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Saudi Arabia

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Even Saudi Arabia has to tighten its belt when expenditure outpaces income

Along the Red Sea, Saudi Arabia has a narrow coastal plain. From here the land rises sharply to highlands that vary from 1,500 metres in the north to 3,000 metres in the south. Beyond these western highlands is a vast plateau that descends gently to the eastern coast along the Persian Gulf. In the centre of this plateau is the rocky expanse of the Najd, around which circles an arc of desert, which includes in the south the world's largest area of sand, the Rub' al-Khali—the ‘empty quarter’. Saudi Arabia has no rivers and must take all its water from underground sources.

The native population is almost entirely Arab, though along the Red Sea coast there is also a black population. This is the original home of Islam. Most people are Sunni Muslim with a strict interpretation known as Wahhabism, but there are also up to two million Shia Muslims who live largely in the east and have suffered repression. Many live abroad in exile. The population is growing fast—2.7% per year. Saudi Arabian citizens generally have benefited from the oil wealth. All receive free education and health care, and enjoy a range of subsidies. Those less wealthy are also entitled to a plot of land and a loan to build a house.

Women have traditionally been kept behind closed doors, and are still not allowed to drive, but their education levels are rising and many are now entering businesses. They can also take full advantage of the internet—two-thirds of Saudi users are women.

Although only one-quarter of the resident population consists of foreigners they make up 80% of the labour force. This includes immigrant workers from other Arab countries and from South and South-East Asia, who do the more menial jobs, as well as Europeans and Americans who do more specialized or technical work.

Nevertheless the boom years now seem to be over. Since the population has been growing faster than the economy Saudi Arabia's per capita income has been falling—it has more than halved in the past 20 years. As a result, Saudi nationals are having to accept more routine jobs such as security guards and taxi drivers.

Most economic activity revolves around oil, which is responsible for more than one-third of GDP, 80% of government revenue, and 90% of exports. Saudi Arabia has the world's largest oil reserves—one-fifth of the global total. This is extracted from huge oilfields—most of which are in the east, though there have also been discoveries elsewhere. At current rates of extraction, reserves should last 80 years or more.

The business is almost entirely in the hands of the government through Saudi Aramco. As well as having local refineries, the company also owns extensive refining and marketing operations in other countries.

Saudi Arabia has other important natural resources. Thus it has 4% of global gas reserves and is well endowed with many other minerals, including gold, iron, copper, and phosphates. Having concentrated on oil, it has barely exploited these but is planning to do so in the future.


Subjects: History

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