JEDDAH: Trade ties between Saudi Arabia and France are improving with balance of trade favoring the Kingdom, says Banque Saudi Fransi (BSF) in a report published to coincide with French President Nicolas Sarkozy’s visit to the Kingdom on Tuesday.
BSF, the Saudi affiliate of France’s Credit Agricole, says Saudi imports from France more than quadrupled while exports almost tripled between 1990-2008.
French foreign direct investment (FDI) into the Kingdom surged five-fold between 2000-08 on greater investments in energy and infrastructure, says the report. It added that the two countries have room for more collaboration in civilian nuclear energy.
Saudi Arabia has long benefited from its trade relationship with France, the balance of trade usually swinging in favor of the Kingdom, which provided more crude oil to France last year than any other OPEC member.
French investment in Saudi Arabia between 2000 and 2008 surged five-fold. In comparison total French global FDI in the same period merely tripled.
The Saudi-French commercial and diplomatic relationship has involved reciprocal benefits. For France — the world’s fourth biggest arms exporter after the United States, Britain and Russia — Saudi Arabia is a crucial market for an arms industry striving to secure new business. The Kingdom, embarking on a renewed military procurement program, was France’s third-biggest customer of arms in 2008.
BSF believes that France is also well placed to collaborate with Saudi Arabia in its quest to develop civilian nuclear energy to meet growing domestic energy needs. A number of privately held French companies have also secured billion-dollar deals which will enable the Kingdom to boost its energy output and improve infrastructure.
“We view French President Nicolas Sarkozy’s visit to Saudi Arabia as an attempt to build upon these commercial and diplomatic interests,” says the report.
In 2008, France was Saudi Arabia’s eighth largest source of imports, valued at SR15.24 billion, according to the Saudi Arabian Monetary Agency (SAMA). France’s share of total Saudi imports was 3.5 percent in 2008, having fallen from 4.1 percent in 2000. But during that period, which was marked by an economic boom, the Kingdom’s imports more than quadrupled. Last year, France accounted for 15 percent of Saudi exports to the European Union.
France’s imports from the Kingdom, comprised mainly of crude oil and amounted to SR18.6 billion in 2008. The bilateral trade relationship has usually favored Saudi Arabia because of its oil sales, with the balance of trade swinging in favor of France only twice (in 1987 and 1998). From the French point of view, the delivery of military equipment has helped keep France’s trade deficit with Saudi Arabia under control.
France’s overtures in the Gulf under Sarkozy have become deeply commercial in nature, sometimes filling a vacuum created by the United States and Britain, which have suffered from a politically tainted popular image in the region, the BSF report observes.
“On the energy front, we see more room for collaboration between the two countries, especially on civilian nuclear energy. The Gulf and wider Middle East are becoming more aware of the importance of using nuclear technology to meet growing energy needs. The Gulf has the potential to provide an estimated $40 billion in contracts for civilian nuclear plants, while Egypt and Jordan also have plans to build nuclear power facilities,” the report adds.