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GAINING
GAINING
ALTITUDE
ALTITUDE
Dr. Khaled Alhussan was recently
admitted
Dr. Khaled as a member
Alhussan, of the
recently prestigious
admitted as
International
a member Academy
of the of Astronautics.
International AcademyHe of
has been playing
Astronautics, a key leadership
is playing a key role role in
in the
the development of Saudi Arabia’s
development of Saudi Arabia’s space space
andandaeronautics
aeronauticsindustry.
industry.
E DI TO R’S
LE ADERS K.S.A. NOT E
PUBLISHER AND EDITOR-IN-CHIEF First of all, we’d like to wish all our readers a happy, healthy and
ALJAWHARA ALOTEISHAN prosperous 2018
CHIEF EXECUTIVE OFFICER
AMJAD HASHIM 2017 was a year of momentous change in Saudi Arabia. Described
ceo@leaders-mena.com by political analysts as “seismic”, the arrests in November of doz-
ens of royal princes, ministers and high-profile business leaders
WRITERS
in an anti-corruption drive by the Saudi authorities was nothing
HUSSEIN ALNAZAR,
AMIRA ZAKAREYA, SHERIF MOHAMED, short of breathtaking. As Thomas Friedman described it in the
LAMYA ABDALLAH New York Times, it felt to many of us as if we were having our
own Arab spring, Saudi style (see the story on page 7). On the
GRAPHIC DESIGNERS
MARWA AHMED, NERMEEN ALSAYED economic front, many of the goals of Saudi Vision 2030, a wide-
ranging plan to bring about social and economic change which
ADVERTISING SALES many believe could shape the direction of the kingdom for de-
SIMON BRINDLE
adsales@leaders-mena.com cades, turned into tangible development projects that are already
attracting the interest of investors worldwide.
PRINTED
SAUDIA PRINT SHOP
Against this background, we have decided to allocate a larger
portion of our editorial content to news and stories about Saudi
Arabia. This re-positioning is reflected in a new masthead which
All rights reserved. No part of this magazine
replaces the previous one that addressed the wider Middle East
may be reproduced or transmitted in any form
or by any means without the written permis- and North Africa region. That said, we are not intending to aban-
sion of the publisher. While LEADERS consid- don our regional coverage and we are very happy and excited to
ers its sources to be reliable and verifies data as
much as possible, reporting inaccuracies may announce that our new website, www.leaders-mena.com., will be
occur and neither LEADERS nor the publisher is launched next month. We hope you find time to visit us there.
responsible for any errors or omissions
2018 promises to continue what we believe to be an unstop-
pable momentum for change. LEADERS K.S.A. will be carefully
Published by
SAWAHAL ALJAZEERA PUBLISHING COMPANY documenting these changes - political, economic and social – in
Riyadh, Kingdom of Saudi Arabia. all their manifestations. This month’s issue sets the tone of the
T: +966 11 41 56053 - +966 11 41 56045 magazine going forward. Inside, you’ll find stories about Saudi
info@leaders-mena.com
Arabia’s developing aerospace industry, initiatives to assist young
Saudi entrepreneurs, tourism, the opening of cinemas and theme
parks - something we could never have imagined a year ago - and
many others.
As always, we hope you find plenty of stories of interest to you in
this issue of LEADERS. If you have comments or suggestions about
our editorial content we’d love to hear from you.
Change is the law of ALJAWHARA ALOTEISHAN
life. And those who EDITOR-IN-CHIEF
look only to the past
or present are certain
to miss the future.
- John F. Kennedy -
4
CO N TEN TS
21. GAINING ALTITUDE
Many will be surprised to learn that Saudi
Arabia is well advanced in the field of space
and aeronautics.
NEWS AND OPINION 18. GLOBAL WEALTH
7. ARAB SPRING, SAUDI STYLE
In a piece for the New York Times, Thomas Friedman wrote about
20 STRANGER THAN FICTION
what he called “the most significant reform process underway any-
where in the Middle East”
TECHNOLOGY
10. SAUDI ARABIA’S VISION FOR TOURISM 25. TECHNOLOGY’S IMPACT ON INDUSTRY
11. SAUDIA NEWS
12. ECONOMIC SNAPSHOT: MENA
14. WILL SUDAN COME IN FROM THE COLD?
16. COMMODITY THEMES TO WATCH IN 2018
New research has identified some of the most important tech-
17. OPEC: REBALANCING THE MARKET nologies likely to affect industry in the next decades
5
CO N TEN TS
29. THE INTERNET OF EVERYTHING INNOVATION
42. TRANSFORMING PROPERTY MANAGEMENT
SERVICES
LEADERSHIP
43. THE ART OF WAR
The next wave of dramatic internet growth will come though the
confluence of people, process, data and things -what is being
called the “internet of everything”
INDUSTRY
33. GCC PETROCHEMICALS
A 2,500 year-old manuscript by a Chinese military general continues
to influence not only students of modern warfare but also political
and business leaders
ARTS AND CULTURE
47. SAUDI CINEMA: HISTORY IN THE MAKING
51. NOT A RETROSPECTIVE, BUT A VOYAGE
A recent report says the GCC chemical industry contributed around
$43.8 billion to the GCC economy in 2017
TRAVEL
55. PICTURE PERFECT: THE BEAUTY OF OMAN
ENTREPRENEURSHIP
37. A NEW GENERATION OF SAUDI ENTREPRENEURS
LIFESTYLE
60. MODEST FASHION WEEK
Three organizations that have played a major role in helping bring
about an entrepreneurial revolution in Saudi Arabia 62. THE FLIGHT CAPTAIN’S CHRONOGRAPH
6
KSA
ARAB SPRING,
SAUDI STYLE.
The arrests in the first week of November 2017
of dozens of Saudi royal princes, ministers and
high-profile businessmen in an anti-corruption
crackdown by the Saudi authorities were noth-
ing less than “seismic”. In a piece for the New
York Times on November 23, Thomas Fried-
man described a four-hour interview he had in
the Saudi capital, Riyadh, with CROWN PRINCE
MOHAMED BIN SALMAN, the head of the anti-
corruption committee that had been formed by
royal decree to lead the crackdown.
Credit: Fayez Nureldine/Agence France Presse
7
KSA
throne in 2015, he vowed to put a
stop to it all. In early 2015, one of his
first orders was to collect all the infor-
mation available. His team worked for
two years and came up with about 200
names. When all the data was ready,
the public prosecutor, Saud al-Mojib,
took action. Those arrested or detained
were shown the files. About 95 percent
of them agreed to a settlement which
meant signing over cash or shares in
their companies to the Saudi state
treasury. About 1 percent were able to
prove their innocence. About 4 percent
chose to go to court.
“One thing I know for sure” wrote
Friedman. “Not a single Saudi I spoke
to here over three days expressed any-
thing other than effusive support for
this anti-corruption drive. The Saudi
silent majority is clearly fed up with
the injustice of so many princes and
billionaires ripping off their country.
“I never thought I’d live long enough ministers “shared different lamb dishes While foreigners, like me, were inquir-
to write this sentence” wrote Friedman. and spiced the conversation.” ing about the legal framework for this
“The most significant reform process operation, the mood among Saudis
underway anywhere in the Middle East The conversation began by Friedman I spoke with was: “Just turn them all
today is in Saudi Arabia. Yes, you read asking the Crown Prince whether what upside down, shake the money out of
that right. Though I came here at the was happening in the kingdom was a their pockets and don’t stop shaking
start of Saudi winter, I found the coun- power play to eliminate rivals. The Crown them until it’s all out!”
try going through its own Arab Spring, Prince responded that it was “ludicrous”
Saudi style. Unlike the other Arab to suggest that the anti-corruption cam- Friedman went on to write that the an-
Springs, all of which emerged bottom paign was a power grab. He insisted that ti-corruption drive was only the second
up and failed miserably, except in Tuni- many of those detained had already pub- most unusual and important initiative
sia, this one is led from the top down by licly pledged allegiance to him and his launched by the Crown Prince. The first,
the country’s 32-year-old Crown Prince reforms, and that “a majority of the royal he wrote, was to bring Saudi Islam back
Mohamed bin Salman, and, if it suc- family” was already behind him. to its more open and modern orienta-
ceeds, it will not only change the char- tion from which it was diverted in 1979
acter of Saudi Arabia but the tone and “This is what happened” he said. The - what the Crown Prince described at a
tenor of Islam across the globe. Only a country had suffered from corruption recent global investment conference in
fool would predict its success - but only since the 1980s. The calculation of ex- Riyadh as a “moderate, balanced Islam
a fool would not root for it.” perts was that roughly 10 percent of that is open to the world and to all re-
all government spending was being si- ligions and all traditions and peoples.”
Friedman described how he met with phoned off by corruption each year,
the Crown Prince, who had not pre- from the top levels to the bottom. Over Friedman noted that he himself began
viously spoken about the events of the years, the government had launched his career as a reporter in the Middle
early November, at his family’s palace more than one ‘war on corruption’ but East in Beirut in 1979 in which there
in Ouja, north of Riyadh. The Crown they all failed because they all started were three major events: the takeover
Prince spoke in English, while his broth- from the bottom up. When King Salman, of the Grand Mosque in Mecca by Saudi
er, Prince Khalid, the new Saudi ambas- who had spent nearly five decades as puritanical extremists who denounced
sador to the U.S., and several senior governor of Riyadh, ascended to the the Saudi ruling family as corrupt, impi-
8KSA
ous sellouts to Western values; the Ira- added to the school day to allow school- situation was tilting in the direction of
nian Islamic revolution; and the Soviet children to explore their passions in sci- the legitimate government which was
invasion of Afghanistan. These three ence and social issues, under a teacher’s in control of 85 percent of the country.
events, Friedman continued, prompted supervision, with their own projects. However, given the fact that pro-Ira-
the Saudi ruling family at the time to try nian Houthi rebels, who held the rest,
to shore up its legitimacy by allowing On foreign policy, wrote Friedman, the had fired a missile at Riyadh airport,
Wahhabi clerics to impose a much more Crown Prince would not discuss the anything less than 100 percent was still
austere Islam on Saudi society and by “strange goings-on” with Prime Minister problematic.
“launching a worldwide competition Saad Hariri of Lebanon coming to Saudi
with Iran’s ayatollahs over who could Arabia and announcing his resignation, The Crown prince’s general view, wrote
export more fundamentalist Islam”. It seemingly under Saudi pressure, and Freidman, seemed to be that with the
didn’t help that the U.S. tried to lever- then returning to Beirut and rescinding backing of the Trump administration —
age this trend by using Islamist fighters that resignation. He simply insisted that he praised President Trump as “the right
against Russia in Afghanistan. In all, it the bottom line of the whole affair was person at the right time” — the Saudis
pushed Islam globally way to the right that Hariri, a Sunni Muslim, was not go- and their Arab allies were slowly build-
and helped nurture 9/11. ing to be allowed to continue providing ing a coalition to stand up to Iran. “We
political cover for a Lebanese govern- learned from Europe that appeasement
The Crown Prince, Friedman contin- ment that was essentially controlled by doesn’t work” said the Crown Prince.
ued, was on a mission to bring Saudi the Lebanese Shiite Hezbollah militia “We don’t want the new Hitler in Iran
Islam back to the center. He had not that was in turn controlled by Tehran. On to repeat what happened in Europe in
only curbed the authority of the once Yemen, the Crown Prince said that the the Middle East.”
feared Saudi religious police to berate
a woman for not covering every inch of On November 9, the Saudi Press Agency published a statement by Attorney
her skin, he had also allowed women to General, Saud al-Mojib, a member of the anti-corruption committee, saying
drive. And unlike any Saudi leader be- that a total of 208 individuals had been called in for questioning 7 of whom
fore him, he had taken the hard-liners had been released without charge. The statement said that the potential scale
on ideologically. “Do not write that we of corrupt practices which had been uncovered was very large. “Based on our
are ‘reinterpreting’ Islam” the Crown investigations over the past three years” it said, “we estimate that at least $100
Prince told Friedman. “We are ‘restor- billion has been misused through systematic corruption and embezzlement over
ing’ Islam to its origins”. several decades”
Friedman described how one of those Reuters reported on November 17 that Saudi authorities were negotiating
present at the interview had pulled out agreements with some of those detained, offering them the opportunity to
his cellphone and shared pictures and hand over assets and cash in return for their freedom. One of the sources told
YouTube videos of Saudi Arabia in the Reuters the deals reportedly involved separating cash from assets such as prop-
1950s — women without heads cov- erty and shares and looking at bank accounts to assess cash values. The source
ered, wearing skirts and walking with said one businessman had tens of millions of Saudi riyals withdrawn from his
men in public, as well as concerts and account after he signed. In another case, a former senior official consented to
cinemas. It was still a traditional and hand over ownership of four billion riyals ($1.07 billion) worth of shares. There
modest place, but not one where fun was no comment from the Saudi authorities on the deals until December 7
had been outlawed, which is what hap- when the Attorney General issued an official statement published in full in a
pened after 1979. Another of those major national newspaper “Al Bilad”
present, the Saudi education minister
said that among a broad set of educa- In his statement, the Attorney General said that as a result of new information
tion reforms, school textbooks were received by the anti-corruption committee, 320 individuals had been brought in
being upgraded and digitized. 1,700 for questioning and, as a precautionary measure, 376 bank accounts had been
Saudi teachers were being sent each frozen. A number of those detained had been transferred to the Public Prosecu-
year to world-class schools in countries tion Office. As a result, the number of detainees stood at 159 most of whom
such as Finland to upgrade their skills. had agreed to a settlement. The assets of those detained, and the rights of any
For the first time, Saudi girls would be other parties related to those assets or corporate entities, would not be affected
able to have physical education classes or disrupted, and all measures to ensure this were being taken.
in public schools and an hour would be
9KSA
SAUDIA
expected to create 35,000 jobs and
generate $4 billion in the economy
annually once completed.
ARABIA’S The Challenge
VISION FOR The main challenge for constructing
a robust international tourism sector
TOURISM will be to continue to build and main-
tain the international community’s
confidence in the kingdom’s com-
By RASHEED ELTAYEB mitment to the process which led
Vice President, Booz Allen Hamilton to the recent social reforms - allow-
ing women to pursue education or
In line with Saudi Vision 2030 the healthcare without getting consent
kingdom is taking steps to develop of male guardianship, allowing wom-
its tourism industry. But being a con- en to drive and enter sports stadiums
servative society, what are some of and so forth.
the challenges in doing so?
Another challenge will be to bal-
We are presently observing a monu- across the kingdom could produce a ance these reforms with appropri-
mental shift in the Kingdom of Saudi 40% increase in domestic vacations by ate dialogue on these subjects with
Arabia, not just in terms of economic 2020. Due to high volumes of domes- the kingdom’s conservative base. A
diversification, but also through a series tic movement and the propensity to primary feature of KSA’s tourism in-
of unprecedented social reforms and ef- spend within Saudi Arabia, high levels dustry will continue to be the millions
forts that are being made to open the of investment are being channeled into of muslims who travel there for pil-
traditionally conservative society to an domestic entertainment in the form of grimage, and respectfully managing
influx of foreign investment and inter- theme parks, shopping and leisure as exposure to a more moderate social
national visitors. Since Crown Prince well as culture and heritage sites. This fabric must be taken into account for
Mohammed bin Salman assumed lead- includes the building of Al Qiddiya, a those visiting the kingdom.
ership, multiple projects have been an- massive cultural, sports and entertain-
nounced that address a number of the ment metropolis southwest of Riyadh Sending the right signals
kingdom’s strategic objectives to diver- with state of the art recreational facili-
sify the economy, attract foreign invest- ties and a Six Flags theme park as well The Future Investment Initiative con-
ment, create employment opportunities as resorts, hotels and residential units ference in Riyadh in late October il-
as well as institute moderate reforms to on the coast of the Red Sea. lustrated that there is need like never
make Saudi society more accessible to before in Saudi Arabia to create a
the world. The investments in the tourism sector funding ecosystem from a combina-
directed by the Public Investment Fund, tion of international investments,
Investing in tourism the kingdom’s sovereign wealth fund public private partnerships and pri-
headed by the Crown Prince, are dem- vate investment to build a diversified
Investment in KSA’s domestic and inter- onstrating a serious commitment to modern economy. In order to estab-
national tourism sector is viewed as a shift into a more moderate and open lish the confidence of the interna-
major driver of potential growth as the society both economically and socially. tional community it will be critical to
kingdom attempts to diversify its econ- Saudi Arabia’s announcement to con- communicate the efforts being made
omy out of dependence on petrodollars vert hundreds of kilometers of Red Sea to modernize, enhance security and
amid a prolonged dive in oil prices. coastline into an international tourism safety effectively to stakeholders, cit-
location governed by laws that reflect izens and tourists who will be inter-
Euromonitor International has fore- international standards will invite lux- ested to come to Saudi Arabia in the
casted that government directed invest- ury travelers from all over the world wake of huge investments in their
ment into developing domestic tourism to the kingdom. This project alone is tourism sector.
10ONBOARD WI-FI inflight using a valid credit card. The dah, and open daily between 10am and
options provide valuable solutions for 6pm, the terminal will enable guests
Saudi Arabian Airlines (SAUDIA), the guests who wish to casually surf the to drop off their bags and collect their
kingdom’s national carrier, has an- net, or be connected throughout their boarding pass from twenty-four hours
nounced it is now offering Wi-Fi on journey. The onboard Wi-Fi experience to eight hours before departure time.
47 of its international routes. On six of is simple and easy-to-use with a two- The service is available for all interna-
these routes - Los Angeles, Washington, step login process which the guest can tional flights except those to the USA
New York, London Heathrow, Man- select upon choosing their desired pack- and UK.
chester and Dubai - passengers in guest age.
class (economy) are offered complimen- A range of services are available in the
tary Wi-Fi for a 20 minutes session, after SAUDIA utilizes SITAOnAir, an inflight 545-square meter terminal. These in-
which several packages are available for Wi-Fi hub providing seamless inflight clude five check-in counters (one of
purchase. Guests travelling in first and internet connectivity to travelers. The them is for special needs guests), a
business class on all 47 routes are of- user-experience has been enhanced prayer room, a baggage warehouse,
fered complimentary Wi-Fi (the length with faster speeds, a new sleeker, more and wrapping service. A self-service ki-
of the session varies by route). intuitive design, with improved naviga- osk is also available for guests to take
tion and user interface. advantage of special promotions. Ap-
Wi-Fi packages may be purchased in ad- proved baggage must meet size and
vance of travel, with a code sent directly NEW TERMINAL AT JEDDAH weight restrictions. If the number of
by email and to a mobile device, or pas- pieces of luggage exceeds the weight
sengers may use their e-ticket number SAUDIA’s new City Terminal at Jeddah limit, the passenger will be requested to
as the Wi-Fi access code. Pre-purchased was inaugurated on Wednesday 13th pay a fee either at the facility or online.
packages can be selected during the December 2017 providing SAUDIA’s Additional baggage allowance benefits
booking stage on www.saudia.com. Al- guests an enhanced hassle-free travel for Alfursan and SkyTeam members can
ternatively, packages can be purchased experience. Located in the heart of Jed- be accessed at the facility.
11MENA
ECONOMIC SNAPSHOT: MENA
BY RICARD TORNÉ
HEAD OF ECONOMIC RESEARCH, FOCUSECONOMICS.
REAL SECTOR | POLITICAL INSTABILITY THREATENS TO DERAIL MENA’S BLOSSOMING ECONOMIC RECOVERY
Higher oil prices, resilient global resented “an act of war” by Iran. The suddenly announced his resigna-
growth and accommodative financial missile, which was intercepted by the tion, citing fears he could be as-
conditions promise to cushion the Mid- kingdom’s defense systems, was fired sassinated in a plot led by Iran. He
dle East and North Africa’s economic from areas under the control of Houthi also criticized the role of Iran and
slowdown from the effects of oil pro- rebels, who are supported by Iran. The its Lebanese partner Hezbollah in
duction cuts. According to our latest two regional superpowers are engaged the Arab world. Lebanese officials
estimates, the region’s economies ex- in a proxy war in Yemen, which is caus- insinuated that Saudi Arabia had
panded an aggregated 2.1% annually ing a humanitarian catastrophe, ag- forced Hariri to resign to destabilize
in Q2, up from the 1.8% rise estimated gravated by a three-week Saudi block- the current Lebanese government,
last month. Tensions between Iran and ade that was a retaliatory measure for which is partially controlled by Hez-
Saudi Arabia continue to threaten the the missile attack. The regional rivalry bollah. The domestic political crisis
stability of the region, however. Saudi between the two countries also rever- eased to some extent on 22 No-
Arabia stated that the missile target- berated in Lebanon. On 4 November, vember. Just a few hours after his
ing the Riyadh airport on 4 November Lebanese Prime Minister Saad Hariri, return to Beirut from Saudi Arabia,
was launched from Yemen and rep- who was in Saudi Arabia at the time, Hariri postponed his resignation.
OUTLOOK | MOUNTING GEOPOLITICAL RISKS DENT 2018 ECONOMIC OUTLOOK
Although the region will benefit from pected to grow 2.9% in 2018, which Iran, Iraq, Lebanon, Morocco, Saudi
higher oil prices and strong global is down 0.2 percentage points from Arabia, the United Arab Emirates
growth next year, rising geopolitical last month’s estimate. Our panel proj- and Yemen. Nearly all the remain-
risks hamper MENA’s growth outlook. ects regional growth of 3.3% in 2019. ing economies saw their forecasts
Moreover, the region could suffer This month’s downgrade to MENA’s unchanged. Egypt was the sole
from monetary policy normalization economic outlook for 2018 reflects economy to experience an upgrade
in the United States. The region is ex- lower growth prospects for Algeria, this month.
SAUDI ARABIA | ANTI-CORRUPTION SWEEP
On 4 November, Saudi authorities is still uncertain. Economic activity litical unrest could undermine the
arrested dozens of Saudi Arabia’s should rebound this year on the back economic recovery. FocusEconom-
business and political elite, includ- of higher oil prices and an improved ics Consensus Forecast panelists
ing princes, ministers and wealthy fiscal position. That said, government expect growth of 1.5% this year,
businessmen. Oil prices hit an over spending will remain below levels last which is down 0.2 percentage
two-year high in the aftermath and seen before prices collapsed in 2014. points from last month’s projec-
financial markets showed some vola- Moreover, spillovers from the ongoing tion. In 2019, growth is seen pick-
tility. The impact on the economy tensions with Iran and domestic po- ing up pace to 2.3%.
12MENA
UAE | IMPROVED ECONOMIC DYNAMICS WILL ALLOW A MORE EXPANSIONARY BUDGET NEXT YEAR
The non-oil sector continues to look expenditure to further solidify non-oil tant weathervane of the overall direc-
sprightly: The PMI rose in October on the growth, with a particular focus on educa- tion of fiscal policy. Growth should
back of higher new orders at home and tion, health and other social development pick up significantly next year, as the
abroad, with employment increasing for programs. The cabinet simultaneously oil sector recovers and the non-oil
the 18th straight month. However, as is aims for a balanced budget, reflecting sector benefits from preparations for
the case across the Gulf region, oil pro- the greater fiscal space generated by the the Dubai 2020 World Expo, which
duction cuts have dented overall econom- substantial uptick in oil prices in recent should boost fixed investment. Fo-
ic growth. In early November, the cabinet months. Although the federal budget cusEconomics panelists expect GDP to
approved the 2018 federal budget. It is is only a small part of total government rise 2.9% in 2018, which is down 0.1
significantly more expansionary than spending - with emirate-level spending percentage point from last month’s
last year’s, and plans a 5.6% increase in making up the rest - it remains an impor- forecast, and 3.1% in 2019.
EGYPT | ECONOMIC RECOVERY SHOWS SIGNS OF LIFE AS GROWTH PICKS UP
The economy continues to recover, Fund once again praised the govern- forward. Recent investment and
and growth reportedly picked up for ment’s progress in implementing re- industrial licensing laws are likely
the fourth consecutive quarter in the forms to reduce the size of the bloated to boost investment. Consumer
July-September period. In addition, public sector and improve the business spending should recover as infla-
the unemployment rate dipped to a environment. The latter will be further tion recedes, and the external sec-
multi-year low over the same period, enhanced by the cabinet’s recent ap- tor will likely be strengthened by
while in October the PMI moved fur- proval of executive regulations for the the weaker pound. However, secu-
ther towards positive territory. In early new investment law, which include tax rity concerns—highlighted by the
November, the IMF concluded the sec- breaks and faster approval processes recent bombing of a mosque—will
ond review under the Extended Fund for firms. International reserves rose cloud the outlook. FocusEconom-
Facility. If the Executive Board signs to a new multi-year high in October, ics analysts expect GDP to expand
off on the agreement, an additional $ reflecting renewed investor confidence 4.3% in FY 2018, up 0.1 percent-
2 billion will be disbursed, on top of in the country. The economy should age points from last month’s fore-
the $ 4 billion already distributed. The continue to gain momentum going cast, and 4.7% in FY 2019.
WWW.FOCUS-ECONOMICS.COM
FocusEconomics is a leading provider of economic analysis and forecasts for 127 countries in Asia, Europe, the
Middle East, Africa and the Americas, as well as 33 key commodities. The company, founded in 1999, is supported
by an extensive global network of analysts from the world’s most renowned international investment banks and
top national financial institutions. Each month, the company surveys several hundred carefully selected economic
experts from the leading banks, think tanks and consultancies to obtain their projection s for the main economic
indicators and commodities prices. The forecasts are corroborated and analyzed by our in-house team of econo-
mists and complemented with brief commentaries on the latest economic trends.
13MENA
WILL SUDAN COME IN
FROM THE COLD?
On October 6 last year, the United States announced that 20-year old economic sanctions against Sudan would be
permanently eased with effect from October 12. The decision was reportedly taken as a result of Khartoum’s “posi-
tive actions” including a sustained cessation of hostilities in the conflict areas of Darfur, Southern Kordofan and Blue
Nile, improved humanitarian access, and cooperation with the US on counterterrorism and regional conflicts. After
decades of isolation and tense relations with the West, the question now is whether Sudan will be allowed to come
in from the cold.
History of the sanctions conflict in Darfur, a region in the west to cooperate with the United States
of the country where Sudanese security on counterterrorism and take on the
The United States first imposed sanc- forces and government-backed militias Lord’s Resistance Army, a rebel group
tions against Sudan in 1997, citing the were accused of carrying out a brutal operating in the borderlands between
country’s support for international ter- campaign of ethnic cleansing. Sudan and the Central African Repub-
rorism, human rights violations, and lic. It would also have to curb the vio-
meddling in the affairs of neighbor- Just over a decade later, in January 2017, lence in Darfur and the states of South
ing countries. In 2006, the Bush ad- President Barack Obama temporarily Kordofan and the Blue Nile, where
ministration expanded the scope of lifted some of the sanctions promising government forces have been fighting
the sanctions by freezing the assets of they would be fully lifted if Khartoum’s a rebellion led by the Sudan People’s
Sudanese officials the US administra- behavior improved. For the sanctions Liberation Movement. It would have to
tion accused of being involved in the to be fully lifted, Sudan would have allow humanitarian aid to reach previ-
14MENA
ously unreachable government-con- provisionally lifted in January 2017, infla- military and security apparatus. Many
trolled areas and end its intervention tion has risen further and the Sudanese of the Sudanese companies removed
in South Sudan currency has continued to depreciate. from the US sanctions list are con-
trolled by members of the ruling party
Sanctions lifted but with conditions Sudan is in debt distress and is eligible or the security organs. Several Suda-
for debt relief under the International nese economists have predicted that
Explaining the decision of the Trump Monetary Fund’s Heavily Indebted Poor Sudan after sanctions will be much the
administration to finally lift the sanc- Countries (HIPC) Initiative. Sudan’s ex- same as Sudan before sanctions and
tions in October, Heather Nauert, the ternal debt is expected to reach $54.1 that any economic benefits will go to
US State Department spokeswoman billion in 2017 and $56.6 billion in 2018. those close to the regime instead of
said: “The government of Sudan’s ac- According to the IMF, economic activity the broader population.
tions during the last nine months show in 2016 grew at a modest rate of 3.5
that it is serious about cooperating percent while inflation increased to 17.8 In an article published by Chatham
with the United States and has taken percent. The fiscal deficit was stable at House in October, Dame Rosalind
significant steps to stop conflict and 1.6 percent of GDP despite shortfalls in Marsden, who was EU Special Repre-
improve humanitarian access within oil related revenues, and the external sentative for Sudan from September
Sudan, and to promote regional sta- trade deficit moderated owing largely 2010 until October 2013, wrote that
bility,” But she added, “Any further to the depreciation of the real exchange it remained to be seen whether the
normalization of ties will require con- rate. In 2017, weaker domestic demand, government of Sudan’s “positive ac-
tinued progress by the government of partly due to a reduction in energy sub- tions” would be sustained following
Sudan.” sidies by the government in late 2016, permanent easing of sanctions. Presi-
was expected limit growth to 3.2 per- dent Bashir, she noted, continued to
The Trump administration said it had cent. The impact of higher energy pric- be the subject of an outstanding arrest
also secured a commitment from Su- es and rapid monetary expansion to warrant from the International Crimi-
dan that it would “not pursue arms help finance large remaining subsidies nal Court on charges of war crimes,
deals” with North Korea although US pushed inflation to 34 percent. The fis- crimes against humanity and geno-
officials said Khartoum’s assurances cal deficit is expected to widen to 2 per- cide. Sudan, she added, remained on
on North Korea were not a condition cent of GDP. the US list of state sponsors of terror-
for lifting sanctions. US officials have ism. While the government might con-
warned that the US is ready to use ad- A team from the (IMF) led by Daniel tinue to collaborate on external issues
ditional tools, including targeted sanc- Kanda visited Khartoum in September such as counterterrorism and migra-
tions as appropriate, to apply pressure 2017. In a statement at the conclusion tion to the extent it considered neces-
if the government of Sudan regresses of the visit, Mr. Kanda said economic sary to appease the West, it was un-
on progress on all these issues or takes conditions in Sudan remained “chal- likely, she wrote, that there would be
other negative actions. lenging” While the Sudanese authori- any improvement in human rights or
ties had embarked on reforms to help opening of democratic space, particu-
Economic impact stabilize the economy and re-establish larly if Khartoum thought that this was
growth, including allowing for greater not a priority for the Trump adminis-
Sudan’s economy has been reeling exchange rate flexibility and reducing tration and that the EU was primarily
since South Sudan, which holds three- energy subsidies “more needed to be concerned about curbing migration.
quarters of former Sudan’s oil wells, done to turn the tide toward sustained “It is crucial” she concluded “that in
seceded in 2011. There are differing macroeconomic stability and broad- the next phase of their engagement,
views on the likely economic impact based growth”. in addition to making clear that there
of lifting sanctions. U.S. officials have will be consequences if there is any
said that sanctions relief, which will The only track that matters backsliding, the US and other West-
unfreeze Sudanese government as- ern governments insist on prioritizing
sets, could benefit a range of business- All of this begs the question of whether benchmarks for human rights and a
es in Sudan, including its key energy bold economic reform will be possible comprehensive and just peace lead-
sector. The Sudan regime has for years without political reform given systemic ing to democratic transformation. For
blamed US sanctions for its economic corruption, mismanagement, lack of ac- Sudanese people, this is the only track
difficulties. Yet since sanctions were countability and heavy spending on the that really matters.”
15INTERNATIONAL
COMMODITY THEMES
TO WATCH IN 2018
S&P Global Platts President, Martin Fraenkel, puts his finger on the pulse
2017 has brought meaningful chang- which it is judging its production cut
es to the global commodity land- agreement—are falling, on the back of
scape, with investors seeing the year robust demand and, it must be said, a
as a consolidation phase for many renewed interest on the part of OPEC,
markets. While energy prices have in particular Saudi Arabia, on reining in
been rangebound for most of the exports.
year, with oil prices posting a sus-
tained recovery only in the final quar- Changing political elites
ter of the year, there have been some
pronounced structural shifts and im- 2017 has also been characterized by
pactful trends evolving in 2017 that a global shift in political elites around
are likely to carry through into 2018 the world. Changes underway in the
and potentially beyond. The year has Middle East in particular may have a Evolving patterns of trade
brought significant political changes lasting impact on commodity markets
and increased political risk, though going forward. The ongoing political Diversification of crude oil supplies
the direct impact on commodities has changes in Saudi Arabia in particu- and evolving trade flows has been
been mostly contained. lar may impact the climate for energy another meaningful theme this year.
markets, given its prevalent role in the With the elimination of restrictions,
OPEC discipline oil market. A new younger leadership US crude exports have soared, aver-
spearheaded by the Crown Prince Mo- aging over 900,000 barrels/day Ex-
Bucking historical precedent, OPEC in hammed bin Salman has a healthy ap- ports have been nearly evenly split
2017 showed strong discipline with its petite for economic reforms. It is too between Canada (a traditional mar-
output cuts under a deal with 10 non- early to judge what domestic changes ket), Europe, Latin America, and Asia.
OPEC countries, led by Russia, to cut are likely to have a pronounced im- The increased flow of US crude to
a combined 1.8 million b/d to hasten pact on global energy markets but the Asia, in particular, was driven by di-
the market’s rebalancing. S&P Global drive for efficiency and transparency versification needs. Buyers in Asia
Platts, which publishes a monthly sur- will benefit the market. The ongoing have expressed willingness to reduce
vey of OPEC crude production, esti- anti-corruption drive has also indicated some term commitments, opting to
mates that compliance among the 12 more division within the kingdom than increase their exposure to spot in-
OPEC members with quotas under previously observed takes. This is already evident with
the deal stood at 106% in the 10 China’s crude intake from the Middle
months through October. However, The first major test of confidence in East posting a decline as it moves to
frustratingly for many members, the the leadership will come in its plan import more from other sources. It
oil market failed to be impressed by to sell a 5% stake in Saudi Aramco. is also interesting to note that Saudi
the high compliance levels for much It is hoped that the sale, which could Aramco cut official selling price dif-
of the year, as lesser self-restraint on include an initial public offering, will ferentials for November delivery into
crude exports, along with the threat value the company at $2 trillion and Northwest Europe suggesting Saudi
of resurgent US production, kept a is a cornerstone of the Vision 2030 Arabia is unlikely to stand idly by as
lid on prices. As the calendar moves strategy to diversify the economy and arbitrage barrels of WTI pour into the
towards 2018, however, the tide may reduce its significant reliance on oil. region from the US.
have finally turned in OPEC’s favour. However, raising $100 billion from the
Global oil inventories—now an even sale still depends on oil prices being This is an annotated excerpt. For the
more closely monitored metric by closer to $70/b. full article, visit www.spglobal.com
16INTERNATIONAL
OPEC: REBALANCING THE MARKET
Herman Wang of S&P Global Platts says that with a renewed output cut agreement that brings Libya and Ni-
geria into the fold, OPEC is confident that its market rebalancing efforts will continue.
The issuance of a combined 2.8 million
b/d cap on formerly exempt members,
Libya and Nigeria, at OPEC’s November
30 meeting means that, when all the
members’ quotas are added up, OPEC
as a whole now has a notional collective
ceiling of 32.74 million b/d. According to
S&P Global Platts estimates, it surpassed
that level just once in 2017, in July, when
output averaged 32.82 million b/d. The
latest survey found that the November
output was 32.35 million b/d, comfort-
ably under the ceiling,
OPEC has defied its critics by maintain-
ing extremely robust conformity with its
quotas. From January through to No-
vember 2017, compliance was 108%, On both counts, OPEC itself remains Petromatrix has noted. Even more of a
according to S&P Global Platts, one of bullish. Its November oil market report concern for OPEC is that US oil exports
the six secondary sources used by OPEC forecast a major tightening of the mar- are also climbing fast. US data shows
to monitor output. But with oil prices ket in 2018, with the so-called “call on the country exported 1.73 million b/d
now 40% above mid-2017 levels, sever- OPEC crude,” to average 33.42 million of crude in October, more than triple
al analysts believe compliance could slip b/d for the year, far in excess of its cur- last year’s levels and stealing OPEC
if some OPEC members are tempted to rent production. market share in key markets in Asia,
overproduce to capture more revenue. notably China.
“Compliance has been pretty good, but The International Energy Agency,
that’s when prices were lower,” Hedg- which represents major oil-consuming OPEC also still has to contend with a
eye analyst Joe McMonigle said. “Now, nations in the Organization for Eco- perceived lack of an exit strategy from
prices are higher… so I definitely see nomic Cooperation and Development the production cut agreement. The
some compliance challenges ahead.” (OECD), however, is far less optimistic. deal is due to be reviewed at OPEC’s
At any rate, production restraint from It estimates that the world will need 1 next meeting, and any signs of an
OPEC, along with the 10 non-OPEC pro- million b/d less of OPEC’s oil next year overtightening market could lead to
ducers led by Russia that agreed to join to meet global demand. OECD stocks the kind of market share battle that
the curbs, is but one part of the market are still about 140 million barrels above preceded the implementation of the
balancing equation. the target level as of November. Much deal. Saudi energy minister, Khalid al-
of the delay is the result of US shale Falih, has largely brushed off the con-
Factors outside OPEC’s control will likely drillers, which have responded to the cerns, noting that producers will have
determine the success of its efforts to re- clear price signals from OPEC’s resolve. “plenty of opportunities” in 2018 to
balance the oil market. In particular, will US production was forecast to hit a plot a new course. With Falih now co-
US shale production, buoyed by rising new all-time record of almost 10 mil- chairing OPEC’s six-country monitor-
oil prices in recent months, surge and lion b/d in December, according to con- ing committee along with Russian en-
undo the OPEC/non-OPEC cuts? And sultancy Rystad Energy. By the time of ergy minister Alexander Novak, their
will global oil demand grow in 2018 as the next OPEC meeting in June 2018, comments with each passing month
forecast, helping soak up any additional the US could very well be producing of the deal will come under closer and
supplies that come onto the market? more than Saudi Arabia, consultancy closer scrutiny.
17INTERNATIONAL
GLOBAL WEALTH
ACCORDING TO A RECENT CREDIT SUISSE REPORT, THE WEALTHIEST ONE PERCENT OF THE WORLD’S POPULA-
TION NOW OWNS 50.1 PERCENT OF THE WORLD’S WEALTH
T
he Credit Suisse Research Insti- months to mid-2017, there was a sig- 620,000 new dollar-millionaires in
tute’s Global Wealth Report is nificant increase in wealth across the the main Eurozone countries - Ger-
the most comprehensive source globe, driven not only by equity but by many, France, Italy and Spain. Anoth-
of global household wealth informa- significant increases in non-financial er 200,000 joined in Australia and
tion. It analyzes wealth held by 4.8 wealth. In total, global wealth grew about the same number appeared
billion adults across the globe, from by $16.7 trillion to $280 trillion, a rise in China and India together. There
the least affluent to the wealthiest of 6.4%. More than half of the $16.7 was a decline in the United King-
individuals. Now in its eighth edition, trillion in new wealth was in the U.S., dom, which lost 34,000 millionaires,
the 2017 report includes a focus on which grew $8.5 trillion richer. and Japan which lost over 300,000,
millennials’ wealth position and pro- mostly associated with depreciating
vides a comparison with earlier gen- There was also an increase of 2.3 mil- currencies.
erations. lion dollar-millionaires, almost half of
whom reside in the United States. Par- Switzerland has seen wealth per
This year’s report notes that in gen- tially due to a 3% rise in the value of adult increase by 130% to $537,600
eral terms, throughout the twelve the euro against the dollar, there were since the turn of the century and
18INTERNATIONAL
continues to lead the global rank- of development rather than excessive serious blows to young workers and
ings. A large part of the rise is asso- borrowing. Among the ten countries savers and hold back wealth accu-
ciated with the appreciation of the for which long series of wealth dis- mulation by the millennials in many
Swiss franc against the dollar be- tribution are available, Switzerland is countries. With the baby boomers
tween 2001 and 2013. Nonetheless, alone in having seen no reduction in occupying most of the top jobs and
measured in Swiss francs, domestic wealth inequality over the past cen- much of the housing, millennials are
household wealth rose by 35% since tury. doing less well than their parents at
2000, an average annual rate of the same age, especially in relation
1.8%. Switzerland today accounts At the bottom of the wealth distribu- to income, home ownership and
for 1.7% of the top 1% of global tion, 3.5 billion people, correspond- other dimensions of well-being as-
wealth holders and over two-thirds ing to 70% of all adults in the world sessed in the report. While millenni-
of Swiss adults have assets above own less than $10,000. Those with als are more educated than preced-
$100,000. 8.8% of Swiss are dollar low wealth tend to be disproportion- ing generations Credit Suisse expect
millionaires and an estimated 2,780 ately found among the younger age only a minority of high achievers and
individuals are in the ultra-high net groups, who have had little chance those in high-demand sectors such
worth bracket, with wealth over $50 to accumulate assets. Millennials face as technology or finance to effec-
million. Financial assets continue to particularly challenging circumstanc- tively overcome the “millennial dis-
make up 54% of gross wealth in es compared to other generations. Al- advantage.” The report also notes
Switzerland, which is less than in Ja- though relatively less severe in some that entrepreneurship, as measured
pan or the United States and debts emerging markets, capital losses by the fraction of self-employed
average $140,500 per adult. This is, during 2008–2009, high unemploy- workers, has been declining across
one of the highest absolute levels ment, tighter mortgage rules, grow- OECD countries since the turn of the
in the world although Credit Suisse ing house prices, increased income century, including millennials who
continues to believe that the debt inequality, less access to pensions are generally thought of as a gen-
ratio reflects the country’s high level and lower income mobility have dealt eration of entrepreneurs.
AMERICA’S RICHEST ONE PERCENT OWN 40 PERCENT OF THE COUNTRY’S WEALTH
A recent paper by economist Edward N. Wolff uses crease in net worth from 1983 to 2016 was much greater
data from the federal Survey of Consumer Finances to for the top wealth groups than for those lower in the distri-
show that the wealth owned by America’s richest one bution… all in all, the greatest gains in wealth were enjoyed
percent increased by nearly three percentage points by the upper 20 percent, particularly the top one percent,”
since 2013, from 36.7 percent to 39.6 percent. That Wolff wrote in the paper. The number represents a widen-
number represents the most wealth owned by the one- ing in the wealth gap in the United States, with Wolff not-
percent since at least 1962. Meanwhile, wealth owned ing that income inequality rose by 24.5 percent between
by the bottom 90 percent has decreased and the top 1983 and 2016.
one percent now own more than the bottom 90 per-
cent combined. The top 20 percent own 89.9 percent Wolff also broke down the disparity between races, not-
of the wealth. ing that average net worth increased by 73 percent for
white households between 1983 and 2001. However, it
To better understand the numbers, Wolff breaks down only rose by 31 percent for black households. He said
the percentages in terms of net wealth. The average the impact of the recession hit “like a tsunami” and “hit
net worth of the top one percent equaled $26.4 million African-American households much harder than whites.”
in 2016. That’s compared to an average net wealth of He also noted that young households were particularly
$8,900 in the bottom 40 percent. “The percentage in- “pummeled.”
19INTERNATIONAL
STRANGER THAN FICTION
1955 that Adolf Hitler was alive and liv- ments. Nevertheless, he borrowed
ing in Colombia – ten years after the the photograph long enough so that
end of World War II ! the Caracas station could take any
action it deemed advisable. Brixnor
The file, classified as “secret” is dated noted that photostats of the picture
October 3, 1955. Its contents were out- were taken, and were being forward-
lined in a memo from David N. Brixnor, ed and that the photograph was to be
the acting chief of the CIA station in returned to its owner the following
Caracas, Venezuela, to the CIA’s chief day. Brixnor noted that the person on
of the Western Hemisphere Division the left in the picture is alleged to be
(WHD). The memo began by saying that Citroen and the person on the right is
on September 29, 1955, a CIA agent undoubtedly the person that Citroen
codenamed Cimelody-3 reported that claims is Hitler. The back side of the
he had been contacted by a trusted photograph contained the words:
friend who served under his command “Adolf Schrittelmayor, Tunga, Colom-
in Europe and who was at the time bia, 1954.”
of the memo residing in Maracaibo,
Venezuela. Cimelody-3 said his friend, Brixnor’s memo noted that neither
DID HITLER COMMIT SUICIDE? whose identity he preferred not to re- Cimelody-3 nor the Caracas station
veal, told him that a man named Phillip was in a position to give an intel-
As LEADERS reported in last month’s Citroen, identified as a former German ligent evaluation of the information
issue, President Trump ordered the re- SS trooper, told him that Adolph Hit- and that it was being forwarded “as
lease in October of more than 2,800 ler was still alive. Citroen, an employee of possible interest.” At the time of
previously withheld documents re- of the Royal Dutch Shipping Company the memo, there was little reason to
lated to the investigation into the in Maracaibo claimed he had been in doubt the accounts of Hitler’s suicide
assassination of former U.S. Presi- contact with Hitler one a monthly ba- provided by his valet, Heinz Linge,
dent John F. Kennedy. After much sis as he travelled between Maracaibo who said that after Hitler and Eva
anticipation, however, thousands of and Columbia. Citroen had indicated Braun committed suicide, he helped
documents were still withheld. Presi- to Cimelody-3’s friend that he took douse their bodies with gasoline and
dent Trump instructed that the re- a picture with Hitler not too long be- burn them. It’s not unreasonable,
maining documents be released by fore they met, but did not show him therefore, that the CIA chief did not
April 26, 2018. What interests most the photograph. The man also stated want to exert much effort and ex-
researchers is information related to that Hitler left Colombia for Argentina pense on what might have been a
the assassination itself, particularly around January 1955. Citroen said that wild goose chase.
whether the Warren Commission’s because ten years had passed since the
889-page report presented to Presi- end of World War II, the Allies could As with the accounts of Kennedy’s
dent Lyndon B. Johnson was accurate no longer prosecute Hitler as a criminal assassination this is one of the many
in concluding that a former U.S Ma- of war. mysteries of history about which
rine, Lee Harvey Oswald, acted alone there is probably insufficient evidence
in shooting President Kennedy and On September 28, 1955, Cimelody-3’s to make a conclusive statement one
wounding Texas Governor, John Con- friend surreptitiously obtained the way or the other. Did Hitler and his
nally, and that Jack Ruby also acted photograph that Citroen had referred wife commit suicide in their bunker
alone when he killed Oswald two to. On September 29, 1955, the photo on April 30, 1945 as most people
days later before Oswald could stand was shown to Cimelody-3 for the pur- have been led to believe? Or did he
trial. However, one of the newly re- pose of getting his reaction to what survive and escape to South Ameri-
leased files relates not to Kennedy’s appeared to a “fantastic” story. He ca? Many people continue to specu-
assassination, but to a report by a wrote that Cimelody-3 obviously was late that might, indeed, have been
CIA agent that he had been told in not in a position to make any com- the case.
20COVER STORY
GAINING
A LT I T U D E
DR. KHALED ALHUSSAN is general
director of Special Programs and the
director of the Space & Aeronautics
Research Institute at King Abdulaziz
City for Science and Technology in
Riyadh. Specializing in mechanical en-
gineering, aerospace and aeronautics,
he attended George Washington Uni-
versity He has published more than
100 scientific papers and has over 50
patents registered with the US Patent
and Trademark Office. He was re-
cently admitted as a member of the
prestigious International Academy of
Astronautics. LEADERS spoke with
Dr. Alhussan about several projects in
which he is currently involved.
21COVER STORY
First of all, Dr. Alhussan, we’d like more to international efforts and coop- and aeronautics which was set up in
to congratulate you on being ad- eration to advance and develop space association with Stanford university,
mitted to the IAA. Tell us about technology director of the decision support cen-
something about that. ter for KACST-Boeing, and director
Please tell us something about of the National Center of Aeronautics
Yes, thank you very much. It’s really a your academic and professional – before taking up my present posi-
great honor for me. The International background tions as general director of Special
Academy of Astronautics was found- Programs and director of the Space &
ed in Stockholm. It’s an independent My particular interest is in applied re- Aeronautics Research Institute.
non-governmental organization rec- search in the field of aerospace and
ognized by the United Nations which aeronautics. I began my career as a Tell us something about KACST
aims to promote the development of professor at George Washington Uni-
space science for peaceful purposes. versity. Between 1998 and 2003, I re- Actually, KACST began life as the
It’s a great honor to have been admit- ceived the title “Professor of the Year” Saudi Arabian National Center for Sci-
ted to the academy whose members several times for my work in different ence & Technology, an independent
include two other Saudi nationals - departments - civil engineering, envi- organization responsible for the pro-
Prince Sultan bin Salman bin Abdu- ronment, mechanical engineering and motion of science and technology in
laziz, the first Arab astronaut, and aerospace. I returned to Saudi Arabia to the kingdom. In 1985, the name was
Prince Turki bin Saud bin Mohammed join KASCT where I’ve worked in sever- changed to King Abdulaziz City for
who is the current president of King al positions – as director of the Numeri- Science and Technology and in 1987
Abdulaziz City for Science and Tech- cal Simulation Center, deputy director KACST became a national member
nology (KACST). As an IAA member, of the Space Research Institute, direc- of the International Council for Sci-
I hope to be able to contribute even tor of the center of excellence of space ence.
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