Saudi Arabia’s King Abdullah Moves To Fix For Dollar: Doing The Obama Job?

26 May 2009

JEDDAH: Custodian of the Two Holy Mosques King Abdullah announced yesterday that a draft agreement on a GCC monetary union would be revised to resolve differences between member countries.

In an interview with Kuwait’s Alseyassah Arabic daily, King Abdullah hoped differences with the United Arab Emirates on the issue would soon be sorted out.

King Abdullah said Saudi Arabia has increased its domestic spending to weather the global financial crisis, but has not sold any of its sovereign investments to boost liquidity. He also said that Crown Prince Sultan was expected back home within six weeks after undergoing treatment in the United States.

“The atmosphere for reviewing the monetary union agreement is open and the UAE has an alert leadership ... We do not doubt their keen (interest to safeguard) the strength of the Gulf Cooperation Council (GCC),” he said when asked about the UAE’s decision to withdraw from the union. “The coming review before the implementation would resolve what has been disputed,” he added.

The UAE’s foreign minister told Reuters last week his country would consider rejoining the monetary union if the terms were changed and its neighbors agreed to allow a joint central bank to be based in his country. But UAE Central Bank Gov. Sultan Nasser Al-Suwaidi said the UAE was not currently in talks to re-enter the single currency plan. “We are not negotiating. For the time being, the UAE’s position is to withdraw,” Al-Suwaidi told reporters in Abu Dhabi.

King Abdullah downplayed the UAE withdrawal, saying there would be differences of opinion among leaders on various issues. “The leadership of GCC countries could disagree over certain opinions and issues, but these differences would quickly fade. The brotherly relations between Saudi Arabia and the UAE will remain and any difference of opinion will soon disappear in the coming reviews,” King Abdullah said. “The agreement on the monetary union ... would undoubtedly be subject to review before approval and enactment,” he added.

The Saudi leader said a fair price for oil was between $75 and $80 a barrel. He added that prices, which have dropped sharply due to global recession, would eventually stabilize at a higher range when the world economy recovers.

“The issue of fluctuating prices is governed by developments in and the conditions of world markets. These (prices) are bound to stabilize at a higher price for oil in the future,” he said, adding that economic recovery would lead to greater demand for oil. Oil prices were just below $60 a barrel in London trade yesterday ahead of an OPEC meeting later this week and amid continued unrest in key oil exporter Nigeria. “Oil prices dropped for well-known reasons which could never happen again in the future. We are currently seeing a fast recovery of the global economy and indications of a higher demand for oil,” King Abdullah said.

Oil fell from record peaks of more than $147 in July to about $32 in December as demand dropped due to the economic crisis, but prices have since risen gradually. Saudi Arabia, estimated to hold about a quarter of global crude reserves, pumps around eight million barrels a day.

The king said Saudi Arabia had not liquidated any state investments during the global economic downturn and would not reduce public spending while seeking to keep inflation under control. “There has been no sale of the Kingdom’s sovereign investments and I want to point out that Saudi money and assets have not been affected by the global economic crisis, which is seeing a gradual recovery,” the king said.

“We are continuing to implement the pledged projects that have been included in our development plans. The volume of spending will not decrease and we don’t need debt, whether local or foreign.” King Abdullah said the government had raised its 2009 fiscal year budget spending by about $10 billion, and was pressing ahead with infrastructure plans.

He said the government would soon announce new infrastructure projects including water projects worth SR9 billion in Riyadh and industrial projects in Yanbu. “We raised spending as we promised and big infrastructure projects have been signed including a road network more than 8,000 km, and a rail network of around 4,000 km, which could be the longest in the world,” he said.

King Abdullah said the Saudi economy is in a relatively good position despite the global downturn. Saudi officials have said they plan to spend about $400 billion on major projects over the next five years, and were set on further diversifying the economy away from the oil sector, which generates over 80 percent of the government’s revenues.

King Abdullah said that Crown Prince Sultan, who is deputy premier and minister of defense and aviation, has recovered and would return home in the next six weeks. “Prince Sultan is now in good health and we pray to the Almighty that he returns to his country and people, enjoying full health.”

King Abdullah said disunity among Arab leaders and the lack of cooperation between Arab countries were the main reasons for the weakness of the Arab Ummah. He said he had urged Arab leaders to open a new chapter of unity and solidarity during the Arab economic summit in Kuwait earlier this year.

“There was an encouraging response to my call. Many Arab leaders have responded favorably ... We are now moving in the right direction and hope the situation would improve further. When I think about the Arab world I ask myself why are we in this situation? We have the potential for political, economic and social progress. What we need now is a clear perception and good intentions,” he explained.

Commenting on US President Barack Obama’s plan to address the Islamic world from Cairo, King Abdullah said: “We are awaiting the president’s speech. We are not warmongers or troublemakers. We are advocates of peace. We want to invest our time and energy for the development of our nations and the progress of our peoples. We want to spend our time in matters that are beneficial to people. Let’s hear out the president. His speech may carry a just approach to Arab and Muslim issues ... I want to repeat here that we want only justice to Arab and Islamic issues.”

EsinIslam.Com