Economic crisis is also a political crisis
The April 23 edition of The Economist includes quite an interesting piece about what Saudi Arabia wants to do at the moment. The piece starts with the following remark by Saudi Deputy Crown Prince Mohammed bin Salman: "We don't care about oil prices, $30 or $70, they are all the same to us." The writer, who finds this statement quite interesting, says that such statements by a Saudi authority must be questioned as the falling oil prices have cost the country billions of dollars. He adds, "For decades Saudi policy has been steered by deft negotiators such as Ali al-Naimi, the kingdom's oil minister. Now it is under the thumb of the 30-year-old prince, who believes low oil prices will help his drive for economic reform at home and weaken Iran, Saudi Arabia's arch-rival." In other words, The Economist is baffled by this change in Saudi Arabia's new economic policy and implies that a 30-year prince, who it considers to be too young to deal with these issues, will not be able to overcome the impacts of falling oil prices.
Indeed, Turkey is very familiar with these views that are firstly expressed in surprise and then in anger and hatred in magazines like The Economist. The hate speech directed at Turkey's democratically elected leaders is a political stance that can never be considered humane within the scope of ordinary journalism and comments. What Saudi Arabia wants to do now is a rather belated move. "The National Transformation Plan and Vision 2020" strategy that has been announced by Prince Salman is a rational initiative as it aims to diversify resources in the Saudi economy, which is merely based on energy sales and financial activities, and remove its dependency on a single exportable asset. Based on this objective, Saudi Arabia has decided to sell 5 percent of its oil giant, Aramco, through an initial public offering (IPO). Even this move alone is enough to surprise and shock media outlets like the Economist. The hydrocarbon reserves and other assets of Aramco, the size of which has not been completely disclosed yet, will also be offered to the public - which means a dramatic change in prices in oil markets. What will happen to Exxon-Mobil, the world's largest publicly traded international oil and gas company, and to what extent it will decline in the face of this development is a topic of another discussion. The transparency of Aramco, which is estimated to be more than $2 trillion in size, means that the Saudi economy will be completely outward-oriented. This being the case, the Saudi riyal, which is fixed to the dollar, will not remain confined to Saudi Arabia, a single company of which costs trillions of dollars. Now, it would be proper to discuss how long the dollar-based reserve currency system, i.e. the Bretton-Woods system, will survive in a global economy where Saudi Arabian and Chinese currencies freely circulate like the dollar and euro.
The Saudi Arabia-based petro-dollar system is one of the most important structures to have sustained the Bretton-Woods system, which was founded after World War II and is the most important institution in the U.S.'s political and economic hegemony. Now, this system is becoming a thing of past and one of the most important bastions of the dollar-based reserve currency system is falling down.
If nothing happens to the young prince, Saudi Arabia will take a major step for the benefit of itself and the world economy. Indeed, this belated move made by Saudi Arabia corresponds with a new development rising from China and South Korea in Asia-Pacific, and from Brazil, Argentina and Chile in Latin America in the beginning of the 21st century. I think Turkey joined this development move under the leadership of President Recep Tayyip Erdoğan in 2008. Similarly, Prime Minister Shinzo Abe's rule in Japan is striving to escape the economic system, which was founded after World War II, and to find Japan's unique economic path.
At this point, we can suggest that developing countries in eastern and southern parts of the world, which were dominated by the West in the previous century, are escaping this pressure and finding an independent path with their competent leaders who produce politics in line with the present time. Meanwhile, traditional and mainstream political movements both in continental Europe and the Anglo-Saxon territory fail to give rise to new leaders as they are incapable of producing convenient policies to overcome the current crisis. The social-democrat movement in the continental Europe and its thesis of a social state have collapsed. Furthermore, right-wing parties, for instance, Germany's Christian Democratic Union (CDU) is in a worse state than social democrats. Also, the U.K.'s left-wing Labor Party and the ruling Conservative Party are in the throes of death. Meanwhile, U.S. politics is in a tragicomic condition, with even Donald Trump's candidacy enough to reveal political misery in the country. In this case, political movements like Iceland's Pirate Party are preparing to replace mainstream politics and Germany's Nazis have reached the public masses for the first time since the fascist era.
Let us underline that neoliberalism is the name of the economic understanding that is upheld by these moribund political movements. Today, both social democrats and Christian democrats are on the neoliberal line. There is no longer a basic economic policy line that distinguishes the Labor Party and Conservative Party in the U.K. Considering all this, we can suggest that there is a strong relation between the West's failure to overcome the economic crisis and its political infertility. Also, it would not be wrong to say that the same strong relationship is also between the East's economic achievements and its new political leaders.
Indeed, Turkey is very familiar with these views that are firstly expressed in surprise and then in anger and hatred in magazines like The Economist. The hate speech directed at Turkey's democratically elected leaders is a political stance that can never be considered humane within the scope of ordinary journalism and comments. What Saudi Arabia wants to do now is a rather belated move. "The National Transformation Plan and Vision 2020" strategy that has been announced by Prince Salman is a rational initiative as it aims to diversify resources in the Saudi economy, which is merely based on energy sales and financial activities, and remove its dependency on a single exportable asset. Based on this objective, Saudi Arabia has decided to sell 5 percent of its oil giant, Aramco, through an initial public offering (IPO). Even this move alone is enough to surprise and shock media outlets like the Economist. The hydrocarbon reserves and other assets of Aramco, the size of which has not been completely disclosed yet, will also be offered to the public - which means a dramatic change in prices in oil markets. What will happen to Exxon-Mobil, the world's largest publicly traded international oil and gas company, and to what extent it will decline in the face of this development is a topic of another discussion. The transparency of Aramco, which is estimated to be more than $2 trillion in size, means that the Saudi economy will be completely outward-oriented. This being the case, the Saudi riyal, which is fixed to the dollar, will not remain confined to Saudi Arabia, a single company of which costs trillions of dollars. Now, it would be proper to discuss how long the dollar-based reserve currency system, i.e. the Bretton-Woods system, will survive in a global economy where Saudi Arabian and Chinese currencies freely circulate like the dollar and euro.
The Saudi Arabia-based petro-dollar system is one of the most important structures to have sustained the Bretton-Woods system, which was founded after World War II and is the most important institution in the U.S.'s political and economic hegemony. Now, this system is becoming a thing of past and one of the most important bastions of the dollar-based reserve currency system is falling down.
If nothing happens to the young prince, Saudi Arabia will take a major step for the benefit of itself and the world economy. Indeed, this belated move made by Saudi Arabia corresponds with a new development rising from China and South Korea in Asia-Pacific, and from Brazil, Argentina and Chile in Latin America in the beginning of the 21st century. I think Turkey joined this development move under the leadership of President Recep Tayyip Erdoğan in 2008. Similarly, Prime Minister Shinzo Abe's rule in Japan is striving to escape the economic system, which was founded after World War II, and to find Japan's unique economic path.
At this point, we can suggest that developing countries in eastern and southern parts of the world, which were dominated by the West in the previous century, are escaping this pressure and finding an independent path with their competent leaders who produce politics in line with the present time. Meanwhile, traditional and mainstream political movements both in continental Europe and the Anglo-Saxon territory fail to give rise to new leaders as they are incapable of producing convenient policies to overcome the current crisis. The social-democrat movement in the continental Europe and its thesis of a social state have collapsed. Furthermore, right-wing parties, for instance, Germany's Christian Democratic Union (CDU) is in a worse state than social democrats. Also, the U.K.'s left-wing Labor Party and the ruling Conservative Party are in the throes of death. Meanwhile, U.S. politics is in a tragicomic condition, with even Donald Trump's candidacy enough to reveal political misery in the country. In this case, political movements like Iceland's Pirate Party are preparing to replace mainstream politics and Germany's Nazis have reached the public masses for the first time since the fascist era.
Let us underline that neoliberalism is the name of the economic understanding that is upheld by these moribund political movements. Today, both social democrats and Christian democrats are on the neoliberal line. There is no longer a basic economic policy line that distinguishes the Labor Party and Conservative Party in the U.K. Considering all this, we can suggest that there is a strong relation between the West's failure to overcome the economic crisis and its political infertility. Also, it would not be wrong to say that the same strong relationship is also between the East's economic achievements and its new political leaders.