JEDDAH - France already has a good basis from which to expand its role in Saudi Arabia and the wider Gulf. Among European countries, only Germany exports more to Saudi Arabia than France.
According to the latest trade note from Banque Saudi Fransi (BSF) on Saudi-French relations, based on the current official data available from Saudi Arabian Monetary Agency (SAMA), in 2008, France was Saudi Arabia’s eighth largest source of imports, valued at SR15.24 billion.
France’s share of total Saudi imports was 3.5 percent in 2008, having fallen gradually from 4.1 percent in 2000 as the kingdom’s imports more than quadrupled over the period, which was marked by an economic boom.
France accounted for 15 percent of Saudi exports to the European Union in 2008. France’s imports from the kingdom, comprised mainly of crude oil, amounted to SR18.6 billion in 2008, SAMA data showed.
BSF chief economist Dr. John Sfakianakis said in the report that the bilateral trade relationship has predominately preferred Saudi Arabia as a result of its oil exports, with the balance of trade swinging in favor of France only two times (in 1987 and 1998). Still, the delivery of military equipment has historically helped keep France’s trade deficit with Saudi Arabia under control.
Formal relations between Saudi Arabia and France date back to the mid-1920s. France has maintained a consulate in Jeddah since 1841, prior to becoming one of the first countries to recognize King Abdul Aziz’s government in 1926.
Ties between the two nations strengthened during the early 1930s when France sent an economic delegation to the Kingdom, followed by a diplomatic delegation in 1936.
The foundations of the current strategic relationship were laid by King Faisal and former President Charles de Gaulle in 1967. King Abdullah paid an official visit to Paris in July 2007 and President Sarkozy has visited the Kingdom in January 2008 and again this month.
France has been a considerable source of FDI into the oil-exporting Gulf region in the past decade. FDI flows into Saudi Arabia from France surged five-fold between 2000 and 2008 to 1.41 billion euros in 2008, according to data of France’s central bank, Banque de France.
Saudi Arabia accounts for the Gulf region’s biggest share of French FDI to the region, attracting 45 percent of direct investments into five of the six Gulf states last year.
French investors have had their eyes on plans to expand oil production capacity and build infrastructure in the Kingdom, which has embarked on a $400-billion stimulatory, state-financed investment program that crosses many sectors.
The report noted that France’s relationship with Saudi Arabia and the wider Gulf region is undergoing change as the country makes clear attempts to raise its profile in the world’s biggest oil-exporting region, which gained global prominence during this decade’s oil price rally. – SG