JEDDAH, 17 May 2006 — Saudi economists and analysts applauded the decision taken by Custodian of the Two Holy Mosques King Abdullah to launch a risk-free fund for individuals and families having low incomes, saying it would improve the condition of ordinary people, promote small businesses and boost the economy.

King Abdullah announced the plan while talking to top journalists from Saudi Arabia and other Gulf countries at his palace in Riyadh on Monday. The fund will allow Saudi nationals to invest up to SR500,000 over two years, with the state shouldering any losses. The fund is aimed at individual investors, estimated to number at more than three million. “Those who wish to invest more than SR500,000 will not be allowed,” the Saudi Press Agency quoted the king as saying. “The fund will be for people with limited income, employees and others... this group matters most to me. Businessmen or the so-called sharks may win or lose,” he added.

King Abdullah said small investors would “be able to invest for two years. If they win, then it’s their luck with God’s will and if they lose then their capital is preserved with us.”

The king did not say when the fund would be established but added: “There is no doubt that I am determined to establish this fund.” Saudi authorities are expected to announce the rules and regulations of the fund and its mechanism within a few days.

Economist Walid Arab Hashim, who is also a member of the Shoura Council, said the fund would help a large number of people having low incomes to make investments without fearing any losses. “This is a good opportunity for low income families. They can invest their money through the fund and the state will manage and protect their money,” he added.

Ehsan Bu-Hulaiga, who is also an economist and chairman of the financial affairs committee at the Shoura Council, described the fund as “a major and unique initiative by the king” adding that it would reflect positively on the economy.

Analyst Dawoud Al-Shiryan said the fund fitted in with King Abdullah’s policy of raising living standards of Saudis. “Poverty and unemployment promote terrorism and instability and the king knows the result of this decision, which has an important political significance,” he said.

Ahmed Nasser, a Saudi youth whose only means of income is through capital gains from stocks, said he hoped the fund would protect small investors like him from people who manipulate the bourse.

Fahd Al-Harbi, another dealer in stocks, said he had lost SR100,000 from his capital investment of SR180,000. He said he was not sure whether he would get his money back. “I was planning to leave the market. But the new fund gives me hope to return my lost money in the bourse,” he added.

During his talks with journalists, King Abdullah said he did not expect the standoff between Iran and the United States over Tehran’s nuclear program to lead to a military showdown.

“I don’t think so,” he told journalists when asked if he expected the current escalation between Iran and the United States to lead to an armed conflict in the Gulf region.

“Iran knows its right and national and global duty, and so does America... There are officials and thinkers in Iran who know the interest of their country and the interest of others as well,” said the king. The Kingdom has advocated a negotiated settlement of the crisis over Iran’s nuclear program.

Abdullah described the situation in violence-plagued Iraq as “frightening,” saying the ongoing killings there “saddens every person.” The king said there were “hidden hands” trying to stir up infighting in Iraq.

Abdullah said he hoped “the cloud hanging over Iraq will be dispelled and that its people will join hands for the sake of Iraq’s interest.” He also commended the role being played by the media in combating terrorism. He hoped that Yemen would soon join the Gulf Cooperation Council. “Yemen is part of the Gulf,” he added.