JEDDAH JOURNAL 13: NEW DIRECTOR FOR SAUDIA;

C O N F I D E N T I A L SECTION 01 OF 02 JEDDAH 000407

SIPDIS

SIPDIS

RIYADH, PLEASE PASS TO DHAHRAN; DEPARTMENT FOR NEA/ARP;
PARIS FOR ZEYA; LONDON FOR TSOU; AMMAN FOR WHITTLESEY

E.O. 12958: DECL: 07/06/2016
TAGS: EAIR ECON KISL KWMN PREL SA SENV SOCI TBIO
SUBJECT: JEDDAH JOURNAL 13: NEW DIRECTOR FOR SAUDIA;
POLLUTION AND DISEASE THREATS IN JEDDAH; NEW WOMEN'S CENTER
DIRECTOR; PRIVATIZATION, IPO'S, AND CITIBANK IN SAUDI

REF: A. JEDDAH 386

B. JEDDAH 269

Classified By: Acting Consul General Hector Morales, for
reasons 1.4 (b) and (d).

NEW DIRECTOR FOR SAUDIA


1. (U) On the morning of June 7, Saudi media carried a
report that by Royal Decree Khaled Abdullah Al-Mulhim, who
was Chief Executive Officer of Saudi Telecom Company until
February, has been named the new Director General of Saudi
Arabian Airlines (Saudia). Mulhim has an engineering degree
from Indiana University. The royal message says Khaled
Abdullah Ben Bakr, who has been the Director General of
Saudia for the last four years, was relieved of his duties at
his own request. Nevertheless, the media speculates that
this move is part of the recent decision (reftel A) by the
Saudi government to accelerate the schedule to privatize
Saudia. During Mulhim's term at Saudi Telecom, he presided
over the partial privatization of that concern to favorable
reviews. Press reports also document a serious decline in
morale among Saudia employees as rumors concerning
privatization-related personnel cut-backs spread.

RENOVATIONS AT KAA AIRPORT TO BEGIN SOON


2. (U) In May the Saudi Civil Aviation Authority announced
that a new phase in the renovations and expansion of King
Abdul Aziz International Airport would begin within 60 days.
When completed, the plan is expected to increase the
passenger capacity of the two terminals at the airport by
50%.

JEDDAH SEWAGE POLLUTES RED SEA


3. (U) Last week the waters off the elegant Jeddah Corniche,
site of many major international hotels and expensive shops
and restaurants, as well as a number of palaces occupied by
Saudi royalty, were fouled by a several kilometer-long plume
of sewage spewing untreated from Jeddah's decrepit sewage
system (reftel B). The effluent was clearly visible from the
luxury hotels lining the lagoon. In the scorching heat of
Jeddah, other evidence of the proximity of the effluent was
readily apparent to the noses of people at some distance from
the polluted shore.

INTERIM SOLUTION TO THREAT OF COLLAPSING LAKE OF
SEWAGE--ANOTHER LAKE OF SEWAGE


4. (U) Jeddah authorities have been aware of the
deficiencies of the Jeddah waste-water treatment system and
are engaged in a multi-billion Saudi Riyal (SR) plan to
replace the system (reftel B). The most threatening
component of this system is a large lake or reservoir of
untreated sewage located about 20 km north of the city. This
sewage lagoon is delicately known among the municipal
authorities as the "perfume" lake, and less delicately know
by the general population as the "musk" lake. This
"facility," if the term can be applied to such a structure,
receives approximately 8,000 truckloads of raw sewage every
day. There has been growing concern in recent years as the
burden on the lake has increased along with Jeddah's
population and as engineering studies raise questions about
the stability of the structure holding back the waste water.
It is now feared that the dam could be over-topped and
collapse and flood large portions of Jeddah. The authorities
recently announced their short-term solution--another lake of
sewage.

SOLUTION WILL RAISE ITS OWN PROBLEMS--A GREATER POTENTIAL FOR
DISEASE


5. (U) In order to reduce the pressure on the musk lake
until the new sewage system is completed in five years, the
authorities have decided to construct a new lake 12 km north
of the current one. Under the interim plan, the new lagoon
will be connected to the current one by a pipeline. This
pipeline will first transfer the waste water to a
desalination plant. After desalination, according to

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officials, the water will be clean and used as non-potable
water, for irrigating parks in Jeddah and possibly in a
Safari Park to be constructed in the vicinity. However,
health specialists have voiced the concern that the solution
to one problem will contribute to the worsening of
another--Dengue Fever. Health researchers pointed out that
the relatively clean water contained in the second lake is
exactly the type of medium in which the mosquito species that
caries Dengue Fever thrives. Consequently, the already
serious Dengue Fever problem in Jeddah could be intensified.

NEW DIRECTOR OF WOMEN'S CENTER. OLD DIRECTOR TO BE TAPPED
FOR GOVERNMENT POSITION?


6. (U) Consulate Jeddah Political Assistant was informed by
contacts that as of May 27, Dr. Basma Omair had been named
the General Manager of the Khadija Bint Khaolied Center for
Women at the Jeddah Chamber of Commerce and Industry. Dr.
Omair is a member of the socio/economic circle of the Mecca
Emara and of the Young Arab Leaders. She obtained her Ph.D
in Educational Technology in 2004 from a university in the
United States. The former director, Dr. Nadia Ba'ashen is
rumored to be under consideration for a high-ranking position
with the Saudi government.

PRIVATIZATION AND IPO'S CONTINUE DESPITE UNSETTLED STOCK
MARKET


7. (U) Despite the fluctuations in the Saudi stock market
the government continues to pursue privatization and private
companies announce initial public offerings (IPO's). On June
7, Saudi papers carried the following notices: The
government-owned Saline Water Conversion Corporation (SWCC),
which operates 30 or more desalination plants on the Red Sea
and Gulf, will be privatized by the end of the year. Since
November 2005, the Saudi government has also announced a
number of public-private agreements with Saudi and
international consortia to construct new desalination plants.
The day's papers also contained an announcement that Inmaa
Bank, whose foundation was approved by Royal Decree as
recently as March 28 of this year, would sell 70% of its
equity in an IPO in the 4th quarter of this year. Three
Saudi government entities, the Public Investment Fund, the
Pension Fund and the General Organization for Social
Insurance will each retain a 10% share in the institution.
Comments accompanying the announcement indicate that the King
decided on privatization in order to give the investing
public more stock choices.

HOW WILL CITIBANK'S RETURN BE MET?


8. (C) Recently, Citibank announced that it was considering
returning to Saudi Arabia. In a conversation with Pol/Econ
Chief, an official of SAMBA, the former Saudi American Bank,
in which Citibank was a major partner, questioned how well
they would be received. In the wake of the rising terrorist
threat in Saudi Arabia, Citibank divested itself of its SAMBA
holdings under conditions which were injurious to SAMBA. The
official says that it took SAMBA several years to recover its
stability and a great deal of bitterness remains among Saudis
associated with the financial sector at Citibank's
precipitant withdrawal and, some say, disrespectful treatment
of Saudis.

Morales