Has Oil Really Affected Saudi Arabia and Saudis Positively - Coursework Example

Has Oil Really Affected Saudi Arabia and Saudis Positively? Introduction The story of modern Saudi Arabia traces its way back to 1933 when King Al-Saud granted oil prospecting rights to Standard Oil of California, which was later to be renamed Chevron. By 1938, the company had already discovered vast oil quantities and limited oil exports began by 1940 before increasing substantially by 1945 and the end of WWII (Sinkler 72). Standard Oil of California joined a consortium of oil companies in the late 40s in Saudi Arabia, creating the Arabian American Oil Company, or ARAMCO, which pushed Saudi Arabia to become the world’s largest producer of oil by the 70s. The government finally assumed full ownership of ARAMCO in the 80s, which saw the country enter a new era and renaming the company Saudi ARAMCO. Soon, the country began exploration of previously untouched areas; discovering vaster supplies of crude oil and continues to discover new oil fields to date (Sinkler 72). This greatly increased the income from oil revenues as Saudi Arabia became the largest and most important exporter of oil in the world. In turn, these had profound changes, both negative and positive, on overall Saudi society. Discussion 1. What were the economic effects of oil discovery in Saudi Arabia on the country and its people? 1.1 Oil discovery and revenues from its exports portended economic changes for the country and its people, of which growth in oil export revenue has enabled the Saudi government to undertake 5 year economic development plans that set out to re-distribute petroleum incomes (Al-Rasheed 34). 1.2 The biggest impediment to the economic diversity envisioned under the nine sequences of five-year plans has been a mismatch between private market job needs and Saudi graduate job skills, resulting in foreigners making up 80% of the entire private sector workforce. The first two five-year plans in the 70s focused on infrastructural development with impressive results that tripled the length of tarmac roads, increased seaport capacity tenfold, and improved power generation 28 times (Al-Rasheed 35). 1.3 The focus shifted for the third 5-year economic plan in the early 80s with spending declining in infrastructure but increasing significantly in social services, health, and education. 1.4 Although expansion and diversification of industries failed to rise as planned, the cities of Yanbu and Jubail that were based on refined oil products, fertilizer, petrochemicals, and steel were completed, benefiting the local people (Al-Rasheed 36). The 4th 5-year plan of the late 80s encouraged private enterprise as the government realized that education and training remained as areas of concern. The private sector rose to account for 70% of GDP, not from the oil sector, especially in construction, banking, agriculture, and industry. 1.5 This growth was supported by incentive and financing programs from the government, which aimed for private sector ownership of at least 70% of all joint venture enterprises. The 5th 5-year plan of the early 90s encouraged the consolidation of defense, regional development, social services, and increasing employment opportunities for Saudis in the private sector by reducing reliance on foreign workers (Al-Rasheed 36). 1.6 The 6th plan of the late 90s concentrated on the lowering of government services costs and expansion of educational training, while also reducing petroleum sector dependence through economic diversification in agriculture and industry (Simmons 51). In addition, the program to localize the labor force continued. The 7th plan of the early 2000s concentrated more on diversification and private sector role in the economy, resulting in the creation of hundreds of thousands of jobs for Saudi citizens. 1.7 The focus was the same in the 8th plan of the late 2000s that also sought to increase participation of women in the economic society, as well as establishment of technically-specialized colleges and universities. The current five-year plan seeks to reduce poverty and increase residential housing projects and educational capacity (Simmons 51). 1.8 Therefore, while looking at the results of the five-year economic plans funded by oil revenues, it can be said that the people of Saudi Arabia have benefited immensely in economic terms from the discovery of oil. 2. Did the discovery and exploitation of oil positively impact the political environment for Saudi Arabia and Saudi citizens? 2.1 One of the major results of the oil discovery and subsequent exploration was the increased control over Saudi Arabia politics by ARAMCO, which continued to control all of the country’s inland oil resources from the end of WWII to the 80s (Champion 44). The control by ARAMCO and the US government continues to date, however, especially in the government where all ministries essentially have a contingent of expatriate advisors from the United States who, in turn, have significant influence on Saudi Arabia policies. 2.2 This increasing clout of the US in Saudi politics has led to resentment and the rise of nationalist-religious extremism, including Al-Qaeda that translates to “the base”, which was created to gain political independence for an Islamic state of Saudi Arabia from the US. In fact, this reaction has been blamed for the rise of modern terrorism and the targeting of American installations in the Middle East, such as the Khobar Towers bombing against American expatriates (Champion 44). 2.3 In addition, political influence from American oil companies has resulted in Saudi citizens exporting terrorism to the rest of the Middle East and Africa, taking advantage of young Saudi resentment for the US. 2.4 The Saudi Arabian government, while largely dealing with political Islam ideologies in Saudi Arabia, still faces numerous challenges. Their ability to withstand growing internal political pressure will be largely dependent on their continued support to the Saudi “lower classes”, the oil market and subsequent revenues, and solidarity of the Saudi people with the royal family (Nakaya 38). 2.5 However, it is important to note that the discovery of oil in Saudi Arabia has transformed Saudi political identity since the 30s with greater integration of the desert tribes into one nation, as well as the emergence of a Saudi identity. The political power and influence that oil revenue wealth has endowed on the Saudi royal family has facilitated it to maintain a high level of control and censorship in the country, while it has also enhanced solidarity with regional countries through aid. 2.6 It is still essential to note that political stability and consensus is based on the royal family’s ability to continue meeting the expectations of its people (Nakaya 38). 2.7 Therefore, there is ample evidence that oil wealth has maintained the undemocratic and totalitarian rule of the Saudi royal family politically, which has had negative effects for marginalized groups like Shi’as and women. 3. What were the social effects of oil discovery in Saudi Arabia on the country and its people? 3.1 Oil had a profound effect on the demographics and lifestyle of Saudi Arabians since, prior to oil discovery, most of its people were nomadic desert-dwellers, which changed with oil. As urbanization increased with the effect of oil revenues, people moved increasingly away from the desert into towns and cities (Clark et al 51). 3.2 Oil wealth resulted in the creation of a world-class social welfare system that enables its people to get free housing, health, and education services. Saudi ARAMCO began development of Saudi society as it was involved in numerous public works project, helping to create the “Saudi Camp” that was meant to provide a place for foreign workers to live in. 3.3 While almost 50% of the entire country’s population was made up of nomadic tribes in the 50s, all of this changed in the 80s with nearly 90% of all Saudis today living in urban areas (Clark et al 51). Oil also influenced secular and religion cultures with traditions that had held for centuries changing considerably, particularly for the Wahhabi Muslims. Industrial development made it more difficult to adhere to traditional Islamic social values, although there is a well-funded religious police to maintain Islamic values. 3.4 Therefore, it is evident that oil has improved the social life of Saudi Arabians by creating a social-welfare state and decreasing poverty. 4. What were the social effects of oil discovery in Saudi Arabia on the country and its people? 4.1 Saudi Arabia also changed culturally because of oil by becoming more of a consumer culture as it gradually embraced capitalist ideology and principles, such as free market liberalization (Maisel & Shoup 66). Life for many Saudis changed as foreigners began to enter Saudi Arabia and take up manual jobs. 4.2 The society became increasingly multi-cultural compared to the period before oil discovery when most of the Saudis were Arabian tribes-people, mixed with small minorities of Black Sudanese slaves, Yemenis, and Turks. ARAMCO brought with it numerous German, Irish, Canadian, British, and White American expatriates to oversee Saudi oil fields. In addition, construction jobs attracted workers from Pakistan, Iran, Palestine, Iraq, and Yemen, later joined by construction workers from Thailand, South Korean restaurant workers, and Filipino sailors (Maisel & Shoup 66). 4.3 Presently, Saudi Arabia is one of the world’s most multi-cultural and diverse societies. However, for immigrant Saudis, their rights are not recognized, and this may have been one of the negative effects of oil discovery for foreigners living there. 4.4 Overall, though, discovery of oil has had positive cultural effects for the Saudi people by increasing the diversity of the country. 5. Finally, what were the global effects of oil discovery in Saudi Arabia on the country and its people? 5.1 Saudi Arabia’s government has become increasingly influential with increasing oil wealth, especially on the regional stage. The discovery of oil has also changed global politics, especially regarding the Middle Eastern balance of power. 5.2 As the world becomes more dependent on fossil fuels and becomes more industrialized, the country’s importance has increased (King 28). However, this is under threat with increased production of shale fuels and the gradual move towards green fuels. 5.3 Still, Saudi Arabia has played a critical role in global politics for decades and will continue to do so. Initially courted by the fascists in WWII, Saudi Arabia had declared support for the Allies by 1945. 5.4 Finally, its oil wealth has also enabled the country to pay a critical role in moderating the volatile Middle East region, especially as part of OPEC (King 28). 5.5 Overall, discovery of oil has turned Saudi Arabia to a global political player with clout in the Middle East and North Africa, which has opened up opportunities for Saudi citizens. Conclusion In conclusion, from the above discussion, it is clear that the discovery of oil has had both negative and positive impacts on Saudi Arabia and Saudis. Economically, socio-culturally, and globally, the country’s oil wealth has enabled the country and its people to become increasingly modernized and industrialized, while also becoming a regional power in the Middle East and North Africa. However, the most prevalent negative effect of oil has been political, where oil wealth has enabled the royal family to maintain an authoritarian and sectarian government that is detrimental to marginalized groups like Shi’as and women. Therefore, it is imperative for Saudi Arabia to undergo political reform for all its citizens to enjoy the benefits of their oil wealth. Research Log During the research process for this project, an internet search was conducted to come up with information concerning whether the impact of oil in Saudi Arabia has been positive for the country and for Saudis. A review of relevant literature was carried out on the internet, after which five main research questions were formulated. These were; What were the economic effects of oil discovery in Saudi Arabia on the country and its people? Did the discovery and exploitation of oil positively impact the political environment for Saudi Arabia and Saudi citizens? What were the social effects of oil discovery in Saudi Arabia on the country and its people? What were the social effects of oil discovery in Saudi Arabia on the country and its people? What were the global effects of oil discovery in Saudi Arabia on the country and its people? After formulating the questions, a further internet search was conducted specifically to answer these questions. The key words used in the search included “political impact of oil discovery in Saudi Arabia”, “economic impact of oil discovery in Saudi Arabia”, social impact of oil discovery in Saudi Arabia”, “cultural impact of discovery in Saudi Arabia”, and “global impact of oil discovery in Saudi Arabia”. Most of the relevant information was linked to books regarding the history of Saudi Arabia and the transformative effect of oil discovery. These books were accessed through the library and information synthesized to answer the research questions. Works Cited Al-Rasheed, Madawi. A History of Saudi Arabia. Cambridge: Cambridge University Press, 2010. Print. Champion, Daryl. The Paradoxical Kingdom: Saudi Arabia and the Momentum of Reform. New York: Columbia University Press, 2013. Print. Clark, Arthur; Tahlawi, Muhammad; Facey, William & Pledge, Thomas. A Land Transformed: The Arabian Peninsula, Saudi Arabia, and Saudi ARAMCO. Dhahran, Saudi Arabia: Saudi Arabian Oil Co. (Saudi ARAMCO, 2009. Print. King, John. Oil in the Middle East. Chicago, Ill: Raintree, 2009. Print. Maisel, Sebastian & Shoup, John. Saudi Arabia and the Gulf Arab States Today: An Encyclopedia of Life in the Arab States. Westport, Conn: Greenwood Press, 2009. Print. Nakaya, Andrea C. Oil. Detroit: Greenhaven Press, 2011. Print. Simmons, Matthew R. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Hoboken, N.J: John Wiley & Sons, 2010. Print. Sinkler, Adrian. Saudi Arabia. San Diego: Greenhaven Press/Thomson Gale, 2013. Print. Read More