Saudi Arabia: Where Does the Oil Money Go?
Not until recently when US banks begin to topple left and right did the activities of so-called Sovereign Wealth Funds begin to occupy the headlines. Indeed, very little has been heard about what the Gulf Oil States do with their sizable petro income.
What’s for sure is that the billions of dollars are not stuffed under a mattress. In a recent report, Saudi Arabia alone holds a 878 billion-dollar portfolio of of foreign assets. To put this figure in perspective, it is comparable to the entire GDP of Turkey in 2007 (IMF Data).
That may not impress most people, but it implies significant economic ties between Saudi Arabia and the rest of the world. It may not be a physical relationship, but the ramifications are significant.
This figure, which, by the way, exceeds Saudi Arabia’s own GDP by 300 billion or so, represents the reality that the country can no longer aspire to a policy of isolation. As mentioned in a previous post, this also presents a catch-22 situation for the state’s petro pricing policy. Whatever the implications are, one thing is for certain – Saudi Arabia’s welfare is absolutely inseparable from the rest of the world.
Bo-yun Liu
