Diplomat warns US firms are losing edge

A US ambassador has warned US businessmen that their companies are losing competitiveness in Saudi Arabia.

RIYADH // The new US ambassador to Saudi Arabia yesterday warned American businesses to wake up to the fact that they are losing their edge in an increasingly competitive Saudi market. Ambassador James B Smith, a retired air force general, also told his audience of about 100 US company representatives that it was time for both Saudis and Americans to "rethink some opinions" of each other forged in the wake of the September 11 terrorist attacks.

"As a group, American business and industry is losing market share to an ever more competitive global economy and if you don't do something then we are going to be in trouble," Mr Smith told the American Business Group of Riyadh. Noting that many US companies are "on the sidelines waiting to see what's going to happen in Saudi Arabia", he added: "My message back to them is: What's happening is the train has already left the station. You are losing market share to India, China, Russia and if you don't move you're never gonna catch the train."

By one accounting, Mr Smith said, $18.75 billion (Dh69bn) that "could have gone to American business and industry ... has now gone East." The new ambassador urged his audience to think beyond just selling their products to envisaging ways to help Saudi Arabia create a more diversified and knowledge-based economy. He suggested training programmes for middle management as an example. Like most previous US envoys to Riyadh, Mr Smith is not a career foreign service officer. But he has been to the kingdom before: as a pilot of the F-15 and T-38, he flew combat sorties from here during Desert Storm, the 1990-91 US-led military campaign to expel Iraq from Kuwait.

His last air force job was deputy commander at the Joint Warfighting Center of the US Joint Forces Command in Suffolk, Virginia. After leaving the air force, Mr Smith worked for Lockheed Martin and then Raytheon Integrated Defense Systems, where he was in charge of international business development. Taking up the issue of waning US competitiveness in a different context, Mr Smith noted that Saudis now studying in the United States have risen to a pre-September 11 level of 21,000, but they represent only 50 per cent of all Saudis studying overseas.

"We're losing market share to the French, the Brits, to the Canadians and Australians who welcomed these students in the aftermath of September 11 and have continued to put the pressure to attract students," he said. "We have got to change that." Mr Smith said he would like to start a term abroad exchange programme for both Saudi and US students. But first, he said, the embassy must straighten out remaining problems in issuing visas on both the US and Saudi side.

The ambassador said the US embassy has improved its visa processing so that 40 per cent of visas are issued "in one week". Overall, he added, 82 per cent are issued within 30 days and 93 per cent within 60 days. "This year we will issue somewhere between 58,000 and 65,000 visas" to Saudis, Mr Smith said. But, he added, "we need to double [that number] in my tenure here". Of greater importance to his US audience, however, are improvements in the Saudi issuance of visas, often a slow, opaque process. Mr Smith said he will continue to press Saudi officials to fully implement a reciprocity agreement that calls for both states to issue five-year visas.

The ambassador also noted the need to reshape "some opinions we made eight years ago" and asked that his listeners help him do that. "There are people in the United States that formed an opinion about Saudi Arabia and Saudi people on the 12th of September 2001. It's time for them to rethink. And there are people in Saudi Arabia who formed an opinion about Americans in the aftermath of September 11. It's time for them to rethink," he said.

Many Americans were upset that 15 of the 19 hijackers on September 11 were from Saudi Arabia. And many Saudis were upset at US actions after September 11, including the refusal to give, or long delays in giving, Saudis US visas. Saudi public opinion was also overwhelmingly against the US invasion of Iraq in 2003. "Those of you - who have contacts on [Capitol] Hill," Mr Smith said, "I need you to go in and tell what's really going on here - [that] this is a country - that wants to do business with the United States -. [and] that wants for the next several generations to have a relationship with the people of the United States."