Saudi Arabia was low profile at Dubai summit but was on many minds

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Saudi Arabia was low profile at Dubai summit but was on many minds

There was less of a presence from Saudi Arabia at the World Government Summit (GWS) in Dubai earlier this week than you would have expected.
Perhaps, having staged their own “Davos in the desert” in Riyadh last October, and then having sent a large delegation to the real Davos in Switzerland in January, Saudi policymakers felt they had done their bit on the international circuit. In any case, there are plenty of events in the Kingdom over the next few months that will attract the “masters of the universe.”
In some ways the Dubai summit represented a missed opportunity since it addressed many of the themes that are emerging in Saudi Arabia as it undergoes a transformation as part of its Vision 2030 strategy.
The summit was youth oriented, technology heavy and governance led — three major concerns for Saudi policymakers as they maneuver the Kingdom toward the goal of reducing oil dependency and increasing the involvement of the private sector in the economy. A direct Saudi perspective on these issues in Dubai would have been invaluable. 
Despite its low profile, the Kingdom was ubiquitous at the summit. Many of the investment bankers, consultants and communications advisers who normally fill the Dubai-to-Riyadh flight were there, keeping an eye on developments in the Kingdom while they were listening to Robert De Niro or Will.i.am.
One banker said that while the Dubai event was stimulating, he really could do with being back in the Kingdom because the “beauty parade” to select advisers for the initial public offering of Saudi Aramco was entering its final stages. Expect announcements, or at least reports marked “exclusive” from Reuters, any day now.
The Aramco situation also surfaced significantly at one of the sessions, when Adena Friedman, the president and CEO of the Nasdaq stock market in New York, was asked whether her exchange would be interested in being the other half of a dual listing along with Riyadh’s Tadawul.
Her response avoided mentioning the Saudi company by name, but she left no doubt that while the spotlight has been on the contest between the New York Stock Exchange (NYSE) and a few others for the listing, there is another exchange in Manhattan that could stage the IPO if asked.
Nasdaq, the world’s biggest market with the exception of the NYSE, has been taking billions of dollars’ worth of listings away from its older neighbor recently, and is regarded by some — evidently Friedman included — as the “exchange of the future.”
The relative newcomer also has a much older relationship with the Tadawul than the NYSE enjoys, having courted the Riyadh exchange for the past couple of decades. Even if it misses out on Aramco, Nasdaq will expect to play a major role in the rest of the multibillion-dollar privatization program looming in the Kingdom.

A global forum has highlighted the importance of ‘innovation-driven government’ to future economic growth — and the Kingdom is perfectly placed to take advantage of this approach.

Frank Kane

How that program pans out, indeed when it kicks off, is also on the minds of other advisers who were present in Dubai in a more formal role.
Those smart people at PwC, the accounting and consulting firm that has been advising the Saudi government on the transformation strategy since its inception, teamed up with the Dubai summit to produce a paper on what it calls “innovation-driven government,” which seems to have direct relevance for Saudi policymakers.
The theory is that innovation — in industry, technology and society — has for too long been regarded as the reserve of the private sector. Non-government companies such as Facebook, Google and Apple were seen as the cutting edge of innovation techniques, and were left to get on with that by privatization-minded governments.
But that is being challenged by some economists recently, who point to the Chinese example as proof that the state has the capacity, even the duty, to “inspire and orchestrate” innovation and resulting economic growth. Saudi Arabia, in the midst of its own “top down” revolution, would seem to be a perfect laboratory for such an approach.
The other Saudi adviser at the summit was AT Kearney, the consulting firm that claims it avoids the “snake oil” approach of other strategists. Whether this is true or not, the firm produced a paper entitled “The Great Energy Shift,” analyzing changing patterns in global energy markets and their consequences for economies in the Gulf and elsewhere.
As Saudi Arabia can testify, oil-based economies everywhere are under pressure to come up with new models for sustainable development. What is fundamentally in dispute is this: How long do they have until oil or gas revenue begins to run out? Some say only the next decade, while others go as far as 2045.
The firm avoids coming down on any side in that complex debate, but does offer a “roadmap for the Middle East,” which sets out a course of action for traditional oil companies, suggesting they should embrace renewables, leverage gas reserves and expand down the value chain of oil-related products.
It sounds like good advice; but Aramco, at least, is already well down that particular route. AT Kearney is in danger of preaching to the converted.
  • Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai
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