ABU DHABI Ñ Western defense and energy majors plan to continue to
operate in Saudi Arabia despite the Al Qaida insurgency campaign in the
The United States has been the largest beneficiary of the Saudi effort
to improve security. U.S. diplomats and industry sources said the FBI and
CIA have established a joint counter-insurgency command and control center
with Saudi security and intelligence personnel to monitor Al Qaida and
respond to threats.
The enhanced Saudi cooperation was launched to stem the exodus of
Americans from the kingdom over the last three months. Industry sources said
the exodus resulted in the departure of small U.S. companies and consultants
and threatened to deplete manpower levels at U.S. defense and energy majors.
As a result, Saudi Arabia has sought to ease its dependence on Western
companies. In May, the Saudi Oil Ministry, in an unprecedented move, chose
oil majors from China and Russia for a multi-billion dollar program to
explore and develop natural gas reserves in the Eastern Province. Russia has
also offered to provide Saudi Arabia with a range of military platforms,
weapons and other services, Middle East Newsline reported.
The Saudi agreements with China and Russia were said to have alarmed
Western majors. Industry sources said the record oil-based revenues flowing
into the kingdom were expected to revive defense, energy and infrastructure
projects in a move that could result in a windfall for Western investors.
Saudi and industry sources said Western defense and oil companies have
reaffirmed their intention to remain in the kingdom and complete their
projects. At the same time, the sources said, Western majors have sought to
operate with fewer British and U.S. personnel and establish a support
network in neighboring Bahrain.
"The challenge is serious, but a withdrawal is not on the table for
those companies," Saudi economist Ihsan Bu Hulaiga said. "It might be an
option for some Western individuals but not companies."
The determination to remain in Saudi Arabia has comprised British,
French and U.S. companies and was the result of a series of meetings with
Saudi security officials over the last two months, the sources said. They
said Western majors have concluded that Riyad would increase efforts to
protect their presence in the kingdom.
The sources said Saudi authorities have approved gun licenses for
foreign security guards to protect leading defense and energy executives.
They said foreign security personnel have been allowed to carry guns in
missions to protect Western embassy employees and selected dependents.
"We want to thank the Foreign Affairs and Interior Ministries for
providing security to French expatriates and other residents across the
kingdom," French consul-general Jean Wiet said in Jedda.
Wiet, speaking at an appearance last month, did not elaborate. About
1,600 French nationals were reported to be in Saudi Arabia.
Since 1999, Westerners comprised half of the $12.5 billion invested in
Saudi Arabia, the Saudi Arabian General Investment
Authority reported. Industry sources said Saudi Arabia expects Western
investment to increase over the next year.
"I believe such [Al Qaida] attacks have created an adverse psychological
impact on investors who want to invest here for the first time but not to
the extent that well established companies in the kingdom have decided to
leave," Saeed Al Shaikh, chief economist at the Saudi National Commercial
Bank, told the Abu Dhabi-based Gulf News. "There are fears among potential
investors and this explains the fact that the foreign capital flow into
Saudi Arabia has been below expectations."
The industry sources said the greatest challenge for Western majors
would be to retain their Australian, British and U.S. employees in Saudi
Arabia. BAe Systems, for example, has offered a $1,600 per month bonus for
its 2,400 Western staffers to remain in their jobs.
"Saudi Arabia is in desperate need of investment, this includes foreign
direct investment, and the bringing home of hundreds of billions of Saudi
money invested outside the kingdom," Rachel Bronson, director of Middle East
studies at the Council of Foreign Relations, said. "An exodus by the expats
will be a clear signal that its not safe to invest in Saudi Arabia. The
Crown Prince's reform agenda will go out the window, and Saudi Arabia's
economic situation will further spiral."