‘I love working with Trump; we have achieved a lot in the Middle East’

Saudi Crown Prince Mohammed bin Salman, in a wide ranging interview to Bloomberg, opens up on the changes in the kingdom, the relationship with the US, Aramco IPO, and the fight against extremism

Trump said you would last two weeks only without the US. Saudi Arabia was there before the US. It’s there since 1744, I believe more than 30 years before the US. And I believe President Obama, in his eight years, worked against many of our agenda not in Saudi Arabia, but also in the Middle East. And even though the US worked against our agenda we were able to protect our interests. The end result is that we succeeded, and the US under the leadership of President Obama failed, for example in Egypt. So Saudi Arabia needs something like around 2,000 years to maybe face some dangers. So, I believe this is not accurate.

So, you don’t mind President Trump saying these incredibly rude things about your father?

Well, you know, you have to accept that any friend will say good things and bad things. So, you cannot have 100 per cent friends saying good things about you, even in your family. You will have some misunderstandings. We put that in that category.

I think Germany and Canada were friends, and it was less rude what they did.

It’s totally different. Canada, they gave an order to Saudi Arabia on an internal issue. It’s not an opinion of Canada about Saudi Arabia as much as they are giving an order to a different country. So, we believe this is a totally different issue. Trump is speaking to his own people inside the US about an issue. And you’ve got the answer now from me.

It does seem to be his opinion that the kingdom should pay more for its security. Do you agree?

Actually we will pay nothing for our security. We believe that all the armaments we have from the US are paid for, it’s not free armament. Ever since the relationship started between Saudi Arabia and the US, we’ve bought everything with money. Before two years ago, we had a strategy to shift most of our armament to other countries, but when President Trump became president, we changed our strategy again for the next 10 years to put more than 60 per cent with the US. That’s why we’ve created the $400 billion in opportunities, armaments and investment opportunities, and trade opportunities. This is a good achievement for President Trump, and for Saudi Arabia. Also part of these armaments will be manufactured in Saudi Arabia, it will create jobs in America and Saudi Arabia, good trade, good benefits for both countries and also good economic growth. Plus, it will help our security.

US-Saudi relations are just as good now as they were 24 hours ago?

Yes of course. If you look at the picture overall, you have 99 per cent of good things and one bad issue.

With President Trump it seems to be a little bit more than one per cent.

One per cent. I love working with him. I really like working with him and we have achieved a lot in the Middle East, especially against extremism, extremist ideologies. Terrorism and Daesh disappeared in a very short time in Iraq and Syria, and a lot of extremist narratives have been demolished in the past two years, so this is a strong initiative. We have also worked together with more than 50 countries to agree on one goal in the Middle East and most of those countries are going through with that strategy. Now we are pushing back against extremists and terrorists and Iran’s negative moves in the Middle East in a good way. We have huge investments between both countries. We have good improvement in our trade — a lot of achievements, so this is really great. Can you see why he would be complaining about the oil price where it is, at $80?

We never in the history of Saudi Arabia decided that this is the right or wrong oil price. The oil price depends on trade — consumers and suppliers — and they decide the oil price based on trade and supply and demand. What we are committed in Saudi Arabia is to make sure there is no shortage of supply. We work with our allies in Opec and also non-Opec countries to be sure that we have a sustainable supply of oil and there is no shortage and that there is good demand, that it will not create problems for the consumers and their plans and development.

Has he made a specific request about oil?

Yes, actually the request that America made to Saudi Arabia and other Opec countries is to be sure that if there is any loss of supply from Iran, that we will supply that. And that happened. Because recently, Iran reduced their exports by 700,000 barrels a day, if I’m not mistaken. And Saudi Arabia and Opec and non-Opec countries, they’ve produced 1.5 million barrels a day. We export as much as 2 barrels for any barrel that disappeared from Iran recently. So we did our job and more. We believe the higher price that we have in the last month, it’s not because of Iran. It’s mostly because of things happening in Canada, and Mexico, Libya, Venezuela and other countries that moved the price a little bit higher. But Iran, definitely no. Because they reduced 700,000 barrels and we’ve exported more than 1.5 million barrels a day.

You’ve just had a meeting in Kuwait thinking about reactivating the production in the neutral zone. How did that go?

Actually the 1.3 million is capacity that we have today, without that opportunity in Kuwait. We believe that we are almost close to having something with Kuwait. There are only small issues that have been stuck there for the last 50 years. The Kuwaiti side, they want to fix it today, before we continue to produce in that area.

The other big deal is Aramco’s negotiation for Sabic. How is it going to be structured?

Everyone heard about the rumors of Saudi Arabia cancelling the IPO of Aramco, delaying that, and that this is delaying Vision 2030. This is not right. Actually, in mid-2017, we had an issue, which was: What’s the future of Aramco? Aramco today produces oil, and it has a few downstream projects. But if we want to have a really strong future for Aramco it has to invest a lot in downstream because we know that the new demand for oil 20 years from now, it will be from petrochemicals. If we see the rising demand from petrochemicals, I believe it’s growing about 2-3 per cent today. Definitely the future of Aramco has to be in downstream and Aramco has to invest in it.

When Aramco does that, it will have a huge conflict with Sabic, because Sabic is about petrochemicals and downstream. And the main source of oil for Sabic is Aramco. If Aramco does follow that strategy, Sabic will definitely suffer. Before we do that, we have to have some sort of agreement to be sure that Aramco benefits from Sabic and Sabic doesn’t suffer in that process. We’ve reached a point that PIF will sell the 70 per cent that it owns in Sabic to Aramco and Aramco will do the other jobs of merging — or whatever they will do with Sabic — to have one huge mega company in that area in Saudi Arabia and around the world.

Of course, the money coming from that deal will go to PIF, but we cannot list Aramco directly after that deal, because you need at least one full financial year before that IPO. So we believe that deal will happen in 2019, so you need the whole 2020.

Do you want to do it in New York, London or Asia?

When you’re talking about the biggest IPO in human history, of course you have to look to all of the options that are available. What’s the decision? It will be the decision that helps the interest of the company.

Is there anything you would have done differently in the last three years?

I believe the last three years were good, and that we couldn’t do anything more than what we’ve done. We learned a lot of things and will continue progressing and developing.

The unemployment is actually going up.

Yes, and now it’s about 13 per cent. But of course, if there are two years of restructuring the economy, of course you will have side effects. You cannot do the restructuring without the side effects. This is part of the side effects of restructuring the economy.

But today we are much more powerful. Today, we talk about the budget of 2019. It’s above 1 trillion riyals for the first time in Saudi Arabia. And it’s 1 trillion and 100 billion riyals. We have our non-oil income or revenue raised by 300 per cent. So there is huge achievement.

I believe the unemployment rate will start to decline from 2019 until we reach 7 per cent in 2030 as targeted in the Vision. And if you see the male unemployment rate, it’s between 5 to 6 per cent, which is almost close to normal. But if you look at the female unemployment rate, it’s above 20 per cent. We don’t know how much of it is real unemployment and women seeking jobs, and non-real job seeking by women.

Do you feel that the Ritz Carlton arrests affected investor confidence?

It created a lot of rumours, but I don’t believe that it affected that. At the end of the second quarter of 2018, the net foreign investment in the Saudi stock market increased by 40.4 per cent compared to the same period of 2017.

How much has been transferred from the arrests?

I’m not sure about the number but I believe it’s something above $35 billion. We think it will complete in the next maybe two years. Forty per cent of the current number is being transferred in cash and 60 per cent is mostly assets.

Is that being managed by Istidama?

That’s right. The companies and properties are. The cash goes to the treasury. Two years from now and the case will be totally closed.

People who are being held, what’s the plan for them?

Also I’m sorry I don’t have the accurate data. There are only eight people left. They’re with their lawyers and facing the system that we have in Saudi Arabia.

Will the former ambassador to Germany return?

That’s right.

And Canada?

It’s up to them. They’ve taken actions against UN law and against diplomatic principles. They interfered in issues that are not Canadian issues. They’re not Canadian interests. They’re totally Saudi domestic interests. And they’re not allowed to do that. The media can talk about any issue.

How is this going to be resolved?

They have to apologise. Simple. I believe they know that they have made a mistake, but we will see how we can get things back again.

The guardianship law, will there be any change?

Well if we look at the 70s, it’s different from now. The rules of guardianship were held in 1979, if I’m not mistaken, and now we’re looking at the laws that were put in after 1979 and we’re talking to most of the Council of Senior Scholars to see what’s Islamic and what’s non-Islamic in that area, and I believe there’s opportunity in that area.

Everyone heard about the rumors of Saudi Arabia cancelling the IPO of Aramco, delaying that, and that this is delaying Vision 2030. This is not right.

We are much more powerful. Today, we talk about the budget of 2019. It’s above 1 trillion riyals for the first time in Saudi Arabia. And it’s 1 trillion and 100 billion riyals. We have our non-oil income or revenue raised by 300 per cent.

Are you going to announce more social reform?

Yes, our target in Saudi Arabia is to be competitive. So for example, I have a foundation, I’ve been trying for the past month to hire a new CEO, a non-Saudi CEO. I can’t. Because they don’t want to live in Saudi Arabia. That’s a problem. Why? Because of the quality of life and the lifestyle is not good. They want to work one week in Dubai and one week in Saudi Arabia. Come on, what’s happening? So we have to reach the best standard as soon as possible to be sure that people can work in this country and can proceed and build things in this country.

How do you feel about some of the criticism?

Actually I didn’t call myself a reformer of Saudi Arabia. I am the crown prince of Saudi Arabia and I am trying to do the best that I can do through my position as the crown prince and the deputy prime minister of Saudi Arabia. But let’s look at the numbers because numbers don’t lie. So Saudi Arabia, the number of those who’ve been arrested in the last three years -- fighting extremism, fighting terrorism, fighting a lot of agencies trying to work through Saudi Arabia and use and intimidate people by using freedom of speech and what we said earlier: about 1,500.

Yemen. How do you see the conflict evolving?

We hope it will end as soon as possible. We don’t need that on our border. But of course we don’t need to have a new Hezbollah in the Arabian peninsula. This is a red line not only for Saudi Arabia but for the whole world. No one wants to have Hezbollah in a strait through which about 15 per cent of the world trade goes through. We will continue to pressure them. We hope they’ll get ready as soon as possible to have negotiations and to have a deal.

Of course we don’t need to have a new Hezbollah in the Arabian peninsula. This is a red line not only for Saudi Arabia but for the whole world.

Has it put a significant strain on your relations with allies like the UK?

Mistakes happen in all wars. In any war, mistakes happen, painful things will happen. We will try to solve it as soon as possible.

So you don’t believe it’s fundamentally risking the relationship with these allies?

It’s not a matter of risking the relationship. It’s a matter of national security. We hope they understand. We try to convince them. We believe they understand the dangers in that area but if it will create problems so be it. We can’t risk our national security for the sake of relations with other countries.