After lunch, things got really interesting. The event was heavily secured, mainly because one of the speakers was Saudia Arabia’s Permanent Representative to the UN, Abdallah Al-Mouallimi. He began with the official statement (as of that day, November 1st, 2018) about the massacre of Saudi journalist Jamal Khashoggi. Then he and Secretary Condoleezza Rice got down to the business of how Saudi Arabia plans to remain a viable country as demand for oil shrinks. As oil represents 46% of its GDP and 87% of its exports, this is a massive challenge to its (rather imbalanced) economy. Rice asked him a host of touchy questions with the utmost diplomacy, as expected from a former Secretary of State.
Secretary Rice asked him how OPEC has changed. He replied, “Number one, the political landscape is different, number two, the percentage of oil that comes from OPEC countries has declined, as countries like the United States are producing more oil. Number 3, the relative strength of the OPEC players has changed. The countries that have small reserves of oil, the objective for them is to hike the price as high as possible. Larger suppliers like Saudi Arabia have a much longer-term vision. For the last 40 years or so, Saudi Arabia has played a moderator role in keeping OPEC within certain parameters. Saudi Arabia is committed to the stability of oil markets. We are instrumental in balancing supply and demand. we believe in a long-term vision of oil markets. We don’t want sharp reductions in demand due to price spikes over $100.”
I heard that last statement as “We want to keep oil just cheap enough to keep you dependent on us forever…” It was chilling, and made all their Silicon Valley investments seem like a fun hobby for the kids, not a real move away from oil. He went on to mention that the United States and Saudi Arabia are working together to try to contain Iran as much as possible in part because Iran has a different approach to oil markets. She then asks him about Russia. He says they’ve been constructive in the past few years, having joined Saudi Arabia in trying to maintain a reasonable balance. Russia also has significant reserves, so it is in their interest to maintain stability.
Secretary Rice then asked some more general questions about the political stability of the Middle East. “How should we think about the stability of the Middle East given all that’s happening, including “divorce” from Qatar?”
Al-Mouallimi replied: “Divorce is a 3-stage process, we still have 2 other stages in our “divorce” from Qatar. There are two major destabilizing forces in the region. one is the Israeli-Palestinian conflict. As long as there is discord between Israel & Palestine, there will continue to be instability in the region. The second is that the expansionist ideology that Iran is trying to achieve needs to be defeated. Especially in Yemen. We cannot accept what Iran is doing in Yemen. The Yemen people do not want a return to the dark ages of a theocratic government in Yemen along the lines of Iran. Iran has never produced a model of government that is appealing to the people. That is going to be the second challenge that brings stability to the Middle East. That is why the United States and Saudi Arabia must continue working together to try to face up to these challenges.”
Secretary Rice then asks “You have gathered before you a group of people who work in and follow the entire energy landscape. Looking forward to the end of 2030, what is Saudi Arabia’s aspiration?”
Al-Mouallimi replied: “We will have a modern country with a diversified economy, that is a beacon of knowledge in the region, a country that attracts tourists and investors, and exports other forms of energy, including solar, and a country that is a model of peace and stability.”
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