Today we are pleased to present for your consideration the SUSRIS interview with Eng. Khaled al-Seif that was originally published last year. His message about the importance of business in the relationship between the United States and Saudi Arabia remains relevant today. We hope you find this SUSRIS interview reprint useful.

Editor’s Note:

Last week [May 2005] a delegation of Saudi Arabians completed a tour to five American cities. Their mission? Promote new business ties between the Kingdom and the United States as Saudi Arabia enters a new economic boom.

On the delegation’s stop in Atlanta, Georgia on May 11, 2005, SUSRIS had the opportunity to talk with Eng. Khaled Al Seif, a leading Saudi businessman and Chairman of the Saudi Committee for the Development of International Trade at the Council of Saudi Chambers of Commerce and Industry — responsible for organizing the trade mission.

***

A Man With A Mission: Khaled Al Seif Talks About US-Saudi Business Relations

SUSRIS: Thank you for taking time from your busy schedule coordinating the trade mission visit here in Atlanta. Can we start by talking about the importance of the business component of the US-Saudi relationship?

Eng. Khaled Al-Seif, Chairman, Committee for International Trade (CIT)

Eng. Al Seif: 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.

What happened on September 11 was a shame. What was also a shame was how a group of terrorists could have damaged the relationship between Saudi Arabia and the US. Just as we have been business partners we are now partners in the war on terrorism. Saudi Arabia and America are cooperating in the fight against the terrorists and we are winning this war together.

SUSRIS: What is happening in the Saudi economy now?

Al Seif: What has been happening there is quite exciting. Saudi Arabia is seeing another boom in the making, an economic boom which in my opinion will be wider and deeper than the boom in the 70′s. The main drivers of this economic boom are twofold.

First, there have been the reforms that have taken place in economic laws and regulations in the country along with the privatization program, which opened up the economy. There are so many opportunities in the private sector now that were not dreamed of ten years ago. Economic reform in Saudi Arabia has been extensive. I was talking today with some of my colleagues that even Saudis cannot sometimes recognize our own country with all the changes that are happening.

SUSRIS: What was the motivation for reform of the economic sector?

Al Seif: If you look at the history of the Saudi economy we had an oil boom and then a slowdown in oil production. We were producing around four to four and a half million barrels of oil a day and the population was growing. All of a sudden people started realizing we were getting poorer and that something had to be done. We couldn’t keep relying on oil so diversification of the economy and sources of income was a must.

A lot of ideas were circulating about what to do. Then the government formed the Supreme Economic Council, which was a critical step in the process. They were able to join ministers and officials together, as well as a consultative body made up from the private sector who contributed their practical expertise. The commission was behind the implementation of economic reforms and although it has taken time the positive results are now being seen.

SUSRIS: Besides economic reform what is behind the current boom?

Al Seif: The second driver is the increase in oil production. As you know Saudi Arabia is committed to the stability of oil prices in the world but global consumption has increased tremendously over the last few years. It has been driven, in particular, by the increased demand from new markets like China and India. Since Saudi Arabia is committed to stabilizing world oil prices we started increasing production to try to put the brakes on the rise in prices. We have boosted oil production to 9.5 million barrels a day.

The additional oil production along with the reforms made in recent years are the main drivers of the economic boom that is taking shape in Saudi Arabia and is likely to continue for quite some time. The main reason for sustained growth is the forecasted increase in global oil demand. As you know, Crown Prince Abdullah met with President Bush in April and he confirmed the commitment of Saudi Arabia to not only maintain oil production but he also presented a plan to increase it to 12 ½ million barrels a day by the year 2009 and up to 15 million barrels a day a few years after that.

What this means is that as those new regulations I was telling you about continue to drive improvements in the economy and oil production continues to increase over the next ten years this boom will be longer than the boom of the 1970′s.

SUSRIS: In addition to the increased oil revenues that will expand the Saudi Arabian economy what will new production capacity mean to the oil industry.

Al Seif: Increasing production does not mean that we just open the tap and produce more from the existing wells. That could damage those wells. When we talk about increased production as related to an expansion of capacity it means further exploration and development of new areas and new wells. The Saudi Arabian government is committing around 50 billion dollars in new investments to accomplish these goals.

SUSRIS: What is the relationship between the economic boom in Saudi Arabia and the trade mission you are leading?

Al Seif: The trade mission’s purpose is not just to attract investments. Many in the private sector in Saudi Arabia are worried about the relationship with our American partners. We consider American companies very talented and great friends and we worked with them for many years. As I mentioned the United States has been our primary trading partner for decades. We saw the relationship deteriorate after Sept 11, including the business ties. With the upturn in Saudi Arabia’s economic prospects a lot of people from other countries started coming to Saudi Arabia for business. What we are worried about is that others will take the place of the US as our trading partner.

So given the history of our partnership with Americans we owe it to the relationship to do just what we are doing now — reaching out to American companies, to our old friends, to tell them what is going on in our country, to tell them about all the exciting opportunities out there and to invite them to come over to Saudi Arabia. What we are really saying to them is that Saudi Arabia again welcomes American business partners and we, as Saudis, will be open to work together. There is a great future and great business to be done there and we would love to do it together.

SUSRIS: The recent summit meeting between President Bush and Crown Prince Abdullah in Texas has been called by some as a milestone in the relationship. Are those observers correct?

Al Seif: It is apparent to us that there really is a new stage in the relationship based on the warmth we have seen from the American officials we have met and representatives of the American companies that have attended the trade mission meetings. I’m glad that I can see this first hand in my visit here to the US. In those sessions there have been representatives of the Department of Commerce, the Department of Energy and the US Embassy in Riyadh and they have been encouraging to American companies to do business in Saudi Arabia. Their tone has been very positive. The atmosphere for building on the relationship has improved greatly and I think the meeting between Crown Prince Abdullah and President Bush was just one more step in the historic connections we enjoy.

The delegates of the Saudi trade mission have felt welcomed at every stop. I’ve talked to many of them and they were very happy to see this kind of a reception and to hear these kinds of positive messages. On their part they reciprocated from their hearts. When they were telling people who were interested in their projects they were really saying from their hearts, “Come on over and join with us.” They were very touched by the reception.

SUSRIS: Can you tell us more about the composition of the trade mission delegation?

Al Seif: The delegation was developed by the Commission of International Trade, one of the main committees of the Saudi Council of Chambers of Commerce. It is a private sector initiative.

There is a group of business people participating as representatives of some of the largest Saudi companies. They are here to network with American companies especially those who are new to working with Saudi partners. It is an effort to ease their entry into the Saudi market.

There are also some government officials involved, by our invitation, because we wanted them to explain projects their ministries are planning. Their participation is part of the new transparency in the Saudi economy that we have been talking about. This is part of putting it to the test. We invited these officials to participate, to show our American friends what projects the government will be opening up through about the year 2020. They agreed and have joined the trade mission delegation. Their presentations were very thorough, very specific. They covered details about project size, amount, location — the whole lot. So I think business partners will have benefited tremendously from this information.

SUSRIS: How have the trade mission meetings gone so far?

Al Seif: New York was the first stop and things went quite well. The speakers at the opening session included Mr. William Lash, Assistant Secretary of Commerce for Market Access and Compliance; Mr. Justin Swift, Assistant Secretary for International Affairs in the Department of Energy; and Mr. James Oberwetter, the US Ambassador to Saudi Arabia. This showed the amount of interest that the US government attaches to this relationship.

We were also pleased that Princess Lolowah al-Faisal, a member of the trade mission delegation, made a speech to the participants. This was something new for us and is part of the social change that is happening in Saudi Arabia regarding the role of women, especially in the business world. Her remarks were very well received.

I would also note that the expansive, positive coverage of the trade mission in both the US and Saudi media is another sign of the improving nature of the relationship.

SUSRIS: There is $623 billion dollars in new business being discussed in the trade mission meetings. Can you talk about the scope of the US-Saudi business relationship in the context of those prospects?

Al Seif: The sum of $623 billion is the estimate of the total expenditures that will be required in Saudi Arabia up to 2020. They represent a broad spectrum of projects – private sector expenditures, government expenditures, realty projects and so forth. Now how much of that would go to American companies really depends on how eager American companies are — how willing they are to come over and get involved before it is too late. This is our message to them. Get involved before it is too late. We welcome you.

SUSRIS: Former US Ambassador to Saudi Arabia Wyche Fowler spoke to the trade mission participants here in Atlanta and mentioned the conditions for business relations were improving. Can you elaborate on changes in areas like visas and the security situation?

Al Seif: These are all major steps. I was pleased to hear Ambassador Fowler, as well as the current ambassador, Mr. Oberwetter, in New York. They talked about these situations. As it has been widely reported and commented upon the security situation in Saudi Arabia has improved tremendously. The cooperation between the US and Saudi Arabia on security matters is proceeding very well. We hear there is movement on the questions like travel warnings and hope to see these issues resolved.

I was very encouraged by the comments of Mr. Lash from the Commerce Department. In his speech in New York he described what he saw in his visit to Riyadh about a month ago. He said he went to the marketplace, the souk, in Riyadh for a visit. He mentioned he walked around freely without a security detail, and he said it was just as safe as any other place in the world. It was quite encouraging to hear these kinds of first hand observations shared with others.

The issue of visas is something, I understand, the US side is hard at work on — especially for students because education is extremely important. Most of the leaders in Saudi Arabian society, whether it is in the government bureaucracy or in the private sector were educated in America. That has become part of the foundation of the good relationship that exists between Saudis and Americans. To see these numbers dwindle is not good for the future. So, to enable students to obtain visas is extremely important. Likewise to facilitate business travel is another key component in the relationship. It is very positive that these issues are being addressed.

SUSRIS: Ambassador Chas Freeman, who also served as US Ambassador to Saudi Arabia, told us in an interview last October, at the height of the US presidential campaign, that both Americans and Saudis needed to get together after the elections, at the highest levels, to “reassess and redefine the relationship” or it could “drift permanently into mutually disadvantageous” directions. Do you think our leaders have accomplished anything on that score?

Al Seif: We still have work to do, but I think you should see the meeting that took place between President Bush and Crown Prince Abdullah last month in Texas as a commitment from both leaders to the future of the relationship.

They also realize that this commitment has to filter down. That’s why they formed a joint committee between Foreign Minister Prince Saud al Faisal and Secretary of State Condoleeza Rice. The main objective of this committee is to see that more clarity is put into the relationship at the various levels so that it doesn’t remain good only at the top and unsettled below. You have to make sure it filters all the way through on both sides.

We have received numerous comments from US government officials about our trade mission — that it is a very important way of assisting to strengthen the relationship. That was why they were ready to assist because they can see the total benefit to both our people.

SUSRIS: With your background in international trade you have insights into American as well as, obviously, Saudi society. What is it on each side of the relationship that you see as a major misunderstanding of the other side?

Al Seif: This is a very good question but to tell you honestly, whenever we have had the chance to meet face to face with American groups or individuals the differences disappear.

The minute we start talking the misconceptions start disappearing and you hear comments like, “I didn’t know that” or “I thought it was like this or like that.” This is really what encourages us to continue doing what we are doing because the more people we meet, the more trade missions we have, the more conferences we arrange, the more that people talk then the less the differences are.

We all realize that in reality both sides are on the same side. We all realize that both sides are partners in so many things — partners in fighting terrorism, partners in economic developments and business, partners, even, on political issues. The differences are not that great once we get to talk to each other.

SUSRIS: Well thank you very much for taking time to talk with us. We have been talking to Khaled Al-Seif, the Chairman of the Saudi Committee for the Development of International Trade at the Council of Saudi Chambers of Commerce and Industry.

***

ABOUT KHALED AL SEIF

Khaled Musaed Al Seif is a businessman and a leading member of the business community in Saudi Arabia who manages one of the largest business groups in the Kingdom. He is active in various committees and councils dealing with the promotion of international trade and bridging relations with the West.

Mr. Al Seif currently serves as Chairman of the Saudi Committee for the Development of International Trade (CIT) at the Council of Saudi Chambers of Commerce and Industry. He has officiated as board member of the Saudi-British Council since January 1993; board member of the Arab-British Chamber of Commerce, London, UK since February 1996; on the Board of Directors of Riyadh Chamber of Commerce and Industry, Riyadh, Saudi Arabia (2004-2008); board member of Royal Philanthropic Society for Science (Prince Sultan University) since 1999; and President and CEO of El Seif Group of Companies, Riyadh, Saudi Arabia.

As the President and CEO of El Seif Group of Companies, Mr. Al Seif is a board member of the following Saudi and international companies: Musaed Al Seif & Sons Company; Saudi Medicare Company; International Management Development Company; Dana Investment and Development Company; Al Azizia Commercial and Investment Company; National Power Company; Modern Arab Construction Company; Marina Towers S.A.L.; and El Seif Holding Company in Lebanon. He has founded the following companies: Arabian Medicare Company; Universal Advanced Systems Company; El Seif Engineering Contracting Establishment; and El Seif Development Company.

Mr. Al Seif holds a B.S. in Civil Engineering from the American University in Beirut.

***

Related Items
How Can the U.S. Re-Open for Business to the Arab World? – MEPC Capitol Hill Forum:

• Part 1 – Ambassador Chas Freeman – President, Middle East Policy Council
• Part 2 – Dr. Edward M. Graham, Senior Fellow, Institute for International Economics
• Part 3 – James Andrew Lewis, Senior Fellow, Center for Strategic and International Studies
• Part 4 – Don N. De Marino, Chairman, National US-Arab Chamber of Commerce
• Part 5 – William A. Reinsch, President, National Foreign Trade Council
• Part 6 – Panel Questions and Answers

Editor’s Note:

For your consideration we present an interview with Engineer Usamah al Kurdi, a member of the Consultative Council of Saudi Arabia. Last year SUSRIS was pleased to bring you our first interview with him where he shared his insights on reform and developments in Saudi-US relations. SUSRIS has also published his presentations at various conferences and symposia (see below for more).

We were fortunate to hear Engineer al Kurdi and Doctor Ghassan al Suleiman, Chairman of the Jeddah Chamber of Commerce and Industry, last month in Washington. At a forum organized by the National US-Arab Chamber of Commerce in cooperation with Meridian International Center, the Middle East Policy Council and the Middle East Institute, they talked on the topic “Opportunities for Economic and Political Reform in Saudi Arabia.” Their presentation as well as an interview with Doctor Ghassan will be provided separately in SUSRIS.

This interview was conducted in Washington, DC on August 12, 2005.

***

SUSRIS: Thank you for taking time to talk about developments in the Kingdom and the state of Saudi-US relations. Last year when you were in Washington you spoke with us about reforms in the Kingdom. Can we start with an update on developments in this area?

Usamah Al-Kurdi

Al-Kurdi: Well I am happy to report that since we spoke a year ago, reform in Saudi Arabia is continuing. The emphasis on job creation and business opportunities is continuing. The attention to social reforms, addressing social ills, is continuing. Overall, I can say reform in Saudi Arabia is healthy and proceeding.

New reform steps have been taken this year with an important one among them, in my opinion, being Resolution 120. It provides for the government to address the well being of women of Saudi Arabia. This resolution included the creation of a national committee for women. It also included special attention to services provided to women, business opportunities for women and, of course, job opportunities for women.

On another front — the relationship between the US and Saudi Arabia — I’m glad to have seen the dramatic success of the Crawford Summit between King Abdullah and President Bush in April. There were many significant areas of mutual interest addressed in the summit joint statement. In my view a very important part is the plan to continue cooperation in the area of education — opening the doors of American universities to Saudi students.

The educational component of the US-Saudi relationship has always been important and this step ensures that it will not be damaged. I was happy to see that the leaders addressed this area.

Generally speaking, the summit and the resolution removed a lot of psychological uncertainties about where the relationship was going. It made clear to everyone around the world how each side values the relationship.

As I have been heard saying many times in the past we have no choice but to have a good relationship. This is good for the world. It is good for the Muslim countries. This is good for the Arab countries. This is good for the causes of both Saudi Arabia and the United States.

SUSRIS: The substance of the summit discussions and the joint statement, as you pointed out, served to strengthen the strategic relationship between the US and Saudi Arabia on a variety of issues. However, the focus of press reports surrounding the meeting was squarely on the issue of gas prices. Why do you think there is such attention given to this single issue when there are so many important items on the bilateral agenda?

Al-Kurdi: Unfortunately, where oil is concerned many people think in terms of the 1980s and early 1990s. They recall an era where Saudi Arabia, and even OPEC for that matter, was able to dramatically influence the price of oil. Those days have changed.

The controlling factors no longer include OPEC. In my opinion, they include the fact that oil is a freely traded commodity on the open market. They include the fact that refining capacities around the world are less than what they should be. They include the fact that production capacities have been unable to keep up with the increased demand –and I must say that Saudi Arabia is working hard on boosting production.

So, as far as both Saudi Arabia and the United States are concerned the idea is to cooperate, to put controls on the market so that there are no spikes in the price as well as the level of production. Saudi Arabia is working — and has announced this — to increase its production capacity because it is becoming clear, in my opinion, that this is the single most important factor influencing the market. We have, at great expense, installed additional production capacity in Saudi Arabia. We have seen new oil fields opening in Saudi Arabia. Yet, despite making huge investments in the area of additional production capacity in Saudi Arabia, we are not seeing similar efforts to meet demand from other countries, including the US, as far as increasing refining capacity.

Less than a year ago, when our Minister of Oil visited the United States, he made an offer for the Saudi oil companies to build two refineries here. In my opinion that would have helped ease the high price of gasoline in the US.

I think the high price of oil is not in the interest of Saudi Arabia. Higher prices reduce consumption. Higher prices make it more economical to find alternatives to oil. What I would like to have seen in the latest energy bill passed by Congress was more emphasis on curtailing consumption so that oil will last longer. In the end we will clearly have to find alternatives but we must all use energy wisely for everyone’s benefit.

SUSRIS: The perception of the Saudi-US relationship among Americans seems to never stray far from the oil question, especially criticism over price manipulation. Does it bother you that most Americans don’t know the full scope of reasons for a strong relationship?

Al-Kurdi: Actually it does bother me because the people who are in the know are not telling the people who are not in the know that the situation has dramatically changed.

We are not in the 1980s or the 1990s. We are in a period of time during which production capacity and refining capacity are the issues that impact the price of oil. The people who do not know the facts insist that Saudi Arabia wants to emphasize the high price of oil. These people need to be told by us and other people in the know that this is not true.

SUSRIS: How important are other factors in the United States’ relationship with Saudi Arabia, such as the strategic geographic position of the Kingdom at the crossroads between Europe and Asia, the influence that Saudi Arabia has as the custodian of the holy places, its leadership in the Islamic world?

Al-Kurdi: You have just listed very important reasons, and there are more, as to why Saudi Arabia and the US must have excellent relations. I don’t say “good,” I say “excellent” relations.

The fact is that Saudi Arabia is an important country in the Middle East and the Islamic world and our close relationship supports US interests in that regard. Those are things that people should understand. They should know that the US is the number one trading partner for Saudi Arabia. They should know the important role that both countries play in the international arena. People should know about all these things, not just the energy component of the relationship.

SUSRIS: There have been obvious strains on the relationship from both sides since 9-11. Some Americans are concerned about Saudi Arabia’s commitment to fighting terrorism. Meanwhile some Saudi Arabians are opposed to elements of American foreign policy. Can you tell us what policies of the United States concern Saudi Arabians?

Al-Kurdi: Let me first tell you that a very important part of the relationship stems from the efforts of both countries to fight terrorism. It is extremely important that we cooperate together to fight terrorism, including going after money laundering that serves to finance terrorism.  Earlier this year we organized an international conference to coordinate international anti-terrorism efforts. We have proposed an international center for fighting terrorism and we have even proposed financing it. It is clear that Saudi Arabia and the United States are in close cooperation in the war on terrorism.

Now let’s go back to the issue of policies of the US that are not popular in Saudi Arabia. It would be difficult for me to find a policy of the US that if it is not popular in Saudi Arabia, is unpopular only in Saudi Arabia. You will find it is the case not only in Saudi Arabia but in many countries, and not only in the Middle East, but in many different countries around the world.

In general, the policies regarding military bases in the Middle East and in other parts of the world; regarding Afghanistan; regarding Iraq, of course; and regarding Palestine are the issues. At this moment the situation in Iraq is especially of concern.

They generate resentment from many people around the world, and from Saudis. The war in Iraq has damaged the US image. The support that is provided to the occupation of Palestinian land by Israel does not generate a positive view. The same thing applies to Afghanistan. So it is important for the US — and I am glad to see there are some efforts in that direction — to improve its image not only in Saudi Arabia and in the Middle East but also in many countries around the world.

In the year that followed the unfortunate events of September 11 my travels took me to many different countries in the world: in Europe, in South America, in Africa and in Asia. I was surprised to see how many friends America had lost. Instead of gaining friends as a result of being victims of September 11, they have lost a lot of their friends. Again, I am happy to see that there are efforts in the US to improve its image.

SUSRIS: Many Americans find it difficult to understand those feelings from other members of the international community. They see the invasion of Afghanistan as having been necessary after 9-11 because that’s where the terrorists operated from, and they see that Americans fought to free the country and assist the Afghan people. Similarly in Iraq, Americans invested billions of dollars and lost almost 2000 troops fighting there. What would you tell Americans who see what is happening in Iraq not as an occupation but rather as spending American blood and treasure to give the people of Iraq a future?

Al-Kurdi: I would say that getting rid of Saddam and the current war in Iraq are not two sides of the same coin. While many people in the Middle East are glad to get rid of Saddam, many are not happy about the way it was done. The same applies to Afghanistan.

Many Americans share that view as well. They have the same concerns. Everyone has seen the movements here demanding a withdrawal of American forces from Iraq.

You and I may understand the overall situation but the point here is the image America has in the Middle East and in other parts of the world. One needs to spend a lot of time and effort explaining these situations. This is why I say I am happy to see planning to do this in the United States.

SUSRIS: Wrapping up your assessment of the Saudi-US relationship, are you optimistic or pessimistic?

Al-Kurdi: Oh, very optimistic. I am very optimistic we are going in the right direction. I believe we are complementing the world community by cooperating together, and I am glad to see the results of the Crawford Summit are actually taking place.

SUSRIS: Turning to the transition in Saudi Arabia from King Fahd to King Abdullah. King Abdullah has been the de facto ruler since 1996 and clearly was involved in government policies and directions. How should Americans view the transition?

Al-Kurdi: Well as I have said before, Saudi Arabia is a country of institutions. I also said before that to continue on the path of reform in Saudi Arabia, public support is important. When a decision is made in Saudi Arabia you are certainly able to detect the consensus that was created in support of that decision.

People are under that impression that decisions in Saudi Arabia are made by the stroke of a pen. In fact, we have our own democracy. The exchanges of dialogue that take place before a decision is made, might not be on the pages of the newspapers all the time. Yet, the issues are certainly discussed and decisions are reached based on hearing the arguments of all the parties. The institutions in Saudi Arabia will continue to perform, I believe, as they have always been planned to perform.

The Basic Law of government in Saudi Arabia, that was issued 13 years ago, clearly addresses the issue of succession. So we were following a law when Prince Abdullah took over after the death of King Fahd, God bless his soul. There was a law that was applied. So the change was not an arbitrary one.

I will place all my bets on the continuing stability of Saudi Arabia and the continuity of reform. With the creation of the National Dialogue Center I think that reform in Saudi Arabia will improve, and might even come faster, depending on public support and consensus. But I see us continuing what we have been doing in this regard, especially in light of the very positive economic situation in the country. The reforms will continue.

SUSRIS: Can you elaborate on the concept of reaching consensus before decisions are made, especially the role of the Consultative Council? Can you give us an example of how the process works?

Al-Kurdi: Important decisions go through a process so each and every decision is an example. But let me give you a specific example of a decision involving the Consultative Council.

There was the case of the issuance of the New Companies Law. The first draft of the law was prepared by the government and forwarded to the Shura Council, the Consultative Council. We looked at it for a very long time. We looked at each and every item, each and every article of that law. We made quite a few changes.

There was a new Minister of Commerce appointed and he made a request to the council, that it not be passed until he had another look at it. So it went back to the Minister of Commerce and it came back to us with a few changes.

We made changes to it, passed it. Then we asked to have the law applied which says when the consultative council passes a law it brings it to the attention of the King. He also received the opinion of the Council of Ministers and the government and if there were any differences in the two opinions it should be brought back to the Shura Council.

So it was brought back to us because there were some disagreements between the government and the Shura Council. We looked at the draft of the law, and agreed with the government that some of the changes were necessary. We sent it back to the King and it’s waiting to be issued. I know this sounds very complicated but it gives you an idea of the level of consultation and consensus that goes into decision making in Saudi Arabia.

SUSRIS: What do you foresee in the coming months in the transition of Abdullah from Crown Prince to King?

Al-Kurdi: Continuity and stability is what I can tell you.

SUSRIS: Included in the Crawford Summit joint resolution was the creation of a commission headed by Secretary of State Rice and Foreign Minister Saud al-Faisal. What is your impression of this initiative?

Al-Kurdi: Well I am happy to see that this commission was reorganized. I think, as I have seen with other countries, these types of commissions meet once, twice, sometimes three times a year.

I am delighted to see that this has been reactivated and to see the Ministers of Foreign Affairs and the Secretary of State heading the commission. That tells me the importance of this commission. I hope that the commission will meet very often so that issues can be addressed before they become problems.

SUSRIS: Building bridges between Saudi Arabians and Americans, including business connections, was discussed in the Crawford Summit joint resolution. What is your assessment of the business-to-business component of the relationship?

Al-Kurdi: I said earlier that the summit in Crawford was a major milestone in developing, increasing, improving relations between Saudi Arabia and the United States. In the past few months we have seen serious efforts from the business communities both in the US and Saudi Arabia to improve relations.

There was a major trade mission from Saudi Arabia in May and I understand that business organizations in the States are planning visits to Saudi Arabia. As many people know there have been visits by business delegations from the US after the summit. I have seen the mood in the business community in both countries improve remarkably which is encouraging because the business connections are an important part of the relationship. I’m sure it will continue.

I’m glad to say that overall the mood is positive. The relations are improving. Business communities are interested and reform in Saudi Arabia is proceeding.

You know I may have painted a rosy picture about the relations and the reform in Saudi Arabia. That was intentional but I would also like to say there is still quite a way to go. We need to develop a lot of the aspects of life in Saudi Arabia. Likewise we must all continue to work to improve the relationship between Saudi Arabia and the United States. But I am glad to say that the a strong foundation between Americans and Saudis are already in place.

SUSRIS: Thank you for sharing your insights and views on these important issues with us today.

Al-Kurdi: It was my pleasure.

***

About Usamah Al-Kurdi

Usamah Al-Kurdi is President of Alagat, a business-consulting firm based in Riyadh and a member of Saudi Arabia’s Consultative Council (Majlis Al-Shura). He serves as a Board Member of Saudi Arabian Airlines and an Executive Committee member of the national U.S. Arab Chamber of Commerce.

From 1990-2001, Mr. Al-Kurdi served as Secretary General of the Council of Saudi Chambers of Commerce, as well as Vice President of Saudi Consulting House, a forerunner of the Saudi Arabian General Investment Authority (SAGIA). He has also served on the Boards of Saudi Arabia’s National Industrialization Committee and the Royal Commission on Jubail & Yanbu (industrial cities).

***

By and About Usamah Al-Kurdi on SUSRIS:

• Business Forum Perspectives: A Conversation with Usamah Al-Kurdi – SUSRIS Exclusive – Apr 28, 2010
• Developments in the Kingdom of Saudi Arabia – Al-Kurdi (MEI) – SUSRIS – Jul 11, 2008
• The View from a Majlis Ash-Shura Member: A Conversation with Usamah al-Kurdi – SUSRIS Exclusive – Dec 31, 2006
• On Relations and Reforms: A Conversation with Usamah al-Kurdi – SUSRIS Exclusive – May 30, 2006 (Reprint)
• On Relations and Reforms: A Conversation with Usamah al Kurdi – SUSRIS Exclusive – Sep 30, 2005
• Political, Social and Economic Reform in Saudi Arabia: Interview with Usamah Al-Kurdi – Part 2 – SUSRIS Exclusive – Dec 15, 2004
• A Strong Relationship is the Only Path: Interview with Usamah Al-Kurdi – Part 1 – SUSRIS Exclusive – Dec 9, 2004
• The Dynamics of Economic and Commercial Reform: Near-Term Prognoses – Usamah Al-Kurdi – SUSRIS – Sep 27, 2004
• How to Reform Saudi Arabia Without Handing It to Extremists – Part 2 – SUSRIS
• How to Reform Saudi Arabia Without Handing It to Extremists – Part 1 – SUSRIS
• Economic Reform in Saudi Arabia – Summary of Remarks by Usamah Al-Kurdi – June 4, 2004

Editor’s Note:

Last month a delegation of Saudi Arabians completed a tour across the United States to promote business relations with American companies. At each stop — New York, Atlanta, Houston, Chicago and San Francisco — Mr. Omar Bahlaiwa presented “Prospects of the Saudi Economy” to set the scene for American business people interested in working with their Saudi counterparts.

Mr. Bahlaiwa is the Secretary General of the Saudi Committee for Development of International Trade at the Council of Chambers of Commerce and Industry. While in Atlanta, Georgia on May 12, 2005, he sat down with SUSRIS for a wide ranging interview covering the breadth and depth of US-Saudi business relations. Today we are pleased to present the first installment from that interview in which Mr. Bahlaiwa discussed the purpose of the trade mission, an assessment of the Saudi economy, Saudization and vocational training, and the booming Saudi stock market.

On Doing Business – Trade Mission 2005
A Conversation With Committee for International Trade Development, Secretary General Omar Bahlaiwa

SUSRIS: Thank you for talking with us today about the business relationship between Saudi Arabia and the United States and about the visit of the Saudi trade mission.

Omar Bahlaiwa: It’s a pleasure to be here.

SUSRIS: Let’s start with the trade mission. Your group, the Committee for the Development of International Trade in the Council of Chambers of Commerce and Industry organized this delegation that is visiting five major cities in the United States. Can you describe what the mission aims to accomplish and why it is visiting the US now?

Omar Bahlaiwa: We invited companies from all over the United States to come and meet with the trade delegation, to meet people concerned about the business relationships between Americans and Saudis.

The idea was to show the American companies the $623 billion worth of projects coming on-line in Saudi Arabia between now and 2020, to show them what we are doing and to give them the chance to come and participate in these projects.

We organized this trade mission not just because it is good business, but we also believe Americans are friends of Saudi Arabia. We wanted to extend our hands to them to show them that Saudi Arabia remains open to our American friends and has an open heart for Americans. We wanted to tell them, “Listen, we’re still open for you. We wanted to give you the first chance before anyone else.” In every city we are discovering many American companies are changing their strategies toward Saudi Arabia as they learn more about the opportunities available. That is good. They are discovering the potential for doing business with Saudi Arabia.

SUSRIS: Tell us about the people you have assembled as members of the delegation.

Omar Bahlaiwa: We brought people who represent the broad range of business sectors being discussed –people from the government, from the ministries, from companies like SABIC and Aramco, people from CIT — our Committee for Development of International Trade — and we brought business people.

The idea is for the government people to talk about their projects, for CIT people to talk about the business environment and performance of the Saudi Arabian economy and for the Saudi business people to start to work together with American business people. If American companies need a local partner in Saudi Arabia we have them with us. So far in New York and Atlanta some have already made connections.

The sessions are organized so that American companies learn about Saudi Arabia, about what is happening there now. They hear the overview, then they get information about the sector they are interested in and then they can talk to business people about specific projects and partnerships.

SUSRIS: You mentioned CIT’s role in the trade mission is to present information about the business environment and economic performance. How would you describe the environment and is the current performance of Saudi Arabia’s economy related to the timing of your mission visit?

Omar Bahlaiwa: Saudi Arabia is in a period of economic expansion, a boom. The primary reason is the increased production of oil. The oil sector has generated extra income and the GDP has increased tremendously – up about 5.3% last year from 211 billion in 2003 to 248.5 billion in 2004. That is just one indicator of the strength of the Saudi economy. It also stands as the strongest economy compared to others in the Middle East. If you match the Saudi Arabian GDP to, for example, the UAE, Egypt, Kuwait, and Qatar, all together, they are less than that of Saudi Arabia. If you put Egypt’s and Israel’s GDP together, they are less than that of Saudi Arabia.

At the same time Saudi planners are thinking wisely and are using the oil revenues to invest in the country — to help diversification, to reduce the dependence on oil. In 2004 the country depended on oil for about 40% of the economic activity. The current projection is that by the year 2020 Saudi Arabia will be at about 22% dependency on oil revenue. That’s the idea, to grow and diversify the economy. The goal is to add value, to use the advantage of the raw materials we have and to use our competitive and comparative advantages.

SUSRIS: What other factors should potential business partners know about Saudi Arabia?

Omar Bahlaiwa: There are a number of circumstances to keep in mind. First, Saudi Arabia has a young population. About 50% of Saudis are below 20 years of age. So we have a future oriented population. Second, Saudi Arabia’s location is in the middle of the world. The distances from Saudi Arabia to the West and to the East are almost the same, relatively close. Third, it has a window on the Red Sea facing Africa and to the Mediterranean. On the other side of the country lies the Persian Gulf, facing the East.

Another consideration, certainly not the last one, is that Saudi Arabia is the leader of the Islamic world. Saudi Arabia is home to the two holy mosques in Mecca and Medina. One and a half billion Muslims look toward Saudi Arabia for leadership. From that perspective you can reach the Islamic world by being a partner with Saudi Arabia.

SUSRIS: The demographics issue, the youthful population you referred to, is a challenge that some observers see as a negative consideration — having to meet the needs of such a large, young population. How do you see it?

Omar Bahlaiwa: I agree that this is a significant challenge. Unfortunately, our education system in the last decade did not concentrate sufficiently on training our youth. We are working to correct that problem.

What is happening now is that there is a training program, introduced by the General Organization for Technical Education and Vocational Training, known as GOTEVOT, for those youngsters. It will open many doors for them. If you consider that 130,000 a year will be trained, in ten years we will have 1.3 million Saudis in the skilled labor pool.

The other factor, besides the need to find jobs for our youth, is that we have seven million non-Saudis living and working in the country. There is a program, we call it Saudization, that aims to replace non-Saudis with Saudis, but you just cannot do it haphazardly. You have to qualify your youth. And to qualify your youth you have to spend some time on them. This is what we are doing now. We are training and qualifying our youth.

You are starting to see Saudis taking jobs that used to be filled primarily by foreign labor. The signs of progress are starting to be seen in the marketplace. You see many companies talking about their Saudization programs. There is also a challenge for companies from the government to employ Saudis by setting and enforcing goals for Saudization, to increase their representation by five percent each year.

SUSRIS: How have Saudi business people responded to Saudization?

Omar Bahlaiwa: Obviously they want to make sure the requirements are applied carefully and wisely. We don’t want to have a charity program just to employ Saudis. We want to have qualified Saudis.

This is where the government comes in. They are working hard to make sure there are qualified employees. I’ve met with the officials of GOTEVOT, the government’s vocational training organization, and I know first hand they are doing a terrific job. Over the next five to ten years we will see many qualified boys and girls from Saudi Arabia taking over a bigger role in the labor force. We’re not just talking about the boys, there are about 40 new colleges for girls coming into service as well.

SUSRIS: So this is a cooperative effort – the government fulfilling its role of properly training the work force to enter the business market?

Omar Bahlaiwa: You bet. And the great thing is that they have secured the budget for five years so they won’t have any financial constraints. It provides for new schools, new colleges for girls, upgrading existing schools, equipment, facilities and curriculum. It is really very impressive. I did not know how well organized the plan was until I saw it for myself. It’s very well done.

SUSRIS: Are there forecasts for closing the gap, for providing qualified Saudis to the job market?

Omar Bahlaiwa: I think we are closing the gaps. There have been a substantial number of Saudis who have submitted their applications to GOTEVOT for training. I believe a good plan is in place and in no time there will be more qualified Saudis in the labor pool. The great part is that the market is grabbing them as fast as they graduate. They are highly qualified and are very much in demand in the labor pool. The marketplace is asking for more.

SUSRIS: It seems that the benefits of Saudization, besides finding work for the large amount of young people in the population, would be to reduce the outflow of capital that results from a large base of foreign guest workers sending money home. How will that affect the Saudi economy?

Omar Bahlaiwa: The repatriation of currency, hard currency – it’s sent as dollars, or euros, or whatever – is a consideration. It’s about $20 billion a year.

In the long term Saudization will mean extra currency in the Saudi market and the circulation of that capital will create more jobs. As those Saudi boys and girls get married they will have certain needs. They have grocery needs. They have furniture needs. The economy will be stimulated and the economy will get stronger. People will benefit financially.

SUSRIS: Let’s talk about the performance of the economy. Samba’s annual report said 2004 showed the best “balanced performance” in Saudi economic history. What developments in the Saudi economy do you see as noteworthy?

Omar Bahlaiwa: One area that showed significant improvement has been the Saudi stock market. It is booming and is spreading the benefits of the strong economic growth. It has become an extra source of income for Saudi families. Last year was a very good year for the stock market and I believe 2005 will be another good year.

SUSRIS: So the Saudi stock market is becoming more accepted as a place for people to invest their money?

Omar Bahlaiwa: Oh yes. I’ll give you an example. Three months ago there was an initial public offering for shares of Al Balad, a new bank that was established. Fifty percent of the population bought shares. Eight million buyers went to buy shares in that stock. The high level of interest is due to the prospects of the capital market itself.

The stock market is becoming very attractive to Saudis. They have the expectation of at least doubling their money. In the case of Al-Balad Bank the opening share price was about 50 Riyals, or $18. Today a share is worth about 700 Riyals.

SUSRIS: Are the values of the companies keeping up with the cost of the stock shares? Do people worry that the stock market might be overheated?

Omar Bahlaiwa: That’s something to be watching. It’s a market driven phenomenon. People are driven by the prospects of the market. But, as with stock markets anywhere you need to be cautious. You might have a “Black Monday” or, as we say in Saudi Arabia, “Black Saturday” because Saturday is the first day of the work week there.

Saudis are confident, however, in the market because the economy is strong. We have looked at the prospect for growth of the economy for the next fifteen years. Through year 2020 we expect the market to grow by 4.15% per year. The income of the country is very high. After September 11th a large amount of cash came back to the country. People are looking for new fields for investments. The market fluctuates, yes, but at the end of the day, it’s still stable. The economy is very strong.

NEXT: Economic reforms, diversification, privatization, and competitors to the US-Saudi business relationship.

ABOUT OMAR BAHLAIWA

Omar Bahlaiwa is the Secretary General for the Saudi Committee for the Development of International Trade (CIT) of the Council of Saudi Chambers of Commerce and Industry in Riyadh, Saudi Arabia.

Prior to this position, Mr. Bahlaiwa was the Assistant Secretary General for Foreign Affairs for the Council of Saudi Chambers of Commerce and Industry. From 1997 to 1999, he was a general manager of the Saudi company for manufacturing carpet materials (Mattex) and prior to this worked as the Vice President of Sales and Marketing at the Saudi Industrial Export Company. From 1983 to 1989, Mr. Bahlaiwa worked with the Saudi Industrial Development Fund as a technical analyst in the Project and Portfolios and Electric Utilities Departments.

Mr. Bahlaiwa holds a B.S. in Electric Engineering from the King Saud University.

Editor’s Note:

Last week a delegation of Saudi Arabians completed a tour to five American cities. Their mission? Promote new business ties between the Kingdom and the United States as Saudi Arabia enters a new economic boom.

On the delegation’s stop in Atlanta, Georgia on May 11, 2005, SUSRIS had the opportunity to talk with Eng. Khaled Al Seif, a leading Saudi businessman and Chairman of the Saudi Committee for the Development of International Trade at the Council of Saudi Chambers of Commerce and Industry — responsible for organizing the trade mission.

***

A Man With A Mission: Khaled Al Seif Talks About US-Saudi Business Relations

SUSRIS: Thank you for taking time from your busy schedule coordinating the trade mission visit here in Atlanta. Can we start by talking about the importance of the business component of the US-Saudi relationship?

Eng. Khaled Al-Seif, Chairman, Committee for International Trade (CIT)

Eng. Al Seif: 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.

What happened on September 11 was a shame. What was also a shame was how a group of terrorists could have damaged the relationship between Saudi Arabia and the US. Just as we have been business partners we are now partners in the war on terrorism. Saudi Arabia and America are cooperating in the fight against the terrorists and we are winning this war together.

SUSRIS: What is happening in the Saudi economy now?

Al Seif: What has been happening there is quite exciting. Saudi Arabia is seeing another boom in the making, an economic boom which in my opinion will be wider and deeper than the boom in the 70′s. The main drivers of this economic boom are twofold.

First, there have been the reforms that have taken place in economic laws and regulations in the country along with the privatization program, which opened up the economy. There are so many opportunities in the private sector now that were not dreamed of ten years ago. Economic reform in Saudi Arabia has been extensive. I was talking today with some of my colleagues that even Saudis cannot sometimes recognize our own country with all the changes that are happening.

SUSRIS: What was the motivation for reform of the economic sector?

Al Seif: If you look at the history of the Saudi economy we had an oil boom and then a slowdown in oil production. We were producing around four to four and a half million barrels of oil a day and the population was growing. All of a sudden people started realizing we were getting poorer and that something had to be done. We couldn’t keep relying on oil so diversification of the economy and sources of income was a must.

A lot of ideas were circulating about what to do. Then the government formed the Supreme Economic Council, which was a critical step in the process. They were able to join ministers and officials together, as well as a consultative body made up from the private sector who contributed their practical expertise. The commission was behind the implementation of economic reforms and although it has taken time the positive results are now being seen.

SUSRIS: Besides economic reform what is behind the current boom?

Al Seif: The second driver is the increase in oil production. As you know Saudi Arabia is committed to the stability of oil prices in the world but global consumption has increased tremendously over the last few years. It has been driven, in particular, by the increased demand from new markets like China and India. Since Saudi Arabia is committed to stabilizing world oil prices we started increasing production to try to put the brakes on the rise in prices. We have boosted oil production to 9.5 million barrels a day.

The additional oil production along with the reforms made in recent years are the main drivers of the economic boom that is taking shape in Saudi Arabia and is likely to continue for quite some time. The main reason for sustained growth is the forecasted increase in global oil demand. As you know, Crown Prince Abdullah met with President Bush in April and he confirmed the commitment of Saudi Arabia to not only maintain oil production but he also presented a plan to increase it to 12 ½ million barrels a day by the year 2009 and up to 15 million barrels a day a few years after that.

What this means is that as those new regulations I was telling you about continue to drive improvements in the economy and oil production continues to increase over the next ten years this boom will be longer than the boom of the 1970′s.

SUSRIS: In addition to the increased oil revenues that will expand the Saudi Arabian economy what will new production capacity mean to the oil industry.

Al Seif: Increasing production does not mean that we just open the tap and produce more from the existing wells. That could damage those wells. When we talk about increased production as related to an expansion of capacity it means further exploration and development of new areas and new wells. The Saudi Arabian government is committing around 50 billion dollars in new investments to accomplish these goals.

SUSRIS: What is the relationship between the economic boom in Saudi Arabia and the trade mission you are leading?

Al Seif: The trade mission’s purpose is not just to attract investments. Many in the private sector in Saudi Arabia are worried about the relationship with our American partners. We consider American companies very talented and great friends and we worked with them for many years. As I mentioned the United States has been our primary trading partner for decades. We saw the relationship deteriorate after Sept 11, including the business ties. With the upturn in Saudi Arabia’s economic prospects a lot of people from other countries started coming to Saudi Arabia for business. What we are worried about is that others will take the place of the US as our trading partner.

So given the history of our partnership with Americans we owe it to the relationship to do just what we are doing now — reaching out to American companies, to our old friends, to tell them what is going on in our country, to tell them about all the exciting opportunities out there and to invite them to come over to Saudi Arabia. What we are really saying to them is that Saudi Arabia again welcomes American business partners and we, as Saudis, will be open to work together. There is a great future and great business to be done there and we would love to do it together.

SUSRIS: The recent summit meeting between President Bush and Crown Prince Abdullah in Texas has been called by some as a milestone in the relationship. Are those observers correct?

Al Seif: It is apparent to us that there really is a new stage in the relationship based on the warmth we have seen from the American officials we have met and representatives of the American companies that have attended the trade mission meetings. I’m glad that I can see this first hand in my visit here to the US. In those sessions there have been representatives of the Department of Commerce, the Department of Energy and the US Embassy in Riyadh and they have been encouraging to American companies to do business in Saudi Arabia. Their tone has been very positive. The atmosphere for building on the relationship has improved greatly and I think the meeting between Crown Prince Abdullah and President Bush was just one more step in the historic connections we enjoy.

The delegates of the Saudi trade mission have felt welcomed at every stop. I’ve talked to many of them and they were very happy to see this kind of a reception and to hear these kinds of positive messages. On their part they reciprocated from their hearts. When they were telling people who were interested in their projects they were really saying from their hearts, “Come on over and join with us.” They were very touched by the reception.

SUSRIS: Can you tell us more about the composition of the trade mission delegation?

Al Seif: The delegation was developed by the Commission of International Trade, one of the main committees of the Saudi Council of Chambers of Commerce. It is a private sector initiative.

There is a group of business people participating as representatives of some of the largest Saudi companies. They are here to network with American companies especially those who are new to working with Saudi partners. It is an effort to ease their entry into the Saudi market.

There are also some government officials involved, by our invitation, because we wanted them to explain projects their ministries are planning. Their participation is part of the new transparency in the Saudi economy that we have been talking about. This is part of putting it to the test. We invited these officials to participate, to show our American friends what projects the government will be opening up through about the year 2020. They agreed and have joined the trade mission delegation. Their presentations were very thorough, very specific. They covered details about project size, amount, location — the whole lot. So I think business partners will have benefited tremendously from this information.

SUSRIS: How have the trade mission meetings gone so far?

Al Seif: New York was the first stop and things went quite well. The speakers at the opening session included Mr. William Lash, Assistant Secretary of Commerce for Market Access and Compliance; Mr. Justin Swift, Assistant Secretary for International Affairs in the Department of Energy; and Mr. James Oberwetter, the US Ambassador to Saudi Arabia. This showed the amount of interest that the US government attaches to this relationship.

We were also pleased that Princess Lolowah al-Faisal, a member of the trade mission delegation, made a speech to the participants. This was something new for us and is part of the social change that is happening in Saudi Arabia regarding the role of women, especially in the business world. Her remarks were very well received.

I would also note that the expansive, positive coverage of the trade mission in both the US and Saudi media is another sign of the improving nature of the relationship.

SUSRIS: There is $623 billion dollars in new business being discussed in the trade mission meetings. Can you talk about the scope of the US-Saudi business relationship in the context of those prospects?

Al Seif: The sum of $623 billion is the estimate of the total expenditures that will be required in Saudi Arabia up to 2020. They represent a broad spectrum of projects – private sector expenditures, government expenditures, realty projects and so forth. Now how much of that would go to American companies really depends on how eager American companies are — how willing they are to come over and get involved before it is too late. This is our message to them. Get involved before it is too late. We welcome you.

SUSRIS: Former US Ambassador to Saudi Arabia Wyche Fowler spoke to the trade mission participants here in Atlanta and mentioned the conditions for business relations were improving. Can you elaborate on changes in areas like visas and the security situation?

Al Seif: These are all major steps. I was pleased to hear Ambassador Fowler, as well as the current ambassador, Mr. Oberwetter, in New York. They talked about these situations. As it has been widely reported and commented upon the security situation in Saudi Arabia has improved tremendously. The cooperation between the US and Saudi Arabia on security matters is proceeding very well. We hear there is movement on the questions like travel warnings and hope to see these issues resolved.

I was very encouraged by the comments of Mr. Lash from the Commerce Department. In his speech in New York he described what he saw in his visit to Riyadh about a month ago. He said he went to the marketplace, the souk, in Riyadh for a visit. He mentioned he walked around freely without a security detail, and he said it was just as safe as any other place in the world. It was quite encouraging to hear these kinds of first hand observations shared with others.

The issue of visas is something, I understand, the US side is hard at work on — especially for students because education is extremely important. Most of the leaders in Saudi Arabian society, whether it is in the government bureaucracy or in the private sector were educated in America. That has become part of the foundation of the good relationship that exists between Saudis and Americans. To see these numbers dwindle is not good for the future. So, to enable students to obtain visas is extremely important. Likewise to facilitate business travel is another key component in the relationship. It is very positive that these issues are being addressed.

SUSRIS: Ambassador Chas Freeman, who also served as US Ambassador to Saudi Arabia, told us in an interview last October, at the height of the US presidential campaign, that both Americans and Saudis needed to get together after the elections, at the highest levels, to “reassess and redefine the relationship” or it could “drift permanently into mutually disadvantageous” directions. Do you think our leaders have accomplished anything on that score?

Al Seif: We still have work to do, but I think you should see the meeting that took place between President Bush and Crown Prince Abdullah last month in Texas as a commitment from both leaders to the future of the relationship.

They also realize that this commitment has to filter down. That’s why they formed a joint committee between Foreign Minister Prince Saud al Faisal and Secretary of State Condoleeza Rice. The main objective of this committee is to see that more clarity is put into the relationship at the various levels so that it doesn’t remain good only at the top and unsettled below. You have to make sure it filters all the way through on both sides.

We have received numerous comments from US government officials about our trade mission — that it is a very important way of assisting to strengthen the relationship. That was why they were ready to assist because they can see the total benefit to both our people.

SUSRIS: With your background in international trade you have insights into American as well as, obviously, Saudi society. What is it on each side of the relationship that you see as a major misunderstanding of the other side?

Al Seif: This is a very good question but to tell you honestly, whenever we have had the chance to meet face to face with American groups or individuals the differences disappear.

The minute we start talking the misconceptions start disappearing and you hear comments like, “I didn’t know that” or “I thought it was like this or like that.” This is really what encourages us to continue doing what we are doing because the more people we meet, the more trade missions we have, the more conferences we arrange, the more that people talk then the less the differences are.

We all realize that in reality both sides are on the same side. We all realize that both sides are partners in so many things — partners in fighting terrorism, partners in economic developments and business, partners, even, on political issues. The differences are not that great once we get to talk to each other.

SUSRIS: Well thank you very much for taking time to talk with us. We have been talking to Khaled Al-Seif, the Chairman of the Saudi Committee for the Development of International Trade at the Council of Saudi Chambers of Commerce and Industry.

***

ABOUT KHALED AL SEIF

Khaled Musaed Al Seif is a businessman and a leading member of the business community in Saudi Arabia who manages one of the largest business groups in the Kingdom. He is active in various committees and councils dealing with the promotion of international trade and bridging relations with the West.

Mr. Al Seif currently serves as Chairman of the Saudi Committee for the Development of International Trade (CIT) at the Council of Saudi Chambers of Commerce and Industry. He has officiated as board member of the Saudi-British Council since January 1993; board member of the Arab-British Chamber of Commerce, London, UK since February 1996; on the Board of Directors of Riyadh Chamber of Commerce and Industry, Riyadh, Saudi Arabia (2004-2008); board member of Royal Philanthropic Society for Science (Prince Sultan University) since 1999; and President and CEO of El Seif Group of Companies, Riyadh, Saudi Arabia.

As the President and CEO of El Seif Group of Companies, Mr. Al Seif is a board member of the following Saudi and international companies: Musaed Al Seif & Sons Company; Saudi Medicare Company; International Management Development Company; Dana Investment and Development Company; Al Azizia Commercial and Investment Company; National Power Company; Modern Arab Construction Company; Marina Towers S.A.L.; and El Seif Holding Company in Lebanon. He has founded the following companies: Arabian Medicare Company; Universal Advanced Systems Company; El Seif Engineering Contracting Establishment; and El Seif Development Company.

Mr. Al Seif holds a B.S. in Civil Engineering from the American University in Beirut.

***

Related Items
How Can the U.S. Re-Open for Business to the Arab World? – MEPC Capitol Hill Forum:

• Part 1 – Ambassador Chas Freeman – President, Middle East Policy Council
• Part 2 – Dr. Edward M. Graham, Senior Fellow, Institute for International Economics
• Part 3 – James Andrew Lewis, Senior Fellow, Center for Strategic and International Studies
• Part 4 – Don N. De Marino, Chairman, National US-Arab Chamber of Commerce
• Part 5 – William A. Reinsch, President, National Foreign Trade Council
• Part 6 – Panel Questions and Answers

Editor’s Note:

Sixty years ago Allied forces were closing in on Nazi Germany and victory in Europe was just months away. For a week in early February, U.S. President Franklin Delano Roosevelt met Winston Churchill and Joseph Stalin at Yalta in the Crimea to discuss the shape of post-war Europe. The summit ended on February 11, 1945 and FDR departed for a rendezvous at the Great Bitter Lake, a waypoint along the Suez Canal in Egypt, with Saudi Arabia’s King Abdulaziz bin Abdulrahman Al-Saud. The King, known as Ibn Saud, sailed from Jeddah aboard an American warship to the meeting with FDR. The two leaders’ focus was shaping the future relationship between the United States and the Kingdom of Saudi Arabia.

Rachel Bronson, Director of Middle East Studies at the Council on Foreign Relations and author of the forthcoming book, Thicker than Oil: The United States and Saudi Arabia, recently spoke with SUSRIS about the meeting. In this conversation she provided the historical context of the meeting and perspective on the relationship that resulted from FDR’s and Ibn Saud’s rendezvous at Great Bitter Lake.

The Meeting at Great Bitter Lake

SUSRIS: Thank you, Doctor Bronson for talking with us today about the early days of the official relationship between the United States and Saudi Arabia. Tell us about your research and about the 1945 meeting at Great Bitter Lake.

Rachel Bronson: I’ve been working on a book called, “Thicker than Oil: The US and Saudi Arabia,” that examines the political relationship, the diplomatic history if you will, between the two countries from 1945 to the present. It looks at how the relationship has evolved over time and what has kept the two countries so closely together.

SUSRIS: Why did the leaders of the United States and Saudi Arabia meet, especially when America was still engaged in fighting the war in Europe and the Pacific?

Rachel Bronson: What brought FDR to the Great Bitter Lake? Officially he went to Great Bitter Lake because of oil. He was sailing back from his meeting at Yalta. It was a very dangerous time for him to be deviating from his path. We were still in the thick of World War II and ships were very vulnerable. He decided while he was out there he was going to meet three leaders. Abdulaziz was one of them. While he was there he met King Farouk and he met the Ethiopian king.

The meeting seemed to be a last minute thing. Two weeks before he went to Great Bitter Lake he sent a memo to the king saying he would like to talk about oil; although oil is not the main part of the conversation as far as I can tell. It’s hard to believe they didn’t speak about it, but they spoke about other things as well.

When Churchill learned FDR was going he was beside himself since the British and the Americans were competing for influence in the peninsula. So Churchill decided he wanted to meet Abdulaziz and King Farouk as well. So FDR sailed in and Churchill came in behind.

Getting back to why does he go? Well, FDR had actually said in a previous trip he had taken to Tehran [1943] that he really did want to stop and meet the Saudi monarch. He wrote a letter to Abdulaziz saying he was sorry he was not able to stop to meet him but if there were future trips to the region he would very much like to.

There are a number of reasons he was interested. First of all, what became very clear was that both Abdulaziz and FDR were very curious about the charismatic leadership of the other. I think it was Harry Hopkins, adviser to FDR, who was skeptical of the meeting. He felt Roosevelt just wanted to go out and meet the monarchs in the region. It’s in part true. They were both very much taken by the other. Each had the other described to him in larger than life terms and wanted to meet the other.

There were other reasons to meet. Oil was obviously very important – its importance had been clearly shown throughout World War II. But King Abdulaziz, who had been essentially neutral throughout the war, was tending toward the Allied side. He had allowed the Allies to use Saudi Arabian airspace and made it easy for them to operate in the region. That was of considerable importance. In 1945 the United States was working to get permission to help build a base at Dhahran, which was going to be incredibly important for moving troops from Europe to the Pacific theater. In the end it wasn’t needed because the war was ending. But Abdulaziz’s leaning toward the Allies was important to the United States and that was another important reason to meet him.

SUSRIS: What did they discuss?

Rachel Bronson: There were not many details reported about the meeting — they talked about development, and agriculture among other things. The big issue they talked about was Palestine. FDR realized that Palestine was an emerging problem and he wanted King Abdulaziz’s help.

As far as the results of those discussions, if you go back and look at a letter that Eleanor Roosevelt wrote to her friend Joseph Lash she reported that FDR was a bit disappointed that he could not get more from the king on the Arab Israeli conflict. Mrs. Roosevelt was really behind the Jewish cause, but her take on the meeting was that FDR didn’t get any solution, which he would have liked. However it was an important, very symbolic meeting.

One of the striking results, on a personal level, was the story about the wheelchair. FDR and Abdulaziz met on the USS Quincy and Abdulaziz was lumbering toward FDR who is sitting in his wheelchair, sort of the old statesman. King Abdulaziz says something to the effect, “Aren’t you lucky you have something like that to move you around?” Roosevelt had an extra wheelchair and gave it to Abdulaziz. It became one of the king’s most prized possessions. It was a symbol of their friendliness and the appreciation one had of the other.

SUSRIS: What other gifts were exchanged?

Rachel Bronson: The Americans gave an aircraft and the British gave a car. Churchill met with King Abdulaziz after the Great Bitter Lake meeting with FDR but it just didn’t go as well.

For instance, on one hand FDR, a smoker, was determined not to smoke in Abdulaziz’s presence. He could have but he wanted to be respectful. There are stories of FDR finding a room and smoking in a stairwell quickly before he would meet with Abdulaziz.

Winston Churchill, on the other hand, was a smoker and he was going to smoke. He had a drink and a smoke and all that was fine, but Abdulaziz was really taken with the respect shown by FDR.

It extended to the exchange of gifts as well. FDR gave King Abdulaziz an airplane, as I mentioned. Churchill sent a car, but the steering wheel, of course, is on the right hand side because it’s British. It turned out that the position of respect is on the right hand side of the vehicle. So if the King was driven in it, and he wanted to sit in the front, he would have to ride on the driver’s left. So apparently he never drove in it. It suggested to the King a lack of cultural sensitivity on the part of the British.

In the case of FDR’s gift of the aircraft, it was actually very useful. The Americans also supplied an American crew for the plane. The British car ended up sitting in a garage.

SUSRIS: The different approaches of the respective FDR and Churchill meetings with Ibn Saud are interesting — the smoking, the gifts and so forth — but what were the other dynamics at play in the Saudi’s differing views of Americans and British.

Rachel Bronson: I think the King was certainly familiar with the motivations of each side. It goes back to 1933 and awarding the oil concessions to the Americans. The Americans were interested in the business arrangement and were not interested in culturally rearranging the country the way the British were known to do. They were not a colonial power. That meant an awful lot to Abdulaziz, one of the only rulers in the area not colonized. He trusted the Americans in that they were unlike the British who were more meddlesome.

King Abdulaziz clearly had a good grasp of geopolitics. He understood that the Americans were the up and coming international actors. He was more comfortable working with them in large part because of their lack of a colonial past. For those reasons he allowed the United States to build a base whereas the British had a much harder time getting access to the kingdom. So there were the geopolitical reasons, and he was culturally more at ease with Americans and had less to fear from them.

SUSRIS: How did concerns for the post-war balance of power vis-a-vis the Soviet Union enter into FDR’s approach to the relationship with Saudi Arabia?

Rachel Bronson: The concern for the Soviets came later. I’m sure it was in the back of his mind, but it didn’t appear as an issue that was front and center. The purpose of a US base at Dhahran was really to help get troops to the Pacific theater of war. So their focus was on the war itself.

Later there were concerns about how you protect the oilfields from a possible Soviet invasion south, especially when they saw the Soviet provocations concerning Iran. There was a concern that emerged on the US side of, “Whoa, wait a minute, the Soviets are coming.” But in terms of building the relationship in 1945, I think it was mostly the competition between the British and the Americans. How do you secure the position there for the United States — oil, industrial and development interests?

SUSRIS: When observers talk about the scope of the relationship between the United States and Saudi Arabia they often refer to the Great Bitter Lake meeting. How would you characterize the meeting in terms of the longer historic relationship?

Rachel Bronson: They do because it was the first time the President visited that part of the region and it was the first time American and Saudi leaders met. I see it as the beginning of official relations between the U.S. and Saudi Arabia. Up to that point there were some shared interests in oil — the concessions in 1933 — but it was February 14, 1945 that marks the beginning of official US-Saudi relations.

SUSRIS: In his book “Inside the Mirage,” Thomas Lippman talked about Colonel William Eddy, the Naval Attaché in Egypt, as the “impresario” of the Great Bitter Lake meeting. Can you talk about the part he played?

Rachel Bronson: At the time the United States did not have ambassadorial representation in Jeddah and a lot of what we were doing was out of Egypt. Bill Eddy was one of the best “Arabists.” He had grown up in Lebanon and he was one of the best that America had in the region. So it made perfect sense that he was the interpreter. That he was the interpreter for both sides was also very rare.

SUSRIS: Eddy recorded his observations in a monograph called, “FDR meets Ibn Saud.” Can you talk about his perspectives?

Rachel Bronson: Yes. It talks about the promises that were made. My book is going to discuss these issues. There is the letter from Eleanor Roosevelt, that I already mentioned, to suggest that the results might not have been so neat and clean as Eddy suggests.

SUSRIS: Thomas Lippman, again in “Inside the Mirage,” relying on Eddy’s account, said the Saudis came away from the meeting believing the Americans would not move on the Palestine question without prior consultation with the Arabs. How did this commitment play out?

Rachel Bronson: It is the question of consultation that is the key. FDR wouldn’t have made promises about what he would do in the future but he apparently agreed to consult with them. That was what became a big issue. They felt that Truman never consulted with them, except just before something happened.

For example, at the UN, Faisal, Abdulaziz’s second son, was blindsided by the United States move forward for a Jewish state. It wasn’t an active negotiation process. It wasn’t even an active dialogue. They didn’t feel they were consulted. Truman’s response was, “Of course you were consulted. I was never unclear about what I was going to do.”

In fact, Truman was unclear about what he was going to do. Truman heard arguments from both sides and wasn’t really sure until three days before he decides on the recognition of Israel. That’s the part the Arabs felt that FDR had promised them. If nothing else they would be consulted on how to proceed and it turned out they were not.

SUSRIS: Other than the discussion of Palestine how did the Saudis view the outcome of the Great Bitter Lake meeting?

Rachel Bronson: It was a huge success. There’s a stream of letters exchanged after the meeting about their excitement to meet each other. There were statements that FDR was a great man and it was confirmed by the meeting. There were very warm feelings between the old physically challenged leaders.

The king had taken risks about going. There was some worry that when he was away there would be domestic unrest at home, but he took those risks to meet the President. Even going on the ship was a challenge. He had only been on a ship once before.

The gift of the wheelchair was very symbolic. It became very cherished. Visitors would be shown the wheelchair. The airplane was used. It was a very, very warm meeting and set the tone of the relationship.

About Rachel Bronson

Rachel Bronson is a senior fellow and Director of Middle East Studies at the Council on Foreign Relations where she is concluding research on her forthcoming book Thicker than Oil: The United States and Saudi Arabia, a History, under contract with Oxford University Press (2005). She co-directed the January 2003 report “Guiding Principles for US Post-Conflict Policy in Iraq,” co-sponsored by CFR and the James A. Baker III Institute for Public Policy at Rice University. She has testified before Congress’ Joint Economic Committee on the topic of Iraq’s reconstruction, and the President’s 9-11 Commission on whether or not the US is involved in a “Clash of Civilizations.”

Dr. Bronson is the recipient of the Carnegie Corporation’s 2003 Carnegie Scholars award. She has served as a consultant to the Center for Naval Analyses, as a Senior Fellow at the Center for Strategic and International Studies in Washington, D.C., and as a Fellow at Harvard’s Center for Science and International Affairs. Her writing has appeared in publications such as Foreign Affairs, Survival, The New York Times and The International Herald Tribune. She has commented extensively in the media including CNN, BBC, NPR, Washingtonpost.com and al-Jazeera and is a consultant for NBC news. She received her doctorate from Columbia University in Political Science in 1997.