Saudi Arabia sees fair oil price at $75-$80

KUWAIT CITY, May 26: Saudi Arabia’s economy remains stable despite the global financial crisis and it has no intention to cut expenditures on lined up projects or borrow from local or international financial institutions, Custodian of the Two Holy Mosques King Abdullah bin Abdul Aziz Al-Saud said Tuesday. King Abdullah also denied allegations that the Kingdom sold some of its sovereign investments to enhance liquidity. He believes $75 to $80 per barrel is a reasonable price for oil, considering the world economy has started to perk up, hence, the increasing demand for oil in the global market. Without mentioning the indicators of global economic recovery, he argued “we are now seeing quick recovery in the world economy, as well as indications of increasing demand for oil, so it is just fair to set the price of oil at $75 or $80 a barrel.”

Commenting on the surprising decision of the United Arab Emirates (UAE) to withdraw from the single currency plan of the Gulf Cooperation Council (GCC) in protest of a decision issued May 5 to establish the joint central bank in Riyadh, King Abdullah underlined the need to reassess the GCC monetary union agreement. He clarified relations between the Kingdom and Emirates will not be affected by the latter’s decision to back out of the agreement. “Reviewing the agreement before its implementation is vital to resolve what had been disputed upon,” he added. On the health of Crown Prince Sultan bin Abdul Aziz, King Abdullah announced the Crown Prince will return to Saudi Arabia six weeks after his successful surgery in New York, USA. “The Crown Prince is in good health and he has recovered,” the King confirmed, without going into details on the Crown Prince’s illness.

Following is a full text of the interview:
Q: What are the latest developments on the health condition of Crown Prince Sultan bin Abdul Aziz?
A: The Crown Prince had a successful surgery and is in good health now. I want to reassure his worried supporters that he is quickly recovering from his illness and we expect his return to the Kingdom within the next six weeks. We and the people of Saudi Arabia closely followed up the course of treatment and we are happy as the operation was successful.

Q: After your impressive speech during the Economic and Social Development Summit in Kuwait in which you assessed your own performance before the others, how far do you think the Arab world has responded to your advice to the leaders of the Arab nations?
A: As a leader keen on advocating the causes of Arabs and Muslims, my heart was full of bitterness and pain after analyzing the recent developments around us. Afraid that the situation will turn from worse to worst, I took the initiative to evaluate my own performance and called for genuine reconciliation among Arabs. The region is rich and has a strong political power, but it lacks unity and cooperation.

So far, everyone who attended the summit responded positively as it was a sincere call for the benefit of everybody. The response was encouraging and comforting. We cannot deny the fact that the Egyptian leadership criticized the attitude of some leaders, but President Hosni Mubarak, as always, responded to the call of reconciliation with full awareness and understanding. At any rate, we are now moving on a better path and we hope to see the best soon.
Whenever I look at the current situation in the Arab nations, I cannot help but wonder why we ended up in this condition. We have the potential for political, economic and social development. We need nothing but purity and sincerity of intentions.

Q: Where do you think the world economy is heading?
A: While listening to the opinions of world leaders during the last G20 summit, I felt like we are just a drop of water in a vast sea, financially and economically. At the time, we were convinced that the leaders of these countries with huge economies, which have a great impact on the whole world, will not allow the destruction of their nations due to panic or temporary crisis that they can easily overcome. We are now witnessing the ‘healing’ of the economies of these countries and the beginning of recovery was evident during the summit. This recovery is faster than what we expected. Panic among economists that affected most countries in the world during the crisis will subside soon.

Q: What about the economy of Saudi Arabia?
A: We are fine. In spite of the fear that engulfed the whole world due to the crisis, I can say our economy is stable. The Kingdom, like many other countries in the world, also dreaded the effect of the global financial meltdown on the local economy, but that feeling vanished into thin air when people realized their country’s economy is strong enough to overcome the repercussions of any emergent global financial crisis. The volume of expenditures in the new budget of the Kingdom increased to 40 billion Saudi riyals, which is equivalent to $10 billion, to finance the implementation of huge infrastructure projects.

Q: It had earlier been reported that you sold some of your investments. Do you need cash?
A: We have not sold any of our sovereign investments as the Kingdom’s funds and assets are not affected by the global economic crisis. We might have seen a reduction in the prices of a few investments, but we will not incur any real losses as the decline was in the book value. If there had been any sale, it was aimed at correcting the selling points of the investment for better performance and value. We can benefit from such sales and everything has been done according to studies and analysis of the country’s financial system.

Q: So, you don’t have any cash shortage and you intend to press ahead with the implementation of development projects?
A: Yes, we will implement all the lined up development projects and have no intention to cut public expenditures. Also, we don’t have to borrow from internal or external financial entities.

Q: What about the unstable oil prices?
A: We still believe that the fair price for oil is $75, and probably $80 a barrel, especially at the moment. Oil is a strategic resource and we have seen signs that the demand for oil in the world market will increase in the coming years, might be more than the previous years. Oil is still the most important source of energy.

Q: What were the concerns of the GCC states at the onset of the global economic crisis?
A: We discussed this issue several times during the meetings of Gulf leaders. We agreed on the need for more cohesion and economic unity. We also talked about various points of view to protect economies in the region and move internationally to contribute to finding solutions, especially since our oil reserves constitute nearly 30 percent of the global oil reserve.

Q: A few days ago, the United Arab Emirates (UAE) announced its decision to withdraw from the GCC monetary union. What is the impact of this decision on the other members?

A: People in the UAE are the children of our brother, Sheikh Zayed, who was one of the pillars of the establishment of the Gulf Cooperation Council (GCC). The member states will surely review the monetary union before approval. GCC leaders recognize the importance of cooperation as it is the source of their strength and power. We are confident that the UAE will not hinder any step to consolidate the aspirations of the GCC nations. The monetary union agreement is open for review. The UAE leadership and its people are fully aware of the affairs of their nation and undoubtedly keen on strengthening GCC resolutions.

Q: Will the withdrawal of the UAE from the Gulf monetary union affect its relations with Saudi Arabia?

A: GCC leaders might disagree on some issues but such differences in opinion often subside either through meetings or summits. The Kingdom and UAE will remain brothers and any differences will disappear soon.

Q: US President Barack Obama is due to deliver a speech to Muslims around the world within the next few days in Cairo, Egypt. Can you comment on this?

A: We are eagerly waiting for what President Obama has to say. We are not advocates of war or trouble-makers as we all want peace. Let us see what the American president will say in this regard. His speech might probably be impartial to the Arab and Muslim issues. We had an interfaith conference in the United States earlier in which we discussed the need to maintain peace around the world, a call that led to great interaction among various capitals of the world and decision-makers. We continue to seek more application on the ground. America is a big and important influence not only in the Arab world, but also in the whole world. We only want justice for the Arabs and Islam, which called for tolerance. Our religion is just and moderate. It is a religion of tolerance, love and fraternity, which encourages people to strengthen their relations.

By Ahmed Al-Jarallah
Editor-in-Chief, the Arab Times

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