia case is a wake-up call for everybody,” says John Sfakianakis of Banque Saudi Fransi.  While he is sceptical that these protests will reach into the Gulf, it is a warning to governments “to be able to adjust and to fix the structural problems that the region has - the biggest of all is unemployment.”

Even in Saudi Arabia, with all the fortune that 25 percent of the world’s oil reserves can offer, the jobless rate is just above 10 percent.  In Tunisia it is 14 percent.  The rule of thumb in this part of the world is that unemployment is double the rate amongst the region’s youth, which makes up two-thirds of the population.

The chief operating officer of Bahrain’s Economic Development Board, Kamal Ahmed, says that leaders of the region “should not wait to have a crisis in order to address the pressing issues.  If we understand our challenges, our situation, we are able to put a plan to try and fix it.”

The second key challenge, the global one, has come back to haunt the region as the world economy has recovered from the depth of the banking crisis - the rising costs of basic foodstuffs.

In 2007, commodity prices hit record highs and governments here were busy scouring East Africa for arable land to enhance their food security.  In this part of the world, households spend about a third of their take-home income on feeding their families.  That is why the stubbornly high jobless rates coupled with, in some cases, double-digit price rises for food are leading people onto the streets demanding change.

“If you are unemployed, no income and the cost of goods and serves are going up, this scenario hits you very directly,” said Ahmed Fattouh, CEO of Globalist Capital Management. “We are at a tipping point.”

Jean-Marie Pen, chairman of consulting group Bain, is convinced that the wealthier Gulf countries use surplus funds to buy time.  Saudi Arabia and Kuwait announced such moves at the Arab League Summit last week.  But the poorer states will struggle.

Pen believes as leaders contemplate the global challenges in Davos, they need to think carefully about a global response to food supplies.  As countries in the East rise, specifically India and China, so too will the need to address food, water and energy shortages near and long term.



soundoff (8 Responses)
  1. Jayson Rex

    Saudi Arabia is known for its financial support of Islamic extremists and the anti-Christianism that permeates its entire foreign policy. No friend of freedom, democracy and values that the West cherishes above all else, it is not a nation nor a country but merely a tribe with a flag that still lives in the seventh century. Were it not for its oil, Saudi Arabia has no place in Davos just as Davos does not have a place any longer in the current globalized economy. A nice idea whose end has come.

    January 25, 2011 at 8:12 am |
  2. Manuel Vilhena

    Unemployment should be the big issue for those summits.

    January 25, 2011 at 12:04 pm |
  3. AZEDDINNE

    the world is changing and we have to change too ,, they make things exepensive and poor countryS cant follow with !
    they have to invest in poor country so they can follow with ,and we have to rebuild the green future before its to late
    we can make electricity to the hus with the donkey , donkey have to just to turn around like a windmill but i call it donkeymill

    January 28, 2011 at 11:13 pm |
  4. Jack Scott

    To : Jayson,

    The truth is most of muslim do not like Saudi. Saudi is the best ally of the West in the middle east.

    January 29, 2011 at 11:13 am |
  5. Majid

    Saudi a Country where Human Rights are violated and people does not have right to Speak Freely again Governments Policy,again Economic reforms, Corruption, In saudia Laws are in Favour of Saudi Citizen.People who came from other courtiers to work in saudia does not have human Right. some of Major Violation are 1) Passport are Held with Saudi Sponcer or with Company . 2) Expatriates people can not work except his sponser and thats why Companies or Saudi citizen never pay them as per they deserve because Expatriates can not work on another place. 3) if any Expatriates will fight for his right with sponcer or saudi Expatriates will get Final Exit from saudia and they can not come back to saudia .4) and many many more. but world is just keept silense because saudia is OIL producer Country and all world is just silense about arab countries . All Arab Couuntries are RAJEEEEEM but EUROPE and USA never Forced these countries, Please Please Please Help us Help Expatriates who are in Arab Countries GULF Countries ( Saudia arabia, Kuwait, Qatar , and others ) Or open door for us so we can come to your country to do jobs as we are treated like slaves.

    January 29, 2011 at 1:52 pm |
  6. asabry

    Gaddafi of Libya, where are you hiding these days, are you hiding in same hole like late Sadam Hessian of Iraq… You are next Gaddafi, you better to run for your life. Opinion from Egypt

    January 31, 2011 at 1:00 am |
  7. Gadaffi british spy

    Libya you're next for oppressing all your people, we know that u're not a US spy, you are a UK spy, time for you to go, as the UK is also economically down, hahaha, Lockerbie was not real, your daughter did not die, it was all created to make the world think that there were issues with Libya and US, we are not falling for the silly western media again

    February 2, 2011 at 12:55 am |
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    April 20, 2012 at 12:26 am |

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