Tales from a port city
In a country that is not known for its openness, the port city of Jeddah provided a safe harbor for some frank discussion about the Kingdom’s future.
Regular visitors of Saudi Arabia know that Jeddah has for 1400 years served as a crossroads on the Silk Route. It has always been a merchant city where new ideas are brought into the agora and passed on.
This was in abundance at this week’s Jeddah Economic Forum, a meeting place for the past nine years and still able to bring in some heavyweight names. Capturing the most attention were the former Federal Reserve Chairman Alan Greenspan, Nobel Laureate Muhammad Yunus, and Saudi Labor Minister/ renowned author Ghazi Al-Gosaibi.
All three carried the show – the first sharing his insights on the pending recession in the United States. Greenspan said the U.S. economy was in “stall speed and the longer that goes on the greater the possibility of slipping into recession.” And the veteran of usually cautious phrases (trying to avoid the global limelight by restricting television cameras in an agreement with the organizers) said that de-pegging the Gulf currencies from the dollar would reduce pressure on inflation.
The idea was quickly rejected in the next speech by the Vice-Governor of the Saudi Arabian central bank Muhammed Al-Jasser. While he praised Greenspan for his wisdom and was a student of his works, he was bold enough to suggest that history has not proven his mentor in this case to be correct. It is a huge issue in the Gulf, with record oil prices also delivering record inflation.
It was the sort of candid give and take I was not expecting in Saudi Arabia. Time again, whether through questions from the floor on the panels I was chairing or through answers from electronic polling, participants were direct, probing and seeking solutions to the shortcomings they see in society.
Mind the Gap
What does this tell us about Saudi society today? With oil above $100 a barrel and revenues to Saudi Arabia alone predicted to top $200 billion dollars in 2008, the people want action and results. This is the biggest challenge. There is a huge gap right now between expectations and reality. Yes, Saudi Arabia plans to build seven new economic cities from scratch, with a budget of at least $100 billion. Twenty-eight billion dollars will be spent this year alone on primary and secondary schools. The aim is to develop human capital.
Skilled workers will be in demand in these new cities but they will need advanced degrees or, at the very minimum, quality technical training. The government was candid about the current problems. Both Saudi Royal Prince Turki Al-Faisal and Labor Minister Al-Gosaibi acknowledged that the reform process should have started 10 to 15 years ago. A big investment opportunity 30 years ago in Saudi Arabia was, many say, ill-conceived and now the new leader King Abdullah is acting like a man in a hurry. He should be.
Official unemployment of 12 percent downplays youth unemployment of more than double that. Fifty percent of the population is below the age of 20 and there are more on the way. They need jobs to avoid civil agitation.
The blueprint put forth by this government is ambitious -- probably the largest undertaken by a government since the rebuilding of Germany and Japan after World War II. But buildings alone, or the hardware, will be of little use if the people, the proper software, are not in place.
Perhaps this is why the participants at this year’s forum were yearning for simple solutions to their challenges, and why they afforded Nobel Laureate Yunus near rock-star status. He shared the work of Grameen Bank, lending without collateral for the poorest of the poor. It struck a chord with this audience who, despite record oil prices, feel they should have a wider swath of society enjoying the wealth. Yunus was swamped after his speech, surrounded by a pack of participants wanting to thank him for his inspiration to tackle poverty.
As I said, expectations are high in the Kingdom and the work has just begun.
What do you think? Email us at firstname.lastname@example.org, or click on "add a comment" below.
ABOUT THIS BLOGJohn Defterios’ blog accompanies the weekly business program, Marketplace Middle East (MME) that is dedicated to the latest financial news from the Middle East. As MME anchor, John Defterios talks to the people in the know, finding out their opinions on the big business moves in the region, he provides his views via this weekly blog. We hope you will join the discussion around the issues raised.
SHOWTIMESFriday: 08:15, 19:45
ALL TIMES GMT