Blog #2 - Saudi Arabia's Involvement with International Organizations

By Nathan Gerdes

In recent history, Saudi Arabia has constantly been thrown into the whirlwind of upheaval and conflict throughout the Middle East. Therefore, it has often been at the center of the global stage attempting to resolve some of the mess that surrounds it. Its relevance in the United Nations and other international organizations has continued to grow as the conflict continues to proceed. The Kingdom of Saudi Arabia joined the United Nations as a Charter Member on the 26^th of June, 1945 as King Faisal signed the Charter as a Founding member. Over the 70 years as a member, Saudi Arabia may have never been as popular as they have been recently. In October of 2013, after months of lobbying and careful preparation, Saudi Arabia was elected for a two-year term

in the United Nations Security Council. However, according to The Economist, within hours of the news, Saudi Arabia renounced the bid for the seat on the council. Just one month after this odd withdrawal, Saudi Arabia was elected for seat on the UN’s Human Rights Council. It is the highest right’s monitoring board, according to Al Arabiya. This appointment drew some criticism as Saudi Arabia’s human right’s record is far from perfect. Just 20 days before the election, BBC News reported an article discussing Saudi Arabia’s failure to address human rights concerns. In the article, Philip Luther, Amnesty International’s Middle East and North Africa director was quoted saying:

"Four years ago, Saudi Arabian diplomats came to Geneva and accepted a string of recommendations to improve human rights in the country. Since then, not only have the authorities failed to act, but they have ratcheted up the repression."

The controversial membership led to much more condemnation in 2015 after a UN Report was released in 2015 that stated Mr. Faisal Trad, Saudi Arabia’s representative to the UN Human Rights Council, was appointed to chair the Consultative Group of UN. The Executive Director of UN Watch, Geneva-based NGO that monitors UN activity stated:

“This UN appointment is like making a pyromaniac into the town fire chief, and underscores the credibility deficit of a human rights council that already counts Russia, Cuba, China, Qatar and Venezuela among its elected members.”

We have even seen a lot of controversy already in 2016. Especially after the 47 executions which I mentioned in my post last weekend. Top UN officials expressed deep dismay over the acts. According to the UN News Center, High Commissioner of the Human Rights Council, Zeid Ra’ad Al Hussein, expressed:

"The application of the death penalty in these circumstances is unconscionable, as any miscarriage of justice as a result of capital punishment cannot be undone, and no justice system is totally free from human error.”

However, the UN Security Council also “condemned in the strongest terms” the attacks made on the Saudi Embassy in Tehran and the Consulate General in Mashhad in Iran following these executions, according to Al Arabiya. As I said, Saudi Arabia is in a whirlwind of diplomatic relations and its involvement in the UN shows this very well.

Along with the UN, Saudi Arabia is a member of two other international organizations which are more closely related to the international economy. The first of which is the International Monetary Fund (IMF). Saudi Arabia has been a member since the 26^th of August, 1957. Today, Saudi Arabia holds a 2.8% voting share of the 188-nation organization. This gives Saudi Arabia the 8^th largest voting power, and, accordingly, it is represented individually on the Executive Board. The current elected Executive Director for Saudi Arabia is Fahad Ibrahim A. Alshathri. Saudi Arabia is also one of 24 members of the International Monetary and Financial Committee. According to this European Union Report, “The Committee is a key instrument for providing direction to the Fund and has in practice become the main source of ministerial-level advice, guidance and feedback to the Executive Board on all the main issues facing the Fund.”

The Executive Board of the IMF also evaluates of the economic condition of its members and produces a report titled, Article IV Consultation. In the 2015 report, the IMF put a lot of emphasis on the impact of the extremely low oil prices, and it recommended that Saudi Arabia continue to privatize its economy. Shortly following this report, the IMF claimed that Saudi Arabia could run out of its financial reserves by the year 2020.

Please watch this Bloomberg Business interview with Masood AhMed, IMF Director of the Middle East and Central Asia, regarding the IMF's outlook for Saudi Arabia.

Lastly, Saudi Arabia was finally selected to be a member of the World Trade Organization (WTO) in 2005. Its accession on December 11^th made it the 149^th member of the organization according to a report by Samba Financial Group of Riyadh, Saudi Arabia. The process took 12 years since its original attempt to join the WTO’s predecessor organization, the General Agreement on Tariffs and Trade, in 1993. According to the same article, the 12-year process, “Saudi Arabia enacted 42 new trade-related laws, created nine new regulatory bodies, and signed 38 bilateral trade agreements.” In 1993, 75% of Saudi Arabia’s import tariffs were at 12%, and by 2003, 85% of its import tariffs were at 5% or less.

In 2011 and 2012, Saudi Arabia underwent a WTO Trade Policy Review. According to a report highlighting the review, Saudi Arabia has seen many trade-related developments since its accession. One important improvement has been the reduced time to process import documents four days to less than one hour. Also noted, was Saudi Arabia’s greater use of the standards developed in the Gulf Cooperation Council (GCC). The GCC is an economic and political alliance formed in 1981 between six Middle Eastern countries (Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Oman). Also in the review, the WTO noted its concerns over Saudi Arabia’s dependency on oil and the presence of state-owned enterprises such as Saudi Aramco. Just as the IMF has done, the WTO has also strongly recommended Saudi Arabia diversify its economy away from petroleum and invest in the private sector.

It will be interesting to see this diversification unfold in the coming years and also how the current diplomatic environment will affect it. Also, it the IMF’s projections are accurate, five years of diversification may not be enough to support the impact of such low oil prices.