Alwaght- The Saudi Prince Mohammed bin Salman last Sunday started his Asian tour by visiting Pakistan where he signed $20 billion worth of investment contracts in the country’s petrochemical, energy, mining, oil refining, renewable energies, services, and sports sectors. The second station of the prince was India where he talked with the Indian leaders the bilateral ties and signed cooperation pacts. He yesterday flew to China and plans to visit Malaysia and Indonesia too.
Bin Salman’s Asian tour is driven by a package of economic and political goals. India and China are the two major Saudi oil importers. The Arab kingdom, which is a top global oil producer, exported over 7.6 million oil barrels per day in December 2018, meaning 548,000 barrels lower than the November. According to the Saudi oil minister, the kingdom is now producing less than OPEC-approved December quota, 10.3 million, due to the fall in the crude prices. The country countered $54 billion of budget deficit last year and is facing $34 billion in the current year, with the experts putting down the economic woes to the mismanagement, multi-billion arms sales, and the war against Yemen.
This comes while Prince Mohammed has in head ambitious programs to cut off the nation’s reliance on the oil income, which now accounts for nearly 90 percent of the national budget, through what he called Vision 2030 strategy he unveiled in 2016. The Vision, he said when he first publicized it, was to reduce unemployment, strengthen the private sector, and boost the industrial, tourist, and entertainment sectors in the next decade.
This ambitious plan makes the kingdom foreign investment and expertise-thirsty. Such a need has driven Riyadh to look at India and China at the strategic vision of the oil-wealthy monarchy, after the Saudi Arabian relations went frayed with the Western allies following the killing of prominent Saudi journalist Jamal Khashoggi at the Saudi consulate in Istanbul, a crime widely believed to be ordered directly by the crown prince.
Saudi Arabia held an economic conference, dubbed by the Western media the “Davos in the desert”, in November 2018 meant to attract the giant Western companies to investment in “Neom Mega City” project, a futuristic city planned to work with renewable energies and act as the powerhouse of the future Saudi Arabian economy. But the meeting fell flat as the aftermaths of the Khashoggi killing kept to destroy the Saudi image. Western investors, including the heads of big Western firms such as Siemens, JPMorgan banking group, AOL group, and many others boycotted the Saudi conference. This left the kingdom in a desperate need to borrow money to fill the budget gaps. On February 1, Fahad al-Saif, the head of Debt Management Office of the Saudi finance ministry, said Riyadh was planning to borrow $31.46 billion to cover the state funding deficit which he said is $34.93 for the next year.
Now the kingdom’s rulers are seeking to address the nation’s tech and financial needs by expanding the ties with the emerging powers like China and India. The Asian leaders were cautious and less critical in dealing with Khashoggi case and bin Salman’s apparently chaos-causing regional policies in hope of attracting bin Salman, compared to the Western allies of Saudi Arabia who did not hide that they thought Prince Mohammed personally sent a hit squad to Turkey to kill his outspoken critic in early October last year.
The Indo-Saudi trade relations are on the rise. The bilateral exchanges in 2018 jumped 10 percent to reach $27 billion and New Delhi imported 17 percent of its oil from Saudi Arabia. Currently, the Indian investments in Saudi Arabia are worth of $1.5 billion. In November, the Indian government stated that it was interested to invest $500 billion in the Saudi infrastructure including railroad, tourism, airports, information technology (IT), and entertainment sectors. It is noteworthy that some 3 million Indians are living in Saudi Arabia. Annually, India earns nearly $10 billion in remittances from the Indians living in the Arab kingdom.
China, on the other hand, is also a big Saudi trade partner. Saudi Arabia’s imports from China in 2018, the statistics suggest, touched $46 billion.
China’s superambitious “One Belt, One Road” initiative, aimed at reviving ancient Silk Road trade route and giving China trade links to the West Asia and Europe, begins to grab the attention of the Saudi leaders. A sign is the Saudi sitting with China and Russia to discuss a “trilateral” investment fund in October. Already existing, the fund before Saudi Arabian joining had invested in 25 various projects in China and Russia including forest protection, infrastructure, baking, and IT.
Bin Salman is also hopeful to get further Asian tourists. Laying the foundation for the expansion of the tourism industry is a pillar of the Saudi economic transformation roadmap. Every year, millions of Muslims visit Saudi Arabia’s holy cities of Mecca and Medina for Hajj ceremony. Riyadh plans to annually attract 30 non-religious tourists up to 2030.
But the Asian tour is not one-aspected and does not only focus on the expansion of the investment and tech ties to the Asian powers. Bin Salman intends to take revenge of the West for what he thinks the Western leaders’ “coup” against him, mainly in case of the murder of Kashoggi for which the de facto ruler and the whole kingdom came under the heaviest-ever criticism by the Western allies and media as many lawmakers, including in the US as the kingdom’s key ally, calling on President Donald Trump to stop arms sales to Saudi Arabia and exit from the ongoing war against Yemen led by Saudi Arabia. One example of bin Salman’s retaliation is the investment in the Eastern financial markets while Riyadh has so far been a fixed funder of Western bonds markets. For some time, China and Russia have been working hard to cut the US dollar dominance over the world economy. Having on board Saudi Arabia can just accelerate this process. But, due to Al Saud ruling family’s heavy reliance on the West for continued rule, bin Salman’s tour’s effects can hardly go beyond a show of unhappiness with the West.