Saudi Aramco: The Company and the State

it seemed like a great idea the world's largest oil producing company pumping millions of barrels a day to become the world's largest ever traded stock market an over-ambitious prince eager to make his mark as a reformer wanted to partially trade saudi aramco for a valuation of 2 trillion dollars but the venture failed to get off the ground and the prince's vision 2030 now seems blurry saudi aramco is almost like the basis of politics in saudi arabia they are always intrinsically tied everybody in saudi arabia in one way or another is a beneficiary of saudi aramco a strong saudi arabia needs a strong aramco and vice versa as well the history of saudi aramco is the history of saudi arabia transforming itself from an isolated tribal society into a global presence get it right you reap a windfall get it wrong and the risk is huge the whole saudi economy was at stake there's always a balance between how did you face the race and to adopt with the new paradigm in the world they run the risk of being toppled the royal family could be running for the hell the issue is really you know is an ipo best for the company and when you look at aramco the company you have to realize that unlike other companies aramco operated for years without ever imagining an ipo so they've never had to make decisions with the thought of oh we're somebody maybe going to be publicly listed or we'd like to publicly list here's how we need to have our finances a raid here's the kind of growth that we need to be showing in our financial statements to make investors see our value analysts have never followed a ramco because it was never seen as a potential investment and now that's changing aramco for many years has had a strategy of long-term growth and long-term revenue because their idea was that they were making money for the benefit of the saudi state if they're going to ipo then they've got to suddenly think about their quarterly reports and that may change how they invest and that may not be the best strategy for saudi arabia the kingdom holds about 16 percent of the world's oil reserves it's the largest exporter of petroleum among opec countries and that means its economy relies heavily on oil 90 of exports 87 of budget revenues nearly half of gdp all comes from oil towering over these numbers is the company which digs out refines and exports that oil it pumps one out of every eight barrels of oil in the world and it's the only company which can produce a barrel of oil for less than ten dollars aramco says it employs 65 000 people but creates direct and indirect work for hundreds of thousands in the kingdom so if it's doing so well why let it go i think there was a strong case for the ipo and there still is for the selling off the stake of saudi aramco and there are lots of reasons for it now it's been talking about diversifying its economy for years i think the specter of climate action has finally made the saudis get serious about it uh and really the only way to diversify is through a ramco i mean aramco is the source of revenues that the saudi state needs to build other economic sectors even the reserve is big in other countries you know and middle east but still there's depletable resources some days somehow the oil will be depleted will be exhaustive so they have to think that you know you have to diversify your energy the economy so it's kind of ironic you're going to be relying on oil to diversify away from fossil fuels so if you think about saudi risk it's 100 owner of this company that supplies almost 100 percent of its government budget okay if it sees a risk to to that company even a far off risk it still needs to start diversifying that risk and passing some of that along to foreign investors is one way of doing it concerns about radical changes in strategy put a spanner in the works for saudi aramco's public listing for the first time in its history the company would have to disclose everything i think when you consider the size and scope and the opportunity there's a lot of emotion and also a lot of momentum and sometimes when momentum and emotion get rolling you may lose sight of the reality of what you had to do when it came to effectively being now an open public company vision 2030 was unveiled as a master plan for socioeconomic reforms as a result women can drive cinemas have begun to pop up muhammad bin salman's aim was to reorient the saudi economy away from oil and reassure investors that saudi arabia is stable and progressive a lot has changed since the prince's international public relations drive the efforts to convince businessmen to feel comfortable working in the kingdom also faced a blow when top saudi business kingpins were put under arrest in an opaque anti-corruption drive and as a cascading effect there has been flight of capital reduced foreign investment increased saudi borrowing and a halt on saudi aramco's ipo the increase in internal repression inside the kingdom you know locking up of folks inside the ritz carlton a lot of those were you know heads of family businesses or large companies or big conglomerates you know that gives foreign investors pause [Music] the murder of one journalist has washed away the veneer of change and quashed investor confidence i'm not asking for democracy i'm asking for people to be allowed to speak i'm asking for the minimum can the interest of a stakeholder ever get priority over the kingdom the privatization process would mean saudi oil reserves will be up for scrutiny and ramco's finances will be in the public eye you go from running a business where you have endless resources and no oversight to one day having to register your company with the exchange and having to disclose every single number the company's had over the last five to ten years every piece of catbacks every decision that's been made every partnership every single thing you've done is now in the public purview once that we move to the public control the state companies i think that's began by the transparency because the company is not only belong to the to the state of the government but belongs also to the public if you're a private company that's run so well it's painful because you have to answer a lot of questions but not nearly as painful as after you take people's money those saudi economists who dared to raise concerns about the prince's ambitious 2030 plans are in jail was indicted on terrorism-related charges his crime was providing analysis some of which explained that a high valuation of aramco could mean that the kingdom will not get any oil revenue for decades because all of it will go to an aramco controlled by shareholders in the beginning stages you haven't taken anyone's money presumed you're just disclosing to the exchanges here's how we run our business here's why you should be comfortable listing us you then go out to raise capital and once you're taking someone else's money they own those shares and you're a company for the people by the people you're not a company for the manager management or the or the kingdom and the transition is massive that changeover from state control to a public listing which began in 2017 is now shelved for years to come kia ramco executives have also left or been moved so that process for a company like this probably a year and a half it's not like a tech startup where you have a slide presentation and some hope you have a business that changes global markets for decades and decades so it's a process that will be expansive it will be intrusive and it will be transformative saudi aramco places the kingdom's reserves at 261 billion barrels of oil but that magic number with no real third party audit has remained more or less constant for nearly 30 years since the 1980s there have been rising production changes in technology and no announcements of major oil discoveries in the kingdom other oil giants such as shell and exxon have revised down their reserves during this period if on average saudi production was at 9 million barrels a day in the last 30 years aramco has pumped out nearly 100 billion barrels without a dent in its 261 billion reserves and the jury's out on how much they actually have and what it's worth looking at their reserves figure is you know makes if you look too closely at it you start to wonder how it can stay roughly constant from year to year when they're they're producing and exporting so much oil every year disclosure of the reserves it's a top secret in saudi arabia and i think this is a significant concern on the part of aramco executives they treat their reserves with kid gloves their duty is to get the most out of these reserves in the best way possible the reserve confidence will only be consistent with third parties verifying the information it's got to be done through a regulatory fashion that everyone's comfortable with it can't just be something a company says and and hopes is the case you've got to verify whatever other qualities god may have given the saudis he gave him a lot of wealth in the ground and that's not going to go away so we want my quibble over the over the reserves but um you know the saudis have the ability to do fracking and they haven't even started basically but would that possibility of higher reserves be enough for investors to finance aramco's ipo probably the biggest downside is the transparency that would have resulted around saudi reserves saudi oil reserves that doesn't change very much from year to year and really hasn't changed much over the past couple of decades doesn't give much insight beyond the single number around 260 billion barrels if saudi aramco would have listed shares in the new york stock exchange or the london stock exchange the regulators would have forced saudi arabia to come clean on all of its reserves uh you know how much of that has proven probable or otherwise i think that that'd be that's a tough sell within the kingdom uh within saudi aramco and within the ministry and all the way up to the head of state i don't think saudi arabia is not trustworthy when it comes to their reserves i think the reserves are there but the capacity is another question saudi aramco has never produced 12.5 million barrels a day and has never come within about a million barrels a day of that aramco says that it can reach that level of capacity after a period of about six months of additional investment right so it can't just twist a few valves uh and crank up an extra two million barrels a day i can remember on one occasion sitting in the office of the then uh minister of petroleum who did not know that i understood arabic um when one of his aides came rushing in and said we've got we've proved the reserves in this particular new field they'd found and he said well how much is it and they said the three billion barrels and he said oh it's too small cap it well that's twice the alaska reserve if you had full access to uh to aramco's reserves figures and you know other inside details about its revenue streams and whatnot you know anybody with a smartphone could could second-guess the saudi minister you know right now when the uh when the oil minister goes to vienna to speak in public at an opec meeting i mean you can see him just surrounded by hordes of reporters each you know shoving their voice recorder uh in his phase to catch a little you know snippet of you know what he says about you know saudi plans saudi reserve saudi oil production um you know saudi market strategy the world wouldn't be as quite as dependent uh on the oil minister for information you know to sort of unlock the uh you know the secrets of what a ramco was going to do also you know you put those those that information out there it's out there for everyone we should just be dynamic and responsive the reserves matter because the reserves and output gives saudi arabia the regional and international clout as the largest producer in the oil producing club of nations known as opec vacation travel lodging billions and billions and billions of dollars of industry get moved by opec and opec being a saudi driven organization they have to be meticulous the company is so good at what it does that that also brings its leaders a certain amount of political clout when it comes to opec and when it comes to other dealings with other countries opec is not the cartel you know we really want to stabilize the oil price to some extent in the unity of opec i think it's still important to how then we can bring together the stabilizer price but it's not the price that benefit only the producer is the price that also benefit the producer and consumer the history of opec we're an economic organization focused on fundamentals focused on addressing the global markets needs for reliable supplies of petroleum saudi arabia is the keystone in opec it is the big dog it's the ringleader if you will within opec opec members maintain a little bit here and there none has more than one million barrels per day of spare oil production capacity that i know of but maintains that that kind of level of spare capacity uh at you know as a policy saudi arabia saudi aramco typically maintain you know a million two million barrels two million barrels a day of oil production capacity that they don't use okay so no profit oriented firm would ever do this right you wouldn't invest all the billions in developing oil fields and pipelines and storage facilities and production infrastructure and then just leave it dormant saudi aramco has done it at the behest of the saudi state and you know it's it's the key aspect in the saudi u.s partnership aramco's ability to bring more oil production online and its willingness to cut back at times the markets are oversupplied it's kind of the crux of the the u.s saudi strategic partnership saudi arabia if we broke with them i think your oil prices would go through the roof i've kept them down they've helped me keep them down right now we have low oil prices or relatively i'd like to see it go down even lower billions of dollars are traded at the world's largest stock exchange it's business as usual on wall street but like other exchanges around the world it also tried to sway saudi aramco to list in new york even the u.s president weighed in on his preferred medium of communication but the strict requirements remained a deterrent for the ipo which was being called the world's largest offering it would be a double whammy for muhammad bin salman to not get the 2 trillion valuation and having to compromise on not listing on the world's largest stock market you're the world's largest oil producer and you don't list in the world's largest stock exchange that definitely says something and it definitely limits your access to capital new york is terribly complicated by virtue of the 9 11 hangover so i thought from the beginning it was quite you know it was a nice thing to dangle before the americans but it was probably not going to come to us you know there aren't that many exchanges that can do this so london and new york were the two main ones that that could really handle something like this both of which have pretty stringent transparency requirements new york's more so london was signaling that it was willing to roll back uh some of its transparency requirements and make a special deal for a ramco the prince's ipo hit the brakes from a lofty two trillion dollar valuation to uncertainty about the size of saudi reserves from litigation risks to stringent requirements from stock exchanges the reality was different from the political statements well i think the two trillion dollar number was significant for saudis but not significant for the rest of the market talking about a business that dwarfs almost every business in the s p 500 i would say two trillion dollars is a high valuation it's not unachievable when you look at what the size of it is whether it's a trillion a trillion half or two trillion the scale is all relative it's massive and so if you have a business that's earning 200 300 400 billion dollars a year there's a multiple put on that and the market's gonna say well even though you're a trillion dollar business give or take whether you're one trillion or three trillion is going to be dependent on your earnings and your decline curves and your growth stretch what type of growth percentage can i put on your business it's a huge number there's no question about it whether you look at the high level or you look at the low level it's huge it's a huge ipo it's a huge company and so i guess what you're asking me is how do they expect to sell it i think there's enough money out there that can cover it but if on the other hand the global economy should begin to tick downward then it's going to be a hard sell they would have to lower the price putting a line in the sand is is strong and smart from your own perspective but the market's going to determine what they feel comfortably about buying your stock at that's worth what someone tells you it's worth not what you hope it's worth so when mohammed bin salman announced the ramco ipo and he basically said we're looking for a valuation of two trillion dollars that's the largest valuation of all time for any company and that's the values for the whole company they were never talking about selling any more than five percent so it seems like they're looking to raise a hundred billion dollars which is a large amount but not that much so um the quit but the question is really is a ramco valued at two trillion dollars um what are their oil reserves valued at which is really tends to be the bulk of what makes up an oil company valuation now ramco also has a lot of other assets around the world not oil not upstream oil assets but they own shares in refineries in china in south korea they own oil storage facilities in japan they own the largest oil refinery in the united states and they also have a lot of research and development things going on they've also got petrochemical and oil refineries in saudi arabia so the company is worth more than what they dig out of the ground and sell but does that get us to two trillion dollars the answer also depends on what the price of oil is at the time of the ipo and when they announced the ipo we were in the midst of a fair a period of very low oil prices so you could see how it would be very hard to reach a two trillion dollar valuation in say 2017 when the price of oil was you know 50 or 55 dollars a barrel it's an indirect evaluation of the saudi economy which is reliant on aramco so it's not just a company with a proposed 2 trillion dollar price tag there's a major problem with valuing the company what is it that's being offered some slice of the overall company i guess but no direct ownership of any part of it how much are the reserves after all are they understated or overstated what level of efficiency does saudi aramco have in comparison with other oil companies where is the future market [Music] mohammed bin salman's vision was to take the money from the ipo to revamp the saudi public investment fund which would play a leading role in developing non-oil industries but that fund has already started borrowing money instead of stacking up oil revenues the tens of billions expected from aramco never arrived and global banks provided their first ever loan of 11 billion dollars the ipo it seems to be from what people say was designed to generate cash for the public investment fund of saudi arabia which is designed to make investments for the future not to use for the saudi budget not to use for for those kind of projects but really a sovereign wealth fund to rely on you know when oil is no longer an important commodity here you have a company which has been deliberately non-transparent it's not listed on any market it has no shareholders other than the kingdom itself to which to report saudi arabia is not a notably free press environment and it is not a democracy and accountability is uncertain [Music] the kingdom is home to the most important religious sites for muslims but saudi arabia's real source of power is its oil wealth and aramco converts that black gold into dollars and realism many academics experts and oil economists either refused or refrained from speaking to us as soon as they heard us about aramco the kingdom's most potent economic firepower saudis can't use oil as a weapon look opec did it in 1973. they put an embargo and what happened to the price of oil it shot up over a hundred dollars a few years ago we saw oil prices tumble who created that it was the saudis they flooded the market why they wanted to put shallow oil out of business well it backfired the partnership between the u.s and saudi arabia rests on linked interests many of which have either disappeared or are now problematic the basic bargain of preferred access to energy in return for security protection but the united states is now the spring producer internationally for oil given fracking and we're an energy exporter not dependent on the gulf the support that the saudis provided by making american foreign policy halal acceptable to muslims now the muslim world is so divided the united states is so islamophobic that that bargain is gone saudi arabia also controls a vast media empire for decades it spent tens of millions of dollars to lobby cultural institutions think tanks universities even governments all to improve the kingdom's image that's jumped from 10 million spent in 2016 to more than 27 million dollars today used to fuel a sophisticated saudi influence machine that money shapes policy and perceptions and it also covers up criticism of the kingdom much of this was revealed in 2015 when wikileaks published thousands of cable exchanges between saudi diplomats posted abroad and the foreign ministry houston texas is an oil town [Music] it's a testament to saudi soft power and how big saudi money is securely invested in the u.s regardless of what saudi arabia is accused of even a local marathon here is sponsored by a ramco but whether it's 911 or the murder of the saudi journalist jamal khashoggi it all continues to cast a shadow over the kingdom's image abroad in terms of jasta which is the law that was passed basically saying that citizens could sue the saudi government for the role in in 9 11. um that has been put forward as a reason not to list on the new york stock exchange i'm not a lawyer but it would not be a real concern at all evidence that at least that's available that the us government has presented and declassified is not significant enough to probably convict or to get a um a ruling you know to be able to sue the saudi government so there's that but say it was um then the question is okay so what kind of assets can you go after and if you're saying that a ramco is an asset of the saudi government and therefore should pay well there's already a lot of aramco investment in the united states that they can go after they can go after motiva the largest refinery they have research centers all over there's a ramco headquarters around coast services company in in america i think that that's a convenient excuse to give but if they wanted to list on the new york stock exchange it's not really a significant barrier motiva is the largest refinery in the united states which goes through a whopping six hundred thousand barrels a day its more than two thousand employees work near the gulf of mexico but this behemoth facility isn't u.s owned it's a subsidiary of aramco the centerpiece of saudi crown prince mohammed bin salman's vision 2030. he wants to expand the petrochemicals business instead of the kingdom's heavy reliance on oil sales motiva's so influential in port arthur that motiva security sent a policeman to stop us from filming they even called the police to hold us until they could question why journalists were filming their facility despite tight control over media and any opinion which doesn't fall in line with that of the kingdom efforts to privatize have been a hard sell at home with very little accountability of the ruling family radical changes are viewed with suspicion by many ordinary saudis one of the major objections by people in the kingdom was their fear that the money would go into the pockets of the royal family rather than be used in a transparent way to provide government services to the people in other words waste fraud and mismanagement are a concern on the part of the public they're also concerned by foreigners i think the crown prince is trying to create an environment conducive to foreign investment but events things keep happening questions keep getting raised that make that difficult saudi arabia's geopolitical power is to is the exclusive access to information about saudi reserves they hold that information uh very close and they let it out and and dribs and drafts it's almost like the strategic ambiguity around the israeli nuclear weapons capability they release what they choose to release when they choose to release it that's a source of power very similar with the oil reserves in saudi arabia this is not the first time reforms have been promised in saudi arabia or the first time when those promises have been lapped up by western powers and lauded by the media since the 1950s the new york times which likes to be called the newspaper of record has given similar coverage to saudi kings and princes the media has given them titles such as trailblazers and reformers similar to the current crown prince even the glitzy 2030 road map hints at old promises well the vision itself is hardly new this was largely drawn up i gather by consultants mckinsey in particular and they were able to do that quickly because the ministry of planning in saudi arabia had all these ideas there to be gathered up so the vision isn't new um the drive for change in the kingdom transformative drive is also not new in many ways mohammed bin salman resembles his grandfather abdulaziz different methods abdelaziz united the kingdom with tribal marriages uh a bewildering number of uh marriages and divorces that brought different groups in the society into his family he conducted a war in the saudi south and ajrang jizan asir which took land from yemen and made it definitively part of saudi arabia he suppressed religious uprisings there are many similarities one could say and it worked whether the current drive will work or not is unknown and certainly not the first time claims of reform have been made in saudi arabia for example king faisal when he became king he made a lot of very important changes and reforms in saudi arabia that before that the the government had been spending very recklessly and carelessly under uh king his brother king saud it was reported actually that he would um carry around in his pocket the budget and whenever he would see a minister saying in the halls or something he would question them and he would say how are you spending this money what are you doing with it so this is not the first time that reforms have been tried probably every previous king in saudi arabia has announced it to some extent and there have been one one of the key aspects i think that a lot of the reform plans always include are mega projects and in my mind those mega projects never really pan out and so those that's always something to be wary of we can hold up the rampo ipo as the key example of that but there were lots of other privatizations that would have really helped kind of um re move saudi arabia's economy from very state status based to a much more diverse uh and vibrant private economy so for example they wanted to sell parts of saudi airlines of of different national companies and it really almost seems like the reverse is happening that the state is actually more involved in the economy as opposed to less involved and that i think is probably not a good sign for developing a diverse and vibrant private economy but at the same time there are shifts in cultural and social expectations that have to occur in saudi arabia and so those changes i think setting a year of 2030 was probably very ambitious i think the saudis realize that the time has come that they must change the way they run the economy the way they do business otherwise look what happened with iraq look what happened with iran look what happened with libya it's not too far-fetched to think that that can't happen with saudi arabia uh [Music] [Music] the ongoing war in yemen is not just creating global pressure but also a strain on the saudi economy in addition tens of thousands of foreign workers have been expelled from saudi arabia the government's reduction in subsidies for fuel and utilities has become a burden it's had to borrow aggressively to plug the budget deficit [Music] well the budgetary uh crisis is not new uh i did have a conversation with the late uh then crown prince abdullah later king abdullah who made a real effort in the late 90s to institute a in a tax uh system other than zakat and and the conversation went like this i said to him you know i think you have a problem here because for example in the united states if i take a section of desert let's say part of nevada and i either invest my own money or i borrow money from a bank and i build an industrial estate a park and a related community and i don't ask the government for anything the government still has to come up with all sorts of services police education waste water management road maintenance even if i build the roads initially and so forth and the same is true in saudi arabia except even more so because at that time at least saudi arabia was heavily subsidizing electricity and water and other things that people needed so i said you know the difference is that in nevada every cent will come back in the form of increased government revenue so the the the debt will be uh replaced by a stream of revenue that makes the government whole and enables a higher level of service whereas in saudi arabia not one halal comes back basically you have a system i said in which private prosperity impoverishes the government it's the opposite of normal economics so i've said to people um i'll give you a real imaginal it's a real parliament and a role in allocating tax resources but in order to do that you've got to pay taxes and he said i came very close to getting a consensus on this in the end i failed the merchants particularly in the western province would not agree so it's difficult to to rationalize a big investment uh in a country um that's already a hard sell for investors anyway because of you know the visa requirements and red tape and you know lifestyle issues in saudi arabia a lot of a lot of foreigners it's not it's not you know considered a great destination for uh you know second home owners or for you know foreigners who are looking to move their families and put their kids in the local schools you know they would go to dubai or bahrain or abu dhabi or doha to go to the region so it's you know saudi arabia's never been a real easy sell for foreign investment for the size of its economy fdi flows there aren't proportionally as big as they are for some of the more open economies around the region perhaps the biggest challenge to the saudi economy comes from the wave of change in the way the country is being run mohammed bin salman's pursuit of vision 2030 has upset the traditional order in 2015 when um king salman ascended to the throne in short order within a year all power was essentially transferred into the hands of his favorite son ahmed bin salman this destroyed the consultative tradition within the royal family and more broadly in the kingdom here you had a young man with great ambition drive imagination uh determined to change things impatient and not willing to wait for consultation so a lot of egos have been bruised a lot of interests have been shaken many people have lodged objections to this fundamental change in the constitutional order in saudi arabia this is before you get to things like the anti-corruption drive which uh exacted huge amounts of money from the wealthy elite in the kingdom king salman will be the last king of his generation it had always passed from brother to brother to brother and it's clear even though there are still some living brothers or sons of abdul aziz it has been decided that salman will be the last of that generation the next generation there are a lot of princes there and a lot of them had a great deal of control and in certain segments of the economy and and of saudi society and there had always been kind of a balancing act that went on between these different uh segments of the royal family there have been a lot of tensions produced basically traditionally in saudi arabia and in gulf arab societies generally the king or the or the emir the leader has the same responsibilities as the sheikh in a tribe there's really two responsibilities one is to ensure that decisions are taken by consensus after consultation he proclaims a consensus does not make a decision and impose it a second responsibility is to ensure that the less fortunate the poor share of the wealth so it's a the government or the this case the leader must distribute arms charity to the needy the saudi state is built on these principles the first one has been badly compromised as power has been gathered into one man's hands or perhaps two the crown prince and his father the members of the family the ruling family who were previously consulted feel excluded in many cases from the decision-making process they would kind of all meet and had to agree together on things almost like different shareholders and it does appear that that process is changing i would be cautious of of saying well it's now different everything is different now it's a one-man show that may be the image that they'd like to present to everyone but that doesn't mean that all of the other sources of power have necessarily been eliminated and that um you know if enough brothers decide that um mohamed salman is not the right way that that couldn't be changed i think where it's too early to write off that process and to say that he has fully consolidated power 533 million dollars 525 million dollars that's peanuts for you from lucrative military contracts to support for each other's wars there is a special relationship between the u.s president the saudi king and muhammad bin salman always the right hand but that special relationship has been under stress lately and i love the king king solomon but i said king we're protecting you you might not be there for two weeks without us you have to pay for your military we filmed this during the period when the saudi government was officially denying that his agents murdered journalist jamal khashoggi the government later confessed to the killing at the saudi consulate in istanbul and admitted it was a premeditated murder a lot of fingers are pointed at the crown prince for allegedly ordering the killing in turkey but the u.s president still has unwavering support for muhammad bin salman i don't know if anyone is going to be able to conclude that the crown prince did it but i will say this i i don't know i don't know but whether he did or whether he didn't he denies it vehemently his father denies it the king vehemently the case remains open regardless of saudi denials and criminal sentences it risks the prince's grip on power foreign investment vision 2030 and aramco's ipo despite several attempts aramco and its subsidiaries did not respond to our request for interviews the killing of the saudi journalists that has put them in the spotlight and if they come forward and tell the whole truth of what happened then that will be a sign that they're really ready for change if not they may be faced with harsh economic sanctions and if that's the case the market seems to be saying well saudi arabia's economy is going to fall off a cliff on the foreign policy front the kingdom has lurched into a series of adventures none of which have turned out well it is stuck with a garrison along with others from the gulf cooperation council in bahrain where unrest continues and shows no sign of abating it is it has become really battered by syria which has been a transformative situation in the middle east brought the russians back in as the major foreign player for example um saudi arabia's relationships with turkey have been badly damaged by this uh it has seen fit to divide itself from qatar uh and uh and conduct blockade which again shows no sign of going away and which essentially divides the gulf cooperation council irreparably and finally of course it is engaged in a war in yemen with no clear objective that is feasible and no war termination strategy saudi aramco's failure to launch and a young leaders stumble from one crisis to another are directly linked there is an urgency to rush into things but also a lack of experience that is really like planning for the growth of a nation not the exit of an ipo and the growth of the nation takes a lot more planning in a couple months and ultimately you see they've pulled back i would guess because they recognize that this is a transformational moment it's going to take a lot more time and energy to get into the the realm of the public markets if they ever get comfortable they may never be comfortable with it i know there are elements within side to side who don't want to see that change and they feel that this is too much and too soon and too big and the push back from the government has been they need to be dragged kicking and screaming into these changes and that's just the way it's going to be i see that as a much bigger backlash than even the religious or conservative people is really unemployment and saudis not taking jobs or they've made a big push to get rid of foreign labor in saudi arabia but the problem is that if you're not replacing that with saudi labor then you're not going to have a an economy if people aren't taking jobs and unemployment remains high despite their being jobs then you've got a significant problem and i see that really as the biggest threat to the changes they can make all the decrees they want but if people don't work and people aren't working and making money and they don't see that as a valuable part of their lives then you're not going to pacify people with movie theaters it's ultimately a function of how fast they want to get to their end goal which none of us know at the moment their industry is obviously oil but they need to be more open and that's the key saudi arabia has to make it on its own to an extent it never did and so far it seems to be having difficulty right now there's no substitute for oil so it's oil's not going to go away in the short term you know the writing is on the wall and the saudis have have read it the saudi crown prince is adamant that he is the harbinger of change he may have the desire but what he can actually achieve remains the big question this was the media savvy prince's first public appearance three weeks after the murder of jamal khashoggi at an event widely referred to as davos in the desert you

Channel: Al Jazeera English

Views: 3,063,671

Keywords: saudi aramco, aramco, saudi arabia, politics, aljazeera, aljazeera english, al jazeera english, international relations, aljazeera live, al jazeera, muhammed bin salman, aljazeera news, United States of America, oil prices, aramco company, aramco saudi arabia reliance, saudi oil, MBS, aramco saudi arabia, aramco saudi arabia attack

Id: NRmGfmqx29g

Length: 50min 0sec (3000 seconds)

Published: Fri Feb 01 2019