Saudi king opens up $1 trillion of business to the West

[emad]

The Times January 14, 2006


By Jenny Davey



SAUDI ARABIA has embarked on an unprecedented drive to open up to $1,400 billion (£795 billion) of its industries to foreign investment as it strives to scale back dependence on oil exports.

The Kingdom, which is committed to lowering investment barriers as it enters the World Trade Organisation, has launched a $624 billion investment programme and has accelerated an $800 billion privatisation plan.

Riyadh is already waging a charm offensive on Western businesses and is to encourage investment from 400 British companies in a roadshow this month. The Saudi Ambassador to the UK and a Saudi government minister are taking part in the campaign to persuade British companies to join in the programme.

The planned spending spree, which is mapped out for the desert state between now and 2020, has the backing of Abdullah bin Abdul Aziz, the King of Saudi Arabia, who acceded to the throne last August.

http://www.timesonline.co.uk/newspaper/0,,175-1984795,00.html

[emad]

1. Saudi Arabia is broke. BBC documentary last year said approx

3 million Saudis are unemployed. Over 5,000 royal princelings have no experience of any kind of work whatsoever and have relied on Al-Saud family coffers for handouts.

Country seems ripe for a coup d'etat....Mark Thatcher's latest business op looming?

[Zynx]

5. Saudi Arabia is the kind of country that could fall to a coup in the time

I usually take a nap in the afternoon.

[1932]

9. Robert Baer (ex-CIA agent whose work Syriana is based) says the same

I forget which of his two books is more about Saudi Arabia. However, the one about Saudi Arabia says that Saudi Arabia is in a lot of financial, social and political trouble.

[SoCalDem]

15. For a pretty long time, when their population was smaller

and their oil wealth was "new", they pretty much ran a total welfare state for their citizens. The people had to pay for little, and they got used to it.They had HUGE families, and of course having many sons is a "blessing" to them...BUT what happens when the royalty starts cutting back in the hand-out division and all of a sudden there are millions of young boys & men with nothing to do...and little access to women? Cultures like that barter their daughters away to increase the family status or wealth, so letting them hook up with a poor guy is not likely.

Frustrated, angry, unemployed, poor men can easily be added to the "terra-ist" rolls...

And families who thought they would ride the gravy train forever, are not all that pleased with their royalty these days.. A coup is very possible..

[mbperrin]

2. Hmmm....must have run out of internal financing or will soon...

main source of revenues = oil sales; so, either oil is in decline or soon will be (production, not prices.)

Very interesting.

[wordpix]

4. oil reserves declining????

[emad]

6. One good reason to start a war with Iraq: Saudi's 'proven oil

reserves' were always a bit of a Wahabbist spin, some say exaggerated by as much as 50%.

[wordpix]

3. OBL and al-Quaeda are gonna love this-more highways & towers in the desert

[Ready4Change]

7. I've a different take on this.

The US economy is on shaky ground. It has far too much debt. And too much of that debt is held by rising countries, who may soon have reason to weaken the US still further.

However, that could precipitate a worldwide economic collapse. If THAT were to happen, the whole oil burning industrial construct will fall asunder. That's the last thing both the Saudis and the ultra-rich want right now, because they are just beginning to rake in REAL money, what with the massively high oil prices.

To them, Peak Oil is not a looming disaster. It is a tremendous money making opportunity. They don't have to produce more oil, yet it becomes vastly more valuable. Profits become extraordinary. However, the economies of industrial nations suffer. And many of the ultra-rich get their monies from those industrial economies, not from oil itself.

Hmmm, how to get some of those massive oil profits from the oil producing nations directly into the hands of the ultra-rich? How, how, how...

[ret5hd]

8. i agree with you (nt)

[flyarm]

10. OR INFUSE MONEY TO BRITIAN AND USA BECAUSE CHINA

/russia..and iran and possibly venezuela are going to take oil into the euro..away from the dollar!!

fly

[ret5hd]

13. i think you are misinterpreting what would happen re: iran oil bourse...

when china et al start dumping dollar based securities (t-bills) onto the market to buy euros (to buy oil with from iran) the market will be flooded with dollars. A paradoxical situation will arise: falling property and security (t-bills, stocks, etc) values coupled with hyperinflation of wages and commodities, with an eventual (as faith is completely lost in the dollar) deflation of both property AND commodities.

the problem won't be lack of dollars...it will be too many.

that's my take anyway, and my life is filled with more errors than most.

[TomClash]

11. Actually they do have to produce more oil

Some of that does go into development and exploration. No one buys oil shares unless the company has increased reserves. Even during the light sweet crude price increases ExxonMobil's PE ratio didn't improve much. Profits were going up but value wasn't because resrves weren't increasing.

It's a balancing act - if prices go too high recession/slowdown clouds their investment opportunities and demand decreases.

$60 bbl is a nice price for them - no recession but greater profits and capital to develop, explore and increase reserves.

Within the next few years, there will be another run up to $80 bbl or so.

In effect, consumers finance the development, exploration and increased reserves - for nothing.

[cliss]

12. There's more to it....

I think that this goes back to the dynamics of cartels and monopolies. You have a product. The public wants it. In the case of oil, people need it. Desperately. In fact, without oil, we go back to the Stone Age. At least the age of Horse & buggy era.

If you draw a line which shows our GDP and lay a line over it which shows our oil usage, you will find that they are exactly parallel. = meaning, our economy is directly related to our oil usage.

Now if you squeeze too hard; if people have to choose between eating vs. filling up the tank, people are going to find alternatives. They'll start looking into alternative energy, like hybrid cars and other gas substitutes like french fry oil, ethanol etc. So they're always treading a fine line: keep prices low enough so people will buy your product, but don't set the price too high so they will stop using your product.

Plus, a problem with Saudi Arabia is that they are trapped by "resource wealth". A country's TRUE wealth is in fact its trained labor force. Japan is an excellent example of that. You have about 160 million people which almost no natural resources. And yet, they are the world's #2 economy.

[0007]

14. Is the future name of Saudi Arabia, "Islamyah?" Big changes

are in the making and perhaps Richard Clark may be correct.

[K-W]

16. Translation: House of Saud pays the piper. EOM

[lovuian]

17. Saudis decrease oil decrease power decrease protection

they need to get a economy not based on oil or go back to hearding camels...