Identifier
Created
Classification
Origin
09RIYADH1219
2009-09-16 10:31:00
CONFIDENTIAL
Embassy Riyadh
Cable title:
LIKELY SAUDI POSITIONS AT THE G-20 SUMMIT
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C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 001219
SIPDIS
DEPT FOR EEB, NEA/ARP
E.O. 12958: DECL: 09/16/2019
TAGS: ECON ETRD EINV ENRG PREL SA
SUBJECT: LIKELY SAUDI POSITIONS AT THE G-20 SUMMIT
Classified By: Charge d'Affaires David Rundell for reasons 1.4 (b) and
(d)
C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 001219
SIPDIS
DEPT FOR EEB, NEA/ARP
E.O. 12958: DECL: 09/16/2019
TAGS: ECON ETRD EINV ENRG PREL SA
SUBJECT: LIKELY SAUDI POSITIONS AT THE G-20 SUMMIT
Classified By: Charge d'Affaires David Rundell for reasons 1.4 (b) and
(d)
1. (C) Summary: The Saudi Finance Ministry provided a
preview of its thinking in preparation for the G-20 Summit in
Pittsburgh. Saudi Arabia is pleased with the G-20's
performance to date and thinks it is the forum best able to
enforce policy changes needed to prevent a recurrence of the
international financial crisis. Saudi Arabia will look for
strong statements from developed countries that they will
continue expansionary fiscal policies until it looks more
certain that the global economy has recovered. Saudi Arabia
also wants to see a strong emphasis on putting the necessary
regulatory reforms in place. The Saudis are likely to be
sensitive to any calls to reduce their voting share, and thus
perceived role, in the IMF. They will also be sensitive to
any attempts to "demonize" oil in discussion about climate
change. End summary.
CONTINUE EXPANSIONARY POLICIES
--------------
2. (C) During a September 15 phone call with Econcouns,
Deputy Finance Minister and G-20 sherpa Hamad Al-Baz'y
provided an overview of Saudi Arabia's positions for the
upcoming G-20 Summit in Pittsburgh. Saudi Arabia's most
important concern is that the gathered leaders provide a
strong message to the world about the need to continue
expansionary policies until the global economic recovery is
assured. It is also important that leaders commit to
restoring fiscal health, particularly in developed countries.
He explained that Saudi Arabia is concerned that failure of
developed countries to rebalance their fiscal policies moving
forward will undermine the long-term sustainability of
economic growth.
3. (C) Saudi Arabia will also look for clear statements in
support of regulatory reform. It is crucial that the world
put in place the right kind of mechanisms to avoid future
crises, especially in the financial sector. In that regard,
it is important for all countries to faithfully implement
their commitments to avoid the possibility of regulatory
arbitrage. Al-Baz'y said it is unfortunate that regulatory
reform discussions often have been bogged down by disputes
over executive compensation. While this is an important
issue, Al-Baz'y said it should not distract from the broader
need to put in place a sound regulatory system.
DON'T BACK US INTO CORNER
--------------
4. (C) Al-Baz'y expressed significant concern that Saudi
Arabia not be backed into a corner at the Summit on the issue
of rebalancing shares in International Financial Institutions
(IFIs),most notably the IMF and World Bank. Al-Baz'y
reported that he was concerned by the detailed and prolonged
discussion at the sherpa meetings on wording to cover this
issue. In particular, Saudi Arabia is concerned that these
proposals ignore the important role Saudi Arabia has played
in the global economy over many years, including providing
considerable amounts of foreign assistance. Al-Baz'y thought
that most of the suggested language (e.g., developed versus
dynamic, under-represented versus over-represented) would not
enhance the role of developing countries (e.g., Saudi
Arabia),and he hoped that the Summit would avoid any
statement that would go against earlier statements such as
RIYADH 00001219 002 OF 002
the London communique.
ENERGY AND SECURITY
--------------
5. (C) Al-Baz'y also expressed concern about agenda items
related to energy security. The original wording struck the
Saudi delegation as being targeted against oil rather than a
broader range of energy sources. Al-Baz'y said that Saudi
Arabia would not be able to support any language that would
undermine its main source of national income, although it
would be able to support a more balanced approach. He argued
that developed countries need to help less developed
countries (LDCs) address difficult political and social
tradeoffs involved with energy policy. Al-Baz'y also said
Saudi Arabia would not support proposals to discuss funding
climate change at this Summit (Comment: We understand from
the British Embassy that the UK delegation will raise this
despite being told by the SAG they will oppose it. End
comment). Al-Baz'y said the Saudi position is that developed
countries should provide assistance to affected poor
countries in addition to current assistance levels, or else
these countries will not be able to meet their Millennium
Development Goals.
G-20 VS. G-7, G-8
--------------
6. (C) Al-Baz'y said Saudi Arabia is very pleased with the
G-20's track record to date as it has demonstrated its
ability to be productive and enhance international
cooperation. Saudi Arabia believed the G-20 is much more
representative than the G-7 or G-8, and will prove much more
effective when it comes to enforcing international financial
regulatory reform. Al-Baz'y also indicated that Saudi Arabia
is very pleased with the agenda's emphasis on financial
issues and is preparing its delegation accordingly.
COMMENT
--------------
7. (C) Although it may not take a proactive role, we expect
that the Saudi delegation will emphasize areas of
cooperation, particularly on international financial
regulatory reform and the need to continue coordinated
stimulus programs. However, we expect they will be very
sensitive to several areas of perceived vulnerability. They
are likely to resent any sustained effort to settle the IMF
voting rights issue at this Summit, as they read this as
discounting their generosity over many years on foreign
assistance issues. We also expect that they will demure on
any commitment to provide fresh funding for the IFIs until
the voting rights issue is settled, as the SAG will want to
avoid the perception that they are paying to rescue the West
from its financial crisis and being thanked with a lower
voting share. Finally, we expect the Saudi delegation will
be sensitive to any discussion of a post-carbon future or of
climate change that seems to "demonize" oil. We are getting
the impression that the SAG increasingly attributes U.S.
leadership to efforts to diminish the role of oil in the
world economy. To the extent that discussions at the Summit
focus on the need to find a sustainable transition to a
cleaner future, this may make the discussions less
contentious.
MUENCH
SIPDIS
DEPT FOR EEB, NEA/ARP
E.O. 12958: DECL: 09/16/2019
TAGS: ECON ETRD EINV ENRG PREL SA
SUBJECT: LIKELY SAUDI POSITIONS AT THE G-20 SUMMIT
Classified By: Charge d'Affaires David Rundell for reasons 1.4 (b) and
(d)
1. (C) Summary: The Saudi Finance Ministry provided a
preview of its thinking in preparation for the G-20 Summit in
Pittsburgh. Saudi Arabia is pleased with the G-20's
performance to date and thinks it is the forum best able to
enforce policy changes needed to prevent a recurrence of the
international financial crisis. Saudi Arabia will look for
strong statements from developed countries that they will
continue expansionary fiscal policies until it looks more
certain that the global economy has recovered. Saudi Arabia
also wants to see a strong emphasis on putting the necessary
regulatory reforms in place. The Saudis are likely to be
sensitive to any calls to reduce their voting share, and thus
perceived role, in the IMF. They will also be sensitive to
any attempts to "demonize" oil in discussion about climate
change. End summary.
CONTINUE EXPANSIONARY POLICIES
--------------
2. (C) During a September 15 phone call with Econcouns,
Deputy Finance Minister and G-20 sherpa Hamad Al-Baz'y
provided an overview of Saudi Arabia's positions for the
upcoming G-20 Summit in Pittsburgh. Saudi Arabia's most
important concern is that the gathered leaders provide a
strong message to the world about the need to continue
expansionary policies until the global economic recovery is
assured. It is also important that leaders commit to
restoring fiscal health, particularly in developed countries.
He explained that Saudi Arabia is concerned that failure of
developed countries to rebalance their fiscal policies moving
forward will undermine the long-term sustainability of
economic growth.
3. (C) Saudi Arabia will also look for clear statements in
support of regulatory reform. It is crucial that the world
put in place the right kind of mechanisms to avoid future
crises, especially in the financial sector. In that regard,
it is important for all countries to faithfully implement
their commitments to avoid the possibility of regulatory
arbitrage. Al-Baz'y said it is unfortunate that regulatory
reform discussions often have been bogged down by disputes
over executive compensation. While this is an important
issue, Al-Baz'y said it should not distract from the broader
need to put in place a sound regulatory system.
DON'T BACK US INTO CORNER
--------------
4. (C) Al-Baz'y expressed significant concern that Saudi
Arabia not be backed into a corner at the Summit on the issue
of rebalancing shares in International Financial Institutions
(IFIs),most notably the IMF and World Bank. Al-Baz'y
reported that he was concerned by the detailed and prolonged
discussion at the sherpa meetings on wording to cover this
issue. In particular, Saudi Arabia is concerned that these
proposals ignore the important role Saudi Arabia has played
in the global economy over many years, including providing
considerable amounts of foreign assistance. Al-Baz'y thought
that most of the suggested language (e.g., developed versus
dynamic, under-represented versus over-represented) would not
enhance the role of developing countries (e.g., Saudi
Arabia),and he hoped that the Summit would avoid any
statement that would go against earlier statements such as
RIYADH 00001219 002 OF 002
the London communique.
ENERGY AND SECURITY
--------------
5. (C) Al-Baz'y also expressed concern about agenda items
related to energy security. The original wording struck the
Saudi delegation as being targeted against oil rather than a
broader range of energy sources. Al-Baz'y said that Saudi
Arabia would not be able to support any language that would
undermine its main source of national income, although it
would be able to support a more balanced approach. He argued
that developed countries need to help less developed
countries (LDCs) address difficult political and social
tradeoffs involved with energy policy. Al-Baz'y also said
Saudi Arabia would not support proposals to discuss funding
climate change at this Summit (Comment: We understand from
the British Embassy that the UK delegation will raise this
despite being told by the SAG they will oppose it. End
comment). Al-Baz'y said the Saudi position is that developed
countries should provide assistance to affected poor
countries in addition to current assistance levels, or else
these countries will not be able to meet their Millennium
Development Goals.
G-20 VS. G-7, G-8
--------------
6. (C) Al-Baz'y said Saudi Arabia is very pleased with the
G-20's track record to date as it has demonstrated its
ability to be productive and enhance international
cooperation. Saudi Arabia believed the G-20 is much more
representative than the G-7 or G-8, and will prove much more
effective when it comes to enforcing international financial
regulatory reform. Al-Baz'y also indicated that Saudi Arabia
is very pleased with the agenda's emphasis on financial
issues and is preparing its delegation accordingly.
COMMENT
--------------
7. (C) Although it may not take a proactive role, we expect
that the Saudi delegation will emphasize areas of
cooperation, particularly on international financial
regulatory reform and the need to continue coordinated
stimulus programs. However, we expect they will be very
sensitive to several areas of perceived vulnerability. They
are likely to resent any sustained effort to settle the IMF
voting rights issue at this Summit, as they read this as
discounting their generosity over many years on foreign
assistance issues. We also expect that they will demure on
any commitment to provide fresh funding for the IFIs until
the voting rights issue is settled, as the SAG will want to
avoid the perception that they are paying to rescue the West
from its financial crisis and being thanked with a lower
voting share. Finally, we expect the Saudi delegation will
be sensitive to any discussion of a post-carbon future or of
climate change that seems to "demonize" oil. We are getting
the impression that the SAG increasingly attributes U.S.
leadership to efforts to diminish the role of oil in the
world economy. To the extent that discussions at the Summit
focus on the need to find a sustainable transition to a
cleaner future, this may make the discussions less
contentious.
MUENCH