Diversity, Inclusion, International Politics, World Karina Robinson Diversity, Inclusion, International Politics, World Karina Robinson

A Saudi revolution in convoluted times

“It’s a good time to be a woman in Saudi Arabia,” said the CEO of a bank over dinner at Riyadh’s fashionable Cipriani restaurant. She – for it was a she – is not alone in thinking that. In fact, the most senior role in the Saudi diplomatic service, Ambassador to Washington, is held by Princess Reema Al Saud, another foreign educated female in her 40s.

A policy including transport subsidies, childcare support and employer incentives for hiring women has resulted in the proportion of Saudi women in work doubling in only four years to 33 percent, exceeding the 27 percent average for the Middle East and North Africa, notes the IMF.

 

Collaboration and Communication

“It’s a good time to be a woman in Saudi Arabia,” said the CEO of a bank over dinner at Riyadh’s fashionable Cipriani restaurant. She – for it was a she – is not alone in thinking that. In fact, the most senior role in the Saudi diplomatic service, Ambassador to Washington, is held by Princess Reema Al Saud, another foreign educated female in her 40s.

A policy including transport subsidies, childcare support and employer incentives for hiring women has resulted in the proportion of Saudi women in work doubling in only four years to 33 percent, exceeding the 27 percent average for the Middle East and North Africa, notes the IMF.

The role of women is not the only change in a country undergoing a seismic shift into a technologically-driven, innovative land. Demography, purpose and funds are the three foundations upon which Mohammed Bin Salman’s Vision 2030 is being built.

Demographic Dividend

Two thirds of Saudi Arabia’s 36m population is under 35 years old. With a fertility rate of 2.3 per woman, the young will continue dominating, although the birth rate has fallen substantially over the last years and that fall will likely accelerate as women take up more working roles. This is one reason for the Crown Prince, known as MBS, to pursue his framework for development at a brisk pace – one look at archenemy Iran provides another.

Iran’s population numbers a heftier 86m, but it has a similar age profile: 60% of its people are under 30. However, without a modernising agenda chock-a-block with opportunities for the young, and with no steady sources of income due to sanctions, its rulers, if they survive, will continue facing riots and revolts – like that sparked in September by the death of a young woman, probably due to religious police brutality.

Purposeful Activity

The second leg of the Saudi development stool is purpose. Vision 2030 envisages the country weaning itself off its dependence on oil revenues and diversifying its economy into sectors including science and technology.

The aims for the tourism sector are among the most ambitious – doubling the number of UNESCO world heritage sites, establishing the largest Islamic museum in the world, and promoting cultural and entertainment activities. This has a couple of advantages. Tourism employs large numbers of people, most likely the young, from both skilled and unskilled backgrounds, while also encouraging an openness to the world that will be hard to row back on.

One of the chosen areas for tourist development is in the northwest, around the town and oasis of AlUla, a stop-off on the historical Incense Road. Old shops are being restored, and local women in full hijab and increasingly more liberal outfits are given the task of running them with the rent and stock subsidised by the state. Cool cafés and restaurants abound, staffed by a mix of foreigners and Saudis, many of the latter on a steep learning curve.

On our recent visit, the tour guide showing us the nearby Nabatean tombs at Hegra – like Petra in Jordan but without the crowds – was a historian whose mother was a Bedouin and father a local. The Royal Commission AlUla (RCA) sends 500 students abroad annually for degrees, mainly to the US, a practice that the central government had been applying for years, resulting in a skilled, English-speaking youth. One of our Uber drivers in Riyadh, between jobs as a town planner, had studied at university in Texas on a full scholarship.

The cleverness of Vision 2030 for youth is that it not only hands them a purpose – pride in their country’s history and beauty, and it in its rapid modernisation – but it also provides entertainment. An example is Boulevard Riyadh City, a 900,000 square metre outdoor area of shops, laser shows, and concerts, built only three years ago and constantly increasing in size and offerings. A couple of weeks ago a female DJ in black leggings and a long-sleeved T-shirt was busy spinning and boogieing to what sounded to our untrained ears like Saudi house music.

The biggest boost to tourism will come from the lifting of the ban on alcohol, rumoured to be happening within the next two years. This will probably apply to tourist areas only, rather like Dubai and Qatar.

Expats make up around 38% of the population, ranging from the most menial jobs to the highly paid consultants from firms like McKinsey and Bain, who are making eye-watering amounts from their work.

Oil Funds

And Saudi Arabia has the money to pay them. The third leg of its development stool are the vast amounts flowing into its coffers due to the energy crisis. Saudi Arabia is making about $1 billion a day from oil exports, according to Bloomberg, marking a 123% increase year on year. The IMF estimates the country will be one of the world’s fastest growing economies this year, with GDP growing at 7.6%.

This is evident everywhere you look, whether in Riyadh or Jeddah, the second largest city on the coast, or AlUla. A plethora of architecturally stunning new buildings spring up continually and the air of excitement is palpable. This year’s annual FII conference, nicknamed Davos in the Desert, was the largest ever, with over 7,000 delegates from all over the world.

What could go wrong?

In a world awash in recession and inflation, Saudi Arabia stands out as the promised land, where vast funds are being applied to create a “vibrant society, a thriving economy and an ambitious nation.” What could be more symbolic than its football team beating World Cup favourites Argentina only a few days ago?

There is, however, one caveat to the fairy tale. “It all depends on one man,” noted a Saudi top executive.

Vision 2030, launched in 2016, was developed with the input of the Council of Economic & Development Affairs, and constant feedback from business, but MBS is key to its implementation. He took power away from the Council of Senior Scholars, the supreme religious body; from the Mutawa, the religious police; from the Saudi financial and political elite, many of whom are part of the royal family, with a well-publicised kidnap of around 500 of the country’s elite, held hostage in the Ritz-Carlton Hotel. Those actions should ensure that the 37-year old Crown Prince will be appointed King by the Royal Court when his father dies.

That ruthlessness was also apparent in the 2018 murder of dissident journalist Jamal Khashoggi in Istanbul, with the CIA ascribing blame to the Saudi ruler. Public opprobrium followed, but was short-lived – most evidently when this summer, vociferous critic Joe Biden travelled to Saudi Arabia to fist-pump with MBS and plead for higher oil production; most recently with rival Turkey gratefully accepting a purported $5bn transfer to its central bank reserves.

Saudi coffee, delicious as it is, is unrecognisable as coffee to Western palates. Saffron, cardamom, ginger, and other spices, add an entirely different dimension. So it is proving with Saudi Arabia’s revolution. An awe-inspiring local creation, but one that won’t suit all palates.

 
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Politics, World Karina Robinson Politics, World Karina Robinson

Is Poland next?

President Putin’s troops are making slow progress in Ukraine but the lack of speed in no way detracts from what military minds see as a foregone conclusion: the physical destruction of a European nation.

In 2017, with a headline-dominating North Korea looking like the biggest threat to global stability, Ben Hodges, then Commanding General of US troops in Europe, told Karina’s Column: “Of course Russia, and its behaviour over the last three years [with invasions of Crimea and Ukraine] is the only nation that really possesses the ability, the capability, to destroy a European country or the United States with their nuclear weapons.”

 

A deformed perception of reality

President Putin’s troops are making slow progress in Ukraine but the lack of speed in no way detracts from what military minds see as a foregone conclusion: the physical destruction of a European nation.

In 2017, with a headline-dominating North Korea looking like the biggest threat to global stability, Ben Hodges, then Commanding General of US troops in Europe, told Karina’s Column: “Of course Russia, and its behaviour over the last three years [with invasions of Crimea and Ukraine] is the only nation that really possesses the ability, the capability, to destroy a European country or the United States with their nuclear weapons.”

So in terms of an existential threat, that’s Russia,” he said, quickly adding a reassuring sentence: “Now it’s not likely, but that’s a part of it.”

Ukrainian bravery cannot stop, only delay, a war criminal with a superior arsenal and armed forces. Negotiations, unless Putin has changed his form, are but a cover for regrouping and keeping his opponents off balance.

We can only speculate at what the ultimate aim of the former KGB spy might be, but a devastated nation, living in fear of the Russian bear next door, is likely to be a satisfactory outcome. There is no need for an occupation, which would drain funds from state coffers. NATO becomes a de jure impossibility for Ukraine – as opposed to a de facto one, which had long been the case. The EU will not, and cannot take on, a country reduced to rubble with a desperate need for a Marshall Plan equivalent.

One of the outcomes of the war is that Russia, despite acquiring pariah status, has slotted back into the top echelon of nations. No more is China the only story.

As the West desperately tries to understand Putin’s motivations and where these will lead, one man who dealt with him as first a President and supporter, to then discover an implacable enemy, says the leaders in the West have never understood and will never understand that Putin has the “mentality of an exponent of organised crime,” Mafia boss rather than statesman.

Mikhail Khodorkovsky, the former owner of petrol company Yukos, worked in parallel with the Russian President until his forays into political opposition landed him in jail for a decade.

In a recent interview with Italian newspaper Corriere, the London-based exile dismissed Putin apologists’ theory that his fear of Ukraine joining NATO led to the invasion.

He hates NATO but does not fear it. Rather, he is now taken with a messianic mission. He is possessed, and you can see that in his having placed a [17.5m high] statue of Vladimir the Great [Prince of Novgorod, Grand Prince of Kiev, and ruler of Kievan Rus' from 980 to 1015] in front of the Kremlin.”

Khodorkovsky has no doubt the aggression against Ukraine is the fruit of a “deformed” perception of reality. After over two decades in power, the Russian President is surrounded by advisers who through fear dare not tell him the truth.

Putin has already threatened the use of nuclear weapons against the West, turned Belarus into a vassal state, and sent troops to Kazakhstan to quell anti-government unrest in January – it is unclear whether they have all returned home. The Russian Ministry of Defence says they have. At the very least, President Kassym-Jomart Tokayev is entirely in his debt.

The West, anxious about a Third World War, has been very clear that unless a NATO nation is attacked, they will not fight. Only two weeks ago, Russia bombed a military facility in Ukraine close enough to Poland for those on the border to see the flashes.

What would NATO do if Putin bombed some of the exported arms from NATO countries building up on the Polish side of the border? That is one of the few ways into Ukraine and into the hands of its army. Would the West prevaricate, arguing that the attack was about the weapons, not the country? That would be a mistake.

Khodorkovsky is not alone in believing that the West’s military inaction is encouraging Putin. He envisages a scenario where the Russian President will conquer Ukraine - guerrilla warfare will continue - and as the Russian economy worsens, he will launch a war against Poland, a similar distraction to the wars he launched in 2008 and 2014, but more in line with his Vladimir the Great-like ambitions.

At least one Polish mother has already contacted her London-based sister for assistance in extracting her conscription-aged son from the country as quickly as possible.

Putin’s heart-breaking and unprovoked war on Ukraine has had the welcome effect of uniting the West – Sweden is likely to announce it will join NATO by the spring. But the effects on his own country - turning Russians into pariahs, devastating the domestic economy on the back of sanctions and a brain drain, eliminating the last vestiges of a free society – sets the scene for more wars.

Meanwhile, the prognosis for the West’s economy, already suffering from inflationary forces, is dire. Wheat prices at record highs are bound to stay there. There will be no new planting in Ukraine. Oil prices are 70% higher than twelve months ago. with Western leaders like Boris Johnson going cap in hand to unseemly leaders of oil producing states to beg for increased production or deals. Saudi Arabia’s Prince Mohammed bin Salman reportedly refuses to take President Joe Biden’s calls, with the latter having been critical of MBS’s human rights record. Autocracies have been strengthened by Russia’s actions.

The erosion of social cohesion and livelihood crises were two of the top five 10-year risks in the 2022 World Economic Forum Global Risk report. The effects of the invasion can but exacerbate these. Governments will need to tread carefully, and apply support, as a toxic cost of living increase feeds into society.

What might happen if Putin does take the war into Poland? We don’t know. But we do know what a previous invasion of Poland I 1939 led to.

 
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Greenhouse Gases, Sustainability, net zero, World Karina Robinson Greenhouse Gases, Sustainability, net zero, World Karina Robinson

Green Finance Blossoms

The perfect storm is right now

The world is facing the perfect storm for environmental change. We are at the most exciting time to fight climate disaster in the last four years. The US is set to rejoin the Paris Agreement, China announced it will be carbon neutral in 40 years, and the mid-November Green Horizon Summit hosted by the City of London saw a handful of key regulatory and financial advances.

Despite weather-related catastrophes like wildfires in California and massive flooding in parts of Asia during his term, outgoing President Trump stuck to his early decision to withdraw from the Paris climate accord. Incoming President Biden, instead, affirms his intention to lead a diplomatic initiative to go beyond its current goals of keeping the temperature rise well below 2 degrees Celsius this century. Sustainability is central to the President-elect’s agenda.

 

The perfect storm is right now

The world is facing the perfect storm for environmental change. We are at the most exciting time to fight climate disaster in the last four years. The US is set to rejoin the Paris Agreement, China announced it will be carbon neutral in 40 years, and the mid-November Green Horizon Summit hosted by the City of London saw a handful of key regulatory and financial advances.

Despite weather-related catastrophes like wildfires in California and massive flooding in parts of Asia during his term, outgoing President Trump stuck to his early decision to withdraw from the Paris climate accord. Incoming President Biden, instead, affirms his intention to lead a diplomatic initiative to go beyond its current goals of keeping the temperature rise well below 2 degrees Celsius this century. Sustainability is central to the President-elect’s agenda. 

Biden has not simply jumped on the latest bandwagon: he was responsible for one of the first climate change bills ever introduced to the Senate. His goal is for the US to be net zero emissions by 2050, and he has promised to create an enforcement mechanism by the end of his first term. That is a crucial element in a democracy where those who deny climate change represent a substantial force and could back in power in four years.

Meanwhile, China may be the world’s largest emitter of greenhouse gases, but its leadership has now taken a stand on the issue.  A couple of months ago, President Xi Jinping announced at the UN General Assembly that his country will achieve carbon neutrality by 2060, only ten years after the US, not a simple achievement for a fast-growing economy that relies on coal.

In part, this plays into China’s narrative of being a responsible member of the international community, ably contrasting with US withdrawal under President Trump.  However, with a Democratic Party administration in place from 2021, one that will continue to stand up to China’s military and economic might, cooperation on climate change looks likely to be the one area where the two superpowers can work together and achieve major progress on tackling the environmental disaster.

The third part of the equation is not as headline-grabbing as the first two but is arguably as important for its private sector consequences. Last week the Financial Conduct Authority (FCA) announced that from January 1st all London-listed companies will have to disclose how climate change affects their business under Taskforce on Climate-related Financial Disclosures (TCFD) standards; the Bank of England announced the launch of its climate stress test for financial institutions in June 2021; Chancellor Rishi Sunak announced the launch of the first green gilts (UK green treasury bonds), in essence government borrowing for low-carbon projects.

London hosts the world’s most global stock exchange, while the City of London is, still, the centre of international finance. Thus although these UK rules may have arrived after those of the European Union, a leader in this sector, they will have global consequences.

In fact, it is indicative of the City’s aim to lead on green finance that China Yangtze Power plans to list on the London Stock Exchange (LSE). It will be the first Chinese company to receive the LSE’s ‘Green Economy Mark’ for companies that derive at least half their revenues from the green economy. Yangtze Power is the world’s biggest hydropower plant operator in terms of capacity.

Meanwhile, the carbon credit market – where regulatory allowances for emissions can be bought and sold – looks like becoming mainstream. This summer, the KFA Global Carbon ETF listed in New York. The exchange-traded fund tracks the performance of the world’s three most liquid markets for carbon credits.

Critics argue there is a plethora of standards on the environment, making it almost impossible to compare like with like and allowing ‘greenwashing’ of projects and companies. These are but growing pains that will sort themselves out. And the reality is that helping companies transition from high carbon-producing energy via ‘brown bonds’ is just as important for the world economy and jobs as the ‘green bonds’ that finance more fashionable endeavours.

A more meaningful criticism is of the asset managers who are slow to take action while their CEOs publicly take companies to task.

BlackRock, the world’s largest investor, is a case in point. A report released last year by Friends of the Earth and other activist groups concluded that the company’s investment in sectors like palm oil and rubber which generally encourage deforestation had increased by over half a billion dollars in the past five years, while its CEO Larry Fink sends out self-reverential missives.

Admittedly it is far from easy to steer a different course quickly when captain of a behemoth with over $6.5 trillion in assets. What will help move the dial is the FCA’s aim to introduce TCFD obligations for the largest asset managers, life insurers and pension providers by 2022. In the US, even with a divided Congress, the new President could use government procurement as a lever, while the Securities and Exchange Commission (SEC) can write mandatory rules for listed companies.

ESG funds already have $40 trillion under management, and growing apace.

A few other factors are critical. Generation Z and millennials form an ever-larger part of the workforce and are pressuring companies to make stronger commitments to change; living legend David Attenborough and environmental campaigner Extinction Rebellion and others are stepping up their activities; and the 2021 COP26 global climate talks in Glasgow will lead to more advances.

Last, zero interest rates allow governments to invest in a sustainable economy at a time when the pandemic-induced crisis demands job creation in new sectors. At the time of writing, UK Prime Minister Boris Johnson was due to announce a ten point plan to combat climate change, including new national parks, energy efficiency for homes and businesses and innovation funding to achieve net-zero.

Dealing with major global problems relies on collaboration between countries and between the private and the public sector, underpinned by dynamic and innovative financial systems. In a potentially more civil era ushered in by Joe Biden’s arrival in the White House, the next few years look like being ground-breaking in transforming how we produce energy – with outer space a distinct possibility for solar farms over the next decade.

In the words of Antonio Guterres, Secretary General of the United Nations,”Decarbonisation is the greatest commercial opportunity of all time.”

 

 
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