Tuesday, February 2, 2010

Aramco: $120 billion for oil and petrochemical projects over next 5-6 years

P.K. Abdul Ghafour of Arab News reports that Khalid Al-Falih, CEO of Saudi Aramco, said the company is planning to invest $120 billion in new projects over the next 5-6 years. His remarks were made to the Al Arabiya news channel.

While this figure is sure to waver slightly, this indicates that Aramco is prepared to bring out the checkbook to continue to make its oil and petrochemical facilities in the Kingdom some of the best in the world as the world’s largest oil producer continues to demonstrate its dedication to economic diversification of oil.

Though half of that $120 billion figure is dedicated to oil according to Al-Falih, that still leaves about $60 billion for petrochemical and other downstream investments. This sheds some light on the Kingdom’s priorities: while it continues to stress downstream investments, it knows that to secure the future in these industries, it must also continue to remain the world’s most advanced petroleum supplier.

Monday, February 1, 2010

Saudi, U.S. step up military cooperation to counter Iran threat

Arm sales are being sped up and defense systems are being upgraded amid a looming threat from Iran, writes Joby Warrick in the Washington Post. The efforts “are part of a broader push that includes unprecedented coordination of air defenses and expanded joint exercises between the U.S. and Arab militaries,” Warrick writes, adding “the United Arab Emirates and Saudi Arabia are leading a region-wide military buildup that has resulted in more than $25 billion in U.S. arms purchases in the past two years alone.”

The growth in forces and systems will help to deter al-Qaeda, but also any strikes from Iran, especially to key oil facilities, the article states. This is crucial for Saudi and Arab trade and business welfare, as a crippling strike to those facilities may force the entire regional economy to shut down, which would be a severe consequence for the Western-allied states in retaliation.

This article is definitely worth a full read. It highlights the strong growth in regional western-allied Arab militaries and the reality of the threat that Iran’s nuclear weapons program poses to the region.

Overall, this news fits interestingly in with other developments that have been happening in the world with respect to U.S. military moves and posture. If the strengthening of the military alliances with Gulf States is aimed at curbing Iranian military ambitions in the region, then it seems increasingly likely that a U.S. decision to sell arms to Taiwan is aimed at reminding China that it can’t simply freeload off the security that the U.S. provides. China has signaled, in recent days, its reluctance to go along with sanctions against Iran, which has to be incredibly frustrating to Secretary Clinton and the Obama administration who has been successful in achieving some Russian support for sanctions.

And, the plot thickens. Iran’s state run PressTV quotes President Mahmoud Ahmadinejad as saying that Iran will “deliver a harsh blow to the ‘global arrogance’ on this year's anniversary of the Islamic Revolution” on February 11th.

We’re worried that Iran might do something stupid. A “harsh blow” – an Iranian attack against the UAE, Saudi Arabia, or Israel would trigger a regional war with U.S. public support surging behind U.S. retaliation. And Iran would be ill-advised to do that, since they have no real allies in this fight (China and Russia, at least, would sit this one out) and the U.S, with Saudi Arabia, the UAE, Israel and also the E.U., Great Britain and, I suspect, India/Pakistan, would demolish the Islamic republic; A sad outcome for those in Iran who wouldn’t want this fight in a million years.

Let’s see some cool heads prevail here. No one needs a fight right now.

Friday, January 29, 2010

Key points from Davos 2k10

Here are some key takeaways from the Davos 2010 forum with respect to Saudi Arabia.

Gulf underrepresented

A “Gulf Gap” exists at this year’s World Economic Forum in Davos, write Henry Meyer and Arif Sharif (Bloomberg), because the region as a whole – and Saudi Arabia especially - is “set to prosper.”


China passes U.S. for Saudi Oil consumption; no peak oil

China has passed the United States in consumption of Saudi Oil, now at over a million barrels a day, according to Aramco CEO Khalid al-Falih. This milestone was expected someday as China’s growth and consumption increases on a dramatic scale, report Arif Sharif and Rob Verdonck in Reuters. There is still plenty of oil in the ground and the world should put aside fears about "peak oil", said Khalid al-Falih at the Davos forum, Gerard Wynn (Reuters) reports.


Saudi peg to the dollar still on, has served economy well

Saudi Arabia, the Arab world's largest economy, has no plans to drop the riyal's peg to the U.S. dollar as it has served its economy very well, according to SAMA chief Mohammed Al Jasser, Summer Said (WSJ) reports.

Thursday, January 28, 2010

Saudi Haiti Relief: “Does that money not count?"

Marty Peretz makes a racist remark.

Mark Leon Goldberg at UN Dispatch takes issue with what appears to be The New Republic’s Marty Peretz blogging while intoxicated, probably from sweet Israeli wine. In praising Israel’s contributions to the Haiti relief, which were indeed impressive and generous, he uses the moment to put down not only what he saw as a shortcoming in Arab support, but also apparently in Arab know-how.

Here’s Peretz:

For God's sake, everybody noticed the deep Israeli involvement. I understand that Obama doesn't like Middle East narratives that do not contain "one side and the other side" equal valence. But he couldn't have that here. The Arabs don't care a fig, not for their impoverished and backward own, and certainly not for strangers. That's why their presence in Haiti amounted to a couple of bucks from Saudi Arabia and maybe from some other sheikhs.

An afterthought: Who would want Arab participation in the rescue effort? This was serious work and dangerous work. Amateurs weren't welcome.

Yes, I think that the labors of the Israelis were edited out of Obama's speech, either by his speechwriters (who have made dissing Israel their forté) or by his own oh-so-delicate but dishonest censoring mechanism.

Mark Leon Goldberg responds:

In fact, Saudia Arabia is the third largest contributor to the $575 million United Nations Flash Appeal for Haiti. The top two are the United States and Canada, at $379,689,687 and $77,625,378 respectively. This amounts to 32% and 6.5% of the total appeal. Right behind Canada is Saudi Arabia, which is contributing $50,000,000, or 4.2% of the total appeal.) Does that money not count?

We’d like to go further beyond Goldberg’s point about “money not counting.” How can Peretz say that the Haiti relief effort was above the specialties of Arab physicians, rescue workers, construction workers, etc.? Our question for Peretz is: how is this not a blatantly racist remark about Arabs? He basically says that all Arabs are “amateurs” and that they could not have helped the people of Haiti.

Is he serious?

Peretz needs to clarify and apologize. The title of his post is “Maybe I’m getting paranoid…about Obama,” but in fact should read something like “Maybe I’m losing touch…with reality.”

Wednesday, January 27, 2010

Victory: Saudi Arabia accepts ceasefire offer

Saudi Arabia has accepted a ceasefire offer from Yemen-based Houthi rebels, which should end the fighting along the border in the near-term. This is definitely good for business and the psyche of Saudi citizens, and one can imagine the West is welcoming this latest development. While it is rare for wars to even have clear “victories” these days, this one appears to be one for Saudi Arabia, as it has achieved its main goal of securing its territory. In addition, Saudi Arabia’s “untested” military is no longer that, and this conflict has apparently allowed it to stretch its legs a bit.

But the effect this may have on Yemen’s stability, which undoubtedly affects Saudi Arabia, is less certain. What next for the Houthi rebels? Will they now turn their focus and menace more towards Yemen’s government?

In addition, Dana Priest in the Washington Post reports that U.S. military cooperation with Yemen is a little more sophisticated than previously believed.

Saudi Arabia should savor its victory and learn from it, for sure. But the plot thickens for the Arabian Peninsula as the focus on Yemen intensifies.

Tuesday, January 26, 2010

Gallup: 4 in 10 in USA feel at least "a little" prejudice towards Muslims

The recently released (Jan. 21st) Gallup Poll about U.S. attitudes towards religion in general and Islam in particular finds that 43 percent of Americans feel at least “a little” prejudice towards Muslims. Of the four religions evaluated, Islam is the most negatively viewed.

We are not surprised by these findings, but we are discouraged. Anti-Islamic sentiment runs strongly in many parts of the United States, though, since we are based in Washington, D.C., we feel generally detached from those that think of Islam unfavorably. The problem is that many cannot uncouple “Islam” with “Islamic extremism,” and we are at war against many elements of the latter.

These figures are worth thinking about. Public opinion of Islam in the United States directly affects our trade relationship with states in the Middle East and the Arabian Peninsula specifically.

Monday, January 25, 2010

Kingdom to receive more stimulus in 2010: al-Assaf

Sometime in the future Saudi Arabia will slow its governmental spending on its economy, but that time is not now.

Maher Chmaytelli and Camilla Hall of Bloomberg report that, at the Global Competitiveness Forum, Finance Minister Ibrahim al-Assaf believes that Saudi Arabia will continue to spend in order to keep its economy going.

The spending is part of a 5-year, $400 billion shot in the arm for Saudi Arabia, and much of the spending will focus on infrastructure and growing its private sector.

Saudi Donates $50 Million in Aid to Haiti

Saudi Arabia has announced a rather generous $50 million donation to Haiti. This donation is rather sizable, considering that it is half that of the United States yet a world away from the Kingdom. Saudi Arabia took some heat from the media for not announcing an aid package.

China has, as of this publishing, donated only $1 million.

Friday, January 22, 2010

Charlie Rose interviews Saudi Prince Alwaleed

"America is down but not out. You know, you are in a mess in the United States. I have to be honest with you because I love the United States," said Prince Alwaleed bin Talal in an interview with Charlie Rose, which appears in BusinessWeek.
It's worth a full read, he's an interesting guy, to be sure, and in may ways seems to embody the U.S.-Saudi "special relationship."
We only wish he had expressed his satisfaction with the James Cameron's movie Avatar. How could you not like it?! At least he was clear about one thing he liked about it: that it may add 400 million to the bottom line of NewsCorp!


Thursday, January 21, 2010

Double Up


If history is any guide, constructing the world’s tallest building for the sake of making history can only guarantee that your building will not, in the end, be the world’s highest.


The Burj Khalifa stands at nearly 2,717 ft and soars over the landscape of Dubai, UAE like a sole candle in a textured birthday cake. It’s completion and opening this winter launches it ahead of the Taipei 101 tower in Taiwan for the tallest in the world.

At about a half-mile high, it’s more than double the height of the Empire State building in the United States.

But not to be outdone, Saudi Arabia’s Kingdom Holding Co. has announced that it plans to build a – gasp – mile high skyscraper in Jeddah to be completed by 2014, though the latest news on this project is hard to come by as its future and feasibility are questioned.

Regardless of whether its economically possible, is it really necessary?

Dubai’s Burj Khalifa launch came at an awkward time as Dubai struggled to regain its feet after a calamitous autumn in its financial sector. The Burj is seen by many not as a triumphant achievement, but as a symbol of flashy excess, one that Dubai apparently couldn’t really afford in the first place.

But aside from the bad timing, the Burj Khalifa has another lesson of caution for Saudi Arabia and other countries that want to one-up each other by constructing increasingly tall buildings.

There is no tallest building in the world. With the way things are going, there’s the tallest building in the world yet. And right now, that’s the Burj. Before that, it was the Taipei 101, and before that, and before that, etc. Until the pace of the current climate of one-upmanship in skyscrapers slows or halts altogether (the Taipei 101 was built in 2004…), the best one can achieve in the long run by building the world’s tallest structure is second place to the next tallest building sure to be built.

The Burj Khalifa amazes us, and if the Mile-high tower is built in Jeddah, that will double our amazement at the achievement, to be sure. But the lessons of the Burj Khalifa must be learned when proceeding forward with any structure taller than it, or like the Burj and any preceding world’s tallest structure, it is doomed to be the next step in another nation’s subsequent triumph over a building built for the wrong reasons.

Robert Lacey on PBS tonight

Robert Lacey, whose recently released book Inside the Kingdom has been a beacon of enlightenment for us at saudinomics.com, will be appearing on PBS tonight for an interview with Tavis Smiley. Head over to SUSRIS for links to excerpts, and check your local listings to watch the interview tonight.

What's so great about his book is that it's not only a history of the Kingdom of Saudi Arabia, but one calibrated to be meaningful to experts and neophytes alike - a rare feat for any publication on a complicated subject.

Click here to size up Lacey's book.

Wednesday, January 20, 2010

Dubai-out 2.0: December bailout (lite)

We here at SN celebrate the clever titles we can give to otherwise serious stories written by more serious news sources, like the best in the business when it comes to Saudi finance and economic press: Reuters.

Dubai's received bailout from benevolent neighbor Abu Dhabi is acutally half (lite) what was previously believed at $5 billion, "
signaling Abu Dhabi's cautious approach to helping its debt-laden neighbor" writes Amran Abocar.

Tuesday, January 19, 2010

Tianjin petrochemical complex financed

Sabic/Sinopec get $2.68 billion in capital and long-term financing: reports

Sino-Saudi cooperation in the private sector is growing. The latest is this report by Reuters that details Sabic’s ability to secure almost $2.7 billion in financing for a petrochemical project in China, in partnership with Sinopec, China’s petroleum and chemical corporation.

Saudi-based Sabic is the world’s largest petrochemical company.

Thursday, January 14, 2010

New IMAX Film “Journey to Mecca” re-creates Hajj, is made by non-Muslims

Film has helicopter shots in IMAX that of millions of Muslim pilgrims in IMAX that has “never been done before and probably won't be done again” -Producer


“Journey to Mecca” is a new film re-creating the Hajj experience of the famed 14th century lawyer from Morocco Ibn Battuta and is showing at the Natural History museum in Washington, D.C.

Julia Duin of the Washington Times discusses the film and the significance of its release, citing a producer as saying that “the effort was the largest documentary production ever assembled in the Arabian Gulf region.”

Our team will be viewing it at the Natural History museum while it is showing there, and we suggest you do the same if you’re in the D.C. area.

Amr Khashoggi: Volunteering "needs to become a natural part of our lives"

Written for Saudi citizens in the wake of the Jeddah floods, Amr Khashoggi's words in this Arab News op-ed ring especially true for those in the United States today as we learn of the terrible devastation in Haiti.

Khashoggi: "The culture of volunteering is an essential part of any civilization, and our religious tenets urge us to cooperate to do good for mankind. The calamity of the recent Jeddah floods opened the eyes of many to the positive effects of such volunteer work. It is our communal duty to encourage this spirit of social service, to continue both in good times and in bad."

Volunteering isn't a national or hemispherical value, its a human value. And, as Khashoggi points out, its not only in times of calamity or disaster that help is needed, but at all times, and should be a part of our lives to some degree every day.

Wednesday, January 13, 2010

Yemen Without Hats: The Safety Dance

Editorial note: Discussing Yemen here is important because Yemen’s welfare directly affects Saudi Arabia’s. The two are neighbors, their governments cooperative, their economies somewhat interconnected, and their challenges are similar (except, of course, Saudi Arabia is successful, and Yemen is, well, not).

Yemen’s problems are multifaceted, interconnected and extremely difficult to tackle individually, much less all at once. Their biggest problem, growing unrest and extremism, is something that is likely to draw regional and NATO attention in a historic way.

We have followed this situation for the last 15 months, the rough, measurable timetable of its deterioration, but really has gotten worse since the late Summer, when a suicide bomber attempted to assassinate Prince Nayef in his home. He only injured Prince Nayef and killed himself, but it was evident that the attack was planned and launched from the Yemen-based AQAP (more below). Shortly thereafter, instability began to rock Yemen, and Houthi rebels began to encroach on Saudi territory, and while that situation is still unresolved, clearly the rebels have been no match for Saudi firepower.

Since attention turned to Yemen, the government there appears to be ready to tackle – or at least try with ample outside help – the threat of extremism and to quell unrest that threatens to make the nation a hotbed of extremism. The U.S. is now palpably interested, to say the least, in the progress on this front, and they should be.

Security Fears Overblown

“Spare us the sky-is-falling hysteria. If anything, the failed bombing shows how little we need to fear al-Qaida,” writes Gene Lyons of Salon.com.

He continues: “Most Americans understand that the long battle against al-Qaida and related terrorist groups has little in common with a Hollywood plot. Or at least I hope they do. Watching excitable media personalities and the Chicken Little wing of the Republican Party doing everything possible to turn the failed Christmas airline bombing in Detroit into a combination Super Bowl-size ratings bonanza and political opportunity, however, made me wonder: Can't these jokers be serious about anything?”

Right on. The world’s citizens, media, and leaders will need to take a deep breath, about the bomber’s connections with AQAP, about AQAP itself, and Yemen’s stability in general. To be sure, the overreaction we are experiencing right now is counterproductive at best. For more on this topic, look no further than Marc Lynch’s great post at Foreign Policy.

While there is no question that Yemen is trending toward instability, the urgency of the situation is overblown.

The reality of our current situation is that the so-called “underpants” bomber failed in every aspect except in, as rumors suggest, burning his manhood off his body. And yet he was successful in creating hysteria and overreaction. How did we let this happen? Fear-mongering is back once more, apparently.

9/11 Scars

The inclusion of Saudi Arabia on the list of 14 nations whose nationals will receive extra scrutiny is the revealing of a tragic scar of the 9/11 attacks in the minds of American citizens and leadership, not especially because Saudi Arabia is any more dangerous than, say, France. Before Yemen became the topic du jour from the connection with the Christmas Day bombing, and even before Yemen became a place of heated conflict with itself and on the Saudi border between Houthi rebels and Saudi forces, al-Qaeda in the Arabian Penninsula was seen as a downgraded organization. This is because Saudi forces basically destroyed al-Qaeda in Saudi Arabia and, if the organization wished to survive at all, it needed to base itself somewhere less secure.

So, in essence, Saudi counterterrorism efforts were extremely effective and still are. To be fair, though, many Saudis travel in an out of Yemen, and have family ties to Yemenis – which is a red flag for an administration that cannot afford to appear soft on extremism. But keep in mind this is pretty much the same way many Americans travel to, and have family ties with, Canada or Mexico. It’s the nature of neighboring countries, and it wont change.

Saudi Arabia and Yemen

World focus on Yemen is, de facto, world focus on Saudi Arabia. This is because, as arguably the strongest U.S. ally in the Middle East if not the Arabian peninsula, Saudi Arabia has a lot at stake if Yemen fails or becomes a greater hotbed of al-Qaeda activity. Understandably, this fact is hard for many Americans to grasp, because when Americans think of al-Qaeda and terrorism in general, the memory of the 9/11 is still relatively fresh, and the fact that 15 of the 19 hijackers on September 11th were Saudi Arabian is still thrown around by commentators and politicians alike. But al-Qaeda considers the Kingdom of Saudi Arabia its enemy. Let me reiterate that, for the large number of Americans who don’t know that.

Al-Qaeda considers the Kingdom of Saudi Arabia its enemy.

The point is that Saudi Arabia will not just let Yemen fail, nor will it tolerate any potential Yemeni ambivalence toward a growing extremism problem. Of all the problems going on with Yemen right now, and the implications of these problems for U.S. security, the fact that Saudi Arabia is responsible for its own security is a major plus and a leg-up in any upcoming U.S. efforts. Tom Gjelten at National Public Radio makes this clear.

Conclusion

It’s still safer to fly in a commercial airliner than drive a car in the United States. New screening efforts will create some discomfort for a while for international visitors, including those from Saudi Arabia, but they are sadly politically necessary. The United States should learn from this experience, since it clearly didn’t learn it following 9/11: overreacting to acts of terrorism – attempted or successful – makes the mission of those terrorists a success.

Tuesday, January 12, 2010

Could Iraq’s oil match the output of KSA?

‘Major challenges lie ahead’ to match Kingdom’s output within the decade: CNN Money

Iraq’s petrol-naissance has made headlines over the last year as the nation has opened up its crude to international bidding and investment. Steve Hargreaves of CNN Money notes that Iraq’s potential for success, which relies “in large part on a mosaic of international investments,” will be challenged by many political, social and economic hurdles for the nation, not to mention the need to overcome years of lost market share. Hargreaves notes that Iraq “has awarded contracts to at least a dozen firms from around the globe to develop its oil fields and boost production in the next seven years to over 11 million barrels a day,” which is roughly where Saudi Arabia’s current output holds.

Hargreaves lists these as challenges for Iraq:

-Overcoming decades of sanctions, mismanagement by Saddam Hussein, and war

-difficulty maintaining tough contract terms with bidders

-security situation in Iraq (no small challenge, indeed)

-relationships with OPEC as its production increases

Hargreaves misses some other challenges, though. Firstly, global consumption of crude is likely to fluctuate over the next ten years, and needless to say is unpredictable as nations pivot their focuses on green and alternative energy. While many see global consumption of crude steadily rising, at least over the next ten years, we still see that is probable, but not definite. Check out this op-ed piece by Thomas Friedman in the NYT, detailing China’s investment in alternative sources of power. On top of this, the world hasn’t yet pulled itself out of the global economic recession, and in the U.S. in particular, energy consumption will grow steadily only when more jobs are created.

Finally, this article also makes no mention of what Saudi Arabian production numbers might be in 2020. Something tells us that the figure might be different than today

UPDATE: 1/14/10: New York Times' Timothy Williams touches on the subject. Here's his opening paragraph:

"A wave of American companies have been arriving in Iraq in recent months to pursue what is expected to be a multibillion-dollar bonanza of projects to revive the country’s stagnant petroleum industry, as Iraq seeks to establish itself as a rival to Saudi Arabia as the world’s top oil producer."

Wednesday, January 6, 2010

For Kingdom Holding, Christmas Comes Late this Season

$600 million in Citigroup Inc. shares were transferred to Saudi Arabia's Kingdom Holding Co. by Citi's largest single shareholder, Prince Alwaleed Bin Talal, reports Glen Carey of Bloomberg/BusinessWeek. The shift has potential borrowing and growth implications for Kingdom Holding.

For more on Kingdom Holding, click here.


Saudi Arabia "absolutely of one mind with the United States" in dealing with AQAP: Ian Bremmer

As we prepare a brief (maybe) essay on Yemen, AQAP, and its effects on Saudi Arabian economic and trade issues, this article from NPR's Tom Gjelten is worth a read in advance.

Here's a key passage:

Saudi Arabia feels very threatened by the rising threat of al-Qaida," says Fawaz Gerges, a Middle East specialist at Oxford University. "Saudi Arabia and Yemen share a very strategic objective in preventing al-Qaida from becoming a potent force either in Yemen or Somalia or in the Arabian Peninsula as a whole.

More later. We want to comment on this issue as we have followed it for some time, but we don't want this portal to become all about Yemen. It's a critical issue for the U.S. and Saudi Arabia, true, AND it presents an opportunity for greater cooperation between the two nations. However, we concern ourselves with trade issues here, and will return to those immediately after our next piece on the above subject.


Monday, January 4, 2010

Happy New Year/Welcome Back

Welcome back to Saudinomics.com

We admit to flaking a bit over the holiday season, but we'll attempt to trim the fat we gained over the holidays through increased writing here at saudinomics.com.

Our new year resolution? Why, it's more posting, of course!