March 13, 2017
Saudi Deputy Crown Prince, Mohammed bin Salman, responsible for the kingdom’s reforms, left on Monday for Washington to meet President Donald Trump on a visit expected to pitch the world’s top oil exporter as an attractive investment destination. It will be the first meeting since Trump took office in January between the U.S. President and the prince who is next in line to lead Saudi Arabia, and is in charge of the kingdom’s efforts to revive state finances by diversifying away from falling crude oil revenues, of which the upcoming Aramco IPO will be a critical component.
Under the Saudi plan, which seeks to promote the private sector and make state-owned companies more efficient, Riyadh plans to sell up to 5 percent of state oil giant Saudi Aramco in what is expected to be the world’s biggest initial public offering. Last year, facing a surging budget deficit due to slumping oil prices, the kingdom announced an austerity drive to reduce state spending, although industry sources say it has also promised major development projects later this year to soften the economic impact of those cuts.
According to Reuters, a royal court statement said that in his talks with Trump and other U.S. officials, Prince Mohammed, who heads a supercommittee driving economic reform and is also Saudi defense minister, was expected to “discuss reinforcing bilateral relations and review regional issues of mutual interest”. It said that the working visit would start on Thursday but gave no further details.
John Sfakianakis, director of economic research a the Gulf Research Center, said the focus of the visit would be “to showcase Saudi investment opportunities… the Saudi Aramco IPO as well as the reforms undertaken in the wider economic space.”
The trip takes place less than a year after the prince, son of Saudi King Salman bin Abdulaziz and the second in line to the throne, visited Silicon Valley to sell his vision of market-oriented reforms and a transformation of the kingdom’s society.
By freeing the kingdom from the statist model of its past, he hopes ultimately to create new private sector jobs for younger people in a country where half the population of 21 million Saudis — there are also 10 million expatriates — are estimated to be under 25.
Younger Saudis face entrenched unemployment, a skills shortage, a lack of housing and growing pressure on living standards as the kingdom’s oil income grows ever less able to finance the needs of a rising population.
Meanwhile, with the crown prince headed to Washington, Saudi king Salman is similarly probing the ground for investment in Asia, and is currently in Japan on a month-long Asia tour to build ties with the world’s fastest growing importers of Saudi crude and promote investment opportunities, including the sale of a stake in its giant state firm Saudi Aramco. He is headed to China soon after.
Trump spoke by telephone with Salman soon after he took office in January and agreed to support safe zones in Syria, according to a White House statement. Salman invited Trump “to lead a Middle East effort to defeat terrorism and to help build a new future, economically and socially,” for Saudi Arabia and the region, Saudi media reported. Before his departure for the United States, Prince Mohammed met Citigroup’s CEO Michael Corbat in Riyadh on Sunday for a similar discussion on investment opportunities in the kingdom and globally, SPA reported.
As a reminder, Saudi Arabia was one of the most aggressive financial backers of the Hillary Clinton presidential campaign, which could prove problematic for the upcoming trip seeking US generosity. Furthermore, with the US itself desperate for Trump’s economic proposals to lead to renewed spending domestically, the Saudis may have to get in line.
This article was posted: Monday, March 13, 2017 at 7:34 am