Banking on experience

09 May 2003
At the end of 2002, a Saudi minister reviewed his achievements during two consecutive terms in the cabinet. Would he serve another four years at the top? 'If I was in charge,' he declared. 'I would not want anybody in the cabinet for more than eight years.' Ironically, that same minister has been reappointed to the Saudi cabinet sworn in by King Fahd on 4 May and given a larger portfolio.

The reshuffle is marked more by continuity than change. There are only five new faces in the cabinet and the biggest jobs remain with the incumbents. Once again, most ministers hold PhDs. With rare exceptions, all are aged over 60 in a country where the average is not much more than 16.

The lack of major change is unsurprising. Gradualism remains central to the way the kingdom is governed, and now is not the time for radical innovation. 'The focus is on restructuring government, not on bringing in new people,' says a member of the kingdom's Majlis al-Shura (consultative council). 'Nobody can implement restructuring better than people who have been in office for a long time.'

King Fahd, head of state and a member of every Saudi cabinet since 1953, continues as prime minister. Crown Prince Abdullah, deputy premier and the kingdom's effective chief executive; Minister of Defence & Aviation Prince Sultan; Interior Minister Prince Nayef; Foreign Affairs Minister Saud al-Faisal and Minister of State Prince Abdulaziz bin Fahd, the king's son who heads the presidency of cabinet affairs, retain their portfolios. Prince Moutib bin Abdulaziz, previously minister of the abolished public works ministry, has been given a new job as minister of municipal & rural affairs & housing. Topping his department's agenda is reform of local government finance, particularly in the rapidly expanding major cities.

Stability at the top signals the domestic emphasis will be on measured reform consistent with the tolerance of one of the world's most conservative Islamic societies. The kingdom's standing as a regional moderate, established for decades, will not change. There will be no adjustment to Saudi Arabia's OPEC role as leading exporter and oil price moderate.

The conservative impulse is reflected in the reappointment of most key technocratic ministers. There had been speculation, as there was before the 1999 reshuffle, that Petroleum & Minerals Minister Ali Naimi would be replaced because of the slow going on the much-hyped gas initiative. Some said that Naimi had alienated oil companies frustrated by objections to terms they believed had previously been offered. 'This struck me as unlikely,' said Robert Mabro, director of the Oxford Institute for Energy Studies. 'If there had been problems, Naimi would have gone earlier.'

Naimi's reappointment owes most to his role as architect since 1999 of OPEC's most successful price maintenance campaign. From that date, the organisation has managed to keep prices within, and frequently above, its target range. 'Without Naimi, OPEC would have disintegrated,' says one veteran oil industry observer.

There was no surprise over the reappointment of Ibrahim al-Assaf, the steely finance minister who joined the cabinet in 1996. Al-Assaf has whipped spending departments into line and put the kingdom's finances on their soundest footing in its history. In 2002, the kingdom recorded a substantial current account surplus for the fourth consecutive year. Budget deficits are still reported, but their scale is now reasonable. Inflation has been extinguished and the exchange rate maintained.

But Al-Assaf's role has altered. Responsibility for economic policy formation has been handed to the renamed Economy & Planning Ministry headed by Khaled al-Gosaibi, who has been in cabinet since 1995. Al-Assaf's responsibilities remain onerous. The challenge is reducing the government's dependence on oil export income, possibly by introducing new direct and indirect taxes. With Al-Assaf at the helm, prudence will continue to be the government's financial priority, despite the oil revenue bonanza created by the Iraq crisis.

Khaled al-Gosaibi, an effective administrator and policy thinker, has been rewarded for his successful stewardship of the Ministry of Posts, Telegraphs & Telephones (PTT), where he was acting minister for three years. 'The merger between economic policy and planning is good,' says Fahd al-Mubarak, a businessman, economist and member of the Majlis al-Shura. 'We will see closer connections between economic policy and planning.'

Two super-ministries have been created. Electricity has been separated from industry and merged with the Ministry of Water, a department created in 2002 and headed by Ghazi al-Gosaibi. The logic of the merger is powerful. A growing proportion of the kingdom's potable water is produced with electricity in massive coastal thermal plants. Most of the power sector reform has been completed with the creation of Saudi Electricity Company (SEC) in 2001 and the appointment, at the start of 2002, of Fareed Zedan as electricity regulator.

The debate about water policy, on the other hand, is just beginning. Ghazi al-Gosaibi, is returning to familiar territory. As minister of industry & electricity in the 1970s, he was responsible for nationalising private electricity companies and creating vertically-integrated regional power corporations that dominated the sector until they were merged into SEC. Al-Gosaibi left the cabinet in the mid-1980s after a brief period as health minister. Deputy minister for water Ali Tokhais retains his position, as does Saleh al-Awaji, a deputy industry minister who joins the new department.

There are no doubts about the calibre of Hashim Yamani, head of the Commerce & Industry Ministry. A holder of a PhD in nuclear physics from Harvard University, Yamani applied his formidable intellect to restructuring the kingdom's power sector. His other achievements include leading Saudi Basic Industries Corporation (Sabic), the Middle East's largest industrial conglomerate which he chairs, to acquire European petrochemicals firm DSM in 2002. Yamani also devised the kingdom's anti-dumping code, a key measure for local infant industries.

Yamani's reputation is raising hopes that he will accelerate Saudi Arabia's accession to the World Trade Organisation (WTO), which has been under negotiation for almost eight years. Previous commerce minister Usama Faquieh was pilloried for stonewalling the WTO process and an illiberal attitude to business. In fact, many Saudis agree that the terms on offer from the WTO have been unacceptable. Faquieh has been made head of the General Audit Bureau.

Al-Assaf, the two Al-Gosaibi cousins and Yamani are a powerful quartet who will shape the kingdom's image in the eyes of foreign companies and potential investors. They will make or break the next phase of the economic reform process.

Mohammed al-Mulla, appointed minister of telecommunications & information Technology, is one of the five first-time cabinet ministers. He was governor of the Saudi Communications Commission (SCC), the agency regulating the telecommunications sector created at the end of 2001. As minister, al-Mulla becomes the agency's chairman. A new governor will now have to be found. Al-mulla's department is based on the remnants of the PTT Ministry after the securitisation and successful privatisation of Saudi Telecom.

Other cabinet newcomers are not inexperienced. The minister of agriculture is Abdul Rahman Balghaneem, previously governor of the SWCC and a member of the Majlis. The appointment delivers a subliminal message. Farming accounts for more than 80 per cent of total water consumption and ending waste is a priority.

Jabara bin Eid al-Seraisry joins the cabinet as minister of transport after a lengthy stint as deputy finance minister, where he was a key figure in the budget process. His department is essentially the renamed Ministry of Communications, but its responsibilities have been expanded to encompass control of the seaports. Flag-carrier Saudi Arabian Airlines and the Presidency for Civil Aviation remain part of the Ministry of Defence & Aviation. Hamad bin Abdullah al-Manie, a career Health Ministry official, takes over the top job from Osama Shobokshi. His task is to shed the ministry's unenviable reputation for poor services and slow payments.

There is excitement about the appointment of Abdullah bin Ahmed Zainal, previously chairman of the Jeddah Chamber of Commerce & Industry, as minister of state with cabinet rank. A leading member of the Alireza family, Abdullah Zainal is an advocate for business and the kingdom's populous Hejaz region.

All three ministers responsible for human resources development have retained their positions, The Education Ministry, headed by Mohammad al-Rashid, is to take over the education programmes run by the National Guard, the Ministry of Defence & Aviation and the Royal Commission for Jubail & Yanbu. Reforms are in prospect at the Higher Education Ministry headed by Khaled al-Anqari. The kingdom's seven universities are to be given more autonomy. Labour & Social Affairs Minister Ali al-Namla's remit to create jobs for young Saudis remains unchanged. Civil Service Minister Mohammed al-Fayez, supervisor of the largest employer of nationals, is unsurprisingly reappointed to the cabinet.

The three departments dealing with religious matters and their impact on government policy retain their ministers: Saleh al-Sheikh at the Islamic Endowments Ministry; Abdullah al-Sheikh at the Justice Ministry and Iyad Madani at the Ministry of the Hajj. Three other ministers of state, who have no specific portfolios but enjoy cabinet rank, have been reappointed: Abdulaziz al-Khuweiter, a former education minister; Mutlib al-Nafisa, a senior adviser in the royal court, and Musaed al-Ayban.

Saudi Arabia is delivering the message: steady as she goes. The task of spreading it to the world is, appropriately enough, in the hands of another incumbent - Fouad Farsi, now head of the renamed Ministry of Information & Culture. n

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