Saudi Arabia’s latest development.
In Muscat, the inauguration of a 680 kms long road from Oman to Saudi Arabia is expected to be some historic milestone.
The opening of the road, will link the 2 largest countries of the GCC for the first time. It is scheduled to take place this October according to the Arabian media, and expected to create investment opportunities boosting tourism and business alike.
The capital cost was more than £342mn for Oman and for Saudi more than £176mn. Completion of the construction work were reported to be by the end of 2013. The Oman 160kms stretch of the road is through mountainous terrain whereas Saudi’s 566kms is through the relatively flat Empty Quarter of sand dunes.
In Riyadh, the Minister of Finance said on Sunday that the Saudi government will cut spending and issue more bonds as it faces a record budget shortfall due to falling oil prices.
Arabia as currently the biggest economy of the Arab League and the world’s largest oil exporter is facing an unprecedented budget shrinkage and it has so far relied on its huge hard currency reserves to sustain the same level of expenditures but the Minister said certain measures are necessary. He notably was quoted by the local press as saying to Dubai-based CNBC Arabia in Washington, where he is accompanying King Salman on a visit :
“We are working… to cut unnecessary expenditure,” as a matter of fact, it became to be known that the government is cutting unnecessary expenses to compensate for loss of revenue and would perhaps have to delay certain projects, leaving only those ones that are important for the economy will go ahead. The Minister elaborating adds : “We have built reserves, cut public debt to near-zero levels and we are now working on cutting unnecessary expenses while focusing on main development projects and on building human resources in the kingdom.”
In July, Riyadh began issuing sovereign bonds for the first time since 2007 in order to help cover a huge state budget deficit. It is also rumoured that the government would continue by also issuing Islamic bonds, or sukuk, to finance specific projects. These latter could be launched before the end of 2015 but a deadline is uncertain for “it all depends on the need to finance the budget deficit.” As the Minister put it.
In Khobar, in the Eastern province of Saudi Arabia, a major newspaper quoting unnamed sources as saying that the government is reviewing possibilities of cutting state subsidies of domestic gasoline prices. Allowing gasoline prices to rise would be one of the biggest economic reforms in the country for many years and a politically sensitive one as well in view of its great numbers of dependants.
In Washington meanwhile, King Salman and President Obama sat at meetings directing their delegation towards the establishment of a new strategic partnership between the two countries in the future. Deputy Crown Prince Mohammed bin Salman, second deputy premier briefed President Obama on the Saudi vision for the new 21st century partnership, saying :”The foundations for new frameworks in the relationship between the two countries have been laid.”
He described the meeting between King Salman and President Obama as positive and fruitful as well as an indicator of the depth of relations, adding that the talks also dealt with cooperation between Saudi Arabia and the US in the areas of energy and environmental protection.
He explained that the two sides discussed the nuclear deal with Iran and President Obama’s assurances to King Salman that the agreement would prevent Iran from developing a nuclear weapon.
King Salman and President Obama reviewed the situation in Yemen and ways to solve the crisis and alleviate humanitarian knock on effects.
The Saudi position on Syria was explained and that the solution includes the departure of Assad noting that Russian military support to Assad, if true, would constitute a serious threat. On Iraq, the two leaders expressed their support that reforms in Iraq would contribute to strengthening national unity and that the importance of an election of a new president in Lebanon is of paramount importance.
The world has been transfixed in recent weeks by the unfolding refugee crisis in Europe, an influx of migrants unprecedented since World War II. Their plight was chillingly highlighted on Wednesday in the image of a drowned Syrian toddler, his lifeless body lying alone on a Turkish beach said The Washington Post of 4 September’s article titled, ‘The Arab world’s wealthiest nations are doing next to nothing for Syria’s refugees’ .