The 2nd US-Saudi Business Opportunities Forum in Atlanta in December brought together a high level delegation of over 200 Saudi officials and business people with over 1000 Americans to explore the $1 trillion-plus commercial openings available in the coming decade in the Kingdom. The response to the Forum – and what it means for American investment and partnerships in Saudi Arabia – was something distinguished businessman Khaled Al-Seif has been working to see for years. In an exclusive interview with SUSRIS he talked about the current climate for US-Saudi commercial cooperation, “American companies are more interested in doing business in Saudi Arabia. They want to take advantage of the incredible opportunities and there has been a rebound in the strength of the relationship between the people.” He provided a context to the depth and scope of US-Saudi business ties when he talked with SUSRIS during the Atlanta stop on the Saudi-US Trade Mission in 2005:
“The business relationship between the United States and Saudi Arabia is an old and historic relationship, which has been very beneficial for both Saudis and Americans. Over the years America has been Saudi Arabia’s primary trading partner. Most of the things you see in Saudi Arabia are a result of this relationship — American technology starting from oil exploration to infrastructure and public works. You even see American influence in our standards due to the success of this relationship over the years. The development that has happened in Saudi Arabia we owe to American companies that have worked hard in the Kingdom. They have gained and we have gained. American exports to Saudi Arabia have provided hundreds of thousands of jobs in the US. Likewise, our economy has benefited from American business involvement so it has been the perfect partnership over all those years.”
The advancement of the commercial relationship with Saudi Arabia on the American side, as it does for business ties around the world, in the State Department, is the province of the Bureau of Economic and Business Affairs. Advancing U.S. commercial interests, dubbed “Economic Statecraft,” includes fostering “prosperity at home and abroad,” according to Jose Fernandez, the Assistant Secretary of State in charge of the Bureau. In January Fernandez talked about the key objectives of his Bureau for 2012: continuing to promote growth at home, re-focusing the development agenda, promoting growth abroad, and ensuring safe and fair access for all.
The State Department Bureau of Economic and Business Affairs, under Fernandez’ leadership since he assumed the office in December 2009, is responsible for “overseeing work on international trade and investment policy; international finance, development, and debt policy; economic sanctions and combating terrorist financing; international energy security policy; international telecommunications and transportation policies; and support for U.S. businesses and the private sector overseas.”
Last month he made his first visit to Saudi Arabia to participate in the 12th Jeddah Economic Forum on a panel focused on “Seeking Economic Growth in an Era of Debt Beyond Borders.” SUSRIS wanted to learn more about his experience at the Forum and his perspectives on the important role the business component plays in the US-Saudi relationship. So today we provide his insights and perspectives on these issues for your consideration and thank Assistant Secretary Fernandez for taking time to share them with SUSRIS. We also commend to your attention the insightful materials that are available through the Bureau’s social media outlets, posted below in our related materials.
Critical Economic and Commercial Ties: A Conversation with Jose Fernandez
[SUSRIS] Can you give a brief run down of your experience at the recent Jeddah Economic Forum? What message did you share in your panel? Were there any noteworthy issues brought to the forum’s attention that you found relevant?
[Asst Secretary of State Jose W. Fernandez] During the Jeddah Economic Forum, I participated in a panel on emerging economies and the issues they will need to address to ensure sustainable and inclusive growth going forward. In particular, we delved into issues related to transparency, corruption, and governance. We also discussed whether there are lessons for new emerging economies to be learned from the U.S. and Europe. Overall, I found that the theme of “Beyond Borders” that the Forum was trying to address is highly relevant given the interconnectedness of the global economy. I enjoyed hearing and participating in frank and open dialogue about the issues that we collectively face in trying to address growth problems at home and abroad.
[SUSRIS] Was your visit to the JEF your first time in the Kingdom? What were your impressions of Saudi Arabia?
[Fernandez] This was my second visit to the Gulf and my first time in Saudi Arabia. Unfortunately, my planned visit to the Kingdom in October 2011 was put on hold, given the tragic death of Crown Prince Sultan bin Abdul Aziz.
My involvement in the Gulf region — and that of many officials in the United States Government — reflects the importance that my government places on our bilateral relationship. We value our alliance and partnership with the Saudis and appreciate their economic support for regional stability in light of the Arab Spring. U.S.-Saudi economic and commercial ties are also critical to the health of our bilateral relationship, and I enjoyed discussing ways we could broaden and deepen the partnership between our companies and entrepreneurs.
[SUSRIS] Former U.S. Ambassador to Saudi Arabia Ford Fraker told a Washington conference in October, “One of the messages I used to deliver on a regular basis to U.S. businesses was that if you were an international business with aspirations for growth internationally and you weren’t looking at the market in the Gulf then you were missing the opportunity of the decade if not the next three decades.” What is your view of the trade and investment climate in the region, especially the prospects for Americans looking to do business in Saudi Arabia? How would you assess the scope and depth of what’s called the new “boom” in the Kingdom?
[Fernandez] I agree with Ambassador Fraker. U.S.-Saudi economic and commercial ties are critical to the health of our bilateral relationship. Saudi Arabia is the largest economy in the Middle East, with opportunities in a wide variety of sectors. U.S. exports in 2011 are up 20 percent over 2010 and there have been two successful iterations of the U.S.-Saudi Business Opportunities Forum, which have drawn thousands of businesses and senior U.S. and Saudi speakers. During my meetings in Riyadh and Jeddah, I heard repeatedly that there was strong desire to increase the footprint of U.S. companies participating in planned projects in the Kingdom, in particular for infrastructure. I think the prospects for Americans looking to do business in Saudi Arabia are strong.
[SUSRIS] Saudi Arabia is a member of the Group of Twenty, the 20 major economies that make up the primary international association for coordination on global financial issues. Can you comment on the importance attached to this membership, as the only Arab and Middle East country included, and how its own economic performance and position in the global energy picture helps shape its G-20 role?
[Fernandez] Saudi Arabia has the largest economy in the Middle East and North Africa and weathered the 2008-2009 financial crisis better than all of its neighbors.
The G20 membership is diverse and collectively accounts for 80% of global GNP. Saudi Arabia is a leader in both the Arab and Muslim worlds. On the economic front, Saudi Arabia is the only OPEC member in the G20, and an important financial center and energy producer. As the G20 grapples with issues related to globalization and takes on challenges in global financial structures, we consider Saudi participation significant. Saudi Arabia has made important contributions to G20 efforts to broaden energy access to less developed regions of the world.
[SUSRIS] Among the wide-ranging responsibilities in the Economic and Business Affairs Bureau is the task of combating terrorist financing. In the years after 9/11 Saudi Arabia took steps, in concert with the U.S. government, to ensure charities in the Kingdom were not being used as conduits for funding extremist groups. What is your view on how well these efforts have been carried out and what is the assessment about Saudi Arabia’s commitment to stemming the flow of funds to such groups?
[Fernandez] Our partnership with Saudi Arabia on combating terrorist financing over the years has grown increasingly strong, and remains critical in our efforts to choke off the funds that support terrorist operations. A country of great wealth struggling with religious extremism, Saudi Arabia has historically served as and remains a worrisome source of funds for al-Qa’ida and other likeminded terrorist groups.
In addition to supporting the appropriate use of targeted sanctions, Saudi Arabia has taken significant steps to combat the abuse of its charitable sector by enhancing financial controls on charitable financial flows to ensure that funds intended for humanitarian purposes do not benefit extremist groups or support terrorist activity. Saudi Arabia is continuing to move in the right direction. In May 2010, the Council of Senior Ulema, the highest religious authority in Saudi Arabia, issued a key religious ruling, a fatwa, against terrorist financing. The fatwa has the force of law in Saudi Arabia, and is emblematic of the Saudi political will to address terrorist financing concerns.
Moving forward, it will be important to continue to build on this successful and critical relationship, and to encourage other countries in the region — in particular Qatar and Kuwait — to follow Saudi Arabia’s lead in its efforts against terrorist financing.
[SUSRIS] Several business associations – the Saudi-U.S. Trade Group and the U.S.-Saudi Business Council in Washington and the Committee for International Trade in Riyadh – have organized high profile conferences in Chicago and Atlanta in the last two years, the Business Opportunities Forums you mentioned, to encourage Americans to take advantage of the Saudi economic expansion. Can you comment on the importance and efficacy of events like these?
[Fernandez] Working together with our partners in Saudi and the region is critical towards transforming education, employment, and entrepreneurship.
We believe strongly that events like these are important to bring together interested stakeholders, to forge networks and exchange ideas. For example, in December 2010, we launched the North African Partnership for Economic Opportunity — or what has become known as NAPEO — with an entrepreneurship conference in Algiers. NAPEO is a network of business leaders and entrepreneurs in the United States and the Maghreb dedicated to fostering people-to-people and business-to-business partnerships.
Earlier this year, the second annual U.S.–Maghreb Entrepreneurship Conference took place in Marrakech, Morocco. Over 450 people participated, including young entrepreneurs, early-stage investors, prominent business leaders, members of the Maghreb diaspora, academics, and government officials. The Conference illustrated the power of bringing these people together to create economic change. To demonstrate this, over 20 locally-owned and locally-driven projects were created as a result of connections made directly through NAPEO. Many of these projects focus on access to capital for start-up companies, training for youth and young entrepreneurs, and job creation in the Maghreb region. Another example of the power of such convening events is the Tunisia Partnerships Forum, which was put on by the Department of State in November 2011. Twenty Tunisians traveled to the United States and joined over 200 forum participants, including Arab-American investors and U.S. business leaders, for the event. The relationships built during this forum were so constructive that U.S. and Tunisian officials agreed to make this the beginning of a long-term effort. Networks such as these are the key to ensuring that the countries of the Arab Awakening develop prosperously and sustainably.
[SUSRIS] The overall relationship between Saudi Arabia and the U.S. has been through ups and downs, described by former Ambassador Chas Freeman as like a marriage that has good times and bad times but manages to get through tough times. The business relationship, however, has been one of the stabilizing components in ties between Washington and Riyadh. Can you describe how you see the role of the economic factors in the overall relationship?
[Fernandez] The U.S.–Saudi relationship has long been a very close one, one which we truly value. We also value our partnership with the Gulf countries and appreciate the lasting contributions they have made toward economic stability in the region. The long-standing relationship between our countries continues to grow. The United States remains Saudi Arabia’s largest trading partner. U.S. exports to Saudi Arabia have increased 20 percent in the past year and a half, and agricultural trade increased by one-third during the last year.
U.S. companies are involved in enormous joint ventures in energy and petrochemicals, the Kingdom’s two most important strategic sectors. The U.S. is also by far the Kingdom’s largest supplier of defense equipment, with sales projected to total as much as $90 billion over the next decade.
As Saudi Arabia seeks to develop and strengthen clusters of high-tech, knowledge-based industry, officials are looking to the U.S. to help meet these challenges, through educational exchanges and more direct investment in key sectors. These plans to diversify, both within the energy and petrochemical sectors and into knowledge-based sectors, will create many opportunities for U.S. business.
[SUSRIS] Thank you, Secretary Fernandez, for sharing your perspectives.
Jose W. Fernandez
Assistant Secretary of State
Economic and Business Affairs
Mr. Fernandez serves as the Assistant Secretary of State for Economic and Business Affairs. He leads the Bureau that is responsible for overseeing work on international trade and investment policy; international finance, development, and debt policy; economic sanctions and combating terrorist financing; international energy security policy; international telecommunications and transportation policies; and support for U.S. businesses and the private sector overseas.
Nominated by President Obama on August 6, 2009, Mr. Fernandez was sworn in as Assistant Secretary on December 1, 2009. Mr. Fernandez came to the State Department after having served as a partner in the New York office of Latham & Watkins, and Global Chair of the firm’s Latin America practice. For nearly three decades, his practice has focused on Latin America, Europe and Africa, advising clients on international mergers and acquisitions, financings, trade and other matters as the economies of these regions have evolved.
Source: U.S. State Dept.
- Jeddah Economic Forum 2012
- BRICS countries should learn the lessons of Europe and the US, say JEF panelists – Arab News – Mar 5, 2012
- “Stay connected with the Bureau of Economic and Business Affairs” – US State Dept.
- Bureau of Economic and Business Affairs – Facebook
- Bureau of Economic and Business Affairs – Twitter
- DipNote Blog – Jose W. Fernandez
- Secretary Clinton Delivers Remarks on Economic Statecraft – Oct 14, 2011
- National Export Initiative – Executive Order 13534 of Mar 11, 2010