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Will Saudi’s Oil-Drenched Economy Slip from the Hands of MbS?

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Saudi Arabia crown prince Mohammed bin Salman

Saudi Arabia’s long-planned journey towards diversification appeared a great initiative, when Crown Prince Mohammed bin Salman (MbS) announced the Vision 2030 plan in April 2016. However, nearly two years down the line, the prominent transition began buffeting the Saudis and their businesses.

As per the statistics, the Kingdom depends on its oil reserves for 87 per cent of the revenue. The government officials avowed that their policies have resulted in economic pain. However, the country is now on a trail of fixing the deep-rooted economic problems, which have been remained hidden behind petroleum revenues.

In an interview, the Saudi economy minister Mohammed al-Tuwaijri said, “We are trying to strike a balance here to make sure our market is sustainably growing.” He explained the “transformation journey”, under which the country is striving to ensure a friendly investment environment with real opportunities and a legal framework based on best practices.

Under its comprehensive plan, the world’s largest oil exporter has been taking several measures to set off its non-oil economy, including introduction of new taxes, rising gasoline and electricity prices, and pressing the foreign workers to leave the country to create opportunities for the Saudi citizens.

However, the outcome has been far from what the Crown Prince and his people expected. A new domestic challenge emanated for Mohammed bin Salman (MbS), while he has been trying to reform the over-conventional culture of his Kingdom. Certain initiatives taken last year were aimed in the same direction, such as permitting cinema, giving women the driving rights and allowing them to enter sports stadiums.

But, where the culture issues are being resolved, the economic program is not proving true to the vision.

ECONOMIC PLAN OR PAIN?

The sweeping economic plan announced by the Saudi government has not been able to impress the citizens, yet. According to reports, some natives have decried that the program has been dissatisfactory for them.

A Jeddah resident complained, “As citizens, we’re not really benefiting from any of it.”

Moreover, certain business firms — Almarai Co. and Fawaz Abdulaziz Alhokair & Co. — also reported of inadequate earnings in 2018, where some also blamed the Saudi government. The new 5 per cent value-added tax and higher energy costs were some reform measures of the Crown Prince that were blamed for the adverse effects on business profits.

ISSUE: FOREIGN WORKERS OR THEIR EXIT?

The amendment policy of the Kingdom imposed new levies on companies hiring foreign workers, along with the introduction of new fees for their families to stay. Over one million expat workers — recorded 7.4 million two years ago — left the country following the policy shifts. The economic decent is also a result of an exodus of the working-class immigrants.

In January, Saudi Arabia entered deflation, as only few people were spending money. Statistics reveal that in February, the consumer prices fell by 22 per cent in contrast to with the same month last year. Saudi central bank claimed that the drop is recorded as the steepest since a 2017 recession.

THE VIOLATIONS AND THE VISION

While the Vision 2030 plan was having a negative impact on the economy, Saudi Arabia’s human rights records were also going against its interests. Moreover, the country had to deal with international reprimand for its role in the brutal assassination of Saudi journalist Jamal Khashoggi, as well as the ruthless destruction of Yemen.

It has resulted in disinclination from the foreign investors to commit, relatively lower oil prices, and rebuffs from the international businesses and institutions; the issues that the Kingdom Prince MbS is contending. Foreign direct investment of $2.4 billion through three quarters of 2018 was up from 2017 — 14-year low of $1.4 billion — but far below historic averages and 2016 annual figure of $7.4 billion.

THE UNEMPLOYED YOUTH

The Kingdom’s imbalanced working population is also a crucial area that needs attention, which the officials claim the policies are addressing. Holding one of the largest youth populations in the G-20, it accounts for nearly 60 per cent of the citizens under 30, most of whom are unemployed. A major portion of the non-oil workforce comprises of low-paid expat workers, marking the official Saudi unemployment rate at 25 per cent.

Economists believe that these economic problems are short term, and that the objectives of Crown Prince MbS would bring favourable results in the long term. However, no such signs are visible, even when the program is about to enter the third year.

HSBC economists Razan Nasser highlighted that the 2019 budget came with an increase of 7 per cent in state spending, where most investments are still state-led rather than private sector. Besides, the Saudi economy has become more reliant on oil revenues, and not less.

Saudi Arabia and its issues have been revolving around the extensive oil reserves, it discovered over the years. The country has spent several years by relying on the sole source of its wealth. However, as so far it has been moving without any future planning, the Kingdom is at a stage of experiencing severe economic crisis, which prompted a sudden need of diversification.

As the Crown Prince Mohammed bin Salman (MbS) is now taking several initiatives, will he be able to save the sinking economy of Saudi Arabia?

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Freight accident in Congo kills at least 50 stowaways

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Freight accident in Congo kills at least 50

Over 50 people lost their lives after a cargo train derailed in southeastern Democratic Republic of Congo (DRC) on September 12.

The train got off the track at 3am in Tanganyika (province) near Mayibaridi. The authorities confirmed a provisional toll of 50 dead and several others wounded,” minister for humanitarian action, Steve Mbikayi, said in a tweet.

However, according to the scene witnesses and local media, more than a hundred people are feared killed in the Congo train accident.

Victor Umba, the union head of the national rail company SNCC, said the cargo train was slated to cover its route from the town of Nyunzu to the town of Niemba when two coaches fell off the tracks.

“Those who died in this derailment were stowaways. It is impossible for the SNCC to provide any kind of toll,” Umba said.

He further added that the SNCC’s chief had reached the provincial capital of Kalemie for figuring out a way to lift the coaches. “It seems that many stowaways are trapped under the derailed carriages”.

DRC railways has been struggling through a bad record for safety, accidents often due to derelict tracks and decrepit locomotives, which are majorly outdated and operating since 1960s.

In March, over 24 people were killed and 31 were wounded after a cargo train loaded with illegal passengers met an accident in the central province of Kasai.

In November 2018, at least 10 stowaways were killed along with 24 wounded close to the eastern town of Samba. The accident was a result of failed brakes.

In November 2017, over 35 people lost their lives when a cargo train with 13 oil tankers dropped into a valley in southern Lualaba region.

Similar to several state companies in DR Congo, the SNCC is falling into bankruptcy and its erstwhile chief Sylvestre Ilunga is the country’s current prime minister.

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Ashura panic-rush kills 31 in Iraq, death toll expected to rise

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Ashura

At least 31 people were killed during Ashura in a tragic stampede in Iraq’s holy city of Karbala after a footbridge suddenly plummeted. Over 100 people were wounded, and according to the Iraqi Health Ministry, the death toll was expected to increase as a couple of wounded were in critical condition.

The incident took place while the Ashura festival procession was nearing end, as the pilgrims marked Shi’ite Muslim holy rituals at the shrine of Imam Hussein. Shrine officials said the Iraq stampede started at the main entry of the ornate building.

The annual pilgrimage marking the death of the Prophet Mohammed’s grandson in battle in 680 draws hundreds of thousands of Shi’ite Muslims to Karbala from around the world.

On this day Shi’ite Muslims commemorate the killing of Hussein in A.D. 680. He was a grandson of the Prophet Muhammad, and was killed by a rival Muslim faction, which is believed to cause rift between Shiite and Sunni Islam. For Shiites, Hussein and his line of descent are the heirs of the prophet by right.

The Shiites pilgrims observe the day with mourning and hitting themselves and some wounding their heads with sharp blades.

In the past, radical Sunni militants have targeted Ashura processions, however, this year was quite peaceful up to the breaking of the walkway. The officials told that the bridge collapsed in the mid of the so-called Tweireej run, when thousands of pilgrims were running toward the Imam Hussein shrine.

That run signifies the time when maternal cousins of Hussein’s half brother came running across a mile fromTweireej village to save him, but found that he was killed.

As the people saw other pilgrims rushing in panic, stampede got instigated near the gold-domed Imam Hussein shrine, which crushed many people to death.

According to the Associated Press, yesterday’s stampede was the most hazardous in a long time during Ashura commemorations in Karbala, which is located over 50 miles south of Baghdad.

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Iranian Oil Tanker Adrian Darya 1 in Criticism from British Officials

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Adrian Darya 1

Recently, the 1997 built Iranian oil tanker Adrian Darya 1 is in criticism from the British officials. On Tuesday, Britain’s foreign minister Dominic Raab accused the Iranian tanker to have sold its crude oil to Assad regime led by the Syrian politician Bashar Hafez al-Assad, who became the president of Syria in 2000.  

“Iran has shown complete disregard for its own assurances over Adrian Darya 1”, said Dominic Raab.

As known from the previous data, the Iranian officials assured that they would not sell crude to any other country, but the Iranian’s act of disregarding their own assurances aggravated the British officials amid continued provoking indifferences with the oil-rich country.  

The conflicts between both the UK and Iran seems to be growing from a long time. Not only that, the Iranian officials are also having a hard time dealing with the US as the latter unilaterally pulled out of a 2015 nuclear deal. Furthermore, the US also imposed various sanctions on Iran, that hindered Iran’s exports to the other Middle-Eastern countries.

In regards to Britain’s accuses, the US State Department on Tuesday said that the Iranian officials have deceived the international community by going back from their words, stressing on the fact that they did sell illicit oil to Assad’s regime.

Previously, Iran seized a British-flagged tanker in the strait of Hormuz in July. The move came two weeks later when the British officials detained an Iranian tanker off the coast of Gibraltar. The Iranian oil tanker Grace 1, which is now named as Adrian Darya 1, was seized for illegally transporting oil to Syria in July, with the claims that the shipping breached the EU sanctions.

The British Royal Marines, however released the Iranian vessel on August 15, with assurances from Tehran that the ship would not discharge its 2.1 million barrels of oil in Syria. But the recent accusations are a clear contradiction to Iran’s previous statements. The British officials made it clear that Iran breached the made promises, transferring oil to Syria through Adrian Darya 1.

Dissatisfied with Iranian’s move, Dominic Raab said, “This sale of oil to (Syrian President Bashar al-Assad’s) brutal regime is part of a pattern of behavior by the Government of Iran designed to disrupt regional security.”

As the situation appears, the government might raise the entire issue of illicit transport of oil through Adrian Darya 1 in the UN meeting ahead this month.

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China Threatened Over UK Warships Deployment in South China Sea

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UK Warships

The UK-China feud in the international waters has been in continuation from a long time. Recently, the Chinese officials warned the government against sailing of the UK warships through the disputed waters in the South China Sea.

Against China’s continuous warnings, the Naval Chiefs claimed that they have every right to sail to the vast South China Sea that provides free navigation of shipping. The rumours that the British officials would be sending an aircraft carrier to the disputed Spratly Islands that has been often claimed by a number of nations in the region including China, Vietnam and the Philippines, along with US jets on board gave way to more insecurities in the South China Sea.

The Chinese officials have warned that in accordance to such hostility, Beijing would respond with military perspective. The US’ involvement with the UK was seen as a major threat by China, which believed that the duo’s joining hands would challenge or violate the sovereignty and territorial integrity of China.

The US often conducts a freedom of navigation operations in the South China Sea to challenge China’s territorial claim. They have even accused China of illegally building military facilities on certain islands, which the latter has called an alleged assumption by the US officials. The Chinese Ambassador to the UK Liu Xiaoming said “Britain should not do this dirty job for somebody else.”

Xiaoming clearly rejected the arguments, which stated that the Royal Navy would be upholding international rules concerning Freedom of Navigation. He further expressed his discontent and objected on the UK warships’ entering into the Chinese territorial waters.

It is not the first time that the situations have been difficult for both the UK and China. Earlier, the relations between both the nations severed in the wake of the ongoing Hong Kong protests that affected China’s authority in the territory. With Britain’s interference, supporting the protestors, Xiaoming reiterated on the fact that Hong Kong is a part of China and the foreign countries shouldn’t interfere in the territory’s affairs.

Despite the warnings from China, the British officials would deploy their new aircraft carrier HMS Queen Elizabeth to the South China Sea in 2021. One of the major aims of the government behind the entire UK warships scenario is to protect the international law, providing freedom of navigation at sea and in the air. Through this the government largely aims to oppose “militarization” of the South China Sea, maintaining regional security in the region.

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Hundreds evacuated as bushfires disrupt Australia

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Hundreds evacuated as bushfires disrupt Australia

Hundreds of people were forced to flee their homes after firefighters struggled to extinguish more than 130 bushfires across Australia’s New South Wales and Queensland.

On Tuesday, over 58 fires were blazing in an area spanning across 100,000 hectares in New South Wales.

Several homes were destroyed by the fire but officials have commended the “Herculean” operation of firefighters to combat the spreading fire. Over 300 firefighters buckled down on Monday night in an attempt to control a major front on Queensland’s Sunshine Coast.

It was observed that heavy winds winnowed bushfires across Australia’s two states, following which the flames ran out of control in neighboring areas, devastating thousands of hectares of land.

During an interaction with the reporters, Queensland Police Commissioner Katrina Carroll said at least eight of these bushfires are suspected to be unnatural and will be subjected to investigation.

Carroll said: “The consequences of some of these fires are dire. People can die. Buildings and residences are being destroyed.”

According to the data obtained by fire service officials, dropping humidity levels, strong winds and parched vegetation in the northeastern state of Queensland have caused over 85 fires that have impacted at least 84 houses in the state.

Acting Queensland premier Jackie Trad confirmed that more than 400 people took refuge in evacuation centres after fire either destroyed their homes or are likely to have an impact. She also said that there were no reports of any causalities so far.

“Apart from Sunshine Coast, we are still seeing fires right throughout the state,” Trad added.

Meanwhile in New South Wales, the fire extinguishing team was battling to contain over 55 fires, which destroyed five properties, according to the NSW Rural Fire Service.

This year, bushfires in Australia took off quite earlier than usual in the southern hemisphere spring. Australia’s Bureau of Meteorology released a statement saying heavy storms would further escalate on Tuesday, however fire warnings might ease till Wednesday.

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