LONDON, 2 October 2007 — Saudi Arabia is increasingly looking eastward and to non-traditional trading partners such as Canada, New Zealand and Australia, in an effort to diversify its economic relations.
“Turning Eastward,” said Dr. Abdulaziz Al-Sowayegh, Saudi ambassador to Canada, “is the natural strategic extension of the Kingdom’s economic policy that aims to diversify both the nature of our economic activity as well as our trade partners in the coming years. It also represents a mature awareness in the Kingdom’s diplomacy, at a time when this part of the world, including China, Japan, India, Malaysia, Pakistan and Singapore, have become giant economic powers that are imposing themselves on the economic world arena. For this reason, Saudi Arabia is very keen on building close relations in this era where strategic partnerships are based on closer economic interdependency that takes into consideration the changes that have taken place as far as the world order is concerned”.
China and Japan are the Kingdom’s largest export markets for oil and oil products. In 2005, bilateral trade between China and Saudi Arabia, according to official figures, soared to $16.02 billion, with Saudi exports accounting for $12 billion of this. The Kingdom exported 22.18 million tons of oil to China in 2005, rising to around 25 million barrels by end-2006. OPEC forecast world oil demand growth in 2007 at 1.3 million bpd with China and the Middle East the main growth regions.
Saudi-Canadian trade is currently at $1.2 billion.
However, turning eastward, Al-Sowayegh said, “does not necessarily mean abandoning our relationship with western countries. These relations are long-standing, and one cannot imply that strengthening relations with other countries in the East, the North or the South, infers that the Saudi relations with the West have cooled off. Our relationship with the United States in particular and the West in general is a strategic partnership that exists for the long run.”
Asia remains one of the most attractive destinations for Saudi Arabia as the Kingdom itself is very attractive for Asian countries. The strategic goals of Saudi Arabia are to maintain and strengthen balanced economic growth and to open up on the rest of the world. This is one of the goals behind the Kingdom’s accession to the World Trade Organization (WTO).
Although the events of 9/11 have had a major impact on the world as a whole, Saudi foreign and economic policy has essentially remained the same. In the oil sector, for instance, Al-Sowayegh said the Kingdom has increased its oil production capacity in order to stabilize oil markets, ensure the continued flow of sufficient oil and curb artificially inflated prices. “Increased cooperation between oil-consuming and oil-producing countries will contribute directly to the stabilization of oil markets, oil being an essential strategic commodity for sustained global economic growth,” he added.
Similarly, Saudi Arabia, the world’s largest oil exporter, plays a major role in promoting and supporting development in other less fortunate countries. Over the last three decades, the Kingdom has contributed around 4 percent of its gross domestic product (GDP) in official development aid (ODA), the highest percentage among other donor nations of the world. Saudi Arabia has also offered debt relief amounting to more than $6 billion to a number of less-developed countries.
Al-Sowayegh said “there is a great potential to expand the scope of our relations not only in the economic, trade and investment fields, but also in the fields of education and culture. We understand that Canada is looking to diversify its trade partners in various regions, the Kingdom is well prepared to become one of the main trade and investment partners in Canada not only in the region but far beyond.” Saudi Arabia is keen to discuss a free trade agreement with Canada to boost bilateral ties, he added.
In tourism, Canada is fast becoming a destination of choice for Saudi tourists, bringing not only revenues for the Canadian economy, but contributing also in strengthening the cultural ties between the two countries. According to the Saudi Arabian Monetary Agency (SAMA), Saudis spend a staggering $25 billion abroad each year.
There is huge scope for cooperation in the field of education. He foresees that the numbers of Saudi students coming to Canada will more than double during the few coming years. There are currently only 3,000 Saudi students studying at Canadian universities compared to 15,000 in the US.
The Saudi Council of Ministers has recently expanded the King Abdullah Scholarship program to include for the first time countries such as Canada and seven European countries. The number of scholarships has been increased to 20,000. The 2007 Saudi budget allocated SR100 billion to education.