Saudi crown prince wins over US media with promises of reform

Arab News
March 22, 2018

Washington, Mar 22: Photos of Crown Prince Mohammed bin Salman and Donald Trump meeting at the White House were published on the front pages of The New York Times and The Wall Street Journal on Wednesday, in what commentators saw as a public relations coup for Saudi Arabia.

The New York Times headlined its story: “Saudi Prince’s White House Visit Reinforces Trump’s Commitment to Heir Apparent.”

The crown prince has dominated a significant amount of the capital’s attention this week and the glowing headlines would have been warmly welcomed by the Kingdom’s officials.

“The early judgment appears to be that US opinion hopes that MBS’s social and economic reforms will succeed, for the benefit of the Kingdom and the wider Middle East,” said Simon Henderson, director of the Gulf and energy policy program at the Washington Institute for Near East Policy.

Trump was effusive in his welcome of the Saudi royal, in remarks that received wide press coverage in the US.

The US president hailed the US-Saudi relationship as “probably the strongest it has ever been.”

“We understand each other,” Trump told reporters. “Saudi Arabia is a very wealthy nation, and they’re going to give the United States some of that wealth, hopefully, in the form of jobs, in the form of the purchase of the finest military equipment anywhere in the world.”

The US public has been suspicious of Saudi Arabia, largely since the attacks of 9/11. In reality, the two countries have long been allies, and working in close cooperation on issues of security and economics.

The Kingdom has been trying to remake its public image in the United States to reflect that fact.

Dov Zakheim, board director at the Atlantic Council, a leading US think tank, said Saudi Arabia would be delighted with the coverage.

“All of this is a clear public relations victory for Saudi and for MBS,” he said.

Zakheim cited an interview with the crown prince on the CBS flagship “60 Minutes” show on Sunday. The show, known for its critical and hard-hitting investigations, gave a highly favorable portrayal.

“There is a change there. It’s not a major change, but it’s enough of a change for American policymakers to feel comfortable doing what America has been doing for years, which is cooperating (with Saudi Arabia),” Zakheim said.

Trump and the crown prince held talks in Washington on Tuesday. Appearing together before the press, Trump talked at length about arms sales and business deals between Saudi and the US, which he said would create jobs for American workers.

The crown prince seemed relaxed and happy as he and the US president fielded questions from the media in a televised appearance.

“The optics are all good,” said Jim Smith, a former US ambassador to Saudi Arabia under President Barack Obama.

But he expressed concern that Trump’s preoccupation with weapons deals was not the best way for the US to support Saudi reform efforts.

“All the White House wanted to talk about was defense sales and the political message of jobs in the US,” he said.

On Tuesday evening, the crown prince had dinner with Jared Kushner, the president’s son-in-law and senior adviser, together with Michael Bell, a senior National Security Council official, and Jason Greenblatt, Trump’s Middle East peace envoy.

They talked about Trump’s hopes to start a new Middle East peace process. Experts agree there is little appetite among the Israelis and Palestinians for talks on terms set by the Trump administration.

Public relations successes aside, confusion remained about the exact outcome of the US-Saudi talks within the US foreign policy establishment and among Middle East watchers in the US capital.

“How does one measure success in Washington? The meeting with President Trump appeared to go well, but the president is fickle,” Henderson, of the Washington Institute for Near East Policy, said in an emailed response to questions from the Arab News.

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News Network
May 11,2020

May 11: Saudi Arabia will triple its value-added tax rate and suspend a cost of living allowance for state workers, it said on Monday, seeking to shield finances hit by low oil prices and a slump in demand for its lifeline export worsened by the new coronavirus.

Historic oil output cuts agreed by Riyadh and other major producers have given only limited support to prices after they sank on oversupply caused by a war for petroleum market share between the kingdom and its fellow oil titan Russia.

Saudi Arabia, the world's largest oil exporter, is also being hit hard by measures to fight the new coronavirus, which are likely to curb the pace and scale of economic reforms launched by Crown Prince Mohammed bin Salman.

"The cost of living allowance will be suspended as of June 1, and the value added tax will be increased to 15% from 5% as of July 1," Finance Minister Mohammed al-Jadaan said in a statement reported by the state news agency. "These measures are painful but necessary to maintain financial and economic stability over the medium to long term...and to overcome the unprecedented coronavirus crisis with the least damage possible."

The austerity measures come after the kingdom posted a $9 billion budget deficit in the first quarter.

The minister said non-oil revenues were affected by the suspension and decline in economic activity, while spending had risen due to unplanned strains on the healthcare sector and the initiatives taken to support the economy.

"All these challenges have cut state revenues, pressured public finances to a level that is hard to deal with going forward without affecting the overall economy in the medium to long term, which requires more spending cuts and measures to support non-oil revenues stability," he added.

The government has cancelled and put on hold some operating and capital expenditures for some government agencies, and cut allocations for some reform initiatives and projects worth a total 100 billion riyals ($26.6 billion), the statement said.

Central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while oil revenues in the first three months of the year fell 24% from a year earlier to $34 billion, pulling total revenues down 22%.

"The reforms are positive from a fiscal side as greater adjustment is essential. However, the tripling of VAT is unlikely to help that much in 2020 revenue wise with the expected fall in consumption," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

She said she kept unchanged her deficit forecast of 16.3% of GDP for this year, which already factors in a greater than previously announced spending cut.

About 1.5 million Saudis are employed in the government sector, according to official figures released in December.

In 2018, Saudi Arabia's King Salman ordered a monthly payment of 1,000 riyals ($267) to every state employee to compensate them for the rising living costs after the government hiked domestic gas prices and introduced value-added tax.

DIFFICULT TIMES

A committee has been formed to study all financial benefits paid to public sector employees and contractors, and will submit recommendations within 30 days, the statement said.

In late 2015, when oil prices fell from record highs, the kingdom slashed lavish bonuses, overtime payments and other benefits once considered routine perks in the public sector.

In a country without elections and with political legitimacy resting partly on distribution of oil revenue, the ability of citizens to adapt to such reforms is crucial for stability.

"Tripling the VAT will test the limits of the balance between revenues and consumption as the economy dives into a deep recession. The move will impact consumption and could also lower the expected revenues," said John Sfakianakis, a Gulf expert at the University of Cambridge.

"These are pro-austerity and pro-revenue moves rather than pro-growth ones," he said.

Hasnain Malik, head of equity strategy at Tellimer, said the VAT rise could bring about $24-$26.5 billion in additional non-oil fiscal revenue. The rise would hit consumer spending further but was a needed step towards fiscal sustainability, he said.

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News Network
January 10,2020

Dubai, Jan 10: Iran denied on Thursday that a Ukrainian airliner that crashed near Tehran had been hit by a missile, Iranian government spokesman Ali Rabiei said in a statement, according to state TV.

"All these reports are a psychological warfare against Iran. All those countries whose citizens were aboard the plane can send representatives and we urge Boeing to send its representative to join the process of investigating the black box".

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Agencies
July 30,2020

Kuwait will allow citizens and residents to travel to and from the country, starting August 1, the government communication center tweeted on early Thursday, citing a cabinet decision.

The decision excludes residents coming from Bangladesh, Philippines, India, Sri Lanka, Pakistan, Iran, Nepal.

Last month, Kuwait announced it would partially resume commercial flights from August, but does not expect to reach full capacity until a year later, as its aviation sector gradually recovers from a suspension sparked by the Covid-19 crisis.

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