U.S. cables detail Saudi royal welfare program.
Besides the huge monthly stipends that every Saudi royal receives, the cables detail various money-making schemes some royals have used to finance their lavish lifestyles over the years. Among them: siphoning off money from “off-budget” programs controlled by senior princes, sponsoring expatriate workers who then pay a small monthly fee to their royal patron and, simply, “borrowing from the banks, and not paying them back.”
As long ago as 1996, U.S. officials noted that such unrestrained behavior could fuel a backlash against the Saudi elite. In the assessment of the U.S. embassy in Riyadh in a cable from that year, “of the priority issues the country faces, getting a grip on royal family excesses is at the top.”
A 2007 cable showed that King Abdullah has made changes since taking the throne six years ago, but recent turmoil in the Middle East underlines the deep-seated resentment about economic disparities and corruption in the region. A Saudi government spokesman contacted by Reuters declined to comment.
The November 1996 cable — entitled “Saudi Royal Wealth: Where do they get all that money?” — provides an extraordinarily detailed picture of how the royal patronage system works. It’s the sort of overview that would have been useful required reading for years in the U.S. State department.
The most common mechanism for distributing Saudi Arabia‘s wealth to the royal family is the formal, budgeted system of monthly stipends that members of the Al Saud family receive, according to the cable. Managed by the Ministry of Finance’s “Office of Decisions and Rules,” which acts like a kind of welfare office for Saudi royalty, the royal stipends in the mid-1990s ran from about $800 a month for “the lowliest member of the most remote branch of the family” to $200,000-$270,000 a month for one of the surviving sons of Abdul-Aziz Ibn Saud, the founder of modern Saudi Arabia.
Grandchildren received around $27,000 a month, “according to one contact familiar with the stipends” system, the cable says. Great-grandchildren received about $13,000 and great-great- grandchildren $8,000 a month.
“Bonus payments are available for marriage and palace building,” according to the cable, which estimates that the system cost the country, which had an annual budget of $40 billion at the time, some $2 billion a year. “The stipends also provide a substantial incentive for royals to procreate since the stipends begin at birth.”
After a visit to the Office of Decisions and Rules, which was in an old building in Riyadh’s banking district, the U.S. embassy’s economics officer described a place “bustling with servants picking up cash for their masters.” The office distributed the monthly stipends — not just to royals but to “other families and individuals granted monthly stipends in perpetuity.” It also fulfilled “financial promises made by senior princes.”
“By far the largest is likely royal skimming from the approximately $10 billion in annual off-budget spending controlled by a few key princes,” the 1996 cable states. Two of those projects — the Two Holy Mosques Project and the Ministry of Defense’s Strategic Storage Project — are “highly secretive, subject to no Ministry of Finance oversight or controls, transacted through the National Commercial Bank, and widely believed to be a source of substantial revenues” for the then-King and a few of his full brothers, according to the authors of the cable.
In a meeting with the U.S. ambassador at the time, one Saudi prince, alluding to the off-budget programs, “lamented the travesty that revenues from ‘one million barrels of oil per day’ go entirely to ‘five or six princes,'” according to the cable, which quoted the prince.
The managing director of another bank in the kingdom told the ambassador that he divided royals into four tiers, according to the cable. The top tier was the most senior princes who, perhaps because they were so wealthy, never asked for loans. The second tier included senior princes who regularly asked for loans. “The bank insists that such loans be 100 percent collateralized by deposits in other accounts at the bank,” the cable reports. The third tier included thousands of princes the bank refused to lend to. The fourth tier, “not really royals, are what this banker calls the ‘hangers on’.”
Activists in Saudi Arabia are calling for protests on March 11th and 20th and this will only fuel the fire. With so much money being grossly thrown away among the royal family, the Saudi citizens will not allow this corruption to continue.