Saudi Arabia's recent announcement that the kingdom is shifting away from direct and unconditional aid to allies carried a worrying message for a number of countries in the region and beyond. The end of what had resembled a free lunch for aid-hungry nations could be in fact a regional game changer, analysts say.
The kingdom, the world's top oil exporter and an Arab powerhouse, is encouraging countries in the region to enact their own economic reforms before soliciting cash inflows from abroad, Saudi Finance Minister Mohammed al-Jadaan recently told the World Economic Forum in Davos. Jadaan also signalled the alignment of Saudi policy with IMF and World Bank-type requirements for structural reform as a pre-condition for financial support. We are working with multilateral institutions to actually say we need to see reforms," the minister said.
We want to help but we want you also to do your part. Analysts said that the message does not seem to be directed at Lebanon, since Saudi Arabia has withheld aid from that country for a long time over wariness at what it sees as intolerable Iranian encroachment in the crisis-plagued country.
Tunisians, who are struggling with an acute budget shortfall, have been hoping that Riyadh would be forthcoming with urgent financial help. Analysts in Tunis interpreted the call on other countries by the Saudis to carry out their own reforms, before seeking outside help, as a message addressed to their own government, which has been reluctant to accept the austerity measures suggested by the IMF for fear of social upheaval.
In recent years, it has become clear that Saudi Arabia was increasingly convinced that donations, grants and no-strings-attached aid are only short-term palliatives because Egyptian and Lebanese crises required far-reaching reforms. Furthermore, Riyadh has not feel it was getting enough in return for its traditional generosity towards countries of the region. Saudi Arabia as well as other Gulf Arab states, including the United Arab Emirates and Qatar, have increasingly moved towards investing rather than extending direct financial aid.
