A New Saudi Vision to the Asian Economy
Marwan Iskandar Al-Hayat - 21/02/06//
The Custodian of the Two Holy Mosques, King Abdullah bin Abdul Aziz, is currently striving to reinforce and develop Saudi Arabia's relations with China and India - a laudable and momentous step indeed underscoring the new Saudi perception of the international political and economic developments.
More than home to one third of the world population, China and India touch the highest growth rates in the world. For instance, China ranks fourth internationally as to its gross income volume behind the United States, Japan, and Germany. Within three years, it is expected to come third internationally in terms of economic weight if it sustains the growth rates registered during the past years. Besides, China holds the world's second largest currency reserves.
In turn, India has become a leading country in IT and global communication; a technology requiring advanced software and an educated labor force. This trend is entrenched further, with English, widely used in the world of business, declared the second language in India. To the educated classes, it is a daily language.
As growth accelerated in both countries, energy consumption soared too. In truth, the mounting needs there spur the demand for oil. Last year for instance, China sought to purchase a US oil company for $19 billion - an attempt foiled by the vehement US opposition driven by strategic considerations.
In parallel, India, the third steel producer in the world, or more precisely, one of its major companies specialized in iron and steel production, has offered a bid to purchase the second biggest steel production group in the world against more than $20 billion. It remains to be mentioned in this regard that such production requires huge quantities of gas or oil derivatives.
In addition to their swift growth and growing demand for oil and gas, China and India have successfully harnessed the modern techniques for consumer goods, satellites, and basic commodities of sustained global consumption.
China, too, has internationally been the engine of a sustained growth. As proof, its exports to the United States outstripped Japan's though the latter has been, for decades, the main exporter to the United States. Likewise, China's imports from Germany outpaced Germany's exports to the United States. As for India, its imports and exports have also become significant at the international level.
Accordingly, South Asian countries constitute a natural market for the Saudi oil exports. Thus, Saudi Arabia may launch many joint ventures with China and, to a lesser extent, with India.
As we all know, King Abdullah is trying to strengthen his country's relations with both states. Undoubtedly, this momentous decision falls within the Saudi strategy to cement the economic and political relations with countries that drive the world economic cycle and shape the international political climate.
With no doubt, the religious dimension has also incited Saudi Arabia to take such step. China is, in truth, home to many Muslims, similarly to India, where the Muslim population equals or even exceeds Indonesia's, the largest Muslim country in the world. King Abdullah has also snatched from the Chinese authorities a commitment to treat Muslims on equal footing with other citizens. In parallel, he urged India and Pakistan to rein in their religious disputes.
Previously contained as much as possible and thanks to this initiative, Saudi Arabia's economic and diplomatic responsibilities regarding India and China will increase. Nonetheless, Saudi Arabia must reassess its relations with both countries, given their swift evolution, which, as expected, will certainly buttress the Kingdom's standing in the Middle East and its role in appeasing conflicts and tensions between countries.
Prior to these Saudi initiatives, Kuwait has, for its part, also reached for India and China last year. Its then Foreign Minister and Kuwait's current Governor, Sheikh Sabah al-Ahmad al-Sabah, visited India and China in an attempt to consolidate Kuwait's bilateral relations with these two economic giants.
As we all know, Japan helped, years ago, exploit an offshore oil field in the Kuwaiti regional waters. But the importance of this operation has unfortunately receded with the field's capacity being relatively weak.
On the other hand, the Saudi and Kuwaiti oil potentials, whether current or future, are one of the pillars to meet the world needs of energy derivatives. Likewise, as both countries tend to strengthen their economic and political relations with the economically most important Asian countries after Japan, the strategic and political map in the Middle East and the whole world will be certainly reshaped.
In the same vein, while focusing on South Asian countries and others reflating the world economic activity, Saudi Arabia and Kuwait will at the same time buttress their own bilateral cooperation. Fortunately, the leaders in both countries embrace modern and transparent aspirations closer to the popular representation.
Hence, in cooperation with Chinese, Indian, and Japanese companies, Kuwait and Saudi Arabia may, in the near future, start implementing projects related to oil, financing, and advanced technology. Moreover, along with the Indian and Japanese economies and the production of major countries in South and South East Asia, like Singapore, Malaysia, Taiwan, and Thailand, the Chinese economy is matching in size the European economy. Hence, the Arab world, notably the Gulf States, must give more attention to countries South and South East Asia.
In short, the two initiatives, one put forth by the Custodian of the Two Holy Mosques, and the other by Kuwait's Emir, lay the foundations of cooperation and open new growth fields previously overlooked. In all cases, this trend is expected to spur growth and stability internationally.
* Dr. Marwan Iskandar is an economic expert.
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