Last Tuesday, March 6, the Ambassador of Spain to Saudi Arabia, the Hon. Mr. Álvaro Iranzo Gutiérrez, was invited to present information about the political, economic and social situation, as well as on diplomatic relations between Spain and Saudi Arabia in the framework of the International Classroom Program of the CEI. Important personalities representing the business, economic and institutional world as well as other members of the Spanish diplomatic attended the meeting.
The ambassador began by describing Saudi Arabia as one of the most important countries in the Middle East, highlighting its economy (with a GDP of 700,000 million dollars) and its political influence in the region, being the cradle of Islam. Saudi Arabia has an economy that has historically and fundamentally been based on oil, of which it is the world’s leading exporter, allowing it to be considered one of the twenty most important economies in the world.
Particularly, Saudi Arabia presented in its last 3 fiscal years a public deficit that is estimated to reach 16%, but has been able to finance the deficit by borrowing with foreign markets for the first time, thanks to its large reserves of foreign currency, maintaining its credit quality with an A note.
The first aspect highlighted by the ambassador was the recent political decisions that have marked an evolution in the situation and expectations of the country. For the first time since 1932, King, Salman bin Abdulaziz Al Saud has agreed to his succession, producing a generational leap, with Prince Mohamed Bin Salman, 32, chosen to succeed him, assuming, due to his young age, a radical change in the traditional line of succession. There is great hope that this generational change, through the 2030 Vision of the Crown Prince, will allow implementing the structural change, that Saudi Arabia needs in order to have a more diversified productive base and an economy that does not depend exclusively on oil.
Likewise, the Ambassador stressed that the relations between Spain and Saudi Arabia, characterized by mutual appreciation, lack a marked contemporary relationship, but arise from the historical link shared between Spain and the Arab world. The evocation of Spain for the Saudis implies cultural and historical prestige. These relationships are also reinforced by the strong connection between the royalty of both countries, the recognition of the Saudis of Spain’s tourist attraction and the anecdotal culmination of the Spanish football follow-up that Saudi citizens appreciate so much and that represents an additional link.
These cordial relations served as a solid base in the Spanish business presence in Saudi Arabia to be developed around various sectors such as infrastructure, transport, water treatment and a multitude of services for Saudi Aramco, which is undoubtedly the main company state. It is estimated that the economic exchanges between both countries are between 5 and 7 billion Euros per year, importing 15% of the necessary oil in Spain and exporting mainly capital goods. The ambassador highlighted the Spanish presence in Saudi Arabia, listing strategic projects such as the AVE from Mecca to Medina or the Riyadh metro, among others.
Following the planning instrument of Prince Mohamed Bin Salman called Vision 2030, there is a desire for economic development and modernization. Although the infrastructure sector has suffered a break, certain key elements such as toll roads or the privatization of airport management remain fundamental for the development of its economy. Other sectors of market relevance for Spanish companies have gained prominence. They represent a great opportunity for these sectors, such as renewable energies, water in all its facets (treatment, distribution and desalination), education and professional training services, entertainment with the creation of large theme parks and sports development and tourism, traditionally very closed, but with great potential, especially on the coast of the Red Sea.
On the other hand, the private sector is called to increase its presence in the Saudi economy. Less tender will be offered for turnkey projects that will be replaced by different types of public-private partnership. The privatization of 5% of Saudi Aramco will allow the creation of a sovereign fund that will be an investment vehicle to be especially taken into account to attract investments in real estate but also in the Spanish industrial sector. Mr. Iranzo Gutiérrez also pointed out the importance of the defense sector for Saudi Arabia, which is the third world importer. Spain has known how to exploit this fact until now and should continue to do so in the face of Saudi necessity in this matter, highlighting the agreements that are in the negotiation phase between Saudi Arabia and Navantia or Airbus for the importation of 5 corvettes and air transport.
The ambassador emphasized the transition phase the country is going through. Investors and businessmen demand legal security and certain guarantees that will condition their presence in Saudi Arabia, but was confident that these elements will exist in the near future highlighting legislative changes, giving as an example the new bankruptcy law or the transparency in the adjudication of contests, filtered by foreign advisers. The labor market is also immersed in a transformation to accommodate the growing national demand for employment, led by well-prepared new generations, especially the female sector that claims its place in the world of work.
The ceremony ended with both him and his office at the disposal of those present for any additional information or necessary assistance that might be required in the development of bilateral projects or investments in both Saudi Arabia and Spain, and encouraged to explore the opportunities that will arise from This change taking advantage of the good relations between Saudi Arabia and Spain.
Report prepared by Jordi Sixto
Student of the Preparation Course to Join the Diplomatic Corps
E-Secretaria
Campus Virtual (Másteres)
Moodle