In These New Times

Brown warned not to treat Saudis as ‘Milch Cow’

(Reuters) Timesonline

Sam Coates, Chief Political Correspondent, Riyadh
Gordon Brown has been warned not to treat Saudi Arabia like a cash cow as senior Saudi royals made clear that the kingdom already had plans for its windfall profits from the oil price surge.

On a visit to Riyadh, the Prime Minister claimed victory this morning in his bid to get the Saudi Government to pump more money into the International Monetary Fund contingency pot to help economies in trouble.

“The Saudis will, I think, contribute so we can have a bigger fund worldwide,” said Mr Brown.

But the Prime Minister did not reveal the scale of any Saudi contribution, which he said would not be announced until an international economic summit in Washington in mid-November. He has previously called for hundreds of billions of dollars to be made available from Gulf States.
At a five-hour meeting with King Abdullah last night, Mr Brown also secured agreement from the Saudi monarch to attend the summit on November 15 to discuss reform of the international global financial system.

Lord Mandelson, the Business Secretary, who is accompanying Mr Brown on the trip, warned that the Saudis and other Gulf states would expect a bigger role in global institutions in return for more investment.

“These are the new kids on the block. And we can’t do this by simply paying lip service to these emerging economies,” he said.

“We have to invite them to the table, treat them as equals and know they are going to be as much part of the solution as we in the developed world in the west need to be,” he said.

There has been anger amongst Middle East leaders at Mr Brown for urging members of Opec not to slash productions after oil prices dropped to $60 a barrel.

The Saudi Royal Family has made clear that the West has no automatic claim on the extraordinary profits generated by the oil spike.

Privately Saudi officials acknowledge that they failed to invest sufficiently in infrastructure and public services in the past. Now they want to use the billions to invest in education and skills, as well as improve the living conditions of families across the country.

Therefore Saudi’s domestic priorities could be prioritised ahead of helping western economies which have been put at risk by global economic turmoil. “Saudi Arabia does not want to be seen as a Milch Cow” a senior UK government figure said.

Mr Brown has struck an upbeat tone about the British economy on this trip, claiming the “building blocks” for recovery were in place.

He said borrowing could be allowed to rise because the Government had relatively low debt, and added: “Of course we have also got low interest rates compared to previous world downturns so the building blocks for a recovery are in place.

The Prime Minister was also challenged over whether Britain should be doing business with a country whose people do not have full democratic rights and do not allow women to drive or walk the streets unaccompanied.

Mr Brown replied that the West needed to recognise the “importance” of countries like Saudi Arabia.

“I feel that it is important for us to work with countries that are making changes, that are showing progress and at the same time are very important to the stability of the world,” he said.

“I think it’s important that we recognise progress that is being made but also the importance of Saudi Arabia to the world.”

This lunchtime Mr Brown left Saudi Arabia for Doha in Qatar.
Brown warned not to treat Saudis as ‘Milch Cow’

(Reuters)
Gordon Brown at King Saud university this morning
Sam Coates, Chief Political Correspondent, Riyadh
Gordon Brown has been warned not to treat Saudi Arabia like a cash cow as senior Saudi royals made clear that the kingdom already had plans for its windfall profits from the oil price surge.

On a visit to Riyadh, the Prime Minister claimed victory this morning in his bid to get the Saudi Government to pump more money into the International Monetary Fund contingency pot to help economies in trouble.

“The Saudis will, I think, contribute so we can have a bigger fund worldwide,” said Mr Brown.

But the Prime Minister did not reveal the scale of any Saudi contribution, which he said would not be announced until an international economic summit in Washington in mid-November. He has previously called for hundreds of billions of dollars to be made available from Gulf States.
At a five-hour meeting with King Abdullah last night, Mr Brown also secured agreement from the Saudi monarch to attend the summit on November 15 to discuss reform of the international global financial system.

Lord Mandelson, the Business Secretary, who is accompanying Mr Brown on the trip, warned that the Saudis and other Gulf states would expect a bigger role in global institutions in return for more investment.

“These are the new kids on the block. And we can’t do this by simply paying lip service to these emerging economies,” he said.

“We have to invite them to the table, treat them as equals and know they are going to be as much part of the solution as we in the developed world in the west need to be,” he said.

There has been anger amongst Middle East leaders at Mr Brown for urging members of Opec not to slash productions after oil prices dropped to $60 a barrel.

The Saudi Royal Family has made clear that the West has no automatic claim on the extraordinary profits generated by the oil spike.

Privately Saudi officials acknowledge that they failed to invest sufficiently in infrastructure and public services in the past. Now they want to use the billions to invest in education and skills, as well as improve the living conditions of families across the country.

Therefore Saudi’s domestic priorities could be prioritised ahead of helping western economies which have been put at risk by global economic turmoil. “Saudi Arabia does not want to be seen as a Milch Cow” a senior UK government figure said.

Mr Brown has struck an upbeat tone about the British economy on this trip, claiming the “building blocks” for recovery were in place.

He said borrowing could be allowed to rise because the Government had relatively low debt, and added: “Of course we have also got low interest rates compared to previous world downturns so the building blocks for a recovery are in place.

The Prime Minister was also challenged over whether Britain should be doing business with a country whose people do not have full democratic rights and do not allow women to drive or walk the streets unaccompanied.

Mr Brown replied that the West needed to recognise the “importance” of countries like Saudi Arabia.

“I feel that it is important for us to work with countries that are making changes, that are showing progress and at the same time are very important to the stability of the world,” he said.

“I think it’s important that we recognise progress that is being made but also the importance of Saudi Arabia to the world.”

This lunchtime Mr Brown left Saudi Arabia for Doha in Qatar.