A new power has arrived in Latin America and the Caribbean: Saudi Arabia.
Following the guidelines set out by Prince Mohammed Bin Salman in the economic plan he called Vision 2030, the Arab monarchy is showing increasing interest in the region and has recently increased its economic and diplomatic presence.
Saudi exports to Latin America, which in 2019 reached a value of US$2.803 billion, reached 4.581 billion in 2023, an increase of 38.8%.
While imports rose from US$3.811 billion in 2019 to US$4.993 billion last year, an increase of 23.6%.
Booming trade has been accompanied by growing Saudi investment, made possible by the vast capital the Arab country enjoys thanks to its vast oil wealth, which allows it to be one of the largest exporters in the world.
Some of that money has begun to flow to Latin America and the Caribbean.
Guyana announced last November that Riyadh has committed to investing US$2.5 billion in the development of Caribbean countries in the coming years.
Saudi state-owned oil giant Aramco has acquired one of Chile’s largest fuel distributors, where it plans to expand its business.
According to Najad Khouri, a researcher at the Middle East Studies and Research Group, a think tank in Brazil, who spoke to BBC Mundo, “these are the first steps in a natural relationship.”
It seems that the relationship is moving forward.
Saudi Investment Minister Khalid A. Al-Fahi completed a seven-country tour of the region in August 2023 to, he said, “explore opportunities to strengthen and deepen investment partnerships.”
What is Saudi Arabia’s Vision 2030?
When he ascended to the Saudi throne in 2015, King Salman surprised everyone by making his seventh son, Mohammed bin Salman, the strongman of the government. He was then only 32 years old and was ahead of all his brothers in his father’s favour.
Tim Callen, an expert at the Arab Gulf Studies Institute in Washington, told the BBC that Bin Salman “came with a very ambitious plan to diversify the economy” and reduce its dependence on oil, as well as transform the very conservative Saudi society.”
Economically, the main objective was to move towards a decarbonised world in the future and to create jobs for young people, a very important part of Saudi society.
Callen stresses that “Although Saudi Arabia will take decades to wean itself off oil, because it has so much of it that it can produce a lot of it at very low cost, it has significant domestic energy needs and is looking to develop alternative forms of energy. and cleaner.”
One of the vehicles for implementing Vision 2030 has been the powerful Saudi sovereign wealth fund.whose resources are estimated at around US$1 trillion.
The prince and Minister Khalid A. Al-Fahi, who was charged with implementing the palace’s directives, have devised a new strategy to direct part of the Saudi sovereign wealth fund’s huge investments to destinations other than the United States, Asia and Europe, where Riyadh has been investing for years.
Through its Future Investment Initiative, The fund has begun to organize what he calls Priority Summits, (Priority Summit, in English) Meetings to promote business and investment in Latin America and the Caribbean whose first editions were held in Rio de Janeiro and Miami.
Vision 2030 also entailed social transformation and an opening to the outside world.
Along these lines, Riyadh began allowing tourists into the country in 2019, when previously it only allowed visits for religious reasons.
A year earlier, a decree had been published containing one of the most symbolic opening measures in a country where a strict interpretation of Islam prevails: allowing women to drive, something they had previously been prohibited from doing.
Why Saudi Arabia is interested in Latin America and the Caribbean
According to Najad Khouri, “Latin America and the Caribbean are interesting destinations for Saudi investments because they generally have stable countries, where there are no wars or revolutions.”
Both parties benefit from this “Latin America and the Caribbean need investments and Saudi Arabia has a lot of money to invest”.
The region hasin addition, some of the elements that are more difficult to find in the desert Arab country, such as Some of the metals that are emerging as strategic in the future, such as lithium, nickel or copperThey are expected to be the ones that drive the world economy when oil no longer does so, and South America has significant reserves.
Although their oil wealth makes it difficult for this fossil fuel to cease being the Saudis’ main business in the short term, they have already begun to position themselves for a future that appears to be electrified.
One of the kingdom’s recent bets is Ceer, the largest Saudi car manufacturer, which is expected to demand some of the South American minerals.
And already today, the fertile region of Latin America exports large quantities of food and agricultural products to Saudi Arabiawhere the arid geography of the Arabian Peninsula makes farming very difficult and expensive. Latin America is also one of the regions with the most fresh water on the planet.
The rapprochement with Latin America and the Caribbean is not just due to economic reasons.
Most governments in Latin America and the Caribbean also belong to countries not aligned with the so-called Western bloc, and Riyadh can count on not being criticized for its handling of human rights, nor will that be an obstacle to its business.
The kingdom has been the target of criticism from Western human rights organizations for years. and women’s groups who denounced the discrimination to which they are subjected in the country.
The murder of critical journalist Jamal Kashoggi in the Saudi consulate in Istanbul in 2018, for which Prince Salman was directly accused, seriously damaged the international image of the Arab monarchy. and since then its government has been engaged in an effort to clean it up through intense commercial and diplomatic activity.
The countries of this region They represent a good handful of votes in the United Nations and the various multilateral forums, so Your support could be a valuable tool in Prince Bin Salman’s attempt at international rehabilitation..
There have already been examples. States in the Caribbean bloc of Caricom, which benefited from Saudi Arabia’s development funds, supported its bid to host the 2030 World Expo, which ended up beating South Korea and Italy.
“One of the prince’s goals is to achieve a more central and leading position in what has been called the global south,” Callen said.
And an activity that arouses passions among millions of Latin Americans also plays a role in this: football.
The Arab country has pumped huge sums into its national championship, attracting top international football stars such as Portugal’s Cristiano Ronaldo and South Americans such as Brazil’s Neymar to Saudi clubs.
The role of Brazil
The growing relationship between Saudi Arabia and Latin America and the Caribbean largely goes through Brazil.
Both countries have been strengthening their economic and political ties.
Brazil, Saudi Arabia’s largest trading partner in the region, will see its exports reach a ten-year high in 2023.
During a visit to Brazil, Minister Al-Fahli expressed the desire for both countries to become one of the five largest investors in each other, in a cooperation driven by “the evolution of the Global South and shared values” between both countries.
Brazilian President Luiz Inácio Lula da Dilva thinks this is a good idea.
During a recent visit to Riyadh, he said: “We are not only interested in knowing how much Saudi funds can invest in Brazil, but how much Brazilian entrepreneurs can invest in Saudi Arabia.”
The rapprochement between Riyadh and Brasilia has intensified in the last times.
The two countries have already held several bilateral summits and Brazil has accepted Saudi Arabia’s invitation to join the Organization of the Petroleum Exporting Countries (OPEC), albeit only as an observer.
Brazilfor its part, He managed to get Riyadh to join the group known as BRICSwhich forms part of China, India, Russia, Egypt, South Africa, Ethiopia, the United Arab Emirates and Iran.
But according to Mohamad Nourad, vice president of the Arab-Brazilian Chamber of Commerce, “it is more a business relationship than a political one, and it is because there are now good opportunities for both parties.”
In terms of trade, Brazil is the largest exporter of halal food to Saudi Arabia, which is produced in accordance with the precepts of the Koran, the holy book of Muslims.
Other notable exports include sugar, corn and animal products.
According to Nourad “There is growing Saudi interest in Brazil’s capacity to produce renewable energy”and also scope for increasing cooperation in more technological sectors such as the manufacture of wind energy turbines or the defence industry in general.
Brazilian mining giant Vale recently sold one of its business units to Saudi capital for US$2.5 billion, and aeronautics company Embraer signed an agreement with Saudi Arabia’s National Industrial Development Center that could lead to its planes being assembled in the Arab country.
For Najad Khouri, “the relationship between Saudi Arabia and Latin America and the Caribbean is just beginning and represents a good opportunity for both.”
Although it will have to overcome “obstacles and limits”, such as the geographical and cultural distance that separates two such distant areas.
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