[quote]Saudi Arabia is planning to establish a $2tn (£1.4tn) sovereign wealth fund by selling off its state petroleum assets in preparation for a world beyond oil.
Greenpeace said it was a pivotal moment akin to Switzerland abandoning banking, but others claimed Riyadh had long wanted to diversify its economy and spread its wealth though it had failed to do so.
If the fund was built up to $2tn, it would be more than double Norway’s sovereign wealth fund, regarded as the largest in the world by assets.
The move was revealed by the country’s powerful deputy crown prince, Mohammad bin Salman, and would mean the desert kingdom using its public investment fund (PIF) to buy up strategic financial and industrial assets abroad.
Some will see the move as a highly symbolic shift away from fossil fuels for a country most associated in the public eye with oil, but critics question whether it is more about style than substance.
The sale of a first tranche of shares to private investors via an initial public offering (IPO) in the state-owned Saudi Aramco could start as soon as next year, with the eventual aim of being big enough to potentially buy some of the world’s largest companies such as Apple and Google’s parent, Alphabet.
“IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the 30-year-old son of King Salman said in an interview with Bloomberg in Riyadh.
“What is left now is to diversify investments, so within 20 years we will be an economy or state that doesn’t depend mainly on oil.”[/quote]
[url]http://www.theguardian.com/business/2016/apr/01/saudi-arabia-plans-to-sell-state-oil-assets-to-create-2tn-wealth-fund[/url]
I disagree. I don't think it has anything to do with transitioning away from oil, rather I think the oil price crash is draining their bank account and they need a short term fix until the price recovers.
[editline]3rd April 2016[/editline]
Second source: [url]https://next.ft.com/content/65189e06-f7f4-11e5-96db-fc683b5e52db[/url]
[quote]If the fund was built up to $2tn, it would be more than double Norway’s sovereign wealth fund, regarded as the largest in the world by assets.
[/quote]
Every country should have one. Kinda weird how Saudi is now leading the world in SWFs.
If the Saudis were actually competent this would be regarded as the start of true reform.
The reality is that they've been calling for "diversification" for 40 years now and they have barely managed to develop or even encourage a single part of the economy which isn't tied to oil or the state.
Outside of a few mineral deposits, some scraps of agricultural production, and tourism from religious pilgrimages, the Saudis have virtually no economy which isn't dependent on the state or upon oil.
They'll probably go bankrupt in the next decade and soon enter an irreversible economic decline because they have practically no means with transitioning to a post-oil economy. Their country is extremely mismanaged (much like the rest of the Arab states), and their future probably most likely resembles that of Yemen.
[quote]I disagree. I don't think it has anything to do with transitioning away from oil, rather I think the oil price crash is draining their bank account and they need a short term fix until the price recovers.[/quote]
Pretty much this, they have to spend a massive amount of money on social programs and subsidies just to keep the massive and rapidly growing population complacent. Their political and socioeconomic systems don't exactly endear themselves to stability or prosperity.
If you want to see real progress, look at china.
They generate 21% of the worlds solar power energy.
[QUOTE=Starpluck;50059303]Every country should have one. Kinda weird how Saudi is now leading the world in SWFs.[/QUOTE]
It's really only good for petrostates, and it's not exactly resilliant. If oil stays this low for another year, Russia's funds will have dried up
[QUOTE=Passing;50059604]If you want to see real progress, look at china.
They generate 21% of the worlds solar power energy.[/QUOTE]
Is building empty cities progress?
Yes.
Wait, was that a trick question?
[QUOTE=Talishmar;50059975]Is building empty cities progress?[/QUOTE]
They should ship all those empty buildings with all those empty cities into Europe, we sure could use more cheap housing. Absolutely ridiculous housing costs in Europe and US as well.
[QUOTE=Passing;50059604]If you want to see real progress, look at china.
They generate 21% of the worlds solar power energy.[/QUOTE]
And like 90% of the world's coal energy
They are a giant nation that requires a lot of power. Of course they will have a huge amount of solar output, but it is negligible compared to the overall power output in their country. The rate that they build solar and wind farms is increasing, however, since they are smart enough to have foresight like Norway regarding the decline of fossil fuel and the ecological need for renewable energy. Also, they make bank off of production :smile:
I don't know why people keep pointing to china as an example of how to structure your industry and workforce. I hear politicians here talk about how much work a Chinese person will do without complaining, and how we should look to them for ideas.
Completely ignoring the fact that no person EVER would want to switch from living under normal conditions in the western world, to normal conditions in china. Where 5 people are crammed into an apartment the size of a toolshed, you work ridiculous hours for a negligible pay, and social mobility is pretty much unheard of.
[QUOTE=Crazy Knife;50062005]They should ship all those empty buildings with all those empty cities into Europe, we sure could use more cheap housing. Absolutely ridiculous housing costs in Europe and US as well.[/QUOTE]
Isn't that more to do with the lack of space than the lack of buildings?
[QUOTE=Starpluck;50059303]Every country should have one. Kinda weird how Saudi is now leading the world in SWFs.[/QUOTE]
Most countries don't have a bunch of black gold flowing directly into their state coffers.
[QUOTE=Sprockethead;50062363]I don't know why people keep pointing to china as an example of how to structure your industry and workforce. I hear politicians here talk about how much work a Chinese person will do without complaining, and how we should look to them for ideas.
Completely ignoring the fact that no person EVER would want to switch from living under normal conditions in the western world, to normal conditions in china. Where 5 people are crammed into an apartment the size of a toolshed, you work ridiculous hours for a negligible pay, and social mobility is pretty much unheard of.[/QUOTE]
Some of the euroskeptics I've talked to have said "we should be having free trade with places like china and india, we don't need the eu" worst idea ever. With free trade they could out compete us in no time, they can pollute more, pay less and treat workers like dirt.
[QUOTE=Sobotnik;50059574]If the Saudis were actually competent this would be regarded as the start of true reform.
The reality is that they've been calling for "diversification" for 40 years now and they have barely managed to develop or even encourage a single part of the economy which isn't tied to oil or the state.
Outside of a few mineral deposits, some scraps of agricultural production, and tourism from religious pilgrimages, the Saudis have virtually no economy which isn't dependent on the state or upon oil.
They'll probably go bankrupt in the next decade and soon enter an irreversible economic decline because they have practically no means with transitioning to a post-oil economy. Their country is extremely mismanaged (much like the rest of the Arab states), and their future probably most likely resembles that of Yemen.
Pretty much this, they have to spend a massive amount of money on social programs and subsidies just to keep the massive and rapidly growing population complacent. Their political and socioeconomic systems don't exactly endear themselves to stability or prosperity.[/QUOTE]
The Saudis never weaned themselves off that oil teat and are more content with getting rich and fat as opposed to actually trying to fix things, but then I suppose that's what you get when you combine a monarchy with downright repressive levels of theocratic conservatism.
Not saying that the alternatives have been much better (we've seen how Islamic theocracies and nationalist dictatorships work out) but Jordan seems to be the most stable/progressive of all the arab nations.
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