Clarify the narrative

Welcome to the latest edition of Riyadh Bureau, a newsletter for people interested in Saudi Arabia — written by me, Ahmed Al Omran. Send your feedback to or via Twitter: @ahmed

It’s official

Saudi Arabia is finally moving ahead with the initial public offering of its state oil company after several delays. Saudi Aramco has officially kickstarted its IPO process on November 3 after the kingdom’s Capital Market Authority said it has approved an application to list the company in the local stock market Tadawul.

One of the main reasons for the day has been the valuation: Crown Prince Mohammed bin Salman has pegged the company’s value at $2 trillion, but many analysts and bankers said investors were likely to buy below that price in the range of $1.5 trillion to 1.8 trillion. Estimates after the ITF announcement varied wildly from around $1.2 to $2.3 trillion.

Accepting a lower price suggests that the prince has decided to “put getting the deal done above being proved right” about the valuation, a rare compromise for the heir apparent whose rise to power has been marked by a decisive drive to achieve the goals of an ambitious economic and social reform programme known as “Vision 2030.”

The IPO is at the centre of the programme and getting the listing done, even if it is limited to the local market for now, has political significance for Prince Mohammed as the government is keen to show that reforms are on track. The Aramco announcement came few days after the finance ministry released its 2020 pre-budget statement which shows that government expenditure next year would be reduced to 1.02 trillion riyals from an estimated 1.05 trillion for 2019.

Not losing sleep

Cutting spending for the first time in three years suggests that the government is confident that reforms are working and there is no need to spend more to stimulate the economy, even as the IMF has revised its forecast for GDP growth from 1.9% to 0.2% this year.

Finance minister Mohammed al-Jadaan said the IMF revision has to do with the global economy slowing down and oil production cuts due to the Opec+ deal. Oil GDP is down 3% this year, while non-oil GDP is growing at 2.9%. “Our KPI in Vision 2030 is the non-oil GDP and not the oil,” he told attendees at the Future Investment Initiative conference in Riyadh last week.

Asked if the volatility of oil prices keeps up him up at night, Jadaan said: “I sleep very well every night. Seriously, I don’t watch the oil price every day. I watch it regularly but not every day.”

Saudi Arabia is the top performer in the “Ease of Doing Business 2020” report issued by the World Bank released last month, jumping 30 positions at the ranking from 92 to 62. Officials said this is the clearest signal yet that reforms are being implemented, but they acknowledge there is still more work to be done. “Economic reform is a long journey and we still have a long way to go,” trade minister Majid al-Qasabi told me after the report release.

The investment forum, hosted by the kingdom’s sovereign wealth fund, was well attended as more than 6,000 people gathered at the Ritz-Carlton for the event’s third year. Many of the top executives and bankers who boycotted the conference last year after the murder of Jamal Khashoggi were back in town this time around.

In reality, many of them have never actually left. While the major names skipped FII last year, most of their lieutenants and staffers —the people who actually do the deals— were there, and the big guns returned publicly when the kingdom hosted its Financial Sector Conference in April.

In addition to business elites, this year has also seen the return of senior US government officials. Treasury Secretary Steven Mnuchin, outgoing Energy Secretary Rick Perry and Senior Advisor Jared Kushner all took the stage and praised Saudi reforms.

Kushner also used the occasion to repeat his assertion that Israel is not responsible for the suffering of the Palestinian people. The problem, according to him, is that the Palestinians have failed to provide a good business environment for investors. “If you want to go and invest in the West Bank or Gaza, the issue that’s holding you back is the fear of terrorism and that your investment could be destroyed,” he said.

Young and dynamic

The only notable absence in this year’s FII was the crown prince who appeared on stage in the first two editions of the event in 2017 and 2018. Prince Mohammed did attend some of the sessions at the end of the second day when the King of Jordan and India PM spoke to the conference, but he did not speak this time around despite many rumours that he would at some point.

A Saudi official who was surprisingly on stage is Ibrahim al-Assaf, who was relieved of his duty as foreign minister just few weeks before the conference after less than one year in that position (he remains as a state minister and member of the cabinet).

A senior Saudi diplomat told me recently that there has been some frustration that the veteran minister was not making progress on his mandate to restructure the foreign ministry after the Khashoggi killing at the kingdom’s consulate in Istanbul. What is needed, the diplomat told me, is someone young and dynamic.

That someone appears to be Prince Faisal bin Farhan who was named foreign minister on October 24 after a brief stint as ambassador in Germany and before that a senior adviser at the Saudi Embassy in Washington DC.

The 45-year-old, who has previously worked in the defence sector, is widely praised as intelligent, skilful and articulate. Adel al-Jubeir will continue in his position at minister of state for foreign affairs, but Prince Faisal is likely to take over the portfolio fully in a couple of years as the government seeks to renew its diplomatic corps with a new generation that is more proactive and engaged.

The prime examples of that effort are Prince Khalid bin Bandar, the envoy to the UK, and his sister Princess Reema bint Bandar, who has recently given an extensive interview to Politico Magazine, her first major engagement with American media since she was appointed in February.

“My job is to clarify that narrative,” she said. “My job is to hear the tone here, understand the sentiment and convey it back home.”

In other news

That is all for this dispatch from Riyadh Bureau, delivered to you this month from Jeddah. Thanks for reading! You can send your feedback by email: If you enjoy this newsletter please do share it with others.