Within the Kingdom, it has been a very satisfactory 12 months — politically, economically and socially.
The year started with stability and security, always key issues for the country, brought to the fore following the incursion by Yemeni rebels in the south in late 2009. This was crushed and the infiltrators driven out of the Kingdom. There was considerable pride in the outcome but little jubilation. Victory was not achieved without sacrifice. By the time the fighting ended early in the year, some 113 Saudi soldiers had been killed and many hundreds of innocent civilians had been driven out of their homes.
Thereafter, the domestic picture was resilient. In a world still reeling from the 2008-2009 financial crisis and markets still unstable, Saudi Arabia was seen as a haven of financial stability and growth. Growth was seen in a flourishing construction sector, a massive number of new projects announced, particularly in the energy and petrochemicals sectors. With oil revenues accounting for around 85 percent of government revenue and the price of oil averaging around $70 a barrel for the year, such confidence in the Saudi economy was hardly surprising.
As ever, Saudi Aramco led the way. In February, it announced plans to invest SR450 billion ($120 billion) over the next 5-6 years, half in the oil sector, the other half in petrochemical projects and foreign investments. The same month, it opened its expanded facilities at its Juaymah and Hawiyah gas plants and also announced it had discovered natural gas in the north of the Kingdom. During the year, it said it had completed a long-term SR375 billion ($100 billion) investment program to expand the hydrocarbon industry, it announced plans for six power generation facilities worth SR3.75 billion ($1 billion), invited bids for the biggest gas plant in the country as well as for a power plant at the Kingdom's Shaybah oil field, organized $9.5-billion worth of funding for the refinery it is building in Jubail with France's Total and handed out a raft of development contracts worth hundred of millions of dollars.
The same mega planning for growth was seen in other areas of the economy. The National Water Company revealed plans to invest SR200 billion ($53 billion) in water projects over the coming 15 years. Saudi Electricity, which awarded a number of major contacts (including one for a SR7.9-billion gas-fired power plant), announced plans to spend $80 billion by 2018. The Saudi Electricity and Co-Generation Regulatory Authority meanwhile said SR526 billion ($140.3 billion) would have to be spent on electricity projects by 2020 to meet rocketing demand. There were other massive power contracts in the news: Saudi utility company Marafiq invited firms to bid to build a $1.5-billion power plant in Yanbu; the Saline Water Conversion Corp. awarded a $2.42-billion contract for the electricity generation part of the Ras Al-Zour power and water project, Saudi Electricity announced work had begun on its multibillion power plant at Rabigh; and GE was awarded a contract worth $700 million for power equipment for a new gas-fired plant in Riyadh.
Among other new power projects announced was the King Abdullah Nuclear Energy City in Riyadh. The royal decree issued by Custodian of the Two Holy Mosques King Abdullah said development of atomic energy was essential to meet the Kingdom's growing requirements for electricity and the production of desalinated water and reducing reliance on hydrocarbon resources.
Other new multibillion infrastructural developments were announced, awarded or opened. In October, it was announced that Kingdom Holdings would go ahead and build its Kingdom Tower in Jeddah. At a mile high, the tallest building in the world will, once built, be the most high-profile of all the Kingdom's new projects. The following month, Crown Prince Sultan, deputy premier and minister of defense and aviation, signed two contracts worth SR27.1 billion to refurbish King Abdulaziz International Airport in Jeddah with a new terminal and infrastructure. The project, to be completed over 36 months, will expand the airport's capacity to 30 million passengers per year from the current figure of 17 million.
This year, however, probably the biggest project was the Mashair Railway, the first phase of which (linking the holy sites of Mina, Arafat and Muzdalifah) was opened for domestic and GCC pilgrims during Haj this year (Nov. 14-18). Most pilgrims agreed it was an invaluable addition to the facilities in the holy sites. Work also progressed on the Haramain Railway linking Jeddah with Makkah and Madinah. The high-speed trains will cover the distance between Makkah and Jeddah in half an hour and between Jeddah and Madinah in two hours. Studies were also conducted on an inner-city monorail system for Makkah to take worshippers to the Grand Mosque and reduce traffic congestion in the city.
With so many projects being planned or undertaken, the Kingdom's status as an investment El Dorado continued to grow during the year. The country remained the largest recipient of FDI in the region. Global Fund manager ING Investment Management said that, along with Egypt, it had the highest growth potential in Middle East and North Africa and was spearheading regional development. PricewaterhouseCoopers, the international professional services organization, said the Kingdom had the leading IPO activity in the region.
In November, International Finance Corporation, part of the World Bank, identified the Kingdom as the most favorable place to do business in the Arab world.
In such a bustling environment, there was a ceaseless flow of foreign trade missions arriving in the Kingdom in 2010 looking for contracts and investment opportunities.
Significantly, many UAE investors also turned their attention to Saudi Arabia during the year. In April, Dubai-based investment bank Rasmala Investments said it planned to invest a third of its $350-million equity fund in Saudi Arabia within the next four years. In June, UAE private equity firm Gulf Capital said it would invest the bulk of its $373-million capital in the Kingdom.
Proof of Saudi economic growth came just days ago with the publication of the 2011 budget — at SR580 billion, the largest in the country's history. Figures accompanying it showed that in 2010, the economy grew 3.8 percent. Government revenue for the year had been projected at SR470 billion. The actual figure turned out to be SR735 billion. With spending projected at SR540 billion, an expected deficit of SR70 billion in fact turned into a surplus of SR108 billion—and that was after an addition SR87 billion was spent, almost entirely on capital projects. The remaining surplus went into retiring public debt.
The year 2010 has seen other notable advances on the economic front, not least the announcement on Dec. 26 that a $500-million company has been set up to make low-cost cars in the Kingdom. It is not the first time that a car production project has been announced for Saudi Arabia, but this joint venture with a South Korean manufacturer appears extremely solid and is a sign of the Kingdom's future status as a major industrial nation.
The peace and stability that has allowed all this to happen during 2010 was not merely the result of good fortune. There was continued constant attention to security. Twice in 2010, there were announcements that a number of suspected militants, over 250 in all, had been arrested during the course of the year.
The year saw King Abdullah being listed by Forbes magazine the third most powerful man in the world in November. This was widely interpreted as a reflection of this king's efforts to bringing peace to the Muslim world and beyond.
As home to the Two Holy Mosques, Saudi Arabia's sense of responsibility to the wider Muslim community was evident during the year in several ways. It was the largest donor to Pakistan following the torrential floods that devastated the country in July. The king launched a nationwide appeal in August that raised more than SR400 million for the victims. He also ordered 1,000 truckloads of relief supplies to be sent to Pakistan. Saudi Arabia also set up two field hospitals near the flood-hit areas and dispatched a team of Civil Defense officers to take part in search-and-rescue operations.
Concern for the victims of natural disasters was not limited to Muslims. Following the earthquake in Haiti in January, which killed an estimated 250,000 people, Saudi Arabia donated $50 million.
But it has been issues nearer home that have been the focus of much of Saudi Arabia’s attention. It has been an increasingly worrying year.
Top of the concerns has been the Palestinian-Israeli conflict. The year ends with a settlement more elusive and the situation on the ground more dangerous than ever.
On May 10, Washington announced the start of indirect talks between the Palestinians and Israelis. They came to nothing at first because of Israeli plans to build news settlements in East Jerusalem. Then came the Israeli naval attack on May 31 on the aid flotilla that set out from Turkey to Gaza and which killed nine activists. It set a new low in Israeli military conduct. It scandalized international public opinion and as such was an own goal for the Israelis. It also set Israeli-Turkish relations on a new low. But none of this deterred Israeli hawkishness.
As for the main stumbling block to direct talks — Israel’s continued settlement expansion — the year ended with the situation as poisonous as ever. Washington managed to briefly build on the international demands for peace following the Gaza flotilla raid and revive direct talks between the Palestinians and Israelis. These took place in September, but they ended at the end of the month when Israeli Prime Minister Benjamin Netanyahu refused to extend the moratorium on settlement expansion.
Between then and early December, Washington tried to persuade the Israeli government to agree a new moratorium but, faced with Netanyahu’s intransigence, it announced it was abandoning its efforts on Dec 7. The peace process is now in abeyance and rising Palestine anger is in danger of sweeping away the Palestinian moderates.
Elsewhere, around the Kingdom there have been other causes for grave concern. It has been a year of growing danger signals within the Arab world. In Iraq, Lebanon and Sudan, communal tensions threaten to tear the countries apart - in the case of Sudan, literally so.
In October, Foreign Minister Prince Saud Al-Faisal warned that the upcoming referendum in the south of Sudan threatened to result in the country’s division. That would not serve the interests of any party and could lead to renewed conflict in the region, he said.
In Iraq, there were fears whether it would be able to establish itself as a united state, free of outside interference, and where its different communities were accepted as full citizens, free from danger and violence.
The elections on March 7 and on Aug. 31, seven years after the invasion of Iraq, US troops officially ending their combat role should have been occasions to celebrate the country’s slow return to normality and peace, but it was not to be. Both events were accompanied with surges in violence as militants tried to test Iraqi security. As for political stability, it was absent for most of the year.
At the end of October, with violence on the rise as Al-Qaeda and other militants exploiting the power vacuum, King Abdullah offered to host talks in Makkah after Eid between Iraqi leaders. In the event, on Nov. 10, a power- sharing deal was announced but even then it was only 10 days ago, on Dec. 21, that Iraq finally had a new government — a grand coalition of most of the main parties led by Nuri Al-Maliki.
In the meantime, the months of stalemate had terrible consequences for hopes of communal peace. The bloody attack by Al-Qaeda supporters on a Christian church in Baghdad on Oct. 31 in which 68 people died has resulted in several thousand Iraqi Christians fleeing abroad or to the Kurdish north. As the new government takes over, violence still stalks the land, foreign interference remains strong and national unity is almost a myth. In such circumstances, there is no great confidence that the coalition will hold together when the pressures mount.
Lebanon too has been cause for considerable concern. The UN tribunal tasked with investigating the assassination of former Lebanese Prime Minister Rafik Hariri in 2005 was expected to announce its findings before the year-end. As the publication date drew near, Hezbollah warned of violence if it was accused of involvement in the killing, as was widely believed it would be.
In October, Saudi Arabia’s responded to these internal Arab issues by calling for a stronger Arab League. At a meeting of the Council of Ministers, chaired by King Abdullah, it appealed to more powerful Arab League institutions, saying that all Arab countries should comply with its decisions.
In the wider region too, the picture provided little cause for comfort. It has been a year of deepest pain in Pakistan. Quite apart from the devastating floods, there have been a number of deadly attacks by militants on military and civilian targets. Although the number of suicide bombings was down, it has been a record year for suicide attack killings.
Hundreds too were killed in drone attacks, civilians as well as militants. In total, the death toll from violence — soldiers, militants, innocent civilians — ran into several thousands.
In Afghanistan too, instability and violence have been ever present. Closer to home, it has been a year of concern about Iran’s nuclear and regional intentions.
All this contrasts to the year of calm and tranquility within the Kingdom. The year ended with the king having to go to New York for treatment for back pain leaving the government of the country in the hands of Crown Prince Sultan, the deputy premier and minister of defense and aviation, and Prince Naif, the second deputy premier and interior minister. On Dec. 21, the king left hospital following successful surgery, and it was announced that he would soon return to Saudi Arabia after a period of convalescence in New York.
