The launch of the King Abdullah University of Science and Technology (KAUST) in Thuwal, Saudi Arabia last month was witnessed by a host of distinguished visitors from around the world. On the list was David Hamod, President and CEO of the National U.S.-Arab Chamber of Commerce, who wrote in “U.S.-Arab Tradeline” – the Chamber’s quarterly newsletter – that “Saudi Arabia is looking ahead to a world that revolves around knowledge, not hydrocarbons.” He noted that, “For Saudis and Muslims all over the world, KAUST is intended to serve as a new House of Wisdom,” referring to the Bait al-Hikma, the intellectual center of the Islamic “Golden Age.” Hamod’s visit to the Kingdom included meetings with business people and officials as part of the NUSACC’s role as the “voice of American business in the Arab world.”

To get Mr. Hamod’s first hand impression of KAUST and his perspective on the business relationship between the United States and Saudi Arabia, we caught up with him by phone from Riyadh on October 9, 2009 for this SUSRIS exclusive interview.

Opportunities and Change in the Kingdom:
A Conversation with David Hamod

SUSRIS: Thank you for joining us today as you travel in Saudi Arabia. In “Tradeline” you said the King Abdullah University of Science and Technology, or KAUST, represented a vital step in the transition of Saudi Arabia to a knowledge-based society. What are your impressions of KAUST? Is KAUST a game changer?

HAMOD: What struck me most about the KAUST launch was the huge amount of pride the Saudis take in this institution, as well as the speed with which they pulled this all together – building an important research university from scratch in less than 1,000 days. KAUST is a very ambitious undertaking, but with a $10 billion endowment and the full support of the Custodian of the Two Holy Mosques, King Abdullah, it represents a remarkable opportunity for the Kingdom.

Is this university a “game changer”? I think this institution, as a new "House of Wisdom," has tremendous potential. The Saudis have worked to bring the best and the brightest from around the world to KAUST. They have purchased some of the most sophisticated equipment available. Now it's a question of pulling it all together in a way that produces rewarding experiences for the scholars, as well as cutting edge research. What we hope for, from a business perspective, are new technologies that can be developed at KAUST and brought to the marketplace. [See David Hamod’s Op-ed on KAUST as a catalyst for business.]

KAUST, according to King Abdullah's vision, will be a "beacon" for scholars from around the world. It's an extraordinary opportunity for intellectual exchange and learning, and for people around the globe to gain a better understanding of Saudi Arabia.

SUSRIS: The boom in Saudi Arabia has been characterized as bigger than the “first boom.” How so? What does this mean for the US-Saudi trade relationship?

HAMOD: The big difference between the boom of the 1970s and the new boom is that there is now a new generation of Saudi business leaders who have been educated at some of the best schools in the world, who have traveled extensively, and who have brought thoughtful new ideas to the table regarding what the Saudi Arabia of the future might look like. That translates into strategic, long-range construction and infrastructure projects that are consistent with 20- or 30-year plans. This rationalized approach takes advantage of economies of scale and is connected to the comparative and competitive advantages that Saudi Arabia has to offer, particularly in terms of downstream petroleum projects. 

There is also a recognition that the population is growing quickly and that Saudi Arabia needs to prepare for the future in terms of health care, education, housing, food security, and a host of other ways. It seems to me that the Saudi leadership, consistent with the vision of King Abdullah, is tackling these issues in a thoughtful way. 

In terms of the trade relationship, we have seen fairly consistent growth over the years. U.S. exports to Saudi Arabia in 2008 were about $12.5 billion, and by our Chamber's best estimates, despite the downturn, we anticipate U.S. exports will roughly triple to $38 billion by 2012. 

That's a reflection of the growing market in Saudi Arabia -- not only for the United States, but also for other countries of the world. There is a clear trend in Saudi Arabia, and in other countries in the Arab world, to “look East" to Asia in the aftermath of 9/11. The tragedy of September 11th did not necessarily cause the Arab world to turn to India, China, and other Asian markets, but it certainly served as a catalyst to do so.

SUSRIS: Do you agree with some specialists who feel that American businesses are not taking full advantage of the opportunities from the current boom? 

HAMOD: I believe that there are major changes underway here that can be attributed, in part, to the work that the Ministry of Finance and the Saudi Arabian General Investment Authority have done to make the Kingdom a more attractive destination for trade and investment. In 2005, the World Bank and IMF ranked Saudi Arabia number 67 in the world in ease of doing business. Today, the Kingdom is number one in the Middle East and number 13 in the world. That is a remarkable improvement by any standard.

I believe that Saudi Arabia is still one of the best-kept secrets of the Middle East. Some American companies have lost ground to the competition, particularly from Asian nations, which have been expanding aggressively in this part of the world. But we see new-to-market U.S. companies coming to the Kingdom on a regular basis, and there are still many untapped opportunities for U.S. firms here. 

In this respect, our Chamber needs to bring more U.S. companies to Saudi Arabia so that they can see the opportunities here with their own eyes. Last year, I had the privilege to lead delegations to this region for U.S. companies managing in excess of $2 trillion, and the success and stability of economies in this part of the world are still generating considerable interest among U.S. companies. 

Saudi Arabia is very well positioned in this economic downturn because the Kingdom has resources on hand at a time when cash is king. The historically high oil prices have come down, which has led to the postponement of some projects, but the vast majority of projects are still moving forward full speed ahead. Unlike some countries in the Middle East, Saudi Arabia is deficit spending in the short term to bring many of these important projects to fruition.

The downturn also creates opportunities for Saudi Arabia to invest outside the Kingdom, and the Arab world beckons. Recent years have seen unprecedented levels of intra-Arab investment within the region, and I expect this trend to pick up as we move beyond the economic slowdown.

SUSRIS: At the recent Pittsburgh G-20 Summit the members specified the Group, of which Saudi Arabia is a member, as the “premier forum” for international economic cooperation. What does it say for Saudi Arabia to be the only Middle Eastern country, the only Arab country and the only member of Opec to belong to the G-20? 

HAMOD: I think Saudis are enormously proud that the Kingdom has been invited to sit at the table and, in my opinion, that invitation is long overdue. The countries of the Arab world, and particularly those of the GCC, have played an increasingly important role in “lubricating” the international economy in recent years -- either directly or indirectly. It no longer makes sense for a handful of countries to try to guide the international economic order without valuable input from Saudi Arabia and the G-20.

SUSRIS: In the context of Saudi Arabia what do you think about the prospects of some governments moving away from the dollar as the global reserve currency?

HAMOD: I've heard rumors about decoupling oil from the dollar and, to the best of my knowledge, these are only rumors. The rumors grow strong when the dollar gets weak, and vice-versa. The fact is, it would be difficult to separate the dollar from oil. The only GCC country that has taken steps in that direction is Kuwait, which now uses a basket of currencies. However, there is no compelling evidence, to the best of my knowledge, that Kuwait has fared substantially better than its neighbors as a result of its break with the dollar.

SUSRIS: How would you assess the health of the relationship between the Kingdom and the United States?

HAMOD: The Saudi-U.S. relationship is longstanding and runs the gamut of mutual interests. King Abdullah's visit to Texas [Crawford Western White House] when he was Crown Prince helped to reinforce those strong relations. We subsequently made a transition from one U.S. president to another, but there have been no disruptions, in part because King Abdullah has made a special effort to get to know each president at a personal level.

Relations are in very good shape these days as evidenced by Saudi Arabia's support of the U.S. dollar, the constructive role that Saudi Arabia is playing in the peace process, the surge in Saudi students now studying in the United States, and the positive overall tenor of the relationship. 

At one level, there are excellent trade and investment opportunities in Saudi Arabia for U.S. companies, which is how we, as Americans, tend to look at the relationship. But at another level, as a result of the economic downturn, there are some excellent bargains available in the United States to savvy Saudi investors.

As far as the new Administration is concerned, I think the Arab world as a whole has rolled out the welcome mat for President Obama. My impression is that many of the Arab countries are looking to President Obama to change the tone of the U.S.-Arab relationship, which includes restoring dignity and minimizing humiliations that the Arab world has suffered in recent years.  Some of these humiliations, like torture at Abu Ghraib prison, have been devastating for America's reputation around the world.  Other indignities, like the demeaning process that Saudis have been through to secure visas to the United States, have resulted in many thousands of Saudis forgoing visits to America.

Historically, the United States has been the favorite destination of the Arab world. Arabs like to take their vacations in our country. They like to send their kids to school in America. If they need medical care, they prefer to come to the United States. And from a commercial perspective, they like the American way of doing business. A lot of this goodwill evaporated after 9/11, however, and we are doing our best to restore that trust.

The relationship between the United States and the Middle East has a very solid foundation, and people in the Arab world are looking to President Obama to build on that foundation.

SUSRIS: What have you heard in reaction to President Obama winning this year’s Nobel Peace Prize? HAMOD: People here are hopeful that the Nobel Prize will serve as a “down payment” for bringing peace to Palestine. SUSRIS: What would you tell Americans about Saudi Arabia given what you know about stereotypes of Arabs and the Kingdom, and about the changes and reforms being made? HAMOD: The only way a group of people can evaluate another group of people is to travel and spend time with each other, face-to-face. Stereotyping of the Arab world has been a problem for a long time, in part because many so-called “experts” on the Middle East have never set foot in the Arab world.  The fact is, we have seen some extraordinary changes taking place in this part of the world during the past decade. These changes are happening not because the United States or any other country is trying to force the Arab world to change. To the contrary, these changes are predominately coming from within -- naturally, organically.  As a result, we see significant economic expansion that is affecting the quality of life of every family in the Arab world. We have also seen the important role that the Internet can play in changing the dynamics of a society, including our own in the United States. So when you package all of this together -- the changing technologies, economic expansion, improvements in the quality of life -- it makes for a substantially different region than anything people might have anticipated even 15 years ago. SUSRIS: What should we expect to see over the horizon in the business component of the relationship? HAMOD: Historically, the U.S. companies that have been most involved in Saudi Arabia are very large businesses. The trend that Saudi Arabia would like to see, I think, is a growing emphasis on small and medium sized enterprises, or SMEs, and entrepreneurship. From the perspective of our chamber, which is predominantly made up of these SMEs, this suggests some remarkable business development opportunities in the years ahead.  SUSRIS: Thank you for taking time to share your insights on U.S.-Saudi relations from Riyadh. Safe travel home.

About David Hamod

David A. Hamod is President and CEO of the National U.S.-Arab Chamber of Commerce (NUSACC), a position he accepted in 2004. Since its inception over 40 years ago, NUSACC has been the preeminent organization for fostering trade and investment between the United States and the 22 countries of the Arab world. 

Mr. Hamod has been a prominent and active member of the U.S. business community for more than two decades. In 1988, he founded Intercom International Consultants, a Washington-based consulting firm that has served as an advisor to numerous business groups, including more than 30 U.S. companies. As President of Intercom, Mr. Hamod served on the International Policy Committee of the U.S. Chamber of Commerce for more than a decade. 

Prior to founding Intercom, Mr. Hamod worked for the Brookings Institution, International Business Machines (IBM) Corporation, Overseas Private Investment Corporation (OPIC), and The New York Times, among others. 

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Source: NUSACC

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