India must move swiftly to meet the new challenges
The global economy has been shaken in recent days by an unprecedented fall in oil prices. This is particularly so in our oil-rich Persian Gulf neighbourhood, from where a substantial share of global oil exports emanates. The economies of other major oil exporting countries like Russia and Venezuela have also been shaken by falling revenues from oil exports. Saudi Arabia, which hosts two million Indian workers and was till recently, our largest supplier of oil, has played a dominant role in determining global oil prices. Its economic growth has fallen from 7 per cent to 3.4 per cent in 2015. It is set to fall to 2.3 per cent in 2016. With half its population aged below 25 years, youth unemployment in Saudi Arabia is unacceptably high. Moreover, with 75 per cent of its budget met from oil revenues, Saudi Arabia has been forced to take harsh measures, which will spiral inflation, even as its foreign exchange reserves fall steadily. Other neighbouring oil-rich Arab Gulf States will face similar challenges.
There are signs of domestic discontent in Saudi Arabia, amidst this difficult economic situation. The Shia population located in the kingdom's oil-rich areas has been infuriated by the recent beheading of the influential Shia cleric, Sheikh Baqir al-Nimr. Worse still, the kingdom is now embroiled in an unpopular military intervention in neighbouring Yemen, to restore a former president to office. Saudi Arabia is being assisted by Sunni Arab States like Egypt, Jordan, Kuwait, Bahrain, UAE and Qatar, in this military intervention. It has mounted relentless air strikes in Yemen, resulting in the displacement of 2.5 million Yemenis. As much as 78 per cent of the Yemeni population is in desperate need of water, food and medical assistance. To add fuel to fire, American defence companies have reportedly supplied weapons and equipment to Saudi Arabia, at an estimated cost $1.29 billion, for precision bombing.
Iran has been blamed for supporting the opposition to the Saudis mounted by Yemeni Shia Houthis. Iran has partnered Shia-dominated Iraq, the Bashar al-Assad-led Shia-dominated government in Syria and the Shia Hezbollah in Lebanon, to challenge the Sunni armed opposition in Syria, which is backed by Saudi Arabia, Qatar and Turkey. These developments have followed the American invasion and ouster of Saddam Hussein’s Sunni-dominated government in neighbouring Iraq and its replacement by the Shia-dominated regime of Nouri al-Maliki. The Maliki dispensation disempowered Sunnis, triggering a civil war and the emergence of the ISIL. Moreover, ill-advised American support for the effort to overthrow the regime of Bashar al-Assad in Syria has led to the exodus of millions of Syrians from their homes. It has also triggered a refugee exodus into the heart of the European Union. The ISIL has, meanwhile, emerged as a potent force, creating prospects for strife across the Islamic world, which threatens regional and global security.