Saudi Arabia is facing serious challenges in the face of advances by the armed forces of Yemen. Recent assessments indicate that the country is in a difficult military and economic position and may not be able to reclaim key areas such as Al-Mokha.
Military and Economic Challenges for Saudi Arabia
According to reports, Mohammed bin Salman, the Crown Prince of Saudi Arabia, recently traveled to Egypt and discussed with President Abdel Fattah el-Sisi the need to strengthen coordination and ensure freedom of navigation in the Red Sea. This visit clearly reflects Saudi Arabia's concerns about developments in Yemen and their impact on the country's maritime and economic security.
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The Saudi government is facing serious doubts about taking unilateral military action against Sana'a. Before any operation, Riyadh seeks to ensure the participation of other countries. Even if bin Salman decides to escalate attacks against Sana'a, there is no guarantee of success for these operations.
Economic Consequences
Recent developments, especially the U.S. instigation against Iran, have severely impacted Saudi Arabia's economic situation. The country's oil production has dropped to its lowest level in decades, and Saudi Arabia's development and economic diversification plans, valued in trillions of dollars, are facing serious complexities.
Forecasts indicate that Saudi Arabia's economy will shrink by 3.1% this year, and if the "East to West" oil pipeline is halted for a month, this decline will reach 4.5%, worse than the peak of the COVID-19 crisis in 2020. This situation poses a serious threat to attracting foreign investment in various fields, from data centers to the energy industry and electric vehicles.
Tim Callen, former head of the International Monetary Fund office in Saudi Arabia, is also deeply concerned about these developments and believes that Saudi Arabia's economic growth will significantly decline. Currently, Saudi government bonds have the worst performance in emerging markets.
Bin Salman is trying to garner more military support from foreign governments like the United States and the UK, but so far, none of these countries have shown readiness for military action. This indicates Saudi Arabia's isolation in the face of current crises.
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