Earlier this week, Saudi Arabia released budget numbers which showed that the kingdom ran a deficit in 2015 that amounted to some 15% of GDP.
To be sure, that was far better than feared, but it’s still a disaster and reflects just how much damage Riyadh’s two wars are inflicting on the monarchy’s finances.
When we say “two” wars, we’re of course talking about the figurative “war” on US shale production and the literal war against the Iran-backed Houthis in neighboring Yemen. The following graphic from Deutsche Bank should give you an idea of just how much Riyadh spends on the military:
Indeed, as we noted on Monday [6], the kingdom would sooner overhaul the welfare state (i.e. reduce subsidies) than it would cede market share to US producers or allow Iran to establish what would amount to a colony overlooking the Bab-el-Mandeb.
The Saudi intervention in Yemen dates back to March of this year when airstrikes dubbed “Operation Decisive Storm” began. At that point, the Houthis had advanced all the way to Aden, driving President Mansur Hadi into exile in Riyadh. With the help of ground troops from the UAE and Qatar, the Saudi-led coalition has now pushed the rebels back to Sana’a, home of a UNESCO world heritage site which has sustained irreparable damage under heavy Saudi airstrikes.
Despite ceasefire talks held earlier this month, the violence continues as Saudi Arabia has been forced to shoot down three Scud missiles fired from Yemen over the past two weeks.
Well, in case the obliteration of an MSF hospital [7] in Saada wasn’t enough to convince you that Riyadh is spending wisely on the war effort, today we learn that a Saudi airstrike has decimated a Coca Cola bottling factory in Sana’a on Wednesday.
We can only assume it was a “rebel hideout” much like the MSF hospital the US destroyed in Kunduz in October. Below, find the video of the strike along with images from the rubble.
And the aftermath:
Money well spent?