The repercussions of Saudi Arabias warmongering policies in the West Asia have finally taken shape in the form of a looming financial crisis. Cornered by low oil prices and costly wars, namely against Yemen and Syria, Riyadh has been forced into adopting a 2016 budget reduction.
On Monday, Saudi media reported that the Finance Ministry would be taking measures to control the deficit including cutting spending and reducing price subsidies for fuel, water, and powera first in the oil-rich kingdom.
Wars Backfire
Since 2011, Saudi Arabia has been funding terrorism in Syria. Financing militants who emerged to fight against Syrian President Bashar Assad, Riyadhs budget has seen unexpected spending.
The same applies to Yemen, where a Saudi-led intervention has proven to be costly since March, not only militarily but also financially.
The report disclosed that military spending reached 25.4% of the kingdoms annual budget while experts estimate that 8 billion dollars have been spent on the war on Yemen.
Yet, Saudi can blame no one but itself on this one. Already facing tumbling oil prices and exhausting financial support for extremist groups in Syria, Riyadh decided to launch an aggressive war against neighbouring Yemen where Ansarullah fighters and the Yemeni army have succeeded to produce a popular revolt against the government spearheaded by Abd-Rabbu Mansour Hadi.
For fear of draining its financial reserve, the Saudis have been forced to enforce unprecedented measures which were received with disdain among the public.
Saving Face
Yet it doesnt seem that Saudi authorities are planning to halt the aggression against Yemen in light of what looks set to morph into a financial crisis any time soon. Instead, the Saudi-led coalition has intensified its bombardment since the announcement, in what appears to be a desperate attempt to save face. This attempt to make the costly war amount to a victory by showering Yemen with airstrikes is doomed to fail.
Since March, the Saudi regime has been attempting to keep the costs of the war confidential to avoid criticism.
The human cost, on the other hand-- as a result of months of airstrikes--has been quite high too.
The Yemen crisis has claimed the lives of more than 7,500 people. The United Nations says that more than 2,500 casualties were civilians.
Earlier this year, the Reuters news agency calculated that Saudi Arabia would spend approximately $175 million per month to support its campaign, adding that a further $500 million will be allocated to a possible ground invasion.
Oil Prices
Saudi Arabia has long been known for its oil and hence it is indisputably its most significant export. This year, things took a turn to the worse when the price of oil plunged due to reduced global demand. However, this was not the only reason behind the steep fall of prices. Riyadh, in fact, is partly responsible for its own dilemma, as it was one of the producers who lowered the prices to keep their share of the market in light of the Iran nuclear deal. Under this deal, Tehran will be able to sell its oil after sanctions are eased.
From $100 one year to $40 the next, the low price of oil has exerted much pressure on countries such as Saudi Arabia and Venezuela while other nations such as the US benefited.
With Saudi Arabias expenditure exceeding its income, many fear that the Persian-Gulf state could dissipate its foreign exchange reserves within 5 years if its oil prices do not return to their former digits or if Riyadh does not slash its spending. For now it seems the kingdom is not ready to back down on its wars which, whether the Saudis admit it or not, are just beginning to take their toll on their launchers.
By Alwaght
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