Saudi Arabia is borrowing more from international markets to meet fiscal shortfalls caused by the halving of the crude oil price, additional unbudgeted expenses prosecuting the war on Yemen and enhanced security needs.
In July the kingdom issued its first sovereign bonds since 2007 to raise about $4 billion from local banks. It’s also been dipping into sovereign fund reserves and now plans to raise another $27 billion, a figure seen by analysts who spoke to The Middle East in Europe as broadly notional and subject to upward change. Saudi Arabian state and private sectors have vast investments in Europe, but there’s no indication yet of any drawings on those investments. Most of the Saudi sovereign fund holdings are based in Europe, North America or offshore financial havens.
Although Saudi Arabia’s development needs are immense, recent spikes in government spending are due largely to war spending in Yemen, military shopping and high security outlays amid a widening repertoire of Saudi actions and policies that have made the kingdom more enemies in the neighbourhood. The Saudi-led Arab coalition’s war on Yemen, aided by outside strategic and technological backstopping, has created a humanitarian crisis of expanding proportions, international advocacy groups say.
The latest [7 August 2015] terrorist attack on a mosque within a military compound illustrates the threat from Saudi Arabia’s detractors isn’t contained despite mass arrests of suspects.
German Foreign Minister Frank-Walter Steinmeier, one of the first senior European Union leaders to react to the suicide bombing in Abha, Asir province, said, “This was a despicable, but also a transparent attempt to sow hatred among the Saudi Arabian people and to incite polarisation in society.” Saudi and international media said the attack was aimed at military worshippers at the mosque inside the compound of a special forces headquarters near Yemeni border.
“This cowardly attack shows once again that terrorism neither respects any religion nor belongs to any religion,” Steinmeier added. “Our thoughts are with the victims’ families and friends and with the Saudi Arabian people as a whole. Germany stands resolutely at Saudi Arabia’s side in the fight against terrorism.” Germany and German Chancellor Angela Merkel recently were cited as special targets by Daesh, aka ISIL, terrorist network.