Prince Alwaleed:There was a consensus in the world that the regime of Saddam was tired and needed to be finished, but there was fundamental disagreement over how this should be achieved. No-one could see a way of going to war without hurting the people of Iraq. There was no solution without casualties and victims: we’ve seen the casualties on TV, they are clear. What we have also seen in Iraq after the disappearance of Saddam is the joy of the people.

The war has taken place, there is no point in discussing whether it was the right thing or not. Looking forward, the issue is whether the US will be vindicated by the establishment of a stable regime that will fulfil the needs of the people and be based on representational government.

How will a new administration in Iraq be established?

What is certain is that the US did not go to these lengths just to give control back to the UN. It might be preferable for the UN to be in control, but it is not practical as there are too many UN members without proper governments themselves. The US and the British will say: ‘We have spilt blood over this and we will shape the new government.’

What are the prospects for Iraq?

The establishment of a new regime could lead to a vibrant economy in Iraq and this will be very good for the region. We are in the era of regionalisation in the Middle East. One weak link can have a ripple effect. But if everyone is strong, it is good for everyone. Iraq has excellent potential: it has fertile soil, blue-collar and educated workers, oil and water. In a way it is richer than Saudi Arabia. Its people are its wealth.

Kingdom Holding has interests in a string of hotels around the region. What has been the regional economic impact of the war in Iraq?

Tourism during the war halted, it has fallen maybe 70 per cent in Egypt, 80 per cent in Lebanon, 30 per cent in Morocco and Syria has been hit too. Now the war has stopped it will recover. It will t ake time, but it will be quicker than the two years Egypt took to recover from the Luxor massacre. Obviously, wars never help but looking at the Arab economies, I’m an optimist. Peace will prevail and the economies will pick up.

How are relations between the US and the Arab world? And could you explain the events surrounding your donation to New York after 11 September and Mayor Giuliani’s actions?

The $10 million was given, taken and put in the bank. What caused the problem was that Mayor Giuliani didn’t like the fact that a friend of the US came and said: ‘Take care. The US needs to apply to the Israelis what it applies to the rest of the world.’ He asked me to retract my statements, but I will not. I believe in the US system. It is good, not bad. But the US is not doing a good job in Palestine. It is not even serving its own interests. UK Prime Minister Blair understands this and is doing a good job pushing for the roadmap. Now that the US has imposed its will on Saddam, why should it not impose its will on Sharon? The double standards that exist in US policy are a timebomb in our region. US President Bush now has a strong mandate – he did not have one when he was first elected, but he does now – to impose his will. In 1956, when the British, French and Israelis invaded the Sinai, President Eisenhower stopped them. That was Eisenhower, this is Bush. I’m a realist. Bush has all the weapons to do the right thing in Palestine. He has got everything he demanded over the new position of a Palestinian prime minister, diminishing the position of Yasser Arafat. I hope they were not empty demands. Now is the time.

How serious is anti-Arab sentiment in the US?

The anti-Arab sentiment in the US was generated by 11 September. But the US public is not stupid. The problem is that the Arab people, the public image and the media have not conveyed a good message. The ‘other side’ – that is what I call them – has taken advantage. They have infiltrated the system. I am trying to bridge the gap that exists between the US and the Arab world. I have established the first centre for US studies in the Middle East and more will open. And vice-versa. I’ve established centres for Islamic studies in Exeter and the US. We have to learn to convey the good message. The media has exaggerated the falling out between the US and Saudi Arabia. I speak to US politicians and I have close contact with the leaders here. Relations are still good, solid. The media is reflecting the views of only one side of the equation: the Jewish lobby. Saudi Arabia and Egypt are the most influential countries in the Arab world and it is no coincidence that the ‘other side’ has been making sure relations between them and the US are attacked. All the other countries follow Saudi Arabia and Egypt – and they have old alliances with the US.