Down and Out in Saudi Arabia

Hen times are tight, the arrival of a utility bill can be enough to push some families over the edge. It is no different in the Hazazi home, a squalid, single-story apartment in one of the poorest areas of Riyadh, the capital of one of the richest countries in the world. “The children need so much, but just surviving is expensive too,” says Fatima Hazazi, looking through her latest water and power statements. “My heart hurts when the bills come.”

Her husband’s minimum-wage job as a coffee server at a government ministry barely covers the family’s rent. Paying the bills is a laborious exercise in priorities. Will the family eat meat this month, or will they have running water? Can she afford a plastic sheet to stop the winter rain from trickling into the bedroom, or should she get the refrigerator fixed? The only thing that is nonnegotiable is the electricity. Hazazi looks to the small white machine that hums at the foot of her bed, its plastic tubes attached to a catheter port embedded in her stomach. For seven hours every day, Hazazi must undergo home dialysis, a painful process that purifies her blood now that her diseased kidneys can’t. “If I don’t pay the electricity bill, the power goes out. When the power goes out, my machine stops. And if my machine stops …” Hazazi doesn’t need to finish her sentence. Even if she were strong enough for a kidney transplant, which doctors say she is not, the waiting list is many years long.

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Saudi Arabia has one of the world’s highest concentrations of superrich households (those worth more than $100 million), yet 1 in 5 Saudi citizens, or some 4 million people, live like Hazazi, subsisting on less than $1,013 a month for a family of eight — which puts them below Saudi Arabia’s official poverty line. Extreme poverty, defined by the government as living on less than $453 a month, is experienced by 1.63% of the population, according a 2009 estimate by the office of the National Strategy to Combat Poverty, one of the government’s more recent attempts to assess the poverty issue. The Saudi government has just launched a poverty-tracking survey, its first systematic assessment of income since 2003. Results will be made public within the next few months, but charity workers and activists suspect the actual number of Saudis living in poverty may be much higher than the earlier estimates of 20% and will keep rising thanks to chronic joblessness, high inflation, costly rent and a rapidly growing population.

The government argues that free health care, free education and subsidized fuel prices (bottled water, at 35 cents a liter, costs more than gasoline) mean that no one is truly poor in Saudi. But an inability to tackle the root causes of poverty demonstrates that the government is inadequately prepared for a future in which the country’s population keeps growing and its oil wealth begins declining. In a region where unemployment, poverty and widening wealth gaps have sparked revolutions, the risks to the Saudi monarchy — one of the U.S.’s most important Middle Eastern allies and a key bulwark against Iranian expansion — are enormous.

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Since oil was first commercially exploited in the 1930s, Saudi Arabia has been able to lavish the windfall on its populace — which served as proof that the monarchy’s legitimacy was blessed by God. That narrative is now under threat. “Poverty is proof, if you needed one, that Saudi is not the Islamic utopia that it strives to be,” says Thomas W. Lippman, author of Saudi Arabia on the Edge: The Uncertain Future of an American Ally. “No longer can its leaders pretend that theirs is a perfect society that embodies the will of God. They have got real problems.”

In less than eight decades, Saudi Arabia has gone from impoverished desert backwater to an oil-producing powerhouse worth $740 billion in GDP, but its population has grown at a similarly precipitous rate, from 6 million in 1970 to 27 million today, largely a result of high birth rates and an influx of foreign workers, who make up a quarter of the population. Employment schemes and benefit programs have failed to keep up. More than two-thirds of Saudis are younger than 30, a demographic fact all the more alarming given that nearly three-quarters of unemployed Saudis are in their early 20s, out of an official unemployment rate of 12%. And while the oil reserves are likely to last well into the middle of the century, domestic consumption is on the rise. If current trends continue, Saudis may end up consuming more oil than they export, undermining an economy dangerously dependent on a single resource, and one that offers little in the way of well-paying jobs. “Ninety-two percent of our budget comes from oil,” notes Prince Alwaleed bin Talal, Saudi Arabia’s richest man and head of Kingdom Holding, an international investment company based in Riyadh. “This is dangerous. This is what we call an economic time bomb.”

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Hand to Mouth
Eight months ago, Fatima Hazazi was diagnosed with kidney failure and stayed in the hospital for more than a month. Her doctors discharged her with a state-of-the-art home-dialysis machine — which retails for about $22,000 — and trained her 24-year-old daughter to operate it. In a way, Hazazi was lucky: medical care that would have bankrupted any of the 48.6 million Americans without insurance doesn’t cost Hazazi a cent. She is grateful, but Hazazi still finds it frustrating that the state spends so much to keep her alive yet has done nothing to assist her beyond that. She brushes away a cockroach that has scuttled across her bed and scowls at another nesting among the machine’s snarl of electrical wires and tubes. “The doctors, they always tell me how sick I can get if I don’t keep everything clean. But how can I? Look where I live!”

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There are no windows in the two-bedroom tenement she shares with her husband and eight children, and the air is stagnant with the smell of vegetables rotting in the malfunctioning refrigerator. Dust from the crumbling mud-brick walls powders the boxes of medicine and dialysate stacked on the bare concrete floor. “No one takes care of me or my family. They only take care of my disease.” For all the money Saudi Arabia spends on free education and health care for its citizens — 37% of last year’s budget — there is no across-the-board government welfare system. Job seekers under the age of 35 can collect up to $533 a month for a year, as long as they can prove they are actively searching. Layla, Hazazi’s daughter, would look for a job, she says as she prepares to unhook her mother from the machine, but tending to her mother’s medical needs takes up most of her days. “I am a full-time doctor right now,” she says, with a hint of regret.

Widows and divorced women with children get a small government stipend, ranging from $250 to $500 a month, as do the elderly. But for those who fall through the gaping cracks — including women with husbands who have jobs, no matter how poorly paid — there is nothing. Housing is hard to come by in Riyadh, where some 23% of Saudis live, and rent is skyrocketing, even in the most run-down parts of the city. A two-bedroom apartment in the capital’s worst slums still rents for $300 a month. More than a third of her husband’s salary goes on rent, says Hazazi, and the landlord wants even more next year.

The government is making efforts to assuage the housing crisis, which impacts all of Saudi society. The Housing Ministry estimates that some 65% of the population is seeking affordable housing. In 2011, King Abdullah pledged $70 billion toward 500,000 affordable housing units to be built across the country, but the first of those homes won’t be available until 2014. The mechanism for prioritizing recipients has yet to be developed. Hazazi is skeptical she will ever see the inside of one of these widely advertised dream homes. She doesn’t have the wasta, the all-important connections that are the engine of Saudi social mobility, to get a place in line. “The most we can hope for is that some rich person who wants to feel better about himself comes along to pay my rent.” That’s not entirely wishful thinking. It’s happened twice already in her neighborhood

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Helping — or Hindering?
Charity is one of the five requirements of Islam. It’s also one of the reasons Saudi Arabia has long resisted a more formalized welfare system — society is expected to step in instead. “In the West, charity is optional, but not for us,” says bin Talal. Muslims must, by Islamic law and custom, give a portion of their wealth every year to the less fortunate; failing to do so risks eternal damnation, says the Koran. Residents of neighborhoods like the Hazazi family’s depend on that religious obligation to survive. Sibala Street, just a few steps away from the Hazazi home in south Riyadh, is known locally as the beggars’ street. Every Friday after prayers, old men and women in black abayas line the sidewalks like blackbirds on a telephone wire, waiting for the slow parade of Audis, Porsche Cayennes and Chevy Suburbans to pass by. Bags of rice and packets of meat and dates are quickly thrust out of the car windows into eagerly waiting hands.

Bin Talal, who with a net worth of $20 billion narrowly missed making Forbes magazine’s top 25 billionaires this year, takes a different approach to charity. He welcomes the needy to his luxurious desert camp about an hour’s drive north of Riyadh, where every Wednesday night he receives their petitions for aid in a tradition dating back to the 18th century founding of the al-Saud dynasty, of which he is a direct descendant. There, standing on thick carpets spread out on the sand in front of a massive bonfire and flanked by a pair of white falcons, he greets his petitioners, some 1,000 a night. One by one, they press well-creased letters into his hands — requests for cash to help repay a loan, buy a car, pay for a wedding or cover rent — and whisper urgent supplications. Bin Talal has an entire office dedicated to vetting each petition and responds with the appropriate bank transfer.

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The problem with such handouts, of course, is that they do nothing to address the root causes of poverty. Bin Talal, who says he has given away more than $3 billion over the past three decades in charity efforts that span the globe, likens the poor’s dependence on charity to Saudi Arabia’s reliance on oil: a source of easy money that disincentivizes difficult and needed reforms. “My two biggest concerns for the country today are unemployment and dependence on oil,” he says. “Failure to address these issues will be catastrophic.” The Arab Spring, he says, “was a wake-up call that we need to focus our attention on employing the majority of our youth population. The key to that is diversifying our economy.”

The government has made some strides over the past two years in reducing unemployment. It has invested heavily in education reform and vocational training, and has instituted a “Saudization” policy — penalizing employers with too high a percentage of imported labor — to reduce the number of foreign workers, who hold 2 out of every 3 jobs in the kingdom. As a result, the official unemployment rate has declined by half from 24% in 2005. But women’s unemployment, at 34%, is on the rise, despite a publicized push in 2011 to open up the retail sector to women. This is a significant issue in low-income households, like the Hazazis’, where one minimum-wage salary is simply not enough to support a large family.

There is no shortage of barriers to women’s employment in a society that practices strict segregation of the sexes, and the Saudi government, fearing a backlash from conservative religious leaders, is unwilling to take them down. Even if Layla Hazazi found an employer with the requisite sex-segregated entrances, gender-partitioned offices and separate dining and bathroom facilities, she wouldn’t be able to get to work. Women are not allowed to drive in the kingdom, and since there is no public transportation in Riyadh, she would have to hire a car and driver that could easily cost twice the minimum wage she would earn as a new hire. “We need a major revamping of the way we think about women in Saudi Arabia,” says bin Talal. “Our real problem is incorporating ladies fully into society.” Female empowerment has been one of the key factors to reducing poverty around the world. “Saudi is no different than anywhere else,” says Fawzia al-Bakr, a women’s-rights activist and professor at Riyadh’s King Saud University. “When women work, society benefits.” But segregation of the sexes, like charitable giving, is deeply ingrained. Challenging those beliefs could be a perilous undertaking for a monarchy that depends on a conservative clerical class to lend it legitimacy.

This is also a society that seeks to keep the dark side of the country’s extraordinary oil wealth under wraps. Many middle- and upper-class Saudis didn’t even know there was poverty in the kingdom until, in 2002, then Crown Prince Abdullah made a highly publicized tour of Hazazi’s south Riyadh slum. Struck by the appalling conditions, he pledged to eliminate poverty for good. But the issue went dormant for several years, until 2011, when a young documentary filmmaker named Feras Bugnah posted a shocking nine-minute video about deep poverty in south Riyadh to YouTube. In the video, he met and interviewed destitute Saudis, including an imam who laid out the links between poverty, drugs and prostitution. His intention was not to challenge the regime, but to find a solution; at the end of the video, which was viewed 2.4 million times, he encouraged viewers to get involved through acts of charity and by pushing for the creation of a needs database for the Saudi poor. “I just wanted to show that we, society, should help society, and that we didn’t need the government,” he says.

The government, though, saw it as a threat and detained him for two weeks. Bugnah is still not sure what red line, exactly, he crossed. “We have a lot of problems in our society, and I don’t think the older generation can solve them. We need new ideas, and we need to work together.” To that end, he is designing a couple of apps to help the poverty problem. One matches volunteers with worthy projects; another helps high schoolers prepare for the workplace by listing future employment needs, and the skills necessary to get such jobs — before they graduate. “Maybe,” he says, “the government will want to buy my apps, and I will make life easier for them and for the people.”

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If the Saudi leadership can embrace innovations like Bugnah’s, it may help the country’s poverty problem going forward. But in the meantime, it is still overlooking the very real needs of the generation that has fallen through the cracks. Layla Hazazi will soon get married, and when she does, it will be her 13-year-old sister Hawataf who takes her place running their mother’s dialysis machine. She will have to quit school then, further reducing her chances of ever finding a job and pushing poverty one more generation into the future.
— with reporting by Lubna Hussain / Riyadh

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