Country Profile and Briefing Document

Saudi Arabia

January 18-20, 2014

Table of Contents

Country Background.......................................................................................................................1

Key People and Society Statistics................................................................................................1

Government Profile.........................................................................................................................2

National Leaders..............................................................................................................................4

Economic Profile..............................................................................................................................5

Key Economic Statistics.................................................................................................................6

Economic Challenges.....................................................................................................................7

Private Sector Profile......................................................................................................................8

Education Profile............................................................................................................................11

Science, Technology and Innovation Priorities........................................................................12

Saudi Arabian General Investment Authority ...........................................................................14

Governor of Saudi Arabian General Investment Authority………………………………….....15

SAGIA- National Competitiveness Council................................................................................16

President of SAGIA-National Competitiveness Council………………………………………..16

Trade Profile...................................................................................................................................17

Saudi Arabia’s Lead Trading Partners in Ranking Order........................................................18

U.S. – Saudi Arabian Relations....................................................................................................18

United States Trade Balance with Saudi Arabia........................................................................19

U.S. Diplomatic Representation in Saudi Arabia......................................................................20

2

Country Background

Saudi Arabia is the birthplace of Islam and home to Islam's two holiest shrines in Mecca and Medina. It is located in the Middle East, where it borders the Persian Gulf and the Red Sea (North of Yemen). Saudi Arabia is mostly uninhabited, sandy desert which suffers from great temperature extremes. As Saudi Arabia is the largest country in the world without a river, it suffers from desertification (depletion of underground water resources), which has prompted the development of extensive seawater desalination facilities.

The modern Saudi state was founded in 1932 by Abd Al-Aziz bin Abd al-Rahman Al Saud (Ibn Saud) after a 30-year campaign to unify most of the Arabian Peninsula. As required by the country's 1992 Basic Law, one of his male descendants rules the country today. As a result, King Abdallah bin Abd al-Aziz ascended to the throne in 2005.

Due to Saudi Arabia’s long history of domestic terrorism and extremism, King Abdallah has introduced a cautious reform program. The king instituted an interfaith dialogue initiative in 2008 to encourage religious tolerance on a global level; in 2009, he reshuffled the cabinet, which led to more moderates holding ministerial and judicial positions, and appointed the first female to the cabinet. In February and March of 2011, King Abdallah announced a series of benefits to Saudi citizens including funds to build affordable housing, salary increases for government workers, and unemployment entitlements. To promote increased political participation, the government held elections nationwide in September 2011 for half the members of 285 municipal councils. Also in September, the king announced that women will be allowed to run for and vote in future municipal elections - first held in 2005 - and serve as full members of the advisory Consultative Council.

The country remains a leading producer of oil and natural gas and holds about 17% of the world’s proven oil reserves. The government continues to pursue economic reform and diversification, particularly since Saudi Arabia's accession to the WTO in December 2005, and promotes foreign investment in the kingdom. A burgeoning population, aquifer depletion, and an economy largely dependent on petroleum output and prices are ongoing governmental concerns.

Key People and Society Statistics

1. Ethnic Groups: Arab 90%, Afro-Asian 10%

2. Languages: Arabic (official)

3. Religions: Muslim (100%)

4. Median Age: male: 27 years female: 24.8 years (2013 est.)

3

5. Population: 26,939,583 (July 2013 est.)

6. Population Growth Rate: 1.51% (2013 est.)

7. Urban Population: 82.3% of total population (2011)

8. Life Expectancy : 74.58 years

9. Literacy Rate: 87.2%

Government Profile

1. Type: monarchy

2. Capitala. Name- Riyadhb. Time Difference- UTC+8 (8 hours ahead of Washington, DC during

Standard Time)

3. Administrative divisions: 13 provinces (mintaqat, singular - mintaqah); Al Bahah, Al Hudud ash Shamaliyah (Northern Border), Al Jawf, Al Madinah (Medina), Al Qasim, Ar Riyad (Riyadh), Ash Sharqiyah (Eastern), 'Asir, Ha'il, Jizan, Makkah (Mecca), Najran, Tabuk

4. Independence: 23 September 1932 (unification of the kingdom)

5. National Holiday : Unification of the Kingdom, 23 September (1932)

6. Constitution: 1 March 1992 (Called the Basic Law of Governance; adopted by Royal Decree of King Fahd)

7. Legal System: Islamic (sharia) legal system with some elements of Egyptian, French, and customary law; note - several secular codes have been introduced; commercial disputes handled by special committees

8. International Law Organization Participation: has not submitted an ICJ jurisdiction declaration; non-party state to the ICCT

9. Suffrage: 21 years of age; male

10. Executive Branch :

a) chief of state: King and Prime Minister ABDALLAH bin Abd al-Aziz Al Saud (since 1 August 2005); Heir Apparent Crown Prince SALMAN bin Abd al-Aziz Al Saud, born 31 December 1935) ; note - the monarch is both chief of state and head of government

4

b) head of government: King and Prime Minister ABDALLAH bin Abd al-Aziz Al Saud (since 1 August 2005); Deputy Prime Minister SALMAN bin Abd al-Aziz Al Saud (since 19 June 2012); Second Deputy Prime Minister MUQRIN bin Abd al-Aziz Al Saud (since February 2013)

c) cabinet: Council of Ministers appointed by the monarch every four years and includes many royal family members

d) elections: none; the monarchy is hereditary; note - an Allegiance Commission created by royal decree in October 2006 established a committee of Saudi princes that will play a role in selecting future Saudi kings, but the system will not take effect until after King ABDALLAH's successor inherits the throne

11. Legislative Branch: Consultative Council or Majlis al-Shura (150 members and a chairman appointed by the monarch to serve four-year terms); note - though the Council of Ministers announced in October 2003 its intent to introduce elections for a third of the Majlis al-Shura incrementally over a period of four to five years, to date no such elections have been held or announced.

12. Judicial Branch:

a) highest court(s): High Court (consists of the court chief and organized into circuits with 3-judge panels except the criminal circuit which has a 5-judge panel for cases involving major punishments)Note - in 2005, King Abdullah issued decrees approving an overhaul of the judicial system and which were incorporated in the Judiciary Law of 2007; one change was the replacement of the Supreme Council of Justice with the High Court

b) judge selection and term of office: the High Court chief and chiefs of the High Court Circuits appointed by royal decree following the recommendation of the Supreme Judiciary Council, a 10-member body of high level judges and other judicial heads; new judges and assistant judges serve 1- and 2- year probations, respectively, before permanent assignment

c) subordinate courts: Court of Appeals; first-degree courts composed of general, criminal, personal status, and commercial courts, and the Labor Court; hierarchy of administrative courts

13. Political parties and leaders: None

14. Political pressure groups and leaders: Ansar Al Marah (supports women’s rights); other: gas companies and religious groups

15. International Disputes: Saudi Arabia has reinforced its concrete-filled security barrier along sections of the now fully demarcated border with Yemen to stem illegal cross-border activities; Kuwait and Saudi Arabia continue discussions on a maritime boundary with Iran; Saudi Arabia claims Egyptian-administered islands of Tiran and Sanafir

5

National Leaders

President/ Prime Minister: King Abdullah bin Abdulaziz

Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz was proclaimed the sixth King of the Kingdom of Saudi Arabia on 25 Jumada al-Thani 1426H (August 1, 2005), upon the death of Custodian of the Two Holy Mosques King Fahd bin Abdulaziz. 

King Abdullah is also Prime Minister of the Council of Ministers and Commander of the National Guard.

King Abdullah was born in Riyadh in 1924, and received his early education at the royal court. Influenced by his father, founder of the modern Kingdom King Abdulaziz Al Saud, he developed a profound respect for religion, history and the Arab heritage.  His years spent living in the desert with Bedouin tribes taught him their values of honor, simplicity, generosity and bravery, and instilled in him the desire to assist in the development of his people.

In 1962, Prince Abdullah was chosen by King Faisal to command the National Guard. He was appointed Second Deputy Prime Minister in 1975 on the succession of King Khalid, and when King Fahd came to the throne in 1982, he was named Crown Prince and First Deputy Prime Minister. In the latter capacity, he presided over cabinet meetings and governed the country as deputy to Custodian of the Two Holy Mosques King Fahd bin Abdulaziz.

Since ascending the throne in 2005, King Abdullah has made development a central focus of his reign. He has initiated a range of major economic, social, education, health, and infrastructure projects that have brought about remarkable changes throughout the Kingdom.

King Abdullah’s notable achievements in this area include the launch of four mega economic cities, the creation of the King Abdullah University of Science and Technology and the Princess Nourah bint Abdulrahman University for Girls, projects to expand the Two Holy Mosques and major welfare projects. He also approved a historic reorganization of Saudi Arabia’s judicial system and enacted laws to formalize the royal succession. As Crown Prince in 2005, he closely monitored the ongoing election process for the country's municipal councils.

On a global level, King Abdullah’s participation in international diplomacy reflects the Kingdom’s leadership role in defense of Arab and Islamic issues and for the achievement of world peace, stability and security.

He has taken a leading role in promoting dialogue among the world’s leading faiths. His call for interfaith dialogue has resulted in the convention of the World Conference on Dialogue in Madrid, Spain and a United Nations conference on dialogue in 2008.

King Abdullah has also sought to resolve conflicts in the Arab and Islamic world. Peace in the Middle East and the plight of the Palestinians are of particular concern to him, and the initiative on these that he presented at the Beirut Arab Summit in 2002 has been adopted by the League of Arab States, as has his forward-looking strategy for a unified Arab stance on international

6

issues. He has played a key role in brokering agreements for a Palestinian national unity government and a reconciliation accord between Sudan and Chad on Darfur.

A strong advocate of constructive global cooperation, King Abdullah has held a number of important international summits and meetings in the Kingdom. In June 2008, he hosted the Jeddah energy summit to discuss ways of stabilizing global oil markets. Other major international meetings include the Third OPEC Summit of Heads of State and the 19th Arab League Summit in 2007 and the 27th summit of the GCC Supreme Council in 2006.

On the issue of terrorism, King Abdullah has been unwavering in his condemnation of the taking of innocent lives, and in his denunciation of deviant groups that falsely claim to be Islamic. At the Counter-Terrorism International Conference in Riyadh in February, 2005, he urged international cooperation to fight this global scourge.

King Abdullah has undertaken numerous state visits both as Custodian of the Two Holy Mosques and as Crown Prince to strengthen Saudi Arabia’s relations with countries around the world. Recent state visits include Spain, France, Egypt, Jordan, Britain, Italy, Germany and Turkey in 2007, and China, India, Pakistan and Malaysia in 2006.

The King's first official visit to the United States was as Prince Abdullah in 1976, when he met with President Gerald Ford. His second visit was in October 1987, as Crown Prince, when he met with President George H.W. Bush. In September 1998, he made his third state visit to the United States, meeting in Washington, DC with President Bill Clinton. He met again with President Clinton in September 2000 while attending the Millennium event at the UN in New York.

On April 25, 2002, and again on April 25, 2005, Crown Prince Abdullah was received by President George W. Bush at the presidential ranch in Crawford, Texas. In 2008, King Abdullah twice hosted President Bush at the royal ranch in Jenadriyah, most recently in May when the president visited Saudi Arabia to mark the 70th anniversary of Saudi-US relations.

Throughout his life, King Abdullah has retained a love of the desert, along with a love of horsemanship. He is a breeder of pure Arabian horses, and founder of the equestrian club in Riyadh. Another life-long passion is reading, to which he attributes great importance. He has established two libraries, the King Abdulaziz Library in Riyadh, and one in Casablanca, Morocco.

Economic Profile

Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 17% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings. Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Diversification efforts are focusing on power generation, telecommunications, natural gas exploration, and petrochemical sectors. Over 5 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors, while Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly focused on employing its large youth

7

population, which generally lacks the education and technical skills the private sector needs. Riyadh has substantially boosted spending on job training and education, most recently with the opening of the King Abdallah University of Science and Technology - Saudi Arabia's first co-educational university. As part of its effort to attract foreign investment, Saudi Arabia acceded to the WTO in 2005. The government has begun establishing six "economic cities" in different regions of the country to promote foreign investment and plans to spend $373 billion between 2010 and 2014 on social development and infrastructure projects to advance Saudi Arabia's economic development.

Key Economic Statistics

1. Total Labor Force: 8.012 million (2012 est.)

2. Labor Force by occupation (2005): Agriculture: 6.7%, Industry: 21.4%, Services: 71.9%

3. Unemployment rate: 10.6% (2012 est.)

4. GDP: $921.7 billion (purchasing power parity 2012 est.):

5. Real GDP Growth Rate: 6.8% (2012 est.), 8.5% (2011 est.), 7.4% (2010 est.)

6. GDP per capita (2012 est.): $31,800

7. Budget (2013 est.) revenues: $326.5 billion expenditures: $234.8 billion

8. Taxes and other revenues: 44.9% of GDP (2012 est.)

9. Budget surplus (+) or deficit (-): 12.6% of GDP

10.Public debt: 11.8% of GDP (2012 est.)

11.Reserves of foreign exchange and gold : $656.9 billion (31 December 2012 est.)

12.Debt- external: $136.3 billion

13.Stock of direct foreign investment- at home: $223.2 billion

14.Stock of direct foreign investment- abroad: $22.12 billion

15.Exchange rates: Saudi riyals (SAR) per US dollar - 3.75 (2012 est.)

16.Fiscal year: calendar year

8

17. Inflation rate: 2.9% (2012 est.)

18.Natural Resources: petroleum, natural gas, iron ore, copper and gold

19.Agriculture Products: wheat, barley, tomatoes, melons, dates, citrus; mutton, chickens, eggs, milk

20.Largest industries: crude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair, commercial aircraft repair, construction

21. Industrial production growth rate: 5.3%

22.Current account balance: $164.8 billion

23. Industrial Products: petroleum and petroleum products 90%, machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles

24.Trade: surplus of $246.6 billion

25.Exports: $388.4 billion (2012 est.)

26. Imports: $141.8 billion (2012 est.)

27. Main export markets in percentage of total exports (2012): US 14.2%, China 13.6%, Japan 13.6%, South Korea 9.9%, India 8.2%, Singapore 4.3% (2012)Economic Challenges

1. Poverty- Millions of Saudis struggle on the fringes of one of the world's most powerful

economies, where jobs and welfare programs have failed to keep pace with a population

that has soared from 6 million in 1970 to 28 million today. Under King Abdallah, the

Saudi government has spent billions to help the growing numbers of poor, estimated to

be as much as a quarter of the native Saudi population. However, critics complain that

those programs are inadequate. Press reports and private estimates suggest that

between 2 million and 4 million of the country's native Saudis live on less than about

$530 a month – about $17 a day – considered the poverty line in Saudi Arabia. Even

though the government spends several billion dollars each year to provide free

education and health care to all citizens, as well as a variety of social welfare programs,

poverty and anger over corruption continue to grow. Vast sums of money end up in the

9

pockets of the royal family through a web of nepotism, corruption and cozy government

contracts.

2. Exporting vs. Importing- The Saudi government makes significant proceeds from

exporting oil but they import everything else. The price they pay is dependent on

exchange rates, given that their sales are denominated in U.S. dollars. As the dollar

goes down, Saudi purchasing power goes down with it — declining 47 percent over the

last three years. Overall, their exporting does not balance with their importing, thus

leading to debt.

3. Domestic expenditures- Saudi Arabia’s domestic expenditures are increasing

significantly. They have a large dependent population and the government has

committed itself to providing most services, many free of charge. There are a huge

percentage of unemployed people and half the population is under the age of 26. All the

demographics tend towards huge government expenditures.

Private Sector Profile

To facilitate the expansion of the private sector's role in the national economy, the government established five specialized credit institutions, which provide economic opportunities to many Saudis who were previously unable to compete in the marketplace. These financial institutions have provided loans to citizens for development projects in agriculture, industry and construction.

In 1974, the Saudi Industrial Development Fund (SIDF) was the first government agency set up to provide interest-free soft loans to enable Saudi businessmen to establish industrial plants. These loans can be used to finance up to 50 percent of the capital for a new factory. SIDF loans have helped launch thousands of new factories and expand hundreds of existing facilities

In addition to the specialized credit institutions, the government offers an array of incentives to the private sector. A sweeping reduction in utility and public service fees, implemented in early 1992, lowered operating and production costs for private companies, making their products more competitive with foreign goods.

Private entrepreneurs are also given access to government information systems specifically created to help local manufacturers target the best market for their products. Government agencies such as the Saudi Consulting House, replaced in April 2000 by the broader Saudi Arabian General Investment Authority (SAGIA), provide free consulting and support services and publish lists of investment opportunities for the production of goods in demand in Saudi Arabia. Government tenders also give priority to locally manufactured products and to Saudi companies. Saudi industries are exempted from paying customs duties on the import of machinery and supplies used in the production of goods domestically.

To facilitate the transfer of technology and expand the operations of the private sector, the government also provides various incentives to foreign companies that enter into

10

joint ventures with Saudi firms. Far-reaching new investment regulations in 2000, including removal of the need for sponsorship, gave further encouragement to foreign investors.

1. Consumer Goods- General Trading Company (GTC) is among Saudi Arabia's largest importers and distributors of consumer products, representing major international principals including Lindt and Colgate-Palmolive. Founded in 1954, GTC is one of The Olayan Group's oldest and largest companies. It markets hundreds of branded product lines and numerous category leaders, including food products, personal and dental care products, and confectionery. GTC serves all main regions of the Kingdom from its branches in Al-Khobar, Riyadh, Jeddah and Abha. Management with world-class talent, recruited from some of the leading branded-goods companies, and a professionally trained sales team give brand partners full product support for building brands and increasing market share in KSA. With the growth of hypermarkets and convenience stores in Saudi Arabia, GTC has extended its distribution network beyond traditional stores, and the company continues its exploration of new ways to serve towns and villages away from major metropolitan areas.

2. Travel and Tourism- The continued efforts by The Saudi Commission for Tourism and Antiquities (SCTA) to diversify the portfolio of its visitors showed positive signs within the different travel and tourism categories, increasing the number of arrivals in 2012. In addition to the increase in pilgrims in 2012, the country witnessed new levels of inbound leisure and business travelers seeking non-religious activities within the country. Between 2011 and 2012, the Tourism Commission organized more than 33 festivals and events in the country. The events involved cultural, social, heritage, sports, and entertainment activities that meet the aspirations of all social categories. The two weeks Jenadriyah Festival is one major event that takes place annually and includes the display of regional architecture, cuisine, craft, markets, dances and folklore.

However, Many Saudis and expatriates residing in Saudi Arabia are looking for entertainment outside of the Kingdom due to the strict religious ruling over personal lifestyle options. The lack of comparable local entertainment attractions such as cinemas, un-segregated restaurants and common areas, and more personal freedom to young men and women are driving many Saudis and expatriates to seek entertainment elsewhere. Regional and International Tourism with newly-introduced budget airline destinations attracted many Saudis to travel outside of the Kingdom at affordable prices. NAS Air, Air Arabia, flydubai, Jazeera Airways, and Bahrain Air are all budget airlines that fly to several destinations. Such increases in budget airline operators positively impacted departure figures in 2012.

3. Oil and Gas- The story of Saudi Arabian oil goes back to 1933 when King Abdulaziz bin Abdulrahman Al-Saud granted Standard Oil of California (SoCal), later renamed Chevron, the right to prospect for oil in the new Kingdom. In 1938, SoCal discovered large quantities of oil in the Dammam Dome near the Arabian Gulf. Limited exports began in 1939, and picked up significantly with the end of World War II. In the late 1940s, SoCal entered into a consortium with other American oil

11

companies and was renamed the Arabian American Oil Company (Aramco). By the 1970s, Saudi Arabia had become the top producer and exporter of oil in the world. The Saudi oil industry entered a new era in 1980 when the government assumed full ownership of Aramco, renaming it Saudi Aramco. The company began exploring in areas that had previously been untouched, and discovered vast deposits of high-grade crude oil.

Since most of the oil is owned by the government, there is very little room for private sector oil companies. Instead, many private oil companies serve as third parties that coincide with the bigger companies, like the Oil and Gas Company.

4. Media- Most of newspapers are privately owned but are subsidized and regulated by the government in Saudi Arabia. Because the Basic Law states that the media’s role is to educate and inspire national unity, most popular grievances go unreported in Saudi Arabia. In recent years, however, the government has allowed some critical stories to be written by selected journalists. Although self-censorship continues to be a method of self-preservation for the nation’s media outlets, government censorship seems to be decreasing, especially on journalistic inquiries into crime and terrorism. The government owns and operates the radio and television companies (BSKSA) in Saudi Arabia. Censors remove objectionable material deemed offensive by the standards of Islam, including references to pork, Christianity and other religions, alcohol and sex.

5. Agriculture- Saudi Arabia’s agricultural development over the last three decades has been astonishing. Large areas of desert have been turned into agricultural fields – a major accomplishment in a country that receives an average of about four inches of rain a year, one of the lowest rates in the world. Today, Saudi Arabia exports wheat, dates, dairy products, eggs, fish, poultry, fruits, vegetables and flowers to markets around the world. Dates, once a staple of the Saudi diet, are now mainly grown for global humanitarian aid.

The Ministry of Agriculture is primarily responsible for agricultural policy. Other government agencies include the Saudi Arabian Agricultural Bank (SAAB), which disburses subsidies and grants interest-free loans; and the Grain Silos and Flourmills Organization, which purchases and stores wheat, constructs flourmills, and produces animal feed. The government also offers land distribution and reclamation programs and funds research projects.

The private sector has played a major role in the Kingdom’s agricultural development. This is mostly due to government programs that offered long-term, interest-free loans, technical and support services, and incentives such as free seeds and fertilizers, low-cost water, fuel and electricity, and duty-free imports of raw materials and machinery.

6. Technology- Innovation and technology development are integral to Saudi Arabia’s long-term vision as set out in the National Science, Technology and Innovation Plan (NSTIP). The aim of the NSTIP is to build a knowledge-based economy by

12

developing the country’s human resource capacities; supporting research and innovation activities in universities and research centers; funding innovative techniques; transferring and localizing technology; and enhancing the legislative and institutional framework to stimulate creativity and innovation. Implementation of the NSTIP falls to the King Abdulaziz City for Science and Technology (KACST) and various Science, Technology and Innovation (STI) institutions; including 17 ministries, 10 universities, and 13 national agencies and commissions. The private sector also plays an important role and is involved in a number of projects. For example, the Saudi Arabian oil company ARAMCO is cooperating with KACST to advance research in oil and gas technology, particularly in the production of clean fuel. Similarly, SABIC, one of the world’s largest petrochemicals manufacturers, is participating in a project to transfer and localize petrochemicals technology in communities across the country.

7. Retail- Retailing saw a strong performance in Saudi Arabia during the review period, with growth being driven by a number of positive factors. Chief among these growth factors were economic growth and retail landscape development. Saudi Arabia's economy proved resilient even during the global economic downturn seen in the middle of the review period, while disposable income levels were further boosted at the end of the review period by increased government spending and a new minimum wage level. These trends encouraged stronger spending on retailing. The review period meanwhile saw strong investment in the country's retail landscape, particularly in the form of shopping malls. This encouraged a marked shift from traditional to modern retailers and boosted retailing in general.

There was a growing focus on shopping as a form of entertainment in Saudi Arabia during the review period, among both those living in the country and incoming tourists. Saudi Arabia is a major global pilgrimage destination but a growing number of pilgrims to the country also take time to enjoy days out at the country's increasingly famous shopping malls. The popularity of shopping as a form of entertainment also boosted some areas of non-store retailing. Home shopping for example benefited from consumers' enjoyment of homes hopping TV programs, while the social aspects of direct selling also attract many customers and sales representatives. With internet household penetration rising rapidly, internet retailing also benefited from browsing online being increasingly viewed as an enjoyable leisure pursuit towards the end of the review period.

Education Profile

The U.S. Department of State estimates the Saudi literacy rate to be 84.7 percent for males and 77.8 percent for females. Saudi Arabia’s nationwide public education system includes eight public universities and more than 20,000 schools. Public education—from elementary through high school—is a major government priority and is open and free to every citizen. In 2005 the government devoted 25 percent of total expenditures to education. Parents are not, however, required to send their children to school. Estimates from 2001 suggest that 59 percent of age-relevant children enroll in primary education. About 61 percent of those eligible attend intermediate and secondary schools, according to 1996 data. Education remains closely tied to

13

Islamic teachings. All curricula must conform to Islamic laws and the Quran, and traditional gender roles still limit the educational opportunities available to females. The education of females has increased dramatically in recent years, from 25 percent of all students in 1970 to 47.5 percent in 2001. However, classroom instruction remains strictly segregated. Additionally, women can only attend six of the nation’s eight universities, and they are prohibited from studying certain subjects. Whereas men may travel to foreign countries to pursue education, women are discouraged from doing so and generally must be accompanied by a spouse or male relative.

Science, Technology and Innovation Priorities

The President of Saudi Arabia, King Abdallah, values science and technology so much that he has created the King Abdulaziz City for Science and Technology (KACST), which is an independent scientific organization. KACST is both the Saudi Arabian national science agency and its national laboratories. The science agency function involves science and technology policy making, data collection, funding of external research, and services such as the patent office. 

Its main responsibilities are:

1. Propose a national policy for the development of science and technology and develop strategies and plans necessary to implement them. 

2. Coordinate with government agencies, scientific institutions and research centers in the Kingdom to enhance research and exchange information and expertise. 

3. Conduct applied research and provide advice to the government on science and technology matters. 

4. Support scientific research and technology development.5. Foster national innovation and technology transfer between research institutes and

the industry. 6. Foster international cooperation in science and technology.

The KACST has compiled a policy called the Science and Technology National Policy, which draws up the broad lines of the future general directions of the science, technology and innovation in the Kingdom system of Saudi Arabia, to lay down an integrated guidance framework. This which will serve as a reference basis to ensure the continuation of the system development efforts and the enhancement of its performance in the way that achieves the objectives sought by the Kingdom, in the long-term.

The framework of this policy is composed of principles and bases which define its directions, and general goals and objectives. The policy is also compliant with the general directions and objectives of the national development plans and the different sectorial policies and plans in the Kingdom.

The basic Goals of the Science and Technology National Policy aim towards:

14

Maintaining the overall national security, represented in the faith, the language, the culture and the land that contains the wealth and natural resources.

Serving the sustained, balanced and comprehensive development.

Raising the citizens' standard of living and quality of life as well as securing better future for the coming generations.

Contributing to build a harmonious human civilization.

The General Objectives include:

1. Adopting a panoramic view of the science, technology and the innovation system that can be used as a reference for the system development and the coordination and integration of its components and rationalizing the system relations and ties with the benefiting sectors.

2. Paying attention to qualifying the manpower in fields of science and technology and continuing its quantitative and qualitative development in a way that suits the different requirements of the system.

3. Fostering the scientific research and providing it with the resources and means necessary to perform properly its tasks in satisfying the requirements of both the national security and the sustainable development.

4. Supporting and developing the national technical capabilities of the various sectors, in a way that enables them to achieve the technology endogenization and development, and to have the ability to compete with their products, especially those of a high added value, on the world markets.

5. Developing and updating the regulations related to science and technology, and coordinating them in a way that supports the system and enhances the interaction and performance of its components.

6. Promoting the scientific and technical cooperation with the outside world, and developing its means and forms, to cope up with the new directions worldwide and to satisfy the requirements of the desired scientific and technical advancement in the Kingdom.

7. Enhancing science and technology support activities, such as information and standardization services, patents, consulting and engineering firms, and scientific societies.

15

8. Optimally investing in information and its technologies in a way that conforms to the information community and knowledge-based economy.

9. Exploiting science and technology in the preservation of the natural resources and protection and development of environment.

10. Creating awareness among the society members of the importance of science and technology and their role and feasibility in realizing the overall national security and sustainable development.

KACST has done many research projects in:

Water Oil & Gas Petrochemicals Nanotechnologies Biotechnology Information Technology Electronics, communications, photonics Space and Aeronautics Technology  Energy Advanced materials Environment

Through research, the KACST has achieved many significant achievements:

KACST's Space Research Institute has designed some satellites that are used in scientific purposes. Such as: SaudiComSat-1 and SaudiGeo-1

In 2006, KACST signed a collaboration agreement with CERN to participate in the construction of LINAC4 project. KACST engineers constructed a warm prototype of it. This prototype was then qualified at CERN. And now, KACST is working build up a high-energy physics community to participate in future CERN programs.

In September 30, 2008, KACST funded the science team of Gravity Probe B, helping them to complete the project.

In 2012, KACST announced the first electrostatic accelerator in Saudi Arabia. This accelerator has been designed by the National Center of Mathematics and Physics.

Saudi Arabian General Investment Authority

The Saudi Arabian General Investment Authority (SAGIA) has been established under the Council of

Ministers Resolution in April 2000. SAGIA is a governmental body that reports to the President of the

16

Supreme Economic Council, with its headquarter in the city of Riyadh. The main objective of the

authority is to oversee investment affairs in the kingdom, including foreign investment. This can

include:

Preparing state policies designed to promote and enhance local and foreign

investment, and submitting them to council.

Proposing implementation plans and criteria to improve the investment climate in the

kingdom and submitting them to the council

Monitoring and evaluating the performance of local and foreign investment, and

drafting a periodical report in this regard whose contents to be specified in the rules

Conducting studies on investment opportunities in the kingdom and promoting these

opportunities

Coordinating and cooperating with the pertinent governmental bodies to enable the

Authority  to accomplish its mission

Organizing and participating in conferences, symposia, local and international

exhibitions and workshops relevant to investment.

Developing database and carrying out statistical surveys required for the conduct of

its functions.

Any task officially assigned to the authority.

Furthermore, SAGIA is the driving force behind Saudi’s investment program. Its aim is to turn

opportunity into success and in return promising rich returns for investors. SAGIA is committed to

supporting new and growing business in Saudi Arabia. To make it as easy as possible to invest in or

set up and operate a business in KSA, it’s creating a network of dynamic Business Centers

throughout the nation (Riyadh, Jeddah, Dammam, Hail, Al Medina, Jizan, Tabuk, Abha). Each center

provides a highly responsive and effective resource to help companies get up and running quickly

and efficiently – offering everything from advise, license requirements and after license services by

providing representatives of all related government departments such as (Ministry of labor, General

directorate of passports, Ministry of commerce and industry, Zakat and income taxation department

and notary public).

Governor of Saudi Arabian General Investment Authority

17

Abdullatif A. Al-Othman was appointed as SAGIA Governor in 18th of May 2012. Al-Othman is a 1979 graduate of KFUPM with a B.A. in civil engineering. In addition, he earned his master's degree in business administration from the Massachusetts Institute of Technology (MIT) as a Sloan Fellow in 1998. Al-Othman began his career with Saudi Aramco in March 1981 as an engineer in Engineering and Project Management. Throughout the 1980s, Al-Othman worked as an engineer on the Gas Gathering Project, Phase II, the Ras Tanura Refinery Modernization Project, the Qasim Refinery Project, the Southwest Refinery Project, and the Ras Tanura and Terminal Projects. In 1990, he was promoted to senior project engineer in the Marjan Completion Division and worked in project management until 1994. From 1994 to 1999, Al-Othman served in staff support functions in Engineering and Project Management, including the Total Quality Management Program. He also was manager of Resource Planning and acting manager of Southern Area Projects. From February 1999 to February 2001, Al-Othman was assigned to Contract Review and Cost Compliance in Finance. He also held the positions of manager of Business Analysis and manager of Long Range Planning in the Corporate Planning function. In February 2001, Al-Othman moved to Crude Oil Sales and Marketing as manager. In June 2001, he was named executive director of Saudi Aramco Affairs and was appointed vice president of Saudi Aramco Affairs in September 2001. In 2003, Al-Othman was named vice president of Finance then was later named senior vice president of Finance, in May 2005. Al-Othman served as president for the Project Management Institute (PMI) Arabian Gulf Chapter and was a member of the International Association of Energy Economics.

SAGIA- National Competitiveness Council

The main goal of the SAGIA- National Competitiveness Council is to support the Kingdom of Saudi Arabia’s competitiveness agenda through objective, data-driven advice on regulatory reform and sector improvement opportunities that will contribute to increasing, sustainable prosperity for the people of Saudi Arabia. The National Competitiveness Center was established by SAGIA in 2006 as a body to monitor, assess, and support competitiveness enhancement in the Kingdom of Saudi Arabia.

The NCC fulfills this role in three ways:

1. It serves as a think-tank for change by conducting and developing competitive assessments and monitoring the implementation and results of change programs. These programs focus on two main areas: improving the ease of doing business in the Kingdom, through spurring modernization of the general business environment; and improving the microeconomic fundamentals of competitiveness, through mobilizing development of world-class clusters. 

2. The NCC works as a facilitator of change by creating forums for discussion between the public and private sectors. It is currently supporting the creation of Cluster Advisory Councils that bring together private and public stakeholders in key clusters to identify and collaborate on competitiveness improvement initiatives.

18

3. It acts as a communicator for change, sharing the results of the Kingdom’s ongoing competitiveness efforts through such channels as The Competitiveness Review.

President of the SAGIA- National Competitiveness Council

Prince Mohammed bin Khalid Al-Abdullah Al-Faisal is the President and Director of the Al Faisaliah Group. He was educated in the United States, receiving a bachelor’s degree in business administration from Menlo College in 1971 and a master’s degree in industrial engineering from Stanford University in 1977. His master's degree studies included the fields of values, technologies and society, and futurology. Faisal bin Abdullah worked in the research and industrial development center at the ministry of commerce from 1971 to 1973. During the period 1992 to 1997, he founded companies and became stakeholder in some firms. Faisal bin Abdullah was deputy commander of the National Guard’s western sector from 1992 to 2003. In the years before his 2009 appointment as minister of education, he was deputy chief of General Intelligence Presidency (GIP), a position he had held since 2003. Prince Faisal was responsible for the reorganization of GIP's administrative structure.

In addition to these official posts, Faisal bin Abdullah played a role in improving the King Abdullah University of Science and Technology. He was also the chairman of steering committee of Al Aghar Group of Strategic Thought. Faisal bin Abdullah was appointed minister of education to the Saudi cabinet on 14 February 2009. 

Trade Profile

Because of its massive oil revenues, Saudi Arabia regularly produces a significant trade surplus. The country’s major trade partners are Japan, the United States, and the European Union. Saudi Arabia maintains memberships in most of the region’s economic organizations, including the Cooperation Council for the Arab States of the Gulf, Islamic Development Bank, Organization of Arab Petroleum Exporting Countries, and Organization of the Petroleum Exporting Countries. Saudi Arabia became the 149th member of the World Trade Organization (WTO) in December 2005, evidence that it is making strides toward market modernization.

19

Saudi Arabia plays an incredibly important role in the economy of the United States, largely because of its position as one of the most influential members of OPEC, the group, which is formed of the countries which are net exporters of oil. Saudi Arabia has huge oil reserves and it is currently the country with the best capacity for increasing or decreasing its oil production in response to changes in oil prices and demand.

The US economy is highly dependent on oil, relying on oil for about 40 percent of its energy production and 97 percent of its vehicle fuel, as well as for the supply of the petrochemicals that are used by many manufacturing industries. Although the United States does produce some of its own oil, it has to import approximately two thirds of the oil that is uses. This means that it is very dependent on the oil producing nations, particularly the OPEC countries and Saudi Arabia. Saudi Arabia has a significant impact on the global oil and petrochemicals industry, which means that it can therefore have a potentially significant influence on the economy of the United States. About 13 percent of the oil that is imported into the US every year, over 100 million barrels a day, comes from Saudi Arabia. This is a significant amount, but Saudi Arabia, as a key player in OPEC, also has an indirect influence on the US, economy through its influence on the other sources of US oil imports.

The United States, with its economy that is dependent on oil, is an important export market for Saudi Arabia, which has an economy that is dominated by oil production. The United States is the largest export market for Saudi Arabia. Meanwhile, Saudi Arabia is one of the largest markets in the Middle East for exports from the United States. Saudi Arabia is also an important market for US exports, with many commercial and manufactured products made in the United States being exported to Saudi Arabia. Saudi Arabia is a particularly important market for the defense sector in the United States, with a lot of US made equipment being exported to Saudi Arabia.

The United States has a very special relationship with Saudi Arabia. This is largely based upon the importance of the trade of oil and other goods for both countries, but Saudi Arabia has also been courted by the United States due to its strategic location and importance in the Middle East. The good relationship between the US and Saudi Arabia, and the influence of Saudi Arabia on the stability of its region, is very important for the US politically as well as economically, and this political side to the relationship also has economic effects in the US, by ensuring a reliable source of Arab oil into the United States and by helping to make it possible for the US to trade with other Arab countries

Saudi Arabia’s Lead Trading Partners in Ranking Order

Major trade partners (exports):

Asia NES (37%), North and Central America, NES (8%), Japan (7%), China (7%), United States (7%)

Major trade partners (imports):

China (14%), Germany (10%), Japan (9%), Korea, Rep. (6%), United States (6%)

U.S. – Saudi Arabia Relations

20

The United States and Saudi Arabia established full diplomatic relations in 1940. Saudi Arabia's unique role in the Arab and Islamic worlds, its possession of the world's largest reserves of oil, and its strategic location make its friendship important to the United States. The United States and Saudi Arabia share common concerns and consult closely on wide range of regional and global issues. As the region is going through a period of great transformation, the United States appreciates Saudi Arabia’s leadership in working toward a peaceful and prosperous future for the region. Saudi Arabia is also a strong partner in regional security and counterterrorism efforts, providing military, diplomatic, and financial cooperation. It works closely with U.S. law enforcement to safeguard both countries' national security interests.

Saudi Arabia’s economic and security relationship with the United States remains strong but not without tension. The terrorist attack on the United States in September 2001 placed considerable strain on the relationship since Saudi Arabia had been one of only two governments to recognize the Taliban administration in Afghanistan, and 15 of the 19 hijackers were of Saudi descent. In the ensuing war on terrorism, criticisms have been traded over the handling of prisoners, U.S. press coverage of Saudi connections to and financing of terrorist organizations, and a civil lawsuit brought against the Saudi government by relatives of the victims of September 11. Even as tensions mounted between the United States and Saudi Arabia, terrorists carried out attacks on Western interests and targets in Saudi Arabia in response to Saudi cooperation with the United States. Although seen as soft toward the West in parts of the Middle East, King Abd Allah, then crown prince, condemned the U.S. war with Iraq and refused to commit Saudi troops.

The United States and Saudi Arabia have a longstanding security relationship and have cooperated closely on this front for nearly 60 years. The U.S. Army Corps of Engineers plays a role in military and civilian construction activities in Saudi Arabia. Three security assistance organizations are funded through the U.S. Foreign Military Sales program: to provide training and support in the use of weapons and other security-related services to the Saudi armed forces; to assist in the modernization of the Saudi Arabian National Guard; and to train and equip a Facility Security Force, part of the Ministry of Interior. The United States has sold Saudi Arabia military aircraft, air defense weaponry, armored vehicles, and other equipment.

The United States and Saudi Arabia enjoy a strong economic relationship, as the United States is Saudi Arabia's largest trading partner, and Saudi Arabia is one of the largest U.S. export markets in the Middle East. The United States and Saudi Arabia have signed a Trade Investment Framework Agreement. Saudi Arabia is also one of the leading sources of imported oil for the United States, providing more than one million barrels per day of oil to the U.S. market.

United States Trade Balance with S audi Arabia

*All figures are in millions of U.S. dollars on a nominal basis

Year Exports Imports BalanceTotal 2013 15,481.3 42,678.1 -27,196.9Total 2012 17,972.0 55,666.9 -37,694.9Total 2011 13,826.6 47,476.3 -33,649.7Total 2010 11,506.2 31,412.8 -19,906.6

21

 U.S. Diplomatic Representation in S audi Arabia

The American Mission to Saudi Arabia began as a legation in Jeddah in 1942. Full diplomatic relations commenced in 1949 and the U.S Mission, located in a traditional house in the old city center, became an Embassy. The Embassy moved in 1952 to the current Consulate General location, which at the time was an isolated, beach-front property far to the north of the city limits. Along with all other foreign missions, the Embassy was transferred to Riyadh in 1984. The former Embassy compound in Jeddah is now a Consulate General in the heart of one of the Middle East's most dynamic cities.

James B. Smith U.S Ambassador

Term of Appointment: 09/16/2009 to present

James B. Smith was sworn in on September 16, 2009, as the U.S. Ambassador to the Kingdom of Saudi Arabia. Prior to his appointment, Ambassador Smith had served in a variety of executive positions with Raytheon Company involving corporate strategic planning, aircraft manufacturing, and international business development.

22

Ambassador Smith was a distinguished graduate of the United States Air Force Academy’s Class of 1974 and received the Richard I. Bong award as the Outstanding Cadet in Military History. He received his Masters in History from Indiana University in 1975, and is also a distinguished graduate from the Naval War College, the Air Command and Staff College and the National War College.

Ambassador Smith spent a 28 year career in the United States Air Force. Trained as a fighter pilot, he logged over 4000 hours of flight time in F-15s and T-38s. He served around the world in a variety of operational assignments and flew combat missions from Dhahran AB during Operation Desert Storm. He commanded the 94th Fighter Squadron, the 325th Operations Group and the 18th Fighter Wing (Kadena AB, Okinawa). In addition, he served in a variety of staff assignments involving coalition partners, and served as Air Force Chair and Professor of Military Strategy at the National War College. During his final assignment at U.S. Joint Forces Command, he led Millennium Challenge, the largest transformation experiment in history. He was promoted to Brigadier General in October, 1998, and retired from the Air Force on October 1, 2002.

Timothy A. Lenderking Deputy Chief of Mission

Tim Lenderking is the new Deputy Chief of Mission at the US Embassy in Riyadh, Saudi Arabia.  He is a career member of the Senior Foreign Service.

Prior to arriving in Riyadh, Mr. Lenderking served as the Director of the Pakistan Office at the Department of State from 2010-2013. From 2008-2010, Mr.  Lenderking completed two tours in Baghdad, the first as the Senior Democracy Advisor at the US Embassy, and the second as the Policy Advisor to LTG Charles Jacoby, Commanding General of Multi-National Forces Iraq (MNF-I), based at Camp Victory.

Before his Iraq tours, Mr. Lenderking served as the Economic Counselor and Acting Deputy Chief of Mission at US Embassy Kuwait.  He was also the Political Counselor at Embassy Rabat from 2002-2006. Mr. Lenderking’s other tours in the Foreign Service include serving as the Special Assistant to Under Secretary for Political Affairs Marc Grossman 2001-2002, as the Lebanon Desk Officer 2000-2001, and as a Watch Officer in the Operations Center.  Mr. Lenderking also served in Dhaka, Bangladesh, and in Damascus, Syria.

23

Mr. Lenderking joined the Foreign Service in 1993 after a career in the refugee field, where he held numerous positions with American NGOs and with the United Nations in New York, Sudan, Pakistan, Afghanistan, and Thailand.

Mr. Lenderking received a Master’s degree in History and International Relations from the University of Washington in 1989 and a Bachelor’s Degree with Honors from Wesleyan University in 1985.  He is the recipient of seven Superior Honor Awards.  He has two daughters, Hania and Philippa.  

24