Saudi Arabia Inviting ‘Capital Flight’ Over Human Rights’ Criticism by Canada?

saudi arabia human rights
Last updated on September 5th, 2018

Saudi Arabia human rights situation has driven away foreign investors enough in the past. It has resulted in the net FDI dropping to an all time low, which has now worried experts that the spat with Canada may make it even worse.

Saudi’s trade relation with Canada is only worth around $4 billion. It is not the recent diplomatic conflict with Canada that is worrying economists. In fact, it is the consequence of the clash and denial over mediation from the kingdom that has put Saudi Arabia in a tough spot, but for the foreign investors.

In 2017, Saudi received only $1.4 billion in FDI, which is an 80% drop from the usual. In 2016 it received $7.5bn, whereas in 2012 it had received $12.2bn. This shows a gradual drop in the inward investment received by Saudi. Back in 2009, Saudi Arabia used to be West Asia’s biggest FDI receiver and now it is struggling to even keep up. Meanwhile, ‘ally’, UAE seems to be absorbing the kingdom’s share of regional FDI. The Emirates received approximately double of what it received in the past six years, jumping directly from 19% to 41% in merely 5 years.

Saudi Arabia’s foreign ministry quoted Canada’s criticism of the kingdom’s human rights records as an “overt and blatant interference in the internal affairs”. Nevertheless, the clash over these ‘internal affairs’ hold the capability of driving away potential foreign investors from capitalizing on the kingdom.

The claims of the Canadian spat becoming a reason for further impact on Saudi Arabia’s economy are being made, because the dictatorial tendencies of the kingdom have backfired in the past as well. The recent arrest of human rights activist, Samar Badawi, is no less than Saudi Arabia’s human rights violations in the past.

The spat began with Canada’s foreign ministry demanding the immediate release of arrested human rights activist. Meanwhile, Saudi Arabia, instead of mediating the matter, denied negotiating and cut diplomatic and trade ties with the country, an abrupt move that is considered to drive away foreign investors from capitalizing on the kingdom.

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