tv Inside Story 2018 Ep 110 Al Jazeera April 21, 2018 10:32am-11:01am +03
rocket test firings from twenty first the northern nuclear test of the d.p. r. k. will also be dismantled to transparently guarantee the discontinuance of you can attest that this continuance of the nuclear test is an important process for the worldwide disarmament and the joint international desire and efforts for a total halt to nuclear testing. will never use nuclear weapons nor transfer them or nuclear technology under any circumstances unless there is a nuclear threat against the. four palestinians including a fifteen year old boy have been killed by israeli gunfire and another day of demonstrations on gaza's border and best solution the united nations is calling for an independent investigation into israel's use of force against protesters syrian rebels have reportedly agreed to withdraw from their last stronghold near the capital the enclave in the south of damascus and includes the palestinian refugee camp. at least twenty civilians have been killed by saudi led coalition air strikes
in yemen the strikes targeted a village in a western district of thise yemen has been locked in a three year war between iran backed rebels and the saudi led military coalition which supports the government of president. south africa's new president has called for calm after days of protests that have turned violent in a northern city demonstrators are demanding the resignation of the reach. of the headlines on al-jazeera the do stay with us and sad story is coming up next thank you for watching. saudi arabia's ambitious economic plan the kingdom has announced several
multi-billion dollar projects to diversify its economy away from oil but can it afford these large projects and how likely are they to become a reality this is inside story. hello and welcome to the program. has embarked on an extensive economic and social transformation crown prince mohammed bin solomon has made it his mission to make the country less dependent on oil and diversify its economy but that's proving challenging because of several factors including the war in neighboring yemen saudi arabia and his coalition partners have been fighting who the rebels there for nearly three years now and as a saudi government announces more megaprojects as part of its so-called vision
twenty thirty strategy that concerns it might be overextending its economy we'll get to our guests shortly but first norah birdman the looks at what's in the pipeline. saudi officials have made it clear the country is entering into a post oil era now this future vision involves the building of megacities being dubbed a knowledge economy so let's take a look at some of these new projects the first planned megacity is called neon it's supported by japanese giant softbank and it aint see the largest city in the world to run on one hundred percent renewable energy is intended to be about thirty three times the size of new york costing around five hundred billion dollars and there's a solar power plant worth two hundred billion dollars touted as the world's largest such project now saudi arabia also has plans with egypt to build a large city on the sinai peninsula and that's costing about ten billion dollars
and a forty four billion dollar refinery deal with three indian companies now saudi arabia won't fund these projects alone but the estimated costs will be more than seven hundred and sixty billion dollars now the numbers indicate the kingdom could struggle to pay for them or less now take a look at saudi arabia's financial resources the kingdom has around four hundred eighty billion dollars in cash reserves it had far more in twenty fourteen when it started burning through the pile that's because oil prices began falling shoppy after a peak of one hundred fifteen dollars a barrel that summer and it's only this year that it came back to the seventy dollars mark that's led to sod eurabia spending more than a earns the past few years it's estimating a budget deficit of just over a fifty billion dollars this year the saudis are hoping to raise at least one hundred billion dollars by selling a five percent stake in the oil giant aramco but that's assuming the company's
worth two trillion dollars as officials assert some of this money though has to be spent on weapons at fifty six billion dollars the biggest item on the air. annual budget is defense especially where the war in yemen showing no signs of ending so is saudi arabia spreading itself then that's bringing our panel from virginia joining us on skype is jamal khashoggi is saudi journalist columnist and author in london on a station as the tide of director of the city political economy research center city university of london and in washington d.c. robert mogul nicky senior analyst at the d.c. based consultancy siwa group way specializes in the political economy of the g.c.c. welcome to you all thank you for being on inside story jamal khashoggi if i could start with you does saudi arabia have the political power and economic resources to pull this off i don't know it is very challenging. the saudi arabian which
goes megaproject to succeed but over the other to see the country and the leadership looking more into attend it doesn't really decide if you took productive society by providing jobs we need to do more of economy oh and. start from inner cities in. the out of towns look at the poverty dead there and look at the unemployment rate there and fix them into destruction of fixed infrastructure there direct if we secure a deficit if we secured to space then we can move on to the future. i would like to see that all of that ins look at more and more into the end of city into the court and situation the government is to issue in earlier than looking at the future when you talk about moving on to the future would you say that saudis today are not convinced that change is inevitable change is happening but the top down approach
could be risky i think the leadership in saudi arabia is very much influenced by the success of the modern. of debate it is a sexist den debate but it cannot be duplicated it is saudi arabia is a city state it is a country. the foundries has under his hand. millions of us who are looking for jobs he provided for them intertainment and fund and cinemas but they need money to enjoy life so they need jobs and their jobless. in saudi arabia. about twenty percent to twenty percent of the population did we have talking about something like. two million people who need jobs disparately so he needs to spend more time there. because
those are the people who all or all get angry want to drive didn't have the jobs let's get anastasia's deal in london as sejour as jamal mentioned there are a number of countries have tried to build their own silicon valley's to have their own mega projects some have succeeded others have failed to do you think saudi arabia is going to be able to succeed are they going to be able to afford this grand vision for the economy interestingly i think the question is more political than it is financial it's quite a bit of the financial results as other at least for the short term but in terms of political vision commitment and actually having a strategy it could be that the vision is not quite formulated. and it can be exposed to a variety of. unexpected shocks some insight from outside something that economists will call exogamous so to an extent it's a it's a complex that lemma two about the solidity of the vision for
a new developmental program the content of that program and i guess i would agree with your previous contributor that it's not quite clear. what that particular model is in the current form in the country and the broad geopolitical climate which is very challenging ok robert do you agree with that the financial resources there in your opinion how likely are these mega projects to become reality bearing in mind that they are by no means the only things that saudi arabia will be spending money on in the coming is well absolutely and i think it's it's really important to remember that these new projects that we've started to hear about in two thousand and later in two thousand and seventeen and over the past few months they follow a longer history of mega projects within saudi arabia back in two thousand and fifteen it's important to note that there were a whole range of economic cities that were launched as part of sag is the saudi arabian general investment authority. which planned which initially
planned to launch six economic cities they scaled that back to four when the financial or financial crisis of two thousand and eight came those projects many of those products were put on hold so in order to go firm understanding of the context of these mega mega projects in saudi arabia it's really important to understand that there is much longer history that goes beyond two thousand and seventeen right in terms of the finances yeah that that's that's a really important element traditionally the state has put forth put forth funding so in terms of economic cities the state put put forth about seventy billion dollars and then they expected a private sector contributions both from local actors and global firms to make up the difference i think that if we look at the current economic the current economic . environment in saudi arabia it's going to very difficult for the state to put forth those that same commitment in terms of funding right specially with the price
of oil dropping but they're hoping as you know to to raise at least one hundred billion dollars by selling a five percent stake in the oil company aramco a do you think investors appetite appetite for the aramco i.p.o. is a certain thing they thrilled with the prospect of acquiring around stock. well i think there certainly is there certainly is interest on a global scale the question really is when will this happen we had an initial date for the i.p.o. that was delayed. and exactly what will be the details the devil is always in the details so i think we're still at this point we're waiting to see what will happen in terms of that i.p.o. where the deal you know what type of details will come out of it and really where will the value be and i think once a lot of those once a lot of those pieces become a bit clearer then we'll start to see a more firm interest from local investors as well as international investors. a
democracy as we've heard there from both anastasia and robert there are very few details as to where the money is going to be coming from military expenditure inside jerry bates extremely high right now they're spending a lot of money in the war in yemen and there's even been talk this week of possibly sending saudi troops to be part of a is so-called coalition u.s. that coalition in syria do you think that will need to cut back on some of this military spending will they have to make a choice at one point between addressing the domestic issues at home and you know their foreign policy the more in saudi arabia it is saudi arabia first you can check this out and you will see many saudis are talking about that is the hold to their saudi arabia i don't think the syria adventures will take place is to airlie it's a very bit of entry idea and it didn't think i'd do it and not into severe to see.
great numbers of sort of the troops in syria i don't think that would have it. but . that is yesterday the need to do to take on the budget doesn't need to spend wisely actually it is mahomedan a sentiment come with this promise and he has to be used to saudi arabian people that him in efficiency spending and that one of his him to do it to go right to support the budget with efficient spending and we need to do that but efficient spinning require a system of check and balance transparency we don't have that yet but that the promise we got efficient spending and the need to see that it isn't in your veins talk about the amount but to people that it is against this mood of of saudi arabia phrase that you talk about that you say is prevalent right now among saudis is that something that the crown prince and the leadership is hearing and if they are
hearing that. message of saudi arabia first will they act on it will they for instance pull out of yemen and not get involved in syria is a leadership here in the people's message if you see saudi arabia feet and if it and i mean as a citizen if you also understand it i don't mean like to see that you know onions are expanding around us and they think that responsibility of the government is to protect the future of my son and my grandsons from those you know onion diminish in indonesia i don't really i don't want to understand the history of that we did at least and expand into syria because syria is part of my. but of my legion about my my old my history same in yemen so i do support the government. in confronting the iranians i just hope they will do it right we need to do it right and we need to confront it and use but on the same time we need to be partners about just been maybe by doing this right maybe we can do it with this money by supporting us that in desperation and that
desperation of democracy in yemen in syria that with what the debt with dr david i mean is out much faster and listen this closely down and continue with the effects anastasia coming back to the finances if in reports that saudi arabia in order to raise money is targeting high oil prices in order to balance its budget there reportedly want a price tag at one hundred dollars a barrel for oil in able to to keep up with these domestic projects how realistic is that how much influence do they have in bringing up these oil prices yeah they hundred dollar price seems to be magical and not just for the saudis russian officials sometimes discuss it as a potential target however i don't think it's actually realistic in the short to medium term and much less in the long term and it's not. necessarily about the
power of these states individual leo even together although they the partnership between saudi arabia and russia for example has been more successful than previously anticipated the problem is more structural it's about how these countries can adapt to the rapidly changing and a g. geo field where new bills and alternative sources of energy. becoming predominant and not. those developments are really not predicting any hike in oil prices anytime soon so if you talk about economic models where certain countries spread themselves thin saudi arabia is not an exception in it is it you mentioned russia for instance and they're also spreading themselves thin when it comes to their economy their involvement in syria and so on how you know how does saudi arabia is economic woes affect the rest of opec countries and its regional
partners. another fascinating question i think it adds it creates lots of questions what people don't necessarily have answers to that can create certain politico i'm not saying the risks but the unknown's. it does it might have an effect on the markets on the stock prices on as you mentioned before i p o so right of projects that need to be valid in the future but in some way it's too early to say this on this new reform in the country has been relatively recent development and we simply don't know enough there isn't kind of a very thick database of big changes in the country that's for control of robert mogul mogul nikki your thoughts on this if sides are a get is struggling economically how does it affect the rest of this region and also opec producing countries on producing countries is an excellent question we can look at in a number of different ways first and foremost saudi arabia is now targeting kuwait
. sorry saudi arabia is now looking into iraq and its reconstruction efforts and that has a real potential to conflict with kuwaiti development aims in kuwait recently launched a integrated economic zone in the five uninhabited islands in the north in the north eastern part of the country it also plant has a major project name silk city these two projects are planning to target the iraqi and also the iranian markets so we see in this in in this process. in this move towards the iraqi market we see a potential for conflict with kuwait at the same time we also had news coming out of. we also had news coming out of. in the last couple of days about saudi's intentions to create a channel along its border with neighboring qatar where obviously there's been
a tense relationship there but looking ahead while i agree with anastasia we have to see what happens and there are plans to put a free trade zone a tourist a tourist hub and also potentially a nuclear waste site on that border so clearly moving ahead with those plans specifically the latter ones involving a nuclear waste plant would certainly raise tensions between qatar and saudi arabia and potentially make engagement in the future more difficult. jamal khashoggi you thoughts looking ahead not just regionally but but first a message if you could tell us how do you see these various plans these mega projects addressing and affecting the fundamental challenges the fundamental issues that sa'ad eurabia faces today and that is high youth unemployment. weak education and health systems is it going to address these issues this is the promise but those are all high kick. jobs better lighting projects. it
i would much rather they said every other two to go to basic economy to change to soroti society into a productive society. sort of how do you mark live a market from over the dividend see or for the labor fun of liberty's did constitute sixty percent of disability of all of the never forced it's all you've got is very much wrong this is very much and another shouldn't for for an economy and. if it had to be fixed. of course of those mega projects succeeded and provided an extra income. or income to disability. next to the oil it would be good news but if to fill god forbid yeah what it would be to leave a little hole in one of the patients. jamal of failure if these projects fail i mean the date they offer that the idea of the crown prince the new crown prince
this is his plan his baby what would be the political implications if this was to fail huge because we are talking about what is budgeted for those project is something about seven hundred billion dollars more than half a trillion dollars and or what we have right now in one hour i sits and for them to go out and see something for four hundred billions. at our uncle what he did because that is five hundred billions what if that what if that money goes to west what if i go out of the product jet into a white elephant this is scary it's just good it's you know you that's why i would like to see a lot of check and balance in saudi arabia so such adventures will not go and checked those i.d.'s need to be checked by the saudi society because it is our future or we've got it. anastasia your thoughts about the consequences both
economic and political perhaps if you can touch on them of any failure i agree the consequences could be very huge originally and perhaps globally financially interesting. to just be a waste of money maybe soon. because the continent of a long term strategic redevelopment of a condom is not yet quite clear the megacity project is there. some sort of service based offshore society or offshore hub for the service economy and high tech is there but saudi arabia would be joining others who already have their very present in this particular market so it's it's challenging but in some ways be a bit more predictable politically it can generate a lot of the a failure can generate a lot of resistance and possibly a reaction towards the the new regime and then the to be then potentially there
will be major consequences for the oil price and the regional security robert mogul nicky you thought surely there's no turning back from this momentous reform project for the new leadership in saudi arabia how do they go about addressing the various challenges mainly the economic challenges challenges whether they get the money from do to go through with these plans. well i think you're right and it's important to remember that the new regime and specifically mohamed bin selman actually specifically mention these major mega these mega projects in saudi vision twenty thirty he mentioned that former economic cities need rehabilitation he specifically mentioned that he would like to revamp the king abdullah financial district so we're already seeing a substantial amount of political and economic capital really being wagered on the successful completion of these projects. again you know new projects like need these are also tied directly to the crown prince's saudi vision twenty thirty so.
on the one hand there certainly is a high bar to meet on the other hand we have to keep in mind that we're looking at saudi vision twenty thirty this is not something that we can evaluate this this excess or failure of today this is a long term plan and also these mega projects many of them have long term time one so we can start talking about them now make sure that appropriate frameworks are in place look at how money is being spent look at processes and make sure that they're done in transparent ways but ultimately this is something that we're going to have to assess over a long term timeframe all right thank you very much for for a very interesting conversation. anastasia anesthetized and robert mogul nicky thank you will for being on this edition of inside story and thank you as well for watching you can always watch this program again any time by visiting our website at al-jazeera dot com for further discussion go to our facebook page at facebook
dot com for sash inside story you can of course also join the conversation on twitter i handle is that inside story from me fully back to bill and the whole team thank you for watching by for now. on counting the cost of a trade war a real war and rising debt find out why the i.m.f. and the world bank a warning of risks to the global economy what saudi arabia is ideal oil price and the castro era ends in cuba but an economic blockade remains counting the cost. and under put it on. u.s. and british companies have announced the biggest discovery of natural gas in west africa but what to do with these untapped natural resources is already a source of heated debate nothing much has changed they still spend most of the
days looking forward to full dry river beds like this one five years on the syrians still feel battered or even those who managed to escape their country have been truly unable to escape the war. inmates learning from other inmates acquiring knowledge that can set them free. through legal education classes and mock tribunals vegetation has led to staggering results even in prison for fifteen yards. that they was. teaching empowerment kenya part of the rebel education series at this time on al jazeera i really felt liberated as a journalist was. getting to the truth as an eyewitness that's what this.
al-jazeera. is. where every. to one predictable deja's i've been working on north korea policy for almost thirty years i can't tell you what the u.s. policy is towards north korea the fine folks to know what they want to deter an attack from the united states as the u.s. struggles to define its foreign policy sunk lines examines the potential fallout we don't see really is a strategy designed to get those talks started because if they expect to surrender fire and fury trumps north korea crisis on al-jazeera the scene for us where
they're online which is a very new sign in yemen that peace is always possible but it never happens not because the situation is complicated but because no one cares or if you join us on sept there are people that little choosing between buying medication and eating this is a dialogue i want to get in one more comment because this is someone who's an activist and has posted a story join the global conversation at this time on al-jazeera coming. up. i mean this is different whether someone is going for something this big red this kind of thing it's how you approach an individual and that's what it is a certain way of doing it you can just. story and i out.