Late this week Gen. David Petraeus, retired four-star Army general and former head of the CIA, appeared on CNBC and proclaimed that Saudi Arabia is “gradually running out of money.”
In the Thursday interview he addressed the on-again, off-again IPO of state-run oil company Aramco as well as Mohammed bin Salman's initiative to diversity the kingdom's economy over the coming decade to reduce oil dependency. Addressing the degree to which MbS' own success and survival is tied to the IPO, the ex-CIA director explained:
“It’s a fact that Saudi Arabia is gradually running out of money, they’d be the first to acknowledge that the sovereign wealth fund has been reduced, it’s somewhere below $500 billion now,” Petraeus, who's also currently chair of the KKR Global Institute, told the CNBC host as they spoke in Abu Dhabi.
“The (budget) deficits each year, depending on the price of Brent crude, can be anywhere from $40 to $60 billion depending on some of their activities in countries in the region.”
“The bottom line is that they need the money, they need that outside investment that is crucial to delivering ‘Vision 2030’ which cannot be realized without outside investment, this is just one component of a number of different initiatives that they’re pursuing to try to attract that outside investment,” he added.
The pessimistic assessment also came on the heels of the close of Riyadh's Future Investment Initiative (FII), or 'Davos in the Desert' — which though largely boycotted by the big names last year (including Petraeus himself as KKR Chairman) over the murder of journalist Jamal Kashoggi, saw Wall Street and international political leaders return in droves this year.
And speaking of the grisly death and dismemberment of Kashoggi on Oct. 2, 2018 at the Istanbul consulate at the hands of a Saudi hit team on orders that no doubt were straight from the top (MbS, according to the UN and CIA), Gen. Petreaus described it as a mere "misstep".
According to the interview:
He said there had been some “missteps — some of them truly grievous, the horrific murder of (Saudi journalist Jamal) Khashoggi being foremost among those” but added that “at the end of the day, we all want Saudi Arabia to succeed, and for that to happen Vision 2030 is some element of that.”
Of course there's also the Saudi-led war on Yemen, now in its fifth year which has claimed over 100,000 lives by most estimates. This was carefully avoided in the interview.
His comments on Saudi Aramco underscored how much is riding for the kingdom on the IPO — that it needs to be hugely successful: "The bottom line is again, they need the money. They need that outside investment..." he said. As we explained weeks ago the outlook is bleak:
Once again reports are out that Saudi Aramco is said to be pushing its mammoth IPO top completed by the end of this year (reportedly relying more on Saudi and MidEast regional investors).
The kickoff, originally scheduled for Oct. 20, was delayed after Aramco got mixed feedback from international investors. Bloomberg reports that Aramco now plans to press on with the listing plans by relying more on investors from Saudi Arabia and other parts of the Middle East to buy its shares, the people said, asking not to be identified because the information is private.
The Saudis plan to release some shares to the public starting in December in a continuing effort to attract outside investors.