COMMERCE MINISTER OPTIMISTIC ON KAUST, COOPERATION

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 001421

SIPDIS

DEPT FOR NEA/ARP

E.O. 12958: DECL: 10/24/2019
TAGS: ECON EINV ETRD SCUL CVIS SA
SUBJECT: COMMERCE MINISTER OPTIMISTIC ON KAUST, COOPERATION
WITH U.S.

Classified By: Ambassador James B. Smith for reasons 1.4 (b) and (d)

Summary
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1. (C) Commerce Minister Abdullah Alireza and the Ambassador
October 19 discussed a range of issues related to the reform
and transformation of the Saudi economy, including the
important role of education reform, visas, and cooperation
between Saudi Arabia and the U.S. Alireza is an enthusiastic
proponent of greater cooperation, stressing that working with
the U.S. is the key to unlocking the Saudi economy's
potential.

Speedy Visas Key to Economic Relationship
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2. (U) On October 19, the Minister of Commerce and Industry
Abdullah Alireza told the Ambassador that commercial
relations between the U.S. and Saudi Arabia are the "bedrock"
of the bilateral relationship and that he would like to see
these relations continue to grow. He emphasized the
importance of the speedy and reliable issuance of visas to
that growth.


3. (SBU) Minister Alireza welcomed the progress that has been
made on this issue, including the issuance of 82 percent of
visas within 30 days of an application being submitted. He
also agreed with the Ambassador's suggestion to double the
number of Saudis traveling to the U.S., particularly students
and businessmen.

Working Towards a Knowledge-Based Society
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4. (C) Alireza agreed with the Ambassador's assessment of
Saudi Arabia's economic potential, but said it will take a
"big push" to change the mentality in the Kingdom to one
conducive to dynamic economic growth. He said that once a
"seed was planted," the Saudi economy would "take off." As
one concrete development towards this potential, Alireza
pointed to the King's upcoming launch of a quality assurance
program for Saudi exports. He also said he had been pushing
for companies working in the same sector to consolidate or
merge so as to achieve the economies of scale necessary to
compete on a regional level. The acquisition of Hail poultry
firm Hadco by the well-established Al-Marai dairy firm a week
earlier was an example of this.


5. (C) Alireza noted Saudi Arabia's biggest challenge will be
figuring out how to transform its education system to
engender new thinking, in particular how to identify
entrepreneurial opportunities, how to get consumers to
understand the potential of e-commerce, and how to set up the
mechanisms that facilitate e-commerce. The Ambassador
responded that the King Abdullah University for Science and
Technology (KAUST) was a step in the right direction.

KAUST: A Step in the Right Direction
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6. (C) Minister Alireza said he felt "100 feet tall" the day
that KAUST opened. He said this was the first step in moving
towards economic development rooted in a knowledge-based
society and that one of the most important steps they can
take next is to move away from the "structure before
strategy" approach that had characterized Saudi
decision-making for decades. Alireza elaborated, saying that
facilities and buildings should be built based upon what
their economic strategy dictates rather than building first
and figuring out how the pieces fit together afterwards.


7. (C) Alireza agreed that the next step for KAUST will be
for it to spinoff the product of its world-class research
facilities into technologies which generate jobs. Alireza
said the challenge of moving from research to applied
research to marketable products remains. He said the King
wants people in Saudi Arabia to learn to execute -- that "we"
(the Saudis) are good at analyzing and diagnosing problems,
but not very good at solving them.

Relationship with U.S. is the Lynchpin
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8. (C) At the end of the conversation, Alireza returned to
his initial theme, saying that the relationship with the U.S.
is "the key" to unlocking this ability to execute and to
transform the Saudi economy. He said the King wants this

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improvement in relations and that it is important not just
for the Kingdom, but for the region.

Comment
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9. (C) Alireza and the Ministry of Commerce and Industry have
generally been at the forefront of reform efforts and
cooperation with the U.S. They have been quick to grasp the
benefits of making it easier for businesses to register and
operate, and of intellectual property protection. Though not
always as ambitious in execution as in discussion, they are
firm in their desire to increase the Saudi economy's
competitiveness on the world stage and in their desire to
work with us to achieve this.
SMITH