We wish to thank Dr. Cordesman for sharing this report with readers of the Saudi-US Relations Information Service.

This analysis will be distributed in three parts.

• Part I - Reducing the Threat of Terrorism
• Part II - The Saudi Economy in 2003 and 2004

-- In January 2002, the Code of Law Practice went into effect in Saudi Arabia. The law outlines the specific requirements necessary to become an attorney, including education, registration and admission to the courts as well as licensing. The law also defines the duties and rights of lawyers, including the right of attorney-client privilege.

-- In May 2002, the Criminal Procedure Law, a 225-article bill, was passed to regulate the rights of defendants and suspects before the courts and police. The law protects a defendant's rights with regard to interrogation, investigation and incarceration and also by granting the defendant access to the Bureau of Investigation and Prosecution. Members of the Bureau of Investigation and Prosecution are to ensure, through visits, that the rights of the defendants and persons in custody are being protected. The law also outlines a series of regulations that justice and law enforcement authorities must follow during all stages of the judicial process, from arrest and interrogation to trial and the execution of verdicts, ensuring that the judicial process remains fair and balanced.

-- In late 2002 the United States and Saudi Arabia held bilateral discussions to advance the WTO accession process. The content of bilateral agreements remains confidential until agreements are concluded with all major trade partners. A bilateral agreement with the United States is still not concluded, but the pace of talks has accelerated.

-- On January 1, 2003, a Customs Union was established by the Gulf Cooperation Council (GCC) to standardize customs duties in the six member countries. In accordance with the Customs Union, the Government of Saudi Arabia approved the reduction to 5 percent of customs for goods formerly charged between 7 and 12 percent. In addition, the GCC agreed to the principle of a single port of entry. Most related laws and regulations will be standardized by the end of 2005.

-- On February 24, 2003, the Saudi Journalists Association was officially established to protect the rights of journalists in the Kingdom and coordinate relations between journalists and the media establishment. The Association will have an elected chairman, deputy chairman and secretary-general. On July 17, 2001, the Kingdom had endorsed a 30-article law to restructure the press industry and allow journalists to establish a trade association.

-- In May 2003, Foreign Minister Prince Saud Al-Faisal announced King Fahd's approval for the establishment of an independent human rights organization in Saudi Arabia.

-- On May 19, 2003, King Fahd pledged to increase resources for education and training to improve the overall educational system in the country. Recent initiatives include:

• Textbooks and curricula are being updated and modernized. Two pilot programs, one in Riyadh and one in Jeddah, have been established to experiment with new teaching methods.
• Saudi Arabia is open to foreign investment for private higher education.
• English language classes will be introduced in the sixth grade for the 2004-2005 academic year in order to improve English teaching at intermediate and secondary schools.

-- On June 9, 2003, the Council of Ministers endorsed the Copyright Law, a 28-article document that meets the requirements of the World Trade Organization's Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), placing Saudi Arabia closer to entry in the WTO. The law protects intellectual property including print publications, lectures, audio recordings, visual displays, as well as computer programs and works of art. The law establishes a range of fines and actions that can be effected for copyright violations. Saudi Arabia has also joined the Universal Copyright Convention and the Berne Convention for the Protection of Literary and Artistic Works to further protect intellectual property and encourage continued development and innovative thinking.

-- On June 16, 2003, the Council of Ministers passed the Saudi Arabian Capital Markets Law aimed at advancing development of the securities (stocks and bonds) markets in the Kingdom. The law will take full effect in 2004 with the appointment of the board of the new Capital Markets Authority, which will regulate the securities markets and grant licenses to new, non-bank financial institutions in the securities business, such as financial advisors, asset managers, investment banks, and brokers. A general expectation is that the new law will lead to growth in the number of IPOs in the stock market, eventual development of a corporate bond market, and entry into the marketplace of many new financial firms separate from the existing domestic banks.  The law will stimulate and strengthen the Saudi economy and increase the participation of Saudi citizens in the capital markets. The law will:

• Establish the Saudi Arabian Securities and Exchange Commission (SASEC) to protect investor interests, ensure fair business, promote and develop the capital market, license brokers, and offer securities to the public.
• Establish the Saudi Arabian Stock Exchange (SASE), which will incorporate the national securities depository center.
• In July 2003, the Council of Ministers approved a new law to regulate the insurance sector in the Kingdom. The law opens the sector to foreign investors and creates a legal framework for the many local and foreign insurance companies currently operating in the Kingdom. The law is also important to further Saudi accession to the WTO.
• In July 2003, the Kingdom signed a gas exploration deal with a consortium including Shell (40 percent), Total (30 percent) and Aramco (30 percent), marking the first entry of foreign companies into gas exploration and production in the Kingdom. At the same time, the much larger "Gas Initiative," which included three core ventures and had been under negotiation since 1998, ended without deals being struck.  The Kingdom also opened bidding by foreign firms for gas exploration elsewhere in the Kingdom, and results of that process will be announced in early 2004. 

-- On July 31, 2003, Saudi Arabia and the United States signed an agreement to strengthen commercial and investment relations. As a result, the U.S.-Saudi Council for Trade and Investment was established to meet at least once a year to enable representatives of both countries to review the signing of additional agreements on trade, protection of intellectual property rights, investment, vocational training, and environmental issues. With almost 300 joint ventures, American companies are the largest group of foreign investors in the Kingdom.

-- On August 3, 2003, Crown Prince Abdullah announced the establishment of the King Abdulaziz Center for National Dialogue to promote the public exchange of ideas as an essential part of life in Saudi Arabia.

-- On August 31, 2003, Saudi Arabia and the European Union signed a bilateral agreement guaranteeing free access to goods and services. In the accession process, the Kingdom is negotiating bilateral agreements with current WTO members while adopting the organization's various trade rules. Saudi Arabia has already signed 14 bilateral trade agreements with other members of the WTO, including Japan, Canada and Brazil.

-- In the fall of 2003, the Minister of Education announced that student councils will be set up in public schools to begin educating young Saudis about civic responsibilities and participatory governance. In Saudi Arabia today, there are eight public universities, more than 100 colleges and more than 26,000 schools. Some five million students are enrolled in the education system, which boasts a student to teacher ratio of 12.5 to 1 - one of the lowest in the world. Of the 5.2 million students enrolled in Saudi schools, half are female, and of the 200,000 students at Saudi universities and colleges, women comprise more than half of the student body. Currently, the government allocates about 25 percent of the annual state budget to education.

• In October 2003, Dr. Maha Abdullah Orkubi was appointed Dean of the Jeddah branch of the Arab Open University (AOU). This was the first time a Saudi woman has been appointed to such a senior academic position.

-- In October 2003, the Kingdom held a human rights conference entitled 'Human Rights in Peace and War.' The conference concluded with the issuance of the 'Riyadh Declaration,' which states that respect for human life and dignity is the foundation of human rights; that a human being deserves respect, regardless of race, color or sex; that violation of human rights is a crime deserving severe punishment; that to hold a human being in custody without legal basis is forbidden by Islamic laws; that disregard for privacy and property rights is a violation of human rights; and that tolerance of faith is required by Islam, which also prohibits coercing people to follow a certain religion.

-- On October 13, 2003, Saudi Arabia approved groundbreaking plans to streamline local and municipal governments by introducing elections for half of the members of each municipal council to ensure that citizens have a strong voice in local affairs. A one-year period has been given to the authorities responsible for managing and finalizing the election procedures. The proposed elections mark an important step in the Kingdom's ongoing reform agenda and follows King Fahd's address to the Consultative Council on May 17 where he said: "I would like to confirm that we will continue on the path of political and economic reform. We will work to improve our system of government and the performance of the public sector and broaden popular participation in the political process."

-- On November 29, 2003, King Fahd approved changes that will enhance the legislative role of the government's 120-member Consultative Council. This represents a process of reform that began in 1992, when King Fahd introduced three major political developments to modernize the government within the framework of the Kingdom's traditions:

• The formation of the Consultative Council (Majlis Al-Shura) - The Consultative Council was later expanded to 120 members who serve four-year terms.
• The establishment of Consultative Councils in each of the 13 provinces of Saudi Arabia - The Consultative Councils are composed of leading citizens who help provide input and review management of the provinces by their respective local governments.
• The introduction of the Basic Law of Governance - The Basic Law is similar to a constitution.
• The amendments to Articles 17 and 23 of the Consultative Council System grant the Council the power to propose new bills or amendments to regulations in force and debate such proposals without prior approval from the King.

-- During 2003, two thousand imams who had been violating prohibitions against the preaching of intolerance were disciplined or removed from their positions, and more than 1,500 have been referred to educational programs. The Ministry of Islamic Affairs has begun a three-year program to educate imams and monitor mosques and religious education to purge extremism and intolerance.

-- On December 31, 2003, The King Abdulaziz Center for National Dialogue concluded its Second National Forum for Intellectual Dialogue, entitled "Extremism and Moderation: A Comprehensive Approach."