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3O7g the POLITICAL and ADMINISTRATIVE ROLE OF 219 3o7g THE POLITICAL AND ADMINISTRATIVE ROLE OF PLANNING AND BUDGETING IN SAUDI ARABIA: ADAPTATION FOR RAPID CHANGE DISSERTATION Presented to the Graduate Council of the University of North Texas in Partial Fulfillment of the Requirements For the Degree of DOCTOR OF PHILOSOPHY By Mohammed S. A. Al-Kahtani, B.S., M.A, Denton, Texas December, 1989 Al-Kahtani» Mohammed Saeed A., The Political and Administrative Role of Planning and Budgeting in Saudi Arabia: Adaptation for Rapid Change. Doctor of Philosophy (Political Science), December, 1989, 276 pp., 20 tables, bibliography, 146 titles. This study examines the political and administrative role of planning and budgeting in Saudi Arabia. It demonstrates how they have contributed to lessening the political crises of distribution, participation, and penetration that confront developing countries. The study also investigates how these two bureaucratic processes have helped adapt rapid changes in a manner acceptable to the cultural milieu. In addition, the study explores the politics of planning and budgeting and identifies the roles various actors play. The evolution and institutionalization of planning and budgeting are examined through printed materials and interviews with planners and budgeters in the Ministries of Planning and Finance. In addition, a number of the Ulama. businessmen, former government bureaucrats, officials of key ministries and agencies, and media were interviewed in an attempt to understand how they interact in the politics of planning and budgeting. It was found that these two bureaucratic processes have opened the political process and have allowed greater participation, altered the means of income distribution, and enhanced the government capability to penetrate every segment of the society. Copyright by Mohammed S. A. Al-Kahtani. 1989 111 TABLE OF CONTENTS Page LIST OF TABLES v LIST OF ILLUSTRATIONS vii Chapter I. INTRODUCTION . 1 Statement of the Problem Purpose of the Study Research Questions Methodology and Data Collection Significance of the Study Limitations of the Study Organization of the Study II. REVIEW OF RELATED LITERATURE 19 Political Development, Modernization, and Change Political participation Distribution Penetration Planning and Budgeting as Political Tools Development vs. Adaptation III. SOCIAL, ECONOMIC, AND POLITICAL BACKGROUND OF SAUDI ARABIA 46 The Consolidation Period 1902-1932 Nation-building Period 1932-1953 The Economic Crisis of the 1950s The Family Feud 1953-1964 The Modernization Period: 1964 to the Present IV. EVOLUTION OF THE BUDGETARY PROCESS IN SAUDI ARABIA 76 Budgeting in the Early Period (1902-1953) IV V. INSTITUTIONALIZATION OF PUBLIC FINANCE IN SAUDI ARABIA 103 Faisal's Views on Development and Change Institutionalization of Public Finance VI. EVOLUTION OF NATIONAL PLANNING IN SAUDI ARABIA 125 The Economic Development Committee (EDC) The Supreme Planning Board (SPB) The Central Planning Authority (CPA) The First National Plan, 1970-1975 The Second and Following Five-Year Plans Development of Credit Institutions VII. INSTITUTIONALIZATION OF THE PLANNING PROCESS.. 164 Ministry of Planning (MOP) The Bureaucracy and the Planning Process The Ulama and the Planning Process The Royal Family and the Planning Process Citizens and the Planning Process The Media and the Planning Process Roles of Major Actors in the Policy Process of Planning VIII. SUMMARY AND CONCLUSION 212 Find ings APPENDICES 225 BIBLIOGRAPHY 267 LIST OF TABLES Page Table I. Summary of the Interview schedule 7 II. Names and dates of established Ministries 54 III. Annual Production of Crude Oil in Saudi Arabia, 1938-1986 55 IV. Revenues from Oil in Saudi Arabia, 1938-1985 (Millions of U.S. Dollars) 57 V. Dates of the Presidency of the Council of Ministers by King Saud and Prince Faisal (later to be King) 1953-1975) 68 VI. Ministries established in Saudi Arabia between 1953-1964 69 VII. The First Saudi National Budget 1930/31 (S.R.) 83 VIII. Names and Dates of Ministries established in Saudi Arabia from 1930-1950 90 IX. Royal and non royal occupants of various Ministries in Saudi Arabia since 1953 98 X. Saudi Royal Governors: Name, Age, Educational Level, and Regions Governed Ill XI. The Saudi Civil Service Employees 1960-1985 121 XII. Summary of Financial Outlays for the First Five-year Development Plan 1970/71-1974-75 (S.R. million) 141 XIII. Actual Revenues and Expenditures for the Fiscal Years 1969/70-1974/75 146 VI XIV. The Size of the First and Second Development Plan 148 XV. Distribution of Total population (percent).... 152 XVI. General Credit Movement of Saudi Arabian Agricultural Bank from 1384/1385 H to 1407/1408 A.H. (1964/65-1987/88) S.R 155 XVII. Saudi Arabian Agricultural Bank Subsidies Disbursed since 1393/1394 A.H. to 1407/1408 (1973/74-1987/88) S.R 156 XVIII. Total Loans Extended by Saudi Credit Bank since its Inception Distributed by Purpose (1393/94-1300/07 (1973/74- 1986/87) S.R 158 XIX. The Policy Process Schematic 200 XX. Relative Influence of Major Actors in the Policy Process of Planning in Saudi Arabia.. 211 v 1 1 LIST OF ILLUSTRATIONS Page Figure 1. The Structure of Planning in Saudi Arabia 170 VI 11 CHAPTER I INTRODUCTION The major challenge to Saudi Arabia, as to all Third World countries, is whether it can politically develop fast enough to accommodate the rapid societal changes which arise concomitantly with modernization. Saudi Arabia, because of its extreme wealth and the dominance of religion in.its society, is unique in the sense that it has the wealth to undertake any major change it deems necessary, but is resistant to any change which it perceives as threatening its cultural values. Conflicting attitudes toward change threaten either to prevent modernization or to cause societal upheavals as a result of the changes brought' about by modernization. Either of these consequences could bring about chaos in the society and cause the downfall of the political system. The political system, therefore, faces the difficult task of developing political institutions strong enough to permit compromise between opposing views of * change and which are capable of adapting policies to allow change, yet preserve the basic traditions of the society. In the past three and one half decades, Saudi Arabia has changed dramatically. Among the major developments has been the growth of strong administrative institutions. As the bureaucracy has grown, it has become, as in most developing 1 2 countries, a major actor in the political system. The i question facing the Kingdom is how the evolution of administrative processes has affected political development. Have these bureaucratic processes provided the necessary flexibility to the system so the system can avoid the calamities predicted by many if political development fails to occur and the system fails to permit greater participation, distribution, and penetration. Planning and budgeting, in particular, are seen as the administrative processes which may effect political development most directly. For the past three and one half decades planning and budgeting have evolved in Saudi Arabia, and this study will examine this evolution and its impact. Statement of the Problem In their quest for development, Third World countries increasingly have relied on the processes of budgeting and planning to manage their national resources. Planning and budgeting, therefore, have become major tools to achieve these countries' goals and aspirations. Increasingly, scholars and Third World leaders realize that sound planning and budgeting are not merely technical and administrative processes reserved for accountants, economists, and administrators. These processes are also vital political 3 processes essential for political development (Waterston 1965; Wildavsky 1986) . As political processes, planning and budgeting may serve essential political functions in the society. They may lessen the severity of the political crises delineated by the Social Science Research Council (SSRC) in "Crises and Sequences in Political Development" that appear and reappear in every political system. These political crises, namely identity, legitimacy, participation, penetration, and distribution are most severe in Third World countries, although they challenge even the first and second world countries (Binder, et al., 1971). Some of the Third World countries inherited their political and administrative institutions from former colonial powers (Chapel 1982, 12-36), whereas others, such as Saudi Arabia, had to build from scratch their institutions for coping with these political crises. Since Saudi Arabia has had to build its basic political and administrative institutions, these political crises have been particularly more challenging. Saudi Arabia was the product of a single ambitious leader, King Abdul Aziz, who, in the words of two western scholars, was "the greatest traditional leader of this century. He combined wit and physical courage with personal charisma and deep religious beliefs to consolidate a people and build a nation" (Bill and Leiden 1984, 182). Since its 4 emergence as a nation-state in 1932, Saudi Arabia has assumed major roles in domestic and international arenas. It literally has moved from the camel caravan to the jet age in its short 57-year history. The two distinguishing characteristics of Saudi Arabia are religion and oil. Islamic religion permeates completely every aspect of Saudi society. Saudi Arabia is the birthplace of prophet Mohammed {Pbuh, peace be upon him—the traditional Muslem's means of showing
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