WAHIB Binzagr’s youthful appearance belies his age. He has been witness to unprecedented changes in Saudi Arabia over the past seven decades and is convinced that a lot more is to come, not least membership of the World Trade Organization (WTO) and all that it implies. "A lot of rules and regulations will have to be changed," he says. It will not be easy. Membership of the organization will open the door to "international bulldozers" who will try to sweep aside as much of the Saudi business sector as they can. But Saudi Arabia is more than capable of facing up to the challenge. Change and challenge are not new to the Saudi businessman, he declares. "The commercial history of Saudi Arabia over the past 50 years is one of change," he said in an interview with Arab News. "Businesses have grown in changing circumstances; others have disappeared."
As to fears that after Sept. 11 foreign investors might shy away from the Kingdom, "it’s not going to happen," he said. Foreign investments and talents will still come, although the Kingdom has its own money, resources and know-how to build the future. "Multinationals are not going to come just to take a stroll in the garden; they will come because there is money to be made here." But Binzagr does not see that as such a great threat. The bigger threat is unemployment. The Kingdom must concentrate its energies on creating business and employment opportunities for more than 150,000 young Saudis who graduate from schools and universities each year. Otherwise, there could be a "socio-economic nightmare." Excerpts from the interview:
Q: How do you see post-Sept. 11 developments vis-a-vis the Kingdom?
A: What happened in the United States on Sept. 11 was a distressing event, a catastrophe. It cannot be defended nor accepted. The perpetrators, irrespective of nationality and religion, must be tracked down and brought to justice in the land where the crime was committed. Regrettably, it is being used to cover up a lot of inefficiencies, problems and issues. I don’t believe that it’s fair to connect it to the slowdown in the economies, whether international or local. Internationally, an economic slowdown was being talked about much before Sept. 11. But it was talked about as if people were feeling guilty — guilty because in previous years there were considerable misrepresentations about the performance of international economies, both traditional and new. Economies were inflated with stock prices running high. What happened to the US economy was no different from the Japanese one. In Japan, prices of land were inflated and the economy appeared to be capitalized too high. The US falsely referred to it as a prospering economy. Still, they were able to borrow and banks were happy to lend. The balloon was getting bigger and bigger. It was bound to burst. Sept. 11 is being used as an excuse for a recession that was already there. Certainly it had an impact. It has created a lot of anxiety and insecurity. People have become a lot more careful about spending. But those who are in charge of world economies are capable and intelligent. They are trying to deal with the health of the world economy.
Q: If global recession was being talked about even before Sept. 11, what has been its impact on the economy, especially the small and medium sector?
A: Sept. 11 and the global recession should not be confused. The writing was on the wall before Sept. 11. We’re part and parcel of the world. But we are also different. We can have our recession in a different way and at a different time. We needn’t have the recession they have — and vice versa. Here the wheel of investment and development slowed down some years ago because income, mainly from oil, has reduced to a level that does no more than match the daily running of the government machinery and services. The Kingdom said that the capital market would be revived and investment generated for downstream industries. But you can’t have a prosperous economy without government spending. It is the only way you can generate projects and employment. European history, much older than that of America, exemplifies how in time of hardship you need government spending. But here, today, there is no available cash. Investment has not been maintained. Inevitably, government services, activities and responsibilities have been pushed into the domain of private spending. Spending on downstream industries and basic economic services is like the much-needed oil for locomotives. A locomotive cannot move if it’s not sufficiently fueled. If it gets a reduced quantity of oil then there’s always a risk of damage. We’ll begin to feel the impact of worldwide recession with the reduction in our oil income. As it is, oil prices and quantities are dropping and what we sell is just enough to balance the budget. But that does not augur well for a prospering economy. Last year’s budget income was enough to run the country. But it did not leave enough to invest in development. Spending from other sources has to be found.
Q: Is there any room for investment and development?
A: Of course, you need investment for further development. There’s talk of privatization, allowing private money from both within the Kingdom and outside to build and maintain things like road and rail networks. The infrastructure requirements that we read in the media run into hundreds of billions of dollars. It’s like a plate of honey and it will attract a lot of flies.
Q: Why can’t the government maintain the system by itself?
A: As I said, government income has reduced to such a level that there is just enough for running the administration. There are enormous needs and requirements. It is officially agreed that private money will have to be attracted. Let me emphasize again that you cannot have a prosperous economy without enormous spending. If you don’t do that then there will be slowdown and deterioration. If you don’t provide a train with power, it will stop. And if it stops, it will be as hard to move again as a camel or an elephant.
Q: Do you think the Sept. 11 event has put a stop to the inflow of foreign investments?
A: I don’t see foreign money flowing in abundance for the current requirements of projects without Saudi (private sector) money coming in first. Western investors will want to see the color of Saudi money. But it will come, despite the adverse media image projected in the West. Westerners are going to come, but for a high price. They will try and take Saudi Arabia for a ride. But during the boom years we acquired the foreign talents and know-how. Now we can take care of things ourselves. We’ve the money, resources and know-how and our people can deliver the goods. And you can’t advance the country simply by Western technology and know-how. Local culture and ways have to play a part. Some changes that could come might harm the country.
Q: Do you think investment, know-how and talents are adequately available?
A: It’s a crime to keep your own money outside when you can put it to better use internally. But then money moves in a two-way traffic. If you think it’s good for outside money to come then why should money going outside be considered bad? It’s high time we formulate clear-cut ideas, but ones that don’t conflict with our values. I was told when I was in Saudi Cairo Bank in the early 1990s that a lot of money had gone abroad. A large proportion was invested in property, in bricks and mortar. This might have happened, but the economy prospered nonetheless. We should be more concerned about investments that will create both business and employment opportunities. We have opportunities for investment but which are not happening because practice has not caught up with the transformation in the country’s economic philosophy. The philosophy of managing and running the economy has totally changed. The economy is no longer run by the government. It is run by the government and the private sector as partners. The mechanics of running it should also be changed. Before, services were provided regardless of cost; now it has to be done in spite of cost. The game now is efficiency, service and accountability.
Q: Are you confident that the private sector is going to cash in on the opportunities?
A: You have to have the means to market and promote these opportunities. You have to make the banks really competitive. They must provide service at reduced charges. They will when foreign banks arrive. Foreign banks are already financing local companies from abroad. An effort has to be made to make things easy and bring down costs. Despite increasing demand, the supply of oil and gas is increasing at an even greater rate, thanks to new discoveries. The price of oil is therefore likely to drop further in the course of time. How will the Kingdom cope? To measure the Saudi economy you have to differentiate between its oil and non-oil incomes. If our non-oil activities give us a sizable income then things will be all right. When the oil money started to rise in the 1970s, the Kingdom did the right thing, spending to create a huge infrastructure and bring in know-how. A steep drop in the oil price could spell catastrophe. The most serious issue we face is unemployment in an era of declining national income. We have to create jobs. Unemployment among Saudis must be dealt with. There are over 150,000 students graduating from schools and universities every year. If we fail, it could be a socio-economic nightmare. An economic plan has to address the problem.
Q: Surely it is not possible to provide a job for everyone. Have not Europe and America abandoned such ideas?
A: They are affluent societies. They have social security systems to help their unemployed. We need a system to build wealth, to reward people for their toil.
Q: What do you think of the World Trade Organization and the Kingdom’s prospects of joining it?
A: The Kingdom is negotiating its entry and that’s why it’s taking time. We understand that consequent to that a lot of rules and regulations will have to be changed. Unfortunately, there are no moves to explain to the public the implications of joining the WTO. No one — not the 21 chambers of commerce, not the banks, not the government — has prepared any program to educate people as to what the post-WTO membership era will be like. People are in the dark. If this were done then everyone would be prepared and ready for WTO entry. I would add that if the WTO demands that trade should be open to non-Saudis, then why wait till we have to do it. Why not make the change now? We will become members. When is not known. It took China 15 years to be part of the WTO. But it will happen.
Q: Is the Kingdom trying to cherry-pick in its negotiations on the issue, trying to alter the rules to suit itself?
A: No. This is what I hear from Western circles and read in their newspapers. But I do believe the West was unrealistic in the negotiations. The WTO has been dominated by Western powers. The fiasco at the Seattle conference was not what happened in the streets, but inside, at the negotiations. That meeting betrayed the shortcomings of the Western leadership. It was only in the last ministerial conference held in Doha, Qatar, that the WTO changed its attitude toward the demands of development countries. The US made a 360-degree turn. When the US changed its stand, everyone else followed. There will be changes and challenges. With WTO membership there will be international bulldozers trying to move in. We will have to be strong. You could say that the WTO is a facade for financial domination. But then who is doing the dominating? There may well be Saudi businesses doing some of that dominating, here and elsewhere. We have to negotiate wisely. The WTO will have a dominant and powerful grip on the world. But we are not afraid of change. The commercial history of Saudi Arabia over the last 50 years is one of change. Businesses have grown in changing circumstances. Others have disappeared. Years ago there were only handful of moderately wealthy companies. The only question is whether WTO membership is going to be an open door to opportunities or a restrictive one for the local business community. I think it will bring opportunities. Competition brings growth. It is nothing to be feared.