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C O N F I D E N T I A L SECTION 01 OF 02 JEDDAH 000284 
 
SIPDIS 
 
SIPDIS 
 
RIYADH, PLEASE PASS TO DHAHRAN; DEPARTMENT FOR NEA/ARP; 
PARIS FOR ZEYA; LONDON FOR TSOU 
 
E.O. 12958: DECL: 04/04/2015 
TAGS: EAIR ECON KISL SA
SUBJECT: BUSINESS COMMUNITY TABLE-TALK 
 
REF: JEDDAH 103 
 
Classified By: Consul General Tatiana Gfoeller, for 
reasons 1.4 (b) and (d). 
 
¶1.  C) SUMMARY  At a reception hosted by the American 
Businessmen of Jeddah (ABJ) held at the CGR on March 29, 
guests commented on a variety of topics relating to local 
business and economic conditions.  In the wake of the recent 
public announcement that Saudi Arabian Airline's (Saudia) 
privatization plan had been approved by Saudi authorities, 
employees were already voicing concern for their jobs.  The 
recent sharp decline in the Saudi stock exchange was 
described as personally painful by some but heralded as an 
essential dose of reality by others.  A major construction 
company expressed satisfaction with the economic outlook, and 
surprisingly, satisfaction with Saudi college graduates.  END 
SUMMARY. 
 
 
SAUDIA EMPLOYEES ALREADY WORRYING 
 
¶2.  (C) During a reception sponsored by the American 
Businessmen of Jeddah (ABJ) on March 29 at the CGR, Pol/Econ 
Chief met Dr. Osama A. H. Zahran who is responsible for all 
medical clearances for personnel at Saudi Arabian Airlines 
(Saudia).  When asked about employees' attitude toward the 
recently announced privatization plan for the airline, he 
indicated that employees were already anticipating job cuts. 
He speculated that the cuts would first affect the office 
staff, then the support staff, and finally the technical 
(among which he included his medical department) and flight 
personnel. 
 
EXPATS HURT BY MARKET REVERSE; OPTIMISTIC ABOUT DIRECT 
INVESTMENT 
 
¶3.  (C) Pol/Econ Chief spoke with an American employee of Bin 
Laden Group who had been enthusiastic about his earnings in 
the stock market during another meeting in late winter.  Now, 
he confessed, he had lost virtually all of his profits in the 
declining market over the last month.  He was chagrined, but 
maintained his optimism, now that expatriates would be 
allowed to invest directly.  He attributed much of his losses 
to the managers of the mutual funds, which had been the only 
avenue through which foreigners had been allowed to invest. 
He surmised that they had not had much of an investment 
strategy and had just bought what was available.  He said he 
would feel better if he only had himself to blame for any 
future losses. 
 
MARKET DECLINE MAY TEACH SAUDIS A LESSON 
 
¶4.  (C) Another guest at the reception, Kamal M. Quadir, a 
financial advisor to companies preparing for IPO's, thought 
that the bear market could be beneficial because it would 
force the Saudi investors to face reality.  In his opinion, 
the sooner the investing public learned that there should be 
a sound financial basis for investment decisions the better. 
He also felt that the market authorities and the government 
should do a better job of teaching potential investors about 
investing. 
 
¶5.  (C) He admitted that one of the greatest difficulties he 
experienced in advising companies about preparation for 
"going public" was the need for transparency and sound 
corporte governance.  He observed "it is difficult to 
eplain to these companies that in dealing with the lobal 
financial enironment, you can't just sit round the kitchen 
table and make a decision, or ell them (banks and investors) 
that grandfather made the decision and that's it."  He 
explains to them that decision-making must be 
institutionalized and experts consulted.  In his opinion, if 
Saudi companies fail to make the organizational transition, 
and adopt sound methods for corporate governance and 
transparency, they will not prosper. 
 
CONSTRUCTION COMPANY HAS DIFFICULTY HIRING ENOUGH ENGINEERS . 
. . 
 
¶6.  (C) Several executives from Turner Construction Company 
complained about the difficulty they face in hiring enough 
experienced engineers and getting them into the country. 
 
JEDDAH 00000284  002 OF 002 
 
 
Husein H. Odeh, the General Manager for Saudi operations, 
said that he simply could not find enough top engineers in 
the U.S. to fill all of his open positions, because of the 
restrictions on life in Saudi Arabia. 
 
. . . BUT HAS SUCCESSFULLY HIRED SOME SAUDI ENGINEERS 
 
¶7.  (C) When asked about the employability of Saudi-educated 
engineers, he said that they have been successful with a 
number of hires, but, he cautioned, they only hire new 
graduates who haven't in his words "developed any bad habits 
yet."  He said the Saudi graduates are competent and if 
inculcated with the proper attitude by senior staff, have 
proven good employees. 
 
OTHER EMPLOYERS NOT PLEASED WITH SAUDI GRADUATES 
 
¶8.  (C) This experience is sharply at odds with what Pol/Econ 
Chief has heard from other senior corporate executives in 
recent weeks.  More typical were the comments of business 
executives attending the Jeddah Economic Forum a few weeks 
earlier.  At a dinner hosted by the Juffally Family for the 
Ambassador, Pol/Econ Chief discussed the employability of 
young Saudis with the head of a pharmaceutical company.  The 
executive brusquely complained that Saudi youths were capable 
of doing the basic factory manufacturing tasks, but could not 
reliably be permitted to carry out product sales and support 
outside the factory.  In the executives words:  "Lock them in 
the factory with a supervisor to watch their every step and 
anyone will do.  But we can't trust them to go out on the 
road and service the product."  Several other executives in 
the group chimed in with similar comments. 
 
ATTITUDE TOWARD TRAINING MAY BE THE DIFFERENCE 
 
¶9.  (C)  COMMENT.  Reconciling these contradictory opinions 
may be explained by the willingness to train the employee. 
Saudi companies seem to be unwilling or unable to provide the 
practical training that instills discipline, flexibility and 
initiative in workers.  This deficiency in their training 
system has at least been tacitly admitted by businessmen who 
constantly lobby post and American businesses for advanced 
training opportunities for Saudi workers (reftel). 
Coincidentally, this was demonstrated only a day after the 
pessimistic assessment at the Jufally dinner.  After the 
day's sessions at the Jeddah Economic Forum (JEF) the 
Ambassador and Pol/Econ Chief were dining on the patio at the 
Hilton Hotel with the Australian Ambassador and Commercial 
Officer, when the group was joined by three Saudi 
businessmen.  In the ensuing discussion, after disparaging 
the results of the Saudi educational system, the three 
businessmen pleaded with the Ambassadors to persuade American 
and Australian businesses to develop internships of a few 
weeks or months for young Saudis in order to teach them 
modern business practices and personal attitudes.  END 
COMMENT. 
 
Gfoeller