Global Glance: June 6, 2016
A quick look at intriguing international stories
By John Bostwick, Managing Editor, Radius
Welcome back to Global Glance. This week we look at:
- How Uber’s $3.5 billion injection may be a setback for women in Saudi Arabia
- OPEC and global oil prices
- King Tut's dagger
How Uber’s $3.5 Billion Injection May Be a Setback for Women in Saudi Arabia
The New York Times reported last week that Uber received a staggering $3.5 billion in funding from Saudi Arabia’s main investment fund. The Times indicates that the Middle East is a key region in the company’s “quest to build a global empire,” which according to Uber’s website now includes 464 cities of operation. For its part, Saudi Arabia viewed the investment as part of its efforts “to transform its economy, reducing its dependence on oil and improving employment.” The article notes that Uber has raised more than $11 billion since its inception in 2008.
The Times article also touches on social issues in Saudi Arabia and how the funding may affect related reforms and practices. Uber claims that 80 percent of its current customers in Saudi Arabia are women, though of course none are Uber workers, as the kingdom prohibits women from driving. Uber spokeswoman Jill Hazelbaker is quoted in the article: “Of course we think women should be allowed to drive. … In the absence of that, we have been able to provide extraordinary mobility that didn’t exist before — and we’re incredibly proud of that.” Saudi Princess Reema bint Bandar al-Saud, a member of Uber’s public policy advisory board, said, according to the Times, “that the investment was a clear sign of change coming to the region.”
Regrettably for the women of the kingdom, the Uber deal may in some ways actually retard gender-equity reforms. Last Wednesday, Rebecca Lindland published a piece in Forbes titled “Why Uber's $3.5 Billion Windfall Is Bad News for Women in Saudi Arabia.” Lindland is a US auto-industry expert who spent over two years as an expat working in Saudi Arabia. She indicates that for at least a couple of reasons (involving a planned Riyadh metro system and a dearth of Saudi women police officers) the legal question of granting driver’s licenses to women is “off the table.”
In the meantime, the Saudi government can (like Uber itself) point to Uber as a liberating force for women, allowing them freedom of transportation without the need for driver’s licenses. Lindland argues that this position ignores the fact that Uber requires “significant out of pocket expenses” and that its services can be cumbersome (and even dangerous) to use and occasionally unavailable. She fears that the promotion of Uber in Saudi Arabia may be put forth as an excuse to continue disallowing women the right to drive.
The next day, Al Jazeera published an article about the reactions of some Saudi women to the funding announcement. The article quotes among others Hatoon al-Fassi, a professor at King Saud University, who notes that Uber helps only a fraction of the population, “those who have a bank account and credit card — which is not the case of the majority of women.” She adds that those who don’t have access to smartphones and those who aren’t “tech-literate” also can’t avail themselves of Uber rides.
Another source quoted in the article — Saudi “media personality” Mona abu Suliman — agrees that Uber doesn’t address the problem of women’s inability to drive legally in the kingdom. But she adds that ride-hailing services are “heaven-sent” solutions to some of the transportation challenges faced by local women.
OPEC and Oil Prices Explained
Last Thursday, Saudi Arabia was in the news for other reasons, as OPEC member countries met at their Vienna headquarters and apparently agreed to disagree about oil production parameters, ultimately taking no action. The Associate Press reported that OPEC’s fruitless meeting was “a missed opportunity to show the resolve that for decades let them set how much consumers and industries worldwide would pay for gas, heating and related necessities.”
The AP article explains that the logjam was primarily the result of disagreements between rival OPEC members Saudi Arabia and Iran, with the latter country unwilling to adhere to quotas that would slow oil production in the wake of recently lifted sanctions against Iran by the UN and other bodies. The inability to come to an agreement at the Vienna meeting is part of a wider conflict between the two Middle East powerhouses, and the stalemate left some questioning whether OPEC itself is still an effective and relevant organization. Here’s the AP again: “OPEC president Mohammed Bin Saleh al-Sada denied that his organization was fading. Instead, he described the cartel as ‘a dynamic, living organ responding to changes.’”
For a brief history of the Organization of the Petroleum Exporting Countries (OPEC’s full name), check out its website. The organization was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, and its members now also include Algeria, Angola, Ecuador, Indonesia, Libya, Nigeria, Qatar and the UAE. The website explains that “OPEC's objective is to coordinate and unify petroleum policies among member countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.” Basically, the organization was formed in the face of, as the website explains, the “Seven Sisters,” western oil companies that “dominated” the oil market and controlled production and pricing. In 1968, OPEC “adopted a ‘Declaratory Statement of Petroleum Policy in Member Countries’… which emphasized the inalienable right of all countries to exercise permanent sovereignty over their natural resources.”
A Reuters article published in the wake of last week’s unproductive Vienna meeting explains that though OPEC’s influence over oil production and pricing has fallen, it is still a remarkably durable cartel and one that many analysts argue is far from irrelevant. After all, Reuters points out, “OPEC says its members hold 80 percent of the world's proven oil reserves, and the de facto group leader Saudi Arabia holds the world's only significant spare capacity.” Reuters gives a brief history of some other commodity cartels that have dissolved where OPEC has endured, including the Texas Railroad Commission (an oil-pricing US precursor to OPEC), the UK’s International Coffee Organization, and the International Natural Rubber Agreement.
For a good overview of the global oil scene, including a brief section on OPEC, read The New York Times’ “Oil Prices Explained: Signs of a Modest Revival,” updated last Thursday. It explains that oil prices and oil-company earnings are down since June 2014 following a run of profits, and that while prices have risen over the last year to about $50-a-barrel “prices are still below what producers need to drill profitable wells.” The Times adds that prices have plunged due to a number of factors, including a surge in oil production from such countries as the US, Canada and Iraq. At the same time demand is “lagging a bit” due to weak economies in Europe and elsewhere and an increase in energy-efficient vehicles. Falling prices and demand have also adversely affected the economies of oil-producing countries such as Venezuela, Russia, and, yes, Saudi Arabia where “many young Saudis have seen cushy jobs vanish.”
As for OPEC, the Times implies that its decision last week to take no action was mostly a logical one, as “analysts have said that setting a production ceiling might only have limited value in regulating prices … because many of the biggest producers, including Saudi Arabia, are already pumping near top capacity.” It adds that Saudi Arabia’s king Salman bin Abdul-Aziz Al Saud may “find it difficult to persuade other OPEC members to keep steady against the financial strains.” Creating any kind of unified front at the moment will indeed be difficult, in part because some OPEC members, including Venezuela and Algeria, want to cut production to create demand, while Iraq “is actually pumping more” and Iran is expected to “become a major exporter again” with the lifted sanctions.
For more information, check out the Times’ interactive graphic “How the US and OPEC Drive Oil Prices.” It explains that OPEC has “long been a dominant force in the global market, manipulating prices by holding back or releasing supplies.” However, the US’s recent increase in oil production due to shale technologies has moved the country into “the role of global swing producer — a supplier with enough spare capacity to respond quickly to markets and affect prices.” In other words, western oil companies and OPEC countries are responding to each other now much as they did back in 1960 when OPEC was formed.
King Tut’s Dagger
Let’s end this GG with a rare pleasant, or at least non-somber, bit of news out of the Middle East. The most popular story last Friday on BBC.com’s “Middle East” section involved a dagger buried with Egyptian pharaoh Tutankhamun 3,300 years ago and discovered in 1925. The article explains that the dagger’s iron blade had been the subject of scientific debate for years, as it has no rust and “such metalwork was rare in ancient Egypt.”
An academic article published in Meteoritics & Planetary Science shows that Tutankhamun's dagger blade is formed from a meteorite, and that its “high manufacturing quality … suggests a significant mastery of ironworking in Tutankhamun's time.” The authors used something called “portable x-ray fluorescence spectrometry” to make their determination. Interestingly, the authors link their finding to a phrase that literally translates as “iron of the sky” and came into use in the 13th century BC. Together, the dagger and ancient term suggest “that the ancient Egyptians … were aware that these rare chunks of iron fell from the sky already in the 13th C. BCE, anticipating Western culture by more than two millennia.”