VZCZCXRO0160
PP RUEHDE RUEHDH RUEHDIR
DE RUEHRH #0987/01 2111211
ZNR UUUUU ZZH
P 301211Z JUL 09
FM AMEMBASSY RIYADH
TO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 1303
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFIUU/FBI WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 RIYADH 000987 
 
SIPDIS 
 
TREASURY FOR DAVID COHEN AND ANDREW BAUKOL 
TREASURY ALSO FOR SARA AVIEL 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV PREL KTFN KWBG SA
SUBJECT: JEDDAH CHAMBER OF COMMERCE AND INDUSTRY HOSTS 
EVENTS FOR TREASURY SECRETARY GEITHNER 
 
¶1. (U) Summary:  In his July 14 visit to Saudi Arabia, 
Treasury Secretary Timothy Geithner led a roundtable 
discussion and delivered a speech at the Jeddah Chamber of 
Commerce and Industry (JCCI).  He discussed the economic 
downturn and measures taken to stem the crisis, sharing his 
outlook for the global economy and long-term U.S. reforms. 
Secretary Geithner was accompanied by Charge d'Affaires 
Ambassador Richard Erdman, Consul General Martin Quinn, 
Assistant Secretary for Terrorist Financing and Financial 
Crimes David Cohen, Acting Assistant Secretary for 
International Affairs Andrew Baukol, Deputy Assistant 
Secretary Andrew Williams, Deputy Treasury Attache Amanda 
Edwards, and Special Assistant to the Secretary Sara Aviel. 
End summary. 
 
BUSINESS LEADERS ROUNDTABLE 
--------------------------- 
¶2. (U) JCCI Chairman Muhammad Al Fadl hosted Secretary 
Geithner at a roundtable with seven Saudi business leaders 
(Abdulaziz Othman bin Sager, Lubna Olayan, Ahmed Mohamed Ali 
Al Madani, Khaled bin Abdullah Al Molhem, Mohamed Abdullah 
Sharbatly, Hamad Al Sulaiman, and Nahid Taher).  Secretary 
Geithner emphasized points he would later discuss in his 
speech, to include expectations for growth in the second half 
of 2009, the strength of the dollar, and support for 
sustained fiscal stimulus and long-term fiscal and financial 
sector reform.  Geithner also highlighted the unknowns in the 
health of Eastern European economies, the possibility of 
commodity price increases, and the danger of governments 
"putting on the brakes too quickly."  Chairman Al Fadl 
moderated the conversation with the roundtable attendees. 
 
¶3. (U) Nahid Taher underscored participants' fears over the 
large size of the U.S. fiscal stimulus package, 
protectionism, and inflation, given Saudi Arabia's large 
holdings of dollar assets.  Geithner assured participants 
that the U.S. is dedicated to contracting expansionary 
policies at the appropriate time and emphasized the USG's 
commitment to open investment. 
 
¶4. (U) Khaled Al Molhem shared his insights on the Saudi 
economy -- emphasizing that the banking sector was still 
strong, but that there has been a mismatching of short-term 
deposits and long-term lending.  He was also confident that 
Saudi investors were investing "everywhere," but that there 
would be an adjustment period during the downturn.  Al Molhem 
and Geither agreed that student exchange programs are vital 
to helping the long-term U.S.-Saudi relationship. 
 
¶5. (U) Lubna Olayan asked about the global recovery, 
inquiring if it would slow as a result of decreased U.S. 
consumer spending.  Olayan questioned who would lead the 
global economy in consumer spending during this time of 
crisis.  The Secretary maintained that the U.S. consumer 
would not lead the world out of recession, as it had in the 
past.  But,  he emphasized that long-term growth in the U.S. 
would benefit from positive household savings.  Olayan was 
also curious about the future of U.S. sanctions -- such as 
those designed to address Iran, Sudan, and terrorist 
financing -- and stressed her concern over their impact on 
the international financial system.  She felt that the USG 
held a lot of power in this regard and expressed that other 
countries may hold the view that the "U.S. is flexing its 
muscle too much."  Secretary affirmed that these programs 
were designed to protect the financial system from abuse and 
underscored the need to address illicit finance at a 
multilateral level. 
 
REMARKS TO THE GULF REGION: REFORM AND 
COOPERATION NECESSARY FOR A STRONGER FUTURE 
------------------------------------------- 
¶6. (U) In public remarks delivered at the JCCI to 
approximately 100 businessmen and women, academics, and 
members of the media, the Secretary discussed the global 
economic downturn, underscored the importance of policies in 
the U.S. and Gulf region that have been helpful in pulling 
the global financial system from the edge of failure, and 
described a four-part strategy to assist with the global 
economic recovery.  JCCI Chairman Al Fadl moderated questions 
from the audience on issues ranging from reform to 
development assistance. 
 
¶7. (U) RECOVERY:  On the global recovery, one attendee shared 
his experience with the downturn in the shipping industry and 
asked the Secretary if he was optimistic about our ability to 
 
RIYADH 00000987  002 OF 002 
 
 
face the current challenges facing global trade.  Noting that 
trade and credit dried up during the crisis, Geithner 
highlighted some positive signs emerging in the broader 
financial markets and observed that countries most reliant on 
trade suffered the most as demand fell during the crisis. 
 
¶8. (U) REFORM:  Another participant raised concerns about the 
long-term structural challenges facing the U.S. moving 
forward, including the aging of U.S. baby boomers and USG 
obligations to provide Social Security and Medicare benefits. 
 The Secretary discussed long-term health care reform as the 
greatest challenge amongst these obligations.  Geithner was 
also asked about reform at the IMF and in the international 
financial system.  Geithner said reforms were necessary for 
the financial system and international financial 
institutions, and expressed the need for structural changes 
in international bodies, such as the IMF, to give a larger 
voice to underrepresented economies. 
 
¶9. (U) DEVELOPMENT ASSISTANCE:  During the 
question-and-answer period, Geithner was also asked whether 
food security in Asia and Africa was a U.S. priority. 
Geithner stressed the need for partnership based on mutual 
respect and interest, calling on countries around the world 
to commit to this important task.  The principal means of 
decreasing poverty in the underdeveloped world is to increase 
agricultural development, and he noted "that's the 
commitment." 
 
¶10. (U) ILLICIT FINANCE:  Money laundering, terrorist 
financing, and proliferation policies were also raised by the 
attendees.  In particular, one participant asked whether the 
recent news about one Saudi company's possible involvement in 
money-laundering would be raised during the visit.  (Note: 
This is a reference to the Saad Group. End note.)  Geithner 
made clear the importance of implementing effective 
regulations to combat money laundering at the national and 
international levels. 
 
¶11. (U) This message was cleared by Secretary Geithner's 
staff. 
RUNDELL