The Kingdom of Saudi Arabia is the richest the country in oil in the Middle East region. The Kingdom has opened its markets to foreign investments two years ago and provided many investors with opportunities to invest in the largest stock market in the Middle East. However, the current conflict in Yemen seems to be an obstacle for successful and safe investments.
The crisis in Yemen broke out in 2015, and since that time, the Kingdom of Saudi Arabia became involved in a long-lasting crisis. The conflict aroused after the rebellion of Houthis — the group of rebels who aimed to take control over the government in Yemen. The president of the country, Abdo Rabbu Mansour Hadi, was made to exile the country by the religious-political movement of Houthis.
Saudi Arabia reacted to the conflict for several reasons. First, the Kingdom had to protect the interests of the internationally recognized president of Yemen. Second, Saudi Arabia supported numerous requests to provide military assistance to fight armed rebels.
As Naylor (2015) writes, “Eight months after launching a war in Yemen, Saudi Arabia appears trapped in a protracted and devastating conflict that is straining relations with its allies” (para. 1). Saudi Arabia formed the coalition with other Gulf states and the U.S. to drive out rebels, but without significant achievements.
Yemen is still under the control of the Houthis. In December 2015, Saudi Arabia and Yemen agreed to the formal truce. However, the Kingdom had to cease it after more than thirty people were killed during one weekend (Mortimer, 2016). It is important to add that Iran is the primary rival of the Kingdom of Saudi Arabia, and the latter is afraid that the Houthis are Iran-backed rebels.
There is no doubt that current instability in the region should be taken into consideration before making any investments in the country. The combination of rational and cultural approaches is necessary for finding the most appropriate solution to the problem (MacIntosh & McLean, 2015).
Several reasons predetermine the need to invest in Saudi Arabia. The first is that despite being involved in the conflict, the Kingdom is still the largest oil exporter in the world. Also, the country has the largest economy among Persian Gulf states. However, the involvement in Yemen conflict has run down Saudi Arabia both politically and economically.
The country faces a budget deficit. The unpredictable ending of Yemen conflict makes it rather risky to invest in Saudi Arabia now. However, foreign investments is what the country needs to sustain its economy and stock markets (Bianchi, 2015).
In regards to the uneasiness about repercussions of clients’ regions of origin, there are no significant threats. As it has been already mentioned, the Kingdom of Saudi Arabia is more concerned about Iranian proxy intervention in the conflict. As far as clients have legitimate registered investment companies with no suspicion of money laundering or dangerous politically-based activities, their origin is more likely to have no influence on their investment activities.
Investment in Saudi Arabia is a risky initiative taking into consideration the uncertainties of the current crisis in Yemen. However, the facts that the country is the largest oil exporter, and foreign investments are crucial for sustaining economy make the risk justifiable. Still, possible aggravation of the situation cannot be predicted the same way as the soon solution of the conflict.
References
Bianchi, S. (2015). Saudi Arabia Withdrew Billions from Markets, Estimates Show. Web.
MacIntosh, R., & MacLean, D. (2015). Strategic Management: Strategists at work. London, UK: Palgrave Macmillan.
Mortimer, C. (2016). Yemen Crisis: Saudi Arabia ends formal ceasefire with Houthi rebels after more than 30 fighters killed over weekend. The Independent. Web.
Naylor, H. (2015). Saudi Arabia Trapped in messy Yemen War. Toronto Star. Web.