Table of Contents

MENA countries have been by far the top recipients of Saudi aid over the past ten years. The dual economic impact of the coronavirus and low oil prices, however, may lead Saudi Arabia to restructure and rationalize its development aid. In the words of one Saudi, the country is already seeking to end the perception of being “an ATM.” Saudi Arabia is likely to accelerate a mindset change that had begun before the crisis, taking a more transactional approach to aid that prioritizes pragmatic political and economic gains for the kingdom over its previous goals related to a loosely defined Arab and Islamic solidarity. The kingdom might henceforth favor loans and forward contracts on commodity exchanges over grants.

What is clear right now is that Saudi aid has become less attractive in some recipient countries, where there has been popular mobilization after the Arab Spring against the perceived curbs on independence that such aid brings. Meanwhile, Saudis have grown resentful of “ungrateful” Arab brothers. Apart from government aid, remittances from Arab labor in Saudi Arabia are expected to take a big hit.

Yasmine Farouk
Yasmine Farouk is a visiting fellow in the Middle East Program at the Carnegie Endowment for International Peace.
More >

The states most likely to lose out in this recalibration (unless their regimes’ survival is at stake) will be those that have traditionally benefited from Saudi Arabia’s largesse if they continue to resist its political conditionality—Jordan, Lebanon, Palestine, and to some extent Egypt—all of whom have already seen instances in which aid was frozen, decreased, or cut off. MENA countries also will have to compete for Saudi resources (state aid as well as private aid and investments) with other countries/regions that have regained strategic importance to the kingdom (South Asia, sub-Saharan Africa, Sudan, and food security destinations elsewhere), as well as with new commitments related to its G20 presidency.

Yet Saudi Arabia must continue certain kinds of aid even if it decreases aid amounts. For example, aid to its neighbors Bahrain and Yemen remains critical to Saudi’s security. And both development and humanitarian aid help the kingdom’s international image. The incapacity to develop alternative foreign policy tools, in addition to potential U.S. and Western aid retrenchment, will keep the pressure on Saudi Arabia to use bilateral and, to a lesser extent, multilateral channels of aid to maintain international support and influence. The centrality of the financial tool in Saudi foreign policy will continue, especially in places where regional foes are contesting Saudi influence (especially Yemen, but also Iraq, Syria, and maybe Libya). The entirety of Saudi aid will continue to be difficult to document, especially as the kingdom has ways to compensate for decreased resources such as giving off-the-books financial aid, reneging on previous pledges, and exerting influence within Arab or Islamic multilateral institutions.