News Updates

President of World Bank Group praises Saudi Arabia’s Vision 2030

King Salman bin Abdulaziz Al Saud received President of the World Bank Group, Dr. Jim Kim and his accompanying delegation at Al-Yamamah Palace in Riyadh on Monday.

During the meeting, they discussed aspects of cooperation between the Kingdom and the World Bank Group.

Dr. Kim praised the Kingdom of Saudi Arabia s vision 2030, expressing the Bank’s desire for participating in achieving the vision s objectives.

The audience was attended by Crown Prince Mohammed bin Naif bin Abdulaziz, Deputy Premier and Interior Minister; Minister of State and Cabinet’s Member Dr. Ibrahim bin Abdulaziz Al-Assaf; Minister of State, Cabinet s Member and Chief of Royal Court Khalid bin Abdulrahman Al-Issa; Minister of Finance Mohammed bin Abdullah Al-Jada an; Governor of Saudi Arabian Monetary Agency Dr. Ahmed bin Abdulkarim Al-Khulaifi; and Kingdom s Executive Director to the World Bank Group Dr. Khalid bin Suleiman Al-Khudairi.

Source: http://english.alarabiya.net/en/business/2017/02/14/President-of-World-Bank-Group-praises-Saudi-Arabia-s-Vision-2030.html

President Erdoğan receives formal reception in Riyadh

Saudi Arabia’s King Salman bin Abdulaziz al-Saud on Tuesday welcomed Turkish President Recep Tayyip Erdoğan at an official reception in Saudi capital Riyadh.

The reception ceremony took place in Riyadh’s Al-Yamamah Palace, where King Salman formally received Erdoğan after which the two leaders reportedly spoke over lunch.

A number of meetings are expected to be held Tuesday afternoon between officials of the two countries.

Earlier Tuesday, President Erdoğan also met with Saudi Deputy Crown Prince Mohammad bin Salman Al-Saud.

That meeting, which lasted roughly 50 minutes, was held behind closed doors.

Erdoğan arrived in Riyadh late Monday from Bahrain within the context of an ongoing tour of the Gulf, which will also bring him to Qatar later on Tuesday.

While in the Gulf, the Turkish president is expected to discuss regional issues with Gulf leaders along with means of bolstering Turkey’s bilateral relations with the oil-rich Gulf States.

Source: http://www.yenisafak.com/en/world/president-erdogan-receives-formal-reception-in-riyadh-2613126

Prince Mohammad Bin Salman: The Kingdom’s Vision 2030 And the Development Program

Saudi Sheikh H.H. Mohammad bin Salman Al Saud’s speech and address at Vision 2030 (English version)

Saudi Sheikh H.H. Mohammad bin Salman Al Saud’s speech and address at Vision 2030 (Arabic version)

Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince

Saudi Arabia is getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets.

Over a five-hour conversation, Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate. The initial public offering could happen as soon as next year, with the country currently planning to sell less than 5 percent.

“IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince said in an interview at the royal compound in Riyadh that ended at 4 a.m. on Thursday. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”

Almost eight decades since the first Saudi oil was discovered, King Salman’s 30-year-old son is aiming to transform the world’s biggest crude exporter into an economy fit for the next era. As his strategy takes shape, the speed of change may shock a conservative society accustomed to decades of government handouts.

Buying Buffett and Gates

The sale of Aramco, or Saudi Arabian Oil Co., is planned for 2018 or even a year earlier, according to the prince. The fund will then play a major role in the economy, investing at home and abroad. It would be big enough to buy Apple Inc., Google parent Alphabet Inc., Microsoft Corp. and Berkshire Hathaway Inc. — the world’s four largest publicly traded companies.

PIF ultimately plans to increase the proportion of foreign investments to 50 percent of the fund by 2020 from 5 percent now, said Yasir Alrumayyan, secretary-general of the fund’s board.

The blueprint for structural change follows a series of measures last year to curb spending and prevent the budget deficit from exceeding 15 percent of gross domestic product. At the end of December, authorities raised the prices of fuel and electricity and pledged to end wasteful budget spending after oil prices plunged.

More will follow those “quick fixes” as part of a “National Transformation Plan” to be announced within a month, including steps to raise non-oil revenue steadily through various measures including fees and value-added taxes.

“We are working on increasing the efficiency of spending,” said Prince Mohammed, who is second-in-line to the throne. The government used to spend up to 40 percent more than allocated in its budget and that was whittled to 12 percent in 2015, he said. “So I don’t believe that we have a real problem when it comes to low oil prices.”

Too Late?

The question is whether the reaction to the more than halving in the price of a barrel of crude has come too late, especially given the Saudi influence over the oil market. The country will only freeze output if Iran and other major producers do so, the prince said.

An International Monetary Fund study in 2014 noted there were “many examples of failure” by countries trying to reduce reliance on energy production and few successes. Gulf Arab monarchies may have missed their best chance when oil prices were above $100 a barrel rather than about $40 now.

“It is clear Saudi Arabia needs to reform, diversify, and re-energize its economy, but this will involve more than just increasing investments in non-oil industries,” said Paul Sullivan, a professor of security studies at Georgetown University in Washington. “One cannot order economic reforms like a multiple course dinner.”

Taking Control

Prince Mohammed has consolidated more power than anyone in his position since the founding of the kingdom in 1932. His attempt to shake up the economy comes against the backdrop of mounting domestic security threats and regional turmoil, with the Sunni-ruled kingdom fighting a war in Yemen against Shiite rebels it says are backed by Iran.

As Defense Minister, Prince Mohammed leads the military effort. He also oversees ministries including finance, oil and the economy through the Council for Economic and Development Affairs. The council, which was established after his father became king, also controls the Public Investment Fund.

More Casual

Appearing casually in a white robe, but without the traditional Saudi headdress, the prince sat in an office adorned with posters of King Abdulaziz Al Saud, the founder of Saudi Arabia, King Salman and Crown Prince Muhammad Bin Nayef.

He said the wealth fund already holds stakes in companies including Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, and National Commercial Bank, the kingdom’s largest lender.

The fund is looking at “two opportunities outside Saudi Arabia” in the financial industry, the prince said, declining to name the possible acquisition targets. “I believe that we will conclude at least one of them.”

It has already started to become more active abroad. In July, PIF acquired a 38 percent stake in South Korea’s Posco Engineering & Construction Co. for $1.1 billion and the same month agreed to a $10 billion partnership to invest in Russia with the Russian Direct Investment Fund.

‘Aggressive’ Plan

The fund has been hiring specialists for markets, private equity and risk management, said Alrumayyan, PIF’s secretary-general and a former chief of Credit Agricole SA-backed Saudi Fransi Capital.

“We’re working now on different fronts,” he said. “Now the government is transferring some of its assets, lands, some of the companies to us. We have different projects in tourism and in new industries that are untapped in Saudi.”

Over a multiple-course dinner with the prince and several top Saudi officials, he described the overseas investment plan as “very aggressive,” though said PIF would initially be skewed toward domestic assets by the addition of Aramco.

“Undoubtedly, it will be the largest fund on Earth,” the prince said. “This will happen as soon as Aramco goes public.”

Source: https://www.bloomberg.com/news/articles/2016-04-01/saudi-arabia-plans-2-trillion-megafund-to-dwarf-all-its-rivals

Why this Saudi Prince is called as ‘Mr. Everything’ – Bloomberg

All about Mohammed Bin Salman – Saudi Arabia’s Deputy Crown Prince Investor Trading Academy

Published on Apr 5, 2016

Welcome to the Investors Trading Academy event of the week. Each week our staff of educators tries to introduce you to a person of interest in the financial world. This could be a person in government or banking or an important investors or trader, on just someone making the financial headlines in recent days. In this video we will take a look at a new name in the headlines, Deputy Crown Prince Mohammed bin Salman.
Ever since the OPEC meeting in November 2014 when Saudi Arabia adopted its new plan to maintain its market share by increasing production and driving prices down oil has been the #1 headline. Mohammed bin Salman, a fast riser in the Saudi hierarchy and member of the new generation, has the world’s ear after an expansive interview where he elaborated on his plan for taking the mega-giant state oil company public.
Bin Salman, son of King Salman, was the surprise choice to serve as deputy to Crown Prince Muhammad bin Nayef, the 56-year-old who had been seen as a possible heir apparent but is now viewed by some as more of a rival. Bin Nayef is interior minister who rose to power on his success as head of the Saudi counterterrorism program. King Salman, himself 80, took the throne when King Abdullah died in January 2015.
Bin Salman has also been popular with Saudi youth, who have been supporting him through the Yemen war. About 70 percent of the population of Saudi Arabia is under 30, and 40 percent is unemployed, said Helima Croft, head of commodity strategy at RBC Capital Markets.
“That’s his constituency. … If your policy is to consolidate a significant portion of the population behind you, he’s done that. I think he’s played the ‘Game of Thrones’ in Saudi Arabia particularly well,” said Croft. “He consolidated power faster than anyone imagined. He’s talked about doing things that go to the heart of the Saudi social contract. He doesn’t seem to be afraid. How this story ends I have no idea. All I know is we’re in totally unchartered water.”
Bin Salman helped knock 4 percent off the price of crude Friday, after he threw into doubt the ability of world oil producers to agree to an output freeze at their meeting in Qatar on April 17. The prince was reported as saying the kingdom would not participate in a freeze if Iran and other major producers, both OPEC and non-OPEC, do not join the program.
“This is dead in the water then,” Croft said. “No one is going to overrule bin Salman on oil policy. If he’s going to stick to his position, there’s no point in showing up in Doha.”
The idea of a global production freeze has been supported by Russia and Saudi Arabia, through Oil Minister Ali al-Naimi. But Iran has said it has no intention of freezing output as it works to return oil to the world market, now that sanctions against it have been lifted.

By Barry Norman, Investors Trading Academy – ITA

Independent.ae interview with HH Mohammed bin Salman al Saud

Meet Saudi Arabia’s deputy crown prince, second deputy prime minister, and the youngest minister of defense in the world, the man who wields power behind the throne of his father, King Salman Al Saud.

On January 4th, as part of a five-hour conversation, Prince Mohammad gave his first on-the-record interview, which we have transcribed below.

Reporter: Let’s focus first on the recent executions. Why did they take place now, so many years after the terrorist attacks in Saudi Arabia? And why did you include a prominent Shia cleric?

Muhammad bin Salman: First of all, these were sentenced in a court of law on charges related to terrorism and they went through three layers of judicial proceedings. They had the right to hire an attorney and they had attorneys present throughout each layer of the proceedings. The court doors were also open for any media people and journalists, and all the proceedings and the judicial texts were made public. And the court did not, at all, make any distinction between whether or not a person is Shi’ite or Sunni. They are reviewing a crime, and a procedure, and a trial, and a sentence, and carrying out the sentence.

But these executions have provoked violent reactions in Iran. Your embassy was attacked, you’ve broken off diplomatic relations, as have the UAE, Bahrain and Sudan. What will be the consequence of this escalation of regional tensions?

We view them as a strange thing, that there are demonstrations against Saudi Arabia in Iran. What is the relationship between a Saudi citizen who committed a crime in Saudi Arabia, and a decision made by a Saudi court. What has this to do with Iran? If this proves anything it proves that Iran is keen on extending its influence over the countries of the region.

Did you not unfairly escalate tensions by breaking off diplomatic relations?

On the contrary, we fear that they will be further escalated. Imagine if any Saudi diplomat, or one of their families or children are attacked in Iran. Iran’s position then will be much more difficult. So we prevented Iran from having to undergo such an embarrassment. The Saudi mission was set ablaze and the Iranian government is watching. If a child, or a diplomat, or their families are attacked, what could happen? Then we will have the real conflict and the real escalation.

Are you suggesting conflict between Iran and Saudi Arabia, outright conflict, is a possibility?

Because of this procedure?

And the consequences thereof.

If it’s because of this procedure I don’t believe that this could be a cause to further any tension between Saudi Arabia and Iran. Because Iranian escalation has already reached very high levels and we try as hard as we can to not escalate anything further, we only deal with the procedures and steps taken against us.

Is war between your two countries, direct war, possible?

It is something that we do not foresee at all, and whoever is pushing towards that is somebody who is not in their right mind. Because a war between Saudi Arabia and Iran is the beginning of a major catastrophe in the region, and it will reflect very strongly on the rest of the world. For sure we will not allow any such thing.

Do you consider Iran to be your biggest enemy?

We hope not.

One area where there might be considered to be what you might call proxy conflict between you is Yemen. You are the architect of the war in Yemen; when will it end?

First of all, I’m not the architect of the Yemen operation. We are a country of institutions. The decision to proceed with the operation in Yemen, this is a decision to do with the Ministry of Foreign Affairs, the Ministry of Defence, with the intelligence, the council of ministers, and the council of security and political affairs, and then all recommendations are submitted to His Majesty, and the decision to go forward is with His Majesty. My job as the minister of defence is to implement whatever decision his majesty has ordered. And I will submit any threats that I see. And to make preparations for any threats.

The decision was taken soon after you became defence minister. When do you expect the operation to finish?

Regarding the fact that the decision was made after I became minister of defence, why did we forget the fact that Houthis usurped power in the capital, Sana’a, after His Majesty became king? This has nothing to do with the fact that I became a minister. It has everything to do with what the Houthis did. I have surface-to-surface missiles right now on my borders, only 30-50 km away from my borders, the range of these missiles could reach 550km, owned by militia, and militia carrying out exercises on my borders, and militia in control of warplanes, for the first time in history, right on my borders, and these war planes that are controlled by the militia carry out activities against their own people in Aden. Is there any country in the world who would accept the fact that a militia with this kind of armament should be on their borders? Especially that they dealt with total disregard of UN Security Council resolutions, and posed a direct threat to our national interests. And we had a previous experience, a bad experience with them back in 2009. The operations carried out were supported and upheld by the UN Security Council, without any opposition.

When the operations began, many expected it to be quick. Now, ten months on, are you in a military quagmire?

No, there were different objectives. The first objective of the Operation Decisive Storm was to disable the main capabilities of this militia. The air capabilities, their air defence capabilities, to destroy 90% of their missile arsenal. And then we started the process of a political solution in Yemen, which is a whole different stage. All of our efforts are to push for the political solution. But this does not mean we will allow for the militia to expand on the ground, they must realise that every day they do not get closer to the political solution, they lose on the ground.

How long will it take?

Nobody can predict that in a war, not from the greatest of generals to the smallest of generals. We could see Daesh today and nobody could predict when they’re going to be defeated. But what I could say was ten months ago half of Aden was not in control of the government, and now over 80% of Yemeni lands are under the control of the legitimate government. And I want to emphasise that the world today has uncovered the games played by the Houthis, especially the games that they’ve been using regarding humanitarian aid.

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You’re also in charge of the economy. Let’s now turn to the budget. The price of oil is $35 a barrel, your deficit last year, 2015, was 15% of GDP. Does Saudi Arabia face an economic crisis?

We’re too far from it. We are further than the ’80s and the ’90s. We have the third-largest reserve in the world. We were able to increase our non-oil revenues this year alone by 29%. We were able to come out with more positive things than what most people thought about the economy of Saudi Arabia, regarding deficit and regarding spending. And we have clear programmes over the next five years. We announced some of them, and the rest we will announce in the near future. In addition to this, my debt-to-GDP is only 5%. So I have all points of strength, and I have the opportunities to increase our non-oil revenues in many sectors, and I have a global economic network.

How will you increase non-oil revenues? Will you introduce VAT? Will you introduce income taxes?

There are going to be no income taxes and no wealth taxes. We’re talking about taxes or fees that are supported by the citizen, including the VAT and the sin tax. They will create good revenues, but not the only revenues. We have many opportunities in mining, we have more than 6% of world reserves of uranium, we have many unutilised assets. We have four million square metres in Mecca alone of unutilised state-owned lands. The value in the market is very high; we have many assets that could be transformed into investment assets. We believe we could reach a point of non-oil revenues reaching $100 billion over the next five years.

When will you introduce the VAT?

We’ll try to do that by the end of 2016 or 2017, and we’ll try to expedite it.

And what will you privatise to raise revenues?

Health care, educational sector, some military sectors such as military industries and some state-owned companies. It will decrease some of the pressure that the government has, and some of them may create good profit.

Can you imagine selling shares in Saudi Aramco?

This is something that is being reviewed, and we believe a decision will be made over the next few months. Personally, I’m enthusiastic about this step. I believe it is in the interest of the Saudi market, and it is in the interest of Aramco, and it is for the interest of more transparency, and to counter corruption, if any, that may be circling around Aramco.

You have said that one of the challenges is to diversify the Saudi Arabian economy away from oil. What sectors will be priority sectors in that diversification?

Mining, subsidy reforms. We have only 20% of those middle classes and lower who benefit from subsidies. We target the 80% and we try to keep the interests of the middle classes and lower; they will generate good revenues. And as I told you there are unutilised assets: expanding religious tourism, like increasing the numbers of tourists and pilgrims to Mecca and Medina will give more value to state-owned lands in both cities.

You have done some price increases in this budget—electricity, gasoline—but you still have many subsidies. Do you aim to get rid of subsidies completely?

We want to reach free energy markets, but with subsidy programmes for those with low income, and not to have the subsidy in the form of lowering the energy prices, but through other programmes. And also, some of the most important assets that we’re working on: We have a very magnificent area north of Jeddah, between the cities of Umluj and Wuj, there are almost 100 islands there, in one atoll. The temperature is ideal, five to seven degrees cooler than Jeddah. It’s virgin land, I spent the last eight holidays there. I was shocked to discover something like this in Saudi Arabia, and there were steps taken to preserve this land, 300km by 200km. This is one of the assets that we target, and we believe it has an added value other than generating income for state funds. So we have many unutilised assets. In Mecca, Medina, in rural areas and in urban areas. Jeddah, for example, there is a land, total area about five million square metres, right on the beachfront, in the heart of Jeddah, it’s owned by the air defence. The value of the land itself is about $10bn. The cost of transferring all the structures and buildings is about $300m. So this is a big waste. So to utilise the unutilised assets will create profit and generate development, this is massive work that we’re addressing. We are targeting to introduce new assets into the state-owned funds that are equivalent to $400bn, over the next few years.

Assets that you will privatise?

These will go to the funds, and then will turn into projects, and into companies, and then will be offered on IPOs to the public.

This is a Thatcher revolution for Saudi Arabia?

Most certainly. We have many great, unutilised assets. And we have also special sectors that can grow very quickly. I’ll give you one example. We are one of the poorest countries when it comes to water. There’s one Saudi company that’s an example of many companies, like Amarai dairy company, their share in the Omani market is 80%. Their share in the Kuwaiti market is more than 20%. Their share in the Emirati market than 40%. In Egypt, where there is the Nile, their share is 10%. One Saudi company. We also have other dairy and agricultural companies, and you can do the same with the banking sector. The mining sector. The oil and petrochemical sector. There are many enormous opportunities to expand and develop.

This will require tremendous investment. One estimate I read said $4 trillion between now and 2030. Where will this money come from?

This is a report from McKinsey, not from the Saudi government. We try to be optimistic in some parts even more, and in some parts, we try to be conservative. Anyway, McKinsey participates with us in many studies, but these investments we’ll try to attract from many sources: the Saudi investor, the state-owned funds, the GCC [Gulf Cooperation Council] funds, and the international funds.

Why would a foreign investor want to invest in Saudi Arabia now?

Profitability is the question, and this is what we’re trying to offer in order to attract investment. And this happens at the same time while having good regulations, and that could guarantee the safety of their investments. And we’re not a country new to foreign investment. The largest of international companies are present in the Saudi market: Boeing, Airbus, GE, GM, Sony, Siemens; all the large players are in the Saudi market. And all the major and key banks are opening branches in Saudi Arabia. So I’m not just opening up to the world; I’m already open to the world. I’m only giving out opportunities.

One challenge we haven’t discussed yet is the youth of the Saudi population: 70% of your country’s population is aged 30 and under. How will you create jobs for these people?

We have great opportunities to create jobs in the private sector. The mining sector will help us a great deal in creating jobs, the programme addressing the pilgrims and the visitors will also generate many jobs, the investments will also create jobs. We do not expect that our unemployment will grow, we believe it will decline over the next few years, to a good extent. At the same time, I have reserves now, ten million jobs that are being occupied by non-Saudi employees that I can resort to at any time of my choosing. But I don’t want to pressure the private sector unless this is the last resort.

So you would prevent the hiring of foreigners?

We’re trying to resort to creating jobs, if we cannot cover all, then we’re forced to exert pressure on the private sector, like what was done, the Saudisation programme.

The shift you’re describing: the introduction of non-oil tax revenue, reduction of subsidies, move towards private sector employment; it suggests the remaking, in many ways, of the Saudi economy and the Saudi social contract. Won’t that force a broader change in what is still a very conservative society?

This one thing is not at all related to the other. We have our values: it is important to us, the participation in decision making; it is important to us to have our freedom of expression; it is important to us to have human rights. We have our own factors, values and principles as the Saudi society and we try to make progress according to our own needs. Our situation today is not the same as it was 50 years ago. Fifty years ago we did not even have a legislative body. Today we have women with good representation in the parliament, and women do vote and nominate themselves for elections, and today we are making progress. According to our own needs, according to our own pace, and not as a response to any other model.

But you believe you can have more taxation without more representation?

There are no taxes.

But you are introducing taxes.

We’re talking about different forms of taxes. We’re talking about VAT, it will not be applied to any of the basic products; it will be on accessories.

The VAT will not be on basic products.

Such as water, dairy, milk…

Will they be excluded?

No doubt. If they will influence the price.

I see. But you can have that kind of taxation without an increase in representation?

Again, one thing is not related to the other. This is not a decision from the government against the people. This is the decision of Saudi Arabia. With the government, that represents the people. Before any decision to reform, we work on many workshops that represent many people.

What about broader social reform? How can you create a high-productivity modern economy with a vibrant tourist industry, a vibrant health-care sector, a vibrant education industry, if women can’t drive, if women can’t travel without permission?

Women today can travel. They work in the business sector…

But with the permission of their family members.

This is different. When you’re talking about permission, you’re talking about women who do not reach a certain age. Not a woman who’s responsible for herself. This has its own social criteria and religious criteria. Some of them are things we can change, and some things even if we want to change we cannot do that. But I guarantee to you that there are no obstacles in the way of women furthering their participation and working in the…

So why is Saudi Arabia’s rate of women in the workforce, 18%, one of the lowest in the world?

The culture of women in Saudi Arabia; the woman herself. She’s not used to working. She needs more time to accustom herself to the idea of work. A large percentage of Saudi women are used to the fact of staying at home. They’re not used to being working women. It just takes time.

Do you think having a greater proportion of women in the workforce would be good for Saudi Arabia?

No doubt. A large portion of my productive factors are unutilised. And I have population growth reaching very scary figures. Women’s work will help in both of these issues.

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You are one of the 70% of Saudi Arabians who are aged thirty and under. You are in charge of the country’s defence and its economy, you epitomise in many ways the new generation of Saudi Arabia. What kind of Saudi Arabia do you want to create?

The Saudi Arabia that I hope for, as well as the other 70%: a Saudi Arabia that is not dependent on oil; a Saudi Arabia with a growing economy; a Saudi Arabia with transparent laws; a Saudi Arabia with a very strong position in the world; a Saudi Arabia that can fulfil the dream of any Saudi, or his ambition, through creating enticing incentives, the right environment; a Saudi Arabia with sustainability; a Saudi Arabia that guarantees the participation of everyone in decision-making; a Saudi Arabia that is an important addition to the world and participates in the production of the world, and participates in facing the obstacles or the challenges that face the world. My dream as a young man in Saudi Arabia, and the dreams of men in Saudi Arabia are so many, and I try to compete with them and their dreams, and they compete with mine, to create a better Saudi Arabia.

You lay out a very positive vision for Saudi Arabia, yet we are living in a time, one of the most dangerous times in the region for many, many years. How do you juxtapose those two visions?

You’re from Britain, and I am a fan of Churchill. And Churchill said that opportunities come during crises. And I recall Churchill’s statement whenever I see the obstacles or the crises in the region. So this is how I view the challenges or the crises in the region.

And has the crisis in the region become more difficult with the United States’ disengagement from the region?

We understand the work carried out by the United States. America is carrying out many efforts. We try to assist with all the efforts carried out by the United States. We try to express our point of view and I can tell you that work between us and the United States is very strong and very magnificent. But the United States must realise that they are the number one in the world and they have to act like it.

Have they not been acting like it?

We are concerned that something like this may happen.

Do you feel let down by them?

We understand. We realise that we are part of the problem of not putting our own perspective through to them. We did not put enough efforts in order to get our point across. We believe that this will change in the future.

Is Saudi Arabia stepping up to a new kind of leadership role in the region?

In the region we are dealing with all of our allies on an equal footing. And we’re all dealing with facing the challenges of the region. We and the GCC countries, Egypt, Turkey, Sudan, the countries in the Horn of Africa, the countries of north Africa, west African countries, east Asian countries, Malaysia, Indonesia, etc., Pakistan. We try to collectively face these challenges. Because these challenges pose threats to us all, and we must face them as one team. And we try to do positive work.

Five years ago, the Arab spring began. It’s been a pretty grim five years in many ways in the region. Will the next five years be better or worse?

First of all I can say that the Arab spring was the real test that put to the test the authoritative form of government and non-authoritative form of government, and the regime that represents its people versus the regime that does not represent its people. Any regime that did not represent its people collapsed in the Arab spring, and the other regimes we saw what happened to them.

The House of Saud represents its people?

We are part of a national process; we are part of the local tribes of the country; we are part of the regions in the country; we have been working together for the past three hundred years.

Your Royal Highness, thank you very much.

Thank you. I’m very glad to have you here today, I’m happy to receive these questions. We always take criticism from our friends. If we are wrong, we need to hear that we are wrong. But if we are not wrong, we need to hear support from our friends. What I request is that the thing you actually believe, to say it.

Link to: http://independent.ae/684/exclusive-qa-with-mohammad-bin-salman-al-saud/

Saudi Prince Mohammed Bin Salman Makes Bold Challenges To Kingdom’s Old Ways

RIYADH: 

Saudi Deputy Crown Prince Mohammed bin Salman got a standing ovation when he visited a gathering of Saudi youth last month. Last week, after hearing about his economic plans in a meeting with religious leaders, one of the kingdom’s most conservative sheikhs tweeted a smiling selfie of himself with the prince.

Whether the 31-year-old son of King Salman will achieve his goal of modernising the kingdom’s economy is the subject of animated debate on social media, in office buildings and at coffee shops here.

The plans, aimed at ending dependence on oil by 2030, require shaking up a bureaucracy that has stymied changes in the past, challenging powerful religious conservatives and building up a private sector currently reliant on state spending.

Diplomats and economists say the programme, which relies on the private sector driving growth and providing new sources of revenue to the state via new taxes and fees, will be exceptionally difficult to implement.

“Saudi Arabia is far away” from its economic goals, said Steffen Hertog, an economist at the London School of Economics (LSE) who studies the kingdom.

The prince’s close aides acknowledge the difficulties. Some ruling family members fear too rapid economic changes could cause social unrest or tension inside the Al Saud dynasty, Saudi analysts say.

Yet in this country of 20 million Saudis and 10 million expatriates, the rise of Prince Mohammed — who runs economic, defence and oil strategy — underscores a dramatic shift towards a leadership seemingly more in tune with the needs of a country where 70 percent of the population is under 30.

It is the first time that effective power has passed from the royal gerontocracy of 70- and 80-something rulers to a third generation of a family founded by the prince’s grandfather, known as Ibn Saud.
King Salman still has the final word, but he has delegated nearly unprecedented powers to his son.

That has meant changes in style and substance. Prince Mohammed works 16-hour days — unlike the more sluggish schedules of his older predecessors — and has appointed business people and economic experts instead of other royals to top jobs.

Many younger Saudis see the rise of a man who is usually referred to as “MbS” as evidence their generation is at last playing a role in a country whose patriarchal traditions had made power the province of the old.

“I’m so excited! I want him to be our king now. I mean he’s open-minded, has a great plan and maybe a little handsome,” said Najla, 20, who did not wish to give her family name.

That backing, and widespread fears about plunging oil prices, is providing MbS with an important springboard for his efforts. When in December, he and his team raised petrol prices — a step previous administrations had hesitated to take for fear of public backlash — Saudis took the move in stride.

The lack of protests surprised MbS, according to people close to the prince, but also helped convince him that Saudis were ready for a change.

Jihad al-Najjar, one of those who lined up outside petrol stations that night to fill up on the lower cost fuel, said he understood the country could no longer afford such subsidies.

“It’s not the real price,” the 22-year-old medical student said.

Abdulaziz al-Sager, head of the Jeddah and Geneva-based Gulf Research Centre, says there is a growing recognition among Saudi leaders that the oil-based economic system is not sustainable. That will necessarily lead to social and political change.

“You cannot do the economic change and the transformation without some sort of political change,” he says. “That raises the question of what sort of a new social contract we are going to have.”

CONFIDENCE

Few had heard of Prince Mohammed before his father, 80-year-old son of modern Saudi Arabia’s founder, became the kingdom’s 7th monarch in January 2015. Today, Prince Mohammed is second in line to rule behind Mohammed bin Nayef, a cousin who is crown prince and, as Interior Minister, head of internal security.

Unlike many other royals, Prince Mohammed did not go to school abroad but graduated from King Saud University with a law degree. Informed Saudis who follow royal affairs say he is the favoured son of King Salman, who made him his personal adviser at a very young age.

In his few public appearances with journalists, the powerful prince projects confidence.  He listens to questions in English but speaks through the Royal Court’s interpreter, and sometimes corrects the interpreter’s phrasing of English translations.

His picks for top cabinet positions and senior advisers have leant more heavily on former businessmen than those of former administrations, which relied more on professional bureaucrats.

Last week, Prince Mohammed officially unveiled Saudi Vision 2030, his blueprint to move the economy decisively from that he called its “addiction to oil” towards the private sector.

The phased removal of subsidies on fuel, water and electricity — part of the welfare lavished on Saudis, of whom about four out of five workers hold public sector jobs — is already underway.

The new plan includes earning non-oil income from private investment and privatisation and setting up the largest sovereign wealth fund in the world. The idea is to create millions of new jobs and raise the participation of women in the workforce from 22 currently to 30 percent by 2030.

The plans also include selling a stake of less than 5 percent in Saudi Aramco, the state oil giant, and placing the proceeds and the company in the Public Investment Fund (PIF), along with other assets that could eventually create an investment vehicle worth up to $3 trillion.

Another ambitious target is to locally source 50 percent of Saudi military procurements — part of the third largest defence budget in the world — by 2030, up from a mere 2 percent now.

Many diplomats, analysts and economists say the magnitude of the goals — including the primary one of ending dependence on oil by 2020 — defy credibility.

“To achieve the economic goals, the kingdom would need a thriving non-oil private sector that caters to private demand, offers sufficient productive jobs for nationals and produces substantial non-oil exports of goods and services,” said the LSE’s Hertog, who has written a book about how the Saudi government works.

RELIGIOUS CONSERVATIVES

There are social challenges because some of Prince Mohammed’s ambitions, including giving women a bigger economic role, will anger religious conservatives, the source of the most dangerous threats to Al Saud rule since the kingdom was founded.

Some had hoped, for example, that Vision 2030 would include moves to lift the ban on women driving, which it did not. Answering a question on it, the deputy crown prince said the issue was a social rather than religious question, therefore it was up to society to decide.

Moreover, the country’s education system is traditionally regarded as under the thumb of religious fundamentalists who, among other things, insist on the cloistering and segregation of women, hindering their ability to enter the workforce.

Some older Saudis, ruling family members and Saudi businessmen fear that Prince Mohammed’s plans to streamline the kingdom’s bureaucracy could cause social fractures if they fail to maintain comfy living standards or soothe conservatives.

And MbS’s meteoric rise has also prompted rumours among some Saudi analysts of friction with Crown Prince Mohammed bin Nayef, 56, a veteran security chief and a favourite of Riyadh’s top ally, the United States.

So far, both men have appeared careful in public, with the younger prince showing deference and respect to his cousin, diplomats say.
Prince Mohammed and his close advisers appear fully aware of the entrenched resistance they will face — and are working to overcome it.

For example, MbS — like his father and previous Saudi rulers — has devoted significant effort to wooing clerics, who have great influence in the legal system. One adviser said that the prince meets between four and five religious leaders a week.

Last week, right after announcing 2030 Vision to reporters, he met a group of religious and intellectual leaders in the next room and directly assured them that he would not go too far. When asked about the issue of women drivers, he turned specifically to look at the religious leaders and said it would not happen yet, a person present said.

Young people say they like MbS’s business-like approach of announcing systemic plans, rather than speaking in generalizations as many of his predecessors did.

Still, there is a long road ahead, especially on social change, they say.

“I’m waiting for the moment where I can travel without a male with me,” said Najla. “And drive — I already know what car I want,” she said, sending by phone a picture of a bright red sports car.

Link to: http://www.ndtv.com/world-news/saudi-prince-mohammed-bin-salman-makes-bold-challenges-to-kingdoms-old-ways-1402944

Bloomberg Interview with Saudi Sheikh Mohammed bin Salman al Saud

Bloomberg’s Editor-in-Chief, John Micklethwait and five other Bloomberg journalists spent five hours talking to Deputy Crown Prince Muhammad Bin Salman, second deputy premier and minister of defense, in Riyadh. In the wide-ranging interview, Prince Muhammad discussed selling shares of Saudi Aramco, the National Transformation Program, energy markets and US-Saudi relations.

Below is a full transcript of that interview.

Bloomberg: The National Transformation Plan, when do you expect that to appear and what do you expect to be in it?

Deputy Crown Prince: We will first launch the vision for the Kingdom of Saudi Arabia within a month under which there will be a number of programs, one of which is the National Transformation Program.

Bloomberg: Could you perhaps tell us a little bit about the role of the Public Investment Fund and the privatization. What structure will it come under the PIF?

Deputy Crown Prince: The Public Investment Fund is one of the programs that will fall under the vision of the Kingdom. It will be launched after the National Transformation Program. We aim to increase the size of the Public Investment Fund by restructuring the funds, and some of the companies and assets owned by the fund today. We believe there’s a great opportunity to increase profitability through introducing new assets, most important of which are Aramco and some huge real estate assets.

Bloomberg: Would Sabic come into the PIF as well?

Deputy Crown Prince: Saudi Arabia, through PIF, owns the majority of Sabic shares, no less than 70 percent of it.

Bloomberg: In terms of looking at Saudi Aramco, just to deal with that, you would hope to have it privatized or have its shares sold next year, in 2017?

Deputy Crown Prince: I’m trying to push for it to be in 2017. Aramco will greatly benefit, not only the fund, but also the Saudi economy as a whole. By simply transferring the shares of Saudi Aramco to PIF will make PIF the largest fund on Earth. Aramco has other benefits to the economy. Many were saying that the idea of IPOing Aramco was just an attempt to get liquidity to cover Saudi financial needs, but that’s far from the truth. The objective is to diversify income. This is the main objective.

Therefore, IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil. However, investments are mostly in oil. What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil, whether from profits of the PIF or other sources of income that we target. So this is one of the benefits of listing Aramco, other than the benefit to the Saudi market, the benefit to the Saudi economy in general and the benefit to the continuity of Aramco and its growth.

Bloomberg: Your plan is to list Saudi Aramco in Saudi and to make it open to foreign investors?

Deputy Crown Prince: There’s no doubt about that.

Bloomberg: And your plan is for Saudi Aramco as a whole, not just to list the refineries?

Deputy Crown Prince: The mother company will be offered to the public as well as a number of its subsidiaries. We will also announce Aramco’s new strategy and will transform it from an oil and gas company to an energy/industrial company.

Bloomberg: Can you give us some idea of the size? Will the size of these new assets, the industrial and the downstream bits of Aramco, will that be as big as the upstream production bits?

Deputy Crown Prince: We’re targeting many projects. Most important is building the first solar energy plant in Saudi Arabia. Aramco is now the biggest company in the world and it has the capability of controlling the shape of energy in the future and we want to venture into that from today. Also, we want to develop the petrochemicals market that depends on oil and the services provided by some of the oil derivatives as well as some of the industries that we might create given the size of Aramco. For example, we could create a huge construction company under Aramco that will also be offered to the public and that services projects other than Aramco’s projects in Saudi. So all these projects that we announce will be how we transform Aramco from an oil and gas company to an industrial and an energy company.

Bloomberg: Would you put the downstream assets of Sabic with those of Aramco, including things like petrochemicals? Is that part of the dream to put those together?

Deputy Crown Prince: Sabic and Aramco are two independent companies, but both will have a majority ownership by PIF. We as owners, it’s important to us not to have conflict between our companies. There was a conflict between the two companies that we resolved over the past few months. This will increase the profitability of both Aramco and Sabic.

Bloomberg: Is your aim for the refineries to build particularly in Asia or are you looking elsewhere?

Deputy Crown Prince: We target emerging markets like China, India, South Africa, Indonesia. We believe these are the main markets that we are targeting. We’re also targeting the U.S. market, including the recent deal we’ve made with Shell.

Bloomberg: And that was all part of directing Saudi Aramco toward the bigger refinery market?

Deputy Crown Prince: Correct.

Bloomberg: Saudi Arabia has always had a relationship with America, whether it’s oil going in one direction and security going in the other. Do you have a similar ambition with China?

Deputy Crown Prince: Our partnership with the US is huge. Oil is only a small part of it. Oil was just the beginning for us.

Bloomberg: Very quickly on the Public Investment Fund, you confirm that the person you’ve selected to sort of run that will be Yasir Alrumayyan. He is the beginning of the management of this new bigger organization.

Deputy Crown Prince: Yes, first of all, the fund’s board has changed. It was chaired by the finance minister. Approximately a year ago this has changed. Now, it is chaired by the chairman of the Economic Development Council. The board of directors was also restructured and we worked on restructuring the fund. At the same time, we made use of the available opportunities. We worked on this file through a number of workshops during the first few days, then we created a team and we selected Yasir Alrumayyan to lead this team.

Bloomberg: What is his position exactly? Is he CEO?

Deputy Crown Prince: No, he is now the general secretary of the board that follows the vision and the strategy of the board.

Bloomberg: When you said that the PIF will become the world’s biggest fund, what would be its size and how quickly do you think you’ll get to that level.

Deputy Crown Prince: I believe this will happen as soon as Aramco goes public.

Bloomberg: How much money?

Deputy Crown Prince: It’s hard to evaluate Aramco now, but we’re working on it. However, undoubtedly, it will be larger than the largest fund on earth. We will surpass $ 2 trillion.

Bloomberg: How much of Aramco will be listed initially?

Deputy Crown Prince: We’re talking about less than 5 percent.

Bloomberg: And it will be listed in 2017?

Deputy Crown Prince: We’re trying to achieve that, but without a doubt it will be in the market by 2018.

Bloomberg: Between now and 2020, how much do you expect to generate and what are the measures that you will push to generate extra non-oil revenue?

Deputy Crown Prince: By 2020, we are aiming to have extra revenue exceeding $100 billion. We did a quick fix in 2015 which increased our non-oil revenue by 35 percent. This year, we’re trying to target over $25 billion. I believe we will succeed in achieving more than $10 billion in non-oil revenue in 2016.

Bloomberg: You’ve talked about privatizing many things as well as Saudi Aramco, can you give us some idea of which industries you’ll get to target first?

Deputy Crown Prince: The most important sectors are the healthcare and services sectors. Healthcare, we are trying to get rid of all the assets owned by the government and transfer them into a holding company. We are trying to push for more health insurance by convincing the citizens that services provided through health insurance are better than the free healthcare services, and faster for them. We will also transfer our health treatment programs abroad to domestic programs and we will also incentivize our partners abroad to invest in healthcare locally. Regarding the services sector, we have a number of entities that have privatized a lot of their services such as the interior ministry. We are trying to encourage the rest of the services ministries to follow in their footsteps. I believe we have the knowledge and the know-how.

Bloomberg: On the non-oil revenue measures, I assume VAT would be one of those measures. Could you share on record other measures?

Deputy Crown Prince: Yes, we have the sin tax, energy drinks and soda drinks tax. We are working on a specific program similar to the green card. Some fees might be on luxury items and as we said earlier, restructuring subsidies. So it’s a large package of programs that aims to restructure some revenue-generating sectors.

Oil Prices

Bloomberg: How threatening is the drop in the price of oil to Saudi Arabia and how might that impede these plans, this vision that you have?

Deputy Crown Prince: I don’t believe that the decline in oil prices poses a threat to us. We have a great capability to reduce spending like we did in ’97, but we don’t believe that we will need to resort to that even if oil prices were low. We are working on increasing the efficiency of spending. We succeeded in many things in 2015, from lowering the deficit which could have reached $250 billion to less than $100 billion, increasing our non-oil revenue by 35 percent. It was estimated that we were going to spend over $300 billion in 2015, but we succeeded in spending less. The government used to exceed allocated budget expenditure by more than 25 percent and in some cases up to 40 percent. In 2015, we succeeded in reducing this gap to 12 percent, so I don’t believe that we have a real problem when it comes to low oil prices. We’ve done plenty of quick fixes in 2015 and we’ve implemented tools that regulate our spending and regulate achieving revenue and liquidity.

Bloomberg: So in a way an oil price of 30-40-50 dollars spurs reforms that you want to push forward.

Deputy Crown Prince: For us, it’s a free market that is governed by supply and demand and this is how we deal with the market.

Bloomberg: But you’re happy with supply and demand ending up with a price in those ranges?

Deputy Crown Prince: We try to focus on the non-oil economy and we have taken precautions for when prices go lower.

Bloomberg: You have the upcoming meeting in Doha in April 17th. Will a freeze be enough?

Deputy Crown Prince: If all countries agree to freeze production, we’re ready.

Bloomberg: So will Saudi Arabia insist that Iran joins the production freeze?

Deputy Crown Prince: Without a doubt. If all countries including Iran, Russia, Venezuela, OPEC countries and all main producers decide to freeze production, we will be among them.

Bloomberg: But would you be happy freezing without Iran, if all the other producers are prepared to freeze would you be prepared to freeze production even if Iran continues.

Deputy Crown Prince: If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.

Bloomberg: Looking forward in terms of demand and supply, do you think there was a time in which oil demand peaks and how close are we to that ?

Deputy Crown Prince: It’s very hard to predict, but we believe that oil demand will increase over the next few years and we expect there to be a correction over the next two years.

U.S. Relations

Bloomberg: Just very quickly on the issue of America, you have Mr. Obama coming to Saudi Arabia. He has talked about the relationship with you being a bit complicated at the moment. Do you still see America as the policeman of the Middle East?

Deputy Crown Prince: America is the policeman of the world, not just the Middle East. It is the number one country in the world and we consider ourselves to be the main ally for the U.S. in the Middle East and we see America as our ally as well.

Bloomberg: Is there a deal nearing on Syria at all?

Deputy Crown Prince: Syria’s situation is very complex and difficult. We are trying to make sure any movement in the future will be positive rather than negative.

Bloomberg: The prospects of a Trump presidency. He has made certain noises about Saudi Arabia.

Deputy Crown Prince: We don’t interfere in the elections of any other country and as a Saudi, I don’t think that I have the right to comment on US elections.

Bloomberg: Do you expect the war in Yemen to be entering its final phase and how do you see it.

Deputy Crown Prince: There is significant progress in negotiations, and we have good contacts with the Houthis, with a delegation currently in Riyadh. We believe that we are closer than ever to a political solution in Yemen. So we are pushing to have this opportunity materialize on the ground, but if things relapse, we are ready.

Bloomberg: In the long run, is Saudi Arabia not better off with oil at a $100 than $40?

Deputy Crown Prince: This question can have two possible aspects. The rise in oil prices is beneficial to us, however it poses a threat to the lifespan of oil. The decline in oil prices poses a drop in revenue for us, but we are adjusting to market conditions, whatever they may be.

Government Payments

Bloomberg: This is a question that I probably should have asked earlier. If you talk to anybody analyzing Saudi economically now and investors they’ve mentioned delayed government payments to construction companies or to companies in general. Is this something that is temporary and will it be sped up?

Deputy Crown Prince: There’s no doubt this issue will be dealt with. What causes this commotion is that we were trying to avoid a bigger danger. We tried to compile all decrees over the last few years and we found that ministries could commit to more than $1 trillion based on these decrees. There were also decisions approved six years ago and to this day, no contractual agreements were made by these entities. However, these entities still had the power to sign on more than $1 trillion. If passed, this would have been a catastrophe. So we froze them in 2015 and abolished three quarters of them that had no contractual commitment. The remaining quarter are things that have contractual agreements and things that we need to move forward on. We’ve started to restructure the process of handling them which is what caused this confusion in the past. But no doubt we are committed to any contractual agreements made by the Saudi government. But there was a grave danger and we were able to avert it.

Bloomberg: So going forward, things will be streamlined again?

Deputy Crown Prince: True, a number of companies have already been paid and the rest is on the way.

Bloomberg: Would that include Bin Ladin and Saudi Oger?

Deputy Crown Prince: No doubt. The problem with Saudi Oger is different to one we have here in Saudi. We have paid them many installments, but they have debt in and out of Saudi. So as soon as money is transferred to their bank accounts, the bank withdraws it. Saudi Oger can’t cover their own labor costs. That’s not our problem, that’s Saudi Oger’s. The contract between us and Saudi Oger, we will honor it. But if the bank withdraws our installments and Saudi Oger can’t pay a thing to its own contractors and workers, that’s their own problem. They can take them to court.

Bloomberg: So the government will not intervene in this issue of unpaid workers.

Deputy Crown Prince: We did not receive any complaints from contractors with Saudi Oger or workers. And no legal action has been taken against Saudi Oger, but as soon as they take legal action, no doubt the government’s role is to protect them.

Bloomberg: Can I ask you a familiar question about Saudi Arabian women through the prism of the economy. You’ve been championing the private sector. You’re a champion of privatization, but one of your most underused resources in the economy is women. You know what an issue it is with foreigners coming here, they look at the gleaming new King Abdullah Financial District and they still ask questions about why women can’t drive in Saudi Arabia. Is this something you want to push for or tackle?

Deputy Crown Prince: I just want to remind the world that American women had to wait long to get their right to vote. So we need time. We have taken many steps. In King Salman’s time, women were able to vote for the first time and 20 women won in these elections. Women can now work in any sector. In business and commerce, as a lawyer, in the political field and in all sectors. Women can carry out any jobs they want. What is left is that we support women for the future and I don’t think there are obstacles we can’t overcome.

Bloomberg: Do you see that as a particular project of yours to promote Saudi women in a new way.

Deputy Crown Prince: No doubt. We look at citizens in general and women are half of this society and we want it to be a productive half.

Bloomberg: In terms of the Public Investment Fund’s Strategy, is the fund looking at any banks, in particular buying the RBS stake in Saudi Hollandi?

Deputy Crown Prince: We have stakes in some banks. Three banks in Saudi, the largest stake is in the National Commercial Bank. There are two opportunities outside of Saudi Arabia being discussed at the moment, but I cannot disclose that information as we have yet to complete them. I believe that we will conclude at least one of them.

Bloomberg: Just on this point, I realize that you can’t give details, but you’re looking at financial assets outside of Saudi Arabia?

Deputy Crown Prince: We are seeking profitability. There are assets in Saudi Arabia that we would like to capitalize on through the fund and any future investment opportunities, we will be looking at profitably whether it’s inside Saudi or abroad.

Bloomberg: But you said there are things you are looking at right now, are they in Saudi Arabia?

Deputy Crown Prince: No, abroad. In the region.

Bloomberg: In the financial sector.

Deputy Crown Prince: That’s right.

Link to: http://www.albawaba.com/business/saudis-national-transformation-plan-bloomberg-interview-deputy-crown-prince-muhammad-bin-sa

The Economist Interview with Prince Mohammed bin Salman al Saud

Muhammad bin Salman, Saudi Arabia’s deputy crown prince and the country’s defence minister, spoke to The Economist on January 4th. As part of a five-hour conversation, he gave his first on-the-record interview, which we have transcribed below.

The Economist: Let’s focus first on the recent executions. Why did they take place now, so many years after the terrorist attacks in Saudi Arabia? And why did you include a prominent shia cleric?
Muhammad bin Salman: First of all, these were sentenced in a court of law with charges related to terrorism and they went through three layers of judicial proceedings. They had the right to hire an attorney and they had attorneys present throughout each layer of the proceedings. The court doors were also open for any media people and journalists, and all the proceedings and the judicial texts were made public. And the court did not, at all, make any distinction between whether or not a person is Shi’ite or Sunni. They are reviewing a crime, and a procedure, and a trial, and a sentence, and carrying out the sentence.

But these executions have provoked violent reactions in Iran. Your embassy was attacked, you’ve broken off diplomatic relations, as have Bahrain and Sudan. What will be the consequence of this escalation of regional tensions?
We view them as a strange thing, that there are demonstrations against Saudi Arabia in Iran. What is the relationship between a Saudi citizen who committed a crime in Saudi Arabia, and a decision made by a Saudi court. What has this to do with Iran? If this proves anything it proves that Iran is keen on extending its influence over the countries of the region.

Did you not unfairly escalate tensions by breaking off diplomatic relations?
On the contrary, we fear that they will be further escalated. Imagine if any Saudi diplomat, or one of their families or children are attacked in Iran. Iran’s position then will be much more difficult. So we prevented Iran from having to undergo such an embarrassment. The Saudi mission was set ablaze and the Iranian government is watching. If a child, or a diplomat, or their families are attacked, what could happen? Then we will have the real conflict and the real escalation.

Are you suggesting conflict between Iran and Saudi Arabia, outright conflict, is a possibility?
Because of this procedure?

And the consequences thereof.
If it’s because of this procedure I don’t believe that this could be a cause to further any tension between Saudi Arabia and Iran. Because Iranian escalation has already reached very high levels and we try as hard as we can to not escalate anything further, we only deal with the procedures and steps taken against us.

Is war between your two countries, direct war, possible?
It is something that we do not foresee at all, and whoever is pushing towards that is somebody who is not in their right mind. Because a war between Saudi Arabia and Iran is the beginning of a major catastrophe in the region, and it will reflect very strongly on the rest of the world. For sure we will not allow any such thing.

Do you consider Iran to be your biggest enemy?
We hope not.

One area where there might be considered to be what you might call proxy conflict between you is Yemen. You are the architect of the war in Yemen; when will it end?
First of all I’m not the architect of the Yemen operation. We are a country of institutions. The decision to proceed with the operation in Yemen, this is a decision to do with the Ministry of Foreign Affairs, the Ministry of Defence, with the intelligence, the council of ministers, and the council of security and political affairs, and then all recommendations are submitted to His Majesty, and the decision to go forward is with His Majesty. My job as the minister of defence is to implement whatever decision his majesty has ordered. And I will submit any threats that I see. And to make preparations for any threats.

The decision was taken soon after you became defence minister. When do you expect the operation to finish?
Regarding the fact that the decision was made after I became minister of defence, why did we forget the fact that Houthis usurped power in the capital, Sana’a, after His Majesty became king? This has nothing to do with the fact that I became minister. It has everything to do with what the Houthis did. I have surface-to-surface missiles right now on my borders, only 30-50 km away from my borders, the range of these missiles could reach 550km, owned by militia, and militia carrying out exercises on my borders, and militia in control of warplanes, for the first time in history, right on my borders, and these war planes that are controlled by the militia carry out activities against their own people in Aden. Is there any country in the world who would accept the fact that a militia with this kind of armament should be on their borders? Especially that they dealt with total disregard of UN Security Council resolutions, and posed a direct threat to our national interests. And we had a previous experience, a bad experience with them back in 2009. The operations carried out were supported and upheld by the UN Security Council, without any opposition.

When the operations began, many expected it to be quick. Now, ten months on, are you in a military quagmire?
No, there were different objectives. The first objective of the Decisive Storm was to disable the main capabilities of this militia. The air capabilities, their air defence capabilities, to destroy 90% of their missile arsenal. And then we started the process of a political solution in Yemen, which is a whole different stage. All of our efforts are to push for the political solution. But this does not mean we will allow for the militia to expand on the ground, they must realise that every day they do not get closer to the political solution, they lose on the ground.

How long will it take?
Nobody can predict that in a war, not from the greatest of generals to the smallest of generals. We could see Daesh today and nobody could predict when they’re going to be defeated. But what I could say was ten months ago half of Aden was not in control of government, and now over 80% of Yemeni lands are under the control of the legitimate government. And I want to emphasise that the world today has uncovered the games played by the Houthis, especially the games that they’ve been using regarding humanitarian aid.

You’re also in charge of the economy. Let’s now turn to the budget. The price of oil is $35 a barrel, your deficit last year, 2015, was 15% of GDP. Does Saudi Arabia face an economic crisis?
We’re too far from it. We are further than the ’80s and the ’90s. We have the third-largest reserve in the world. We were able to increase our non-oil revenues this year alone by 29%. We were able to come out with more positive things than what most people thought about the economy of Saudi Arabia, regarding deficit and regarding spending. And we have clear programmes over the next five years. We announced some of them, and the rest we will announce in the near future. In addition to this, my debt-to-GDP is only 5%. So I have all points of strength, and I have the opportunities to increase our non-oil revenues in many sectors, and I have a global economic network.

How will you increase non-oil revenues? Will you introduce VAT? Will you introduce income taxes?
There are going to be no income taxes, and no wealth taxes. We’re talking about taxes or fees that are supported by the citizen, including the VAT and the sin tax. They will create good revenues, but not the only revenues. We have many opportunities in mining, we have more than 6% of world reserves of uranium, we have many unutilised assets. We have four million square metres in Mecca alone of unutilised state-owned lands. The value in the market is very high; we have many assets that could be transformed into investment assets. We believe we could reach a point of non-oil revenues reaching $100 billion over the next five years.

When will you introduce the VAT?
We’ll try to do that by the end of 2016 or 2017, and we’ll try to expedite it.

And what will you privatise to raise revenues?
Health care, educational sector, some military sectors such as military industries and some state-owned companies. It will decrease some of the pressure that the government has, and some of them may create good profit.

Can you imagine selling shares in Saudi Aramco?
This is something that is being reviewed, and we believe a decision will be made over the next few months. Personally I’m enthusiastic about this step. I believe it is in the interest of the Saudi market, and it is in the interest of Aramco, and it is for the interest of more transparency, and to counter corruption, if any, that may be circling around Aramco.

You have said that one of the challenges is to diversify the Saudi Arabian economy away from oil. What sectors will be priority sectors in that diversification?
Mining, subsidy reforms. We have only 20% of those middle classes and lower who benefit from subsidies. We target the 80% and we try to keep the interests of the middle classes and lower; they will generate good revenues. And as I told you there are unutilised assets: expanding religious tourism, like increasing the numbers of tourists and pilgrims to Mecca and Medina will give more value to state-owned lands in both cities.

You have done some price increases in this budget—electricity, gasoline—but you still have many subsidies. Do you aim to get rid of subsidies completely?
We want to reach free energy markets, but with subsidy programmes for those with low income, and not to have the subsidy in the form of lowering the energy prices, but through other programmes. And also some of the most important assets that we’re working on: We have a very magnificent area north of Jeddah, between the cities of Umluj and Wuj, there are almost 100 islands there, in one atoll. The temperature is ideal, five to seven degrees cooler than Jeddah. It’s virgin land, I spent the last eight holidays there. I was shocked to discover something like this in Saudi Arabia, and there were steps taken to preserve this land, 300km by 200km. This is one of the assets that we target, and we believe it has an added value other than generating income for state funds. So we have many unutilised assets. In Mecca, Medina, in rural areas and in urban areas. Jeddah for example: there is a land, total area about five million square metres, right on the beach front, in the heart of Jeddah, it’s owned by the air defence. The value of the land itself is about $10bn. The cost of transferring all the structures and buildings is about $300m. So this is a big waste. So to utilise the unutilised assets will create profit and generate development, this is massive work that we’re addressing. We are targeting to introduce new assets into the state-owned funds that are equivalent to $400bn, over the next few years.

Assets that you will privatise?
These will go to the funds, and then will turn into projects, and into companies, and then will be offered on IPOs to the public.

This is a Thatcher revolution for Saudi Arabia?
Most certainly. We have many great, unutilised assets. And we have also special sectors that can grow very quickly. I’ll give you one example. We are one of the poorest countries when it comes to water. There’s one Saudi company that’s an example among many companies, like Amarai dairy company, their share in the Omani market is 80%. Their share in the Kuwaiti market is more than 20%. Their share in the Emirati market than 40%. In Egypt, where there is the Nile, their share is 10%. One Saudi company. We have other dairy, agricultural companies, and you can also do the same with the banking sector. The mining sector. The oil and petrochemical sector. There are many enormous opportunities to expand and develop.

This will require tremendous investment. One estimate I read said $4 trillion between now and 2030. Where will this money come from?
This is a report from McKinsey, not from the Saudi government. We try to be optimistic in some parts even more, and in some parts we try to be conservative. Anyway, McKinsey participates with us in many studies, but these investments we’ll try to attract from many sources: the Saudi investor, the state-owned funds, the GCC [Gulf Cooperation Council] funds, and the international funds.

Why would a foreign investor want to invest in Saudi Arabia now?
Profitability is the question, and this is what we’re trying to offer in order to attract investment. And this happens at the same time while having good regulations, and that could guarantee the safety of their investments. And we’re not a country new to foreign investment. The largest of international companies are present in the Saudi market: Boeing, Airbus, GE, GM, Sony, Siemens; all the large players are in the Saudi market. And all the major and key banks are opening branches in Saudi Arabia. So I’m not just opening up to the world; I’m already open to the world. I’m only giving out opportunities.

One challenge we haven’t discussed yet is the youth of the Saudi population: 70% of your country’s population is aged 30 and under. How will you create jobs for these people?
We have great opportunities to create jobs in the private sector. The mining sector will help us a great deal in creating jobs, the programme addressing the pilgrims and the visitors will also generate many jobs, the investments will also create jobs. We do not expect that our unemployment will grow, we believe it will decline over the next few years, to a good extent. At the same time I have reserves now, ten million jobs that are being occupied by non-Saudi employees that I can resort to at any time of my choosing. But I don’t want to pressure the private sector, unless this is the last resort.

You would prevent the hiring of foreigners?
We’re trying to resort to creating jobs, if we cannot cover all, then we’re forced to exert pressure on the private sector, like what was done, the Saudisation programme.

The shift you’re describing: introduction of non-oil tax revenue, reduction of subsidies, move towards private sector employment; it suggests the remaking, in many ways, of the Saudi economy and the Saudi social contract. Won’t that force broader change in what is still a very conservative society?
This one thing is not at all related to the other. We have our values: it is important to us, the participation in decision making; it is important to us to have our freedom of expression; it is important to us to have human rights. We have our own factors and values and principles as the Saudi society and we try to make progress according to our own needs. Our situation today is not the same as it was 50 years ago. Fifty years ago we did not even have a legislative body. Today we have women with good representation at the parliament, and women do vote and nominate themselves for elections, and today we are making progress. According to our own needs, according to our own pace, and not as a response to any other model.

But you believe you can have more taxation without more representation?
There are no taxes.

But you are introducing taxes.
We’re talking about different forms of taxes. We’re talking about VAT, it will not be applied to any of the basic products; it will be on accessories.

The VAT will not be on basic products.
Such as water, dairy, milk…

They will be excluded?
No doubt. If they will influence the price.

I see. But you can have that kind of taxation without an increase in representation?
Again, one thing is not related to the other. This is not a decision from the government against the people. This is the decision of Saudi Arabia. With the government that represents the people. Before any decision to reform, we work on many workshops that represent many people.

What about broader social reform? How can you create a high-productivity modern economy with a vibrant tourist industry, a vibrant health-care sector, a vibrant education industry, if women can’t drive, if women can’t travel without permission.
Women today can travel. They work in the business sector…

But with the permission of their family members.
This is different. When you’re talking about permission, you’re talking about women who do not reach a certain age. Not a woman who’s responsible for herself. This has its own social criteria and religious criteria. Some of them are things we can change, and some things even if we want to change we cannot do that. But I guarantee to you that there are no obstacles in the way of women furthering their participation and working in the…

So why is Saudi Arabia’s rate of women in the workforce, 18%, one of the lowest in the world?
Culture of women in Saudi Arabia; the woman herself. She’s not used to working. She needs more time to accustom herself to the idea of work. A large percentage of Saudi women are used to the fact of staying at home. They’re not used to being working women. It just takes time.

Do you think having a greater proportion of women in the workforce would be good for Saudi Arabia?
No doubt. A large portion of my productive factors are unutilised. And I have population growth reaching very scary figures. Women’s work will help in both of these issues.

You are one of the 70% of Saudi Arabians who are aged thirty and under. You are in charge of the country’s defence and its economy, you epitomise in many ways the new generation of Saudi Arabia. What kind of Saudi Arabia do you want to create?
The Saudi Arabia that I hope for, as well as the other 70%: a Saudi Arabia that is not dependent on oil; a Saudi Arabia with a growing economy; a Saudi Arabia with transparent laws; a Saudi Arabia with a very strong position in the world; a Saudi Arabia that can fulfil the dream of any Saudi, or his ambition, through creating enticing incentives, the right environment; a Saudi Arabia with sustainability; a Saudi Arabia that guarantees the participation of everyone in decision-making; a Saudi Arabia that is an important addition to the world and participates in the production of the world, and participates in facing the obstacles or the challenges that face the world. My dream as a young man in Saudi Arabia, and the dreams of men in Saudi Arabia are so many, and I try to compete with them and their dreams, and they compete with mine, to create a better Saudi Arabia.

You lay out a very positive vision for Saudi Arabia, yet we are living in a time, one of the most dangerous times in the region for many, many years. How do you juxtapose those two visions?
You’re from Britain, and I am a fan of Churchill. And Churchill said that opportunities come during crises. And I recall Churchill’s statement whenever I see the obstacles or the crises in the region. So this is how I view the challenges or the crises in the region.

And has the crisis in the region become more difficult with the United States’ disengagement from the region?
We understand the work carried out by the United States. America is carrying out many efforts. We try to assist with all the efforts carried out by the United States. We try to express our point of view and I can tell you that work between us and the United States is very strong and very magnificent. But the United States must realise that they are the number one in the world and they have to act like it.

Have they not been acting like it?
We are concerned that something like this may happen.

Do you feel let down by them?
We understand. We realise that we are part of the problem of not putting our own perspective through to them. We did not put enough efforts in order to get our point across. We believe that this will change in the future.

Is Saudi Arabia stepping up to a new kind of leadership role in the region?
In the region we are dealing with all of our allies on an equal footing. And we’re all dealing with facing the challenges of the region. We and the GCC countries, Egypt, Turkey, Sudan, the countries in the Horn of Africa, the countries of north Africa, west African countries, east Asian countries, Malaysia, Indonesia, etc., Pakistan. We try to collectively face these challenges. Because these challenges pose threats to us all, and we must face them as one team. And we try to do positive work.

Five years ago, the Arab spring began. It’s been a pretty grim five years in many ways in the region. Will the next five years be better or worse?
First of all I can say that the Arab spring was the real test that put to the test the authoritative form of government and non-authoritative form of government, and the regime that represents its people versus the regime that does not represent its people. Any regime that did not represent its people collapsed in the Arab spring, and the other regimes we saw what happened to them.

The House of Saud represents its people?
We are part of a national process; we are part of the local tribes of the country; we are part of the regions in the country; we have been working together for the past three hundred years.

Your Royal Highness, thank you very much.
Thank you. I’m very glad to have you here today, I’m happy to receive these questions. We always take criticism from our friends. If we are wrong, we need to hear that we are wrong. But if we are not wrong, we need to hear support from our friends. What I request is that the thing you actually believe, to say it.

We always do. Thank you.

Link to: http://www.economist.com/saudi_interview

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Quote by the Prince

"We seek to be proud of our country, and allow the latter to contribute to the development of the world, whether on the economic, environmental, civilisational, or intellectual levels."

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