The disappearance of Saudi Arabian journalist, Jamal Khashoggi, has global leaders very skeptical of future dealings with the middle eastern country. So, skeptical that global leaders such as, British billionaire Richard Branson, Uber CEO Dara Khosrowshahi, and more are suspending their ties with Saudi Arabia until further investigation. Khashoggi was last seen entering the Saudi consulate in Istanbul with marriage paperwork; Khashoggi has since been missing for a week. Saudi Arabian Prince Muhammad Bin Salman has been a tyranny to his country, with throwing protesters in jail and being suspected of having goons beat a native satirist, and now suspected of killing a native journalist. It is an unclear motive but what does this mean for Saudi Arabia's export partners? The U.S. being one of many with a 9.8% import of petroleum and petroleum products. What will happen to terms of trade and welfare of Saudi Arabia if more global leaders start to fear future dealings with middle eastern country, afraid they may disappear too? I think both terms of trade and welfare will decrease. If Saudi Arabia can't export as much then they can't afford to import as much also. In turn meaning that Saudi Arabia won't have as much consumer goods. And SA won't have as much production since SA imports machinery and equipment, textiles, chemicals, etc. at a cost of $136.8 billion dollars. Their production will decrease and so will their welfare. If the findings happen to be against SA what course of action should be taken? I don't believe global leaders will completely stop importing goods from SA but they should be held accountable. Putting tariffs and sanctions does not seem like a stiff enough punishment. Their government seems to be out of control and that's a good place to start cleaning things up.
https://abcnews.go.com/International/wireStory/richard-branson-freezes-business-ties-saudis-58454809
https://www.realclearpolitics.com/articles/2018/10/12/why_do_we_care_about_jamal_khashoggi_138334.html
https://www.economist.com/leaders/2018/10/13/what-it-means-if-saudi-arabia-murdered-a-journalist-in-turkey
I agree that Saudi Arabia's terms of trade will decrease due to this situation, but being a major exporter of oil still gives Saudi Arabia major influence in the world market. Oil in many countries is a daily necessity and there are only so many oil producers in the world. I think that because of this situation there may be some sort of back lash against Saudia Arabia in terms of trade possibly a tariff. If a tariff were put on Saudi-produced oil this would cause world price of oil to increase, causing the US to shift to greater domestic production of oil.
ReplyDeleteI agree with Erin that trade will decrease because of the incident with Jamal. But I think that this will be short lived because many countries are dependent on oil and will probably forget about the event since they rely on Saudi Arabia's oil production. Also a Tariff would be a good move from other countries because they can shift over to other major oil producers in the Middle East and the US can start to produce their own oil instead of relying on Saudi Arabia's oil.
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