Tag Archives: Edward Burton

There is more beneath the sand

The Australian Financial Review has an interesting article that they released a little over 12 hours ago (at https://www.afr.com/world/middle-east/is-saudi-arabia-s-royal-family-ready-for-a-market-economy-20191112-p539sv), the title ‘Is Saudi Arabia’s royal family ready for a market economy?‘ is an interesting view on the issues that are coming around over the next decade. Stephen Cook gives us part of the goods, yet I wonder if he is cautiously holding back (an acceptable stance for any journalist) or is there more?

That is not an attack on the article; it is well written and shows a writer with a good grasp of grammar 😉 He also makes a few very nice observations. The issues that come from that are not always visible, but we should argue before we get there that any cautious journalist does not need to go there; a blogger like me on the other hand is (at times) all about the informed speculation. So when we see: “to pull off Vision 2030, Mohammed bin Salman needs some of the international goodwill he enjoyed until mid-2017“, that partially true, most of it can however be built with money and Saudi Arabia has plenty of that. At which point Mr Cook takes that frying pan and hits us with “There’s just one problem: the Aramco IPO is far riskier than the Saudis are letting on“. He gives it in the form of “The Saudis are offering stock in 2-5 per cent of the company. One of the sticking points has been valuation“, he is true, and we see that in the article that there is a margin of valuation (depending on the offerer) that is almost 50%, And that is not the only part, there is a view that Saudi Aramco will value at almost twice the price of Apple, that is a lot and there will be an actual benefit that Mr Cook does not offer. He does give us that the Saudi offering could end up netting between 24 billion and 115 billion. No matter how this turns, there will be plenty of Saudis all wanting a share or two, a population supporting its own national product, so there is interest, the benefit we do not see here is the corporatocracy that the EU has become, with value in the fire of shares, whatever Iran will think of next will bounce back, any attacks is no longer a mere Saudi Problem, Saudi Arabia has done something interesting. By offering 2.5% of a company its visibility will become global and that is the first nail in a coffin named Iran. And that is not the only one; there is another benefit to see when we take a harder look at Vision 2030.

You see Vision 2030 will be a clean systems sweep of 5G (and 4G lte) systems, the old 3G and other systems will be absent, the Saudi’s will get a much better view of what is needed in the 5G atmosphere without having old equipment holding it back, you might laugh, but do you have any idea on the amount of equipment out there switched on because there is some ‘twittle’ hardware connection, or the owners merely does not know that some equipment does not need to be turned on? It amounts to almost 7% of the electricity bill and the amount of technology and hardware involved shows a massive amount of additional loopholes requiring fixing. You might not think this is essential, yet when we realise that there is an amount that is between calculated and measured that is not addressed, we see a much larger issue, in at least two cases I have seen the ‘connections’ merely being ‘improperly’ addressed, I wonder what else was not done. Vision 2030 will allow us to look at hardware connected and we will see a whole range of equipment never connected. There will be an amount of niche markets that will evolve because of it and as we see that evolve, whoever is working in Neom City, will get an interesting benefit to this change.

Getting back to the IPO, there is every concern that the quote “Iran’s Islamic Revolutionary Guard Corps (IRGC) has every reason to keep the Saudis on the defensive and mess with Aramco’s IPO” has value, yet the first one who is part of the IPO will have the benefit of calling out Iran’s actions and now there will be nations with skin in the game, Iran is basically done for and it needs the nuclear benefit of playing the bully, yet it is running out of time no matter how blind the EU tends to be. When any Wall Street corporation has skin in the IPO, they will report it to any channel willing to expose Iran and that is what Iran really does not like, you see playing the bully only works when no one is looking at you and that option is about to end. They will now enter a stage where the writer claims ‘make investors nervous‘, yet when they go a little overboard and ‘make investors angry‘ their benefit is gone and that is why they need the nuclear pact to be in their favour. A bully merely knows no other way to look at matters, but now we see a much larger field and Iran is about to get exposed a lot more.

So now we get back to Neom City, the writer gives us “The plans (and promotional video) were impressive, but the effort failed miserably“, yet he gives no reason, I will, The amount of media willing to give Neom City the light of day could be counted with two hands, with the hundreds of accepted media in the Aether, they all shied away from Neom City and it was not Jamal Khashoggi. It was in part America and in part Europe that was scared. A city that is stated to be 22 times the size of New York is a building marvel, it would be no less than another world wonder and the powers that be have no intention of letting Saudi Arabia walk away with a world wonder, not in this age. Even as the bridge to Africa might never become a world wonder, the bridge itself will be a global accomplishment and it will give larger gains to Saudi Arabia. In addition it takes another premise, the city of Sharm-El-Sheikh (Sinai) would gain in several ways, whilst the bridge would open Saudi Arabia to Egypt in larger ways. It would also open up technology paths to Saudi Arabia. In addition we see: “Mohammed bin Salman has calculated that he has a greater chance of eliciting the loyalty of his subjects – and thus shoring up his power – by giving them movies, concerts, and WWE wrestling events; reining in the religious police; and granting women the right to drive“, yet it is missing a part, with the building needs growing for close to two decades, we will see a new class of people, A class to Egyptian Muslims working in Saudi Arabia growing the population and growing a larger stage of a new population drive, those needing a better life, we have seen this in America and Europe and it will drive a new need in these people finding a niche where they can settle their family in growth, that part will be new to Saudi Arabia and it will create new wealth group and a larger drive towards Saudi Arabia. I reckon that Saudi Arabia could grow to well over 20% this was and the size of Neom city would allow for a much larger growth giving new options to Saudi’s and those wanting to be Saudi.

As I see it Saudi Arabia could over time grow that IPO to be up to 9%, so basically it will get access to 3 times that maximum of 115 billion, with an offering that over time will be close to $400 billion, we see that Neom city has been paid for, at that point with the IPO in place, and Neom city ready to grow Iran will be shown to be the bully of the Middle East, and bullies can be dealt with in swift ways by any global population that is clearly aware, which now leaves us Hamas and Hezbollah, we actually need not look in those directions, Israel is looking there already, we merely have to wait what will happen next, with these two elements clearly in lace it will not take long for technology firms to seek their nesting grounds in Neom city, Huawei is actively looking, Google has set its premise, as have Apple, Microsoft and IBM (who added 197 jobs in the last month alone), so the need is being addressed, now it merely takes time for the entire stew to settle, once all the elements have been added, we only have to wait (which will be the hardest part), yet there is little to no doubt in my mind that when we see the elements of Neom City, we will see a much larger shift in the west, it will not only be to stay on par with Saudi Arabia, it will be to get all the residual hardware and all the non-effective hardware to be removed from hundreds of places, I reckon that the US will face a new technology need at that point.

You see, in the end, there is less to a decade to a ‘futuristic city’ and a technologically ‘apt city’, Saudi Arabia is about to show the world that part and all the other nations will need to show that they can keep up and with their debts sized the way they are that will be the hardest issues for them and the US knows it has a large problem keeping up, as does the EU, they never thought that they would require to meet wits with Saudi Arabia, they never thought it was ever going to happen, as such they were not ready. Iran is banking on it, in the end I wonder which of the two elements will be the strongest, I’ll let you figure out what I mean.

i believe that by 2035 the global technological will be redrawn, it will be a map that the EU and the US will not be happy about. The Wall Street Journal gave a nice presentation 4 days ago with ‘U.S. Government Is Tripping Over Itself in Race to Dominate 5G Technology‘ and ever as we see sources stating: “U.S. officials say the country is in position to reap those benefits”, we merely need to see SDXCentral giving us: “AT&T is tempering expectations for its forthcoming 5G network riding on sub-6 GHz spectrum. While AT&T says it was the first wireless operator to demonstrate 1 Gb/s and later 2 Gb/s speeds on a commercial 5G network running on millimeter wave (mmWave) spectrum, it’s not making any grand projections for a speed improvement on its forthcoming 5G network running on the lower spectrum bands” (at https://www.sdxcentral.com/articles/news/att-down-on-low-band-5g-speed/2019/11/) to see that they are all running for the advertised word and there is a large hiatus between the ‘advertised word‘ and ‘achieved technology‘, that difference was seen at the end of October as Reuters gave us: ‘Trump says U.S. will cooperate with ‘like-minded’ nations on 5G networks‘, everybody on the US sided mind is trying to fix the backlog that they have against Huawei and some of them have a huge backlog, when we see “Trump has held numerous calls with foreign leaders, including British Prime Minister Johnson in August, to urge them not to let Huawei use 5G networks“, yet at by the time have we seen ANY EVIDENCE that there is a national interest failure on Huawei hardware? America hopes that it has taken the hardware drive and fixed its own economy (and the mere fact that we will not ask questions), yet Saudi Arabia already has ties to Huawei giving Saudi Arabia the option to pull ahead and make the monthly gap larger on a daily basis. The difference is that intense. There is more and more evidence to see that the EU is not going the way of the US and that will give them an advantage on the hardware range, yet they still have all the other old hardware to deal with. They could face two issues, let’s not forget that Riyadh faces that too, but if Neom City shows the benefit to a newly constructed fast internet city, what we saw in the UK 5G image, that path will be faster seen in Neom city, merely because the change is pushed from the beginning and not after the fact (as most technologies are).

The ‘what 5G is about‘ shows what 5G could do and in many nations we see part of this appear over time, yet in case of Neom city, with a 5G focus it will come all at once, it will give Arabian software Engineers a larger playing field and a playing field on rolling out some of those solutions anywhere else in the world. It is a path that we seemingly forgot about and we have seen this path a few times from Japan and the US, just the idea that Saudi Arabia will be able to focus on it was never in the sight of any of them and it is scaring them, Neom City has become that scary to both the US and the EU (well and Japan too). They have all been in the mind for well over 5 years that they see it first in Japan and later on it will be rolled out to the rest of the world. Now that setting changes those in charge are afraid, they have no ties to Saudi Arabia and no ways to make them.

Fear will be the key that the US and the EU will employ to set issues straight, and stopping Neom City to a much larger extent will be their focus, which gets us back to the quote we saw: “the effort failed miserably“, There was as I see it a much larger need to keep it out of the media, the people just never got to see all the elements that were clearly visible in 2018 when initial view of Neom City was given. I saw the first parts in May 2nd 2018 when I gave “the attached Burton presentation ‘Opportunities in Saudi Arabia – Vision 2030 and Beyond‘ spends two slides on it and the most important part shown is “Vision 2030 calls for 50 percent of military equipment purchases from domestic suppliers instead of imports“” a presentation by Edward Burton, President and CEO, U.S.-Saudi Arabian Business Council from June 2017. (at https://lawlordtobe.com/2018/05/02/are-there-versions-of-truth/) in the article ‘Are there versions of truth‘ I had not realised all the elements at that point (why should I?) yet I saw that Vision 2030 would be a bigger issue yet the larger impact would be visible beyond “90 executives from both countries to sign new trade and investment agreements worth $350 billion” the fact that in these 90 we would see “Lockheed Martin ● Honeywell ● JPMorgan Chase ● The Dow Chemical Company ● ExxonMobil ● Jacobs Engineering ● Baker Hughes ● McDermott International” was clear, the fact that Jacobs Engineering Group Inc. (Steven J. Demetriou) was involved was a clear indicator of that. I believed that whatever think-tank Edward Burton responded to was seeing ‘roadmap for economic development‘ and Identifies general directions, policies‘ and optionally ‘CEDA established new operating models‘ and realised that this went way past the Council of Economic and Development Affairs (Saudi Arabia) there was an actual global impact. This setting has merely taken an accelerated view, especially in regards to Huawei, there is a much larger setting and we will soon see that the impact is global.

Darn! I was not the first to notice!

Even as we realise that the Council of Economic and Development Affairs was created in 2015, there is a larger stance where Saudi Arabia has found the flex point where they will become a global player, that is why Iran is scared, that is why other parties are about to play diminished roles and they are all afraid, their status quo is about to be removed.

 

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Are there versions of truth?

It is a question that has haunted plenty of people, you see there is just one truth, although, is that ‘there is your side, my side and the truth’; it comes from Robert Evans ‘The kid stays in the picture‘, a 2002 documentary. We have seen the quote is several works including the famous Sci-fi series Babylon 5. The fun part of this is that the three parts are all based on honesty, yet it is more than just a matter of perspective. I have always known that, although the interaction of perception and observations is something that needs to be in a book, not on a blog. So when I was confronted with the site ‘Seeking Alpha‘, which was described by the Wall Street journal in 2014 as “SeekingAlpha.com predicted stock returns, as well as earnings surprises, above and beyond what was evident from Wall Street analyst reports and financial news articles” is from the article more than just that. The article (at https://seekingalpha.com/article/4168001-investors-face-moral-dilemmas-investments-saudi-arabia) gives us ‘Investors Face Moral Dilemmas with Investments in Saudi Arabia‘, can be countered with ‘every investment has a moral dilemma’, so that is not much to go by. Yet the setting of a 500 billion market where we see the foundation with “A component of the Saudis’ Vision 2030 is to create an indigenous defense industry one that will promote volatility, not stability, in a region on perpetual warfooting“, gives me not the shivers, but the contemplation of what game is played. You see there is no doubt that Saudi Arabia wants to create an indigenous defence industry; every nation wants that, especially when it has been under threat for many years. I would have told Crown Prince Mohammed bin Salman if he would respectfully consider buying Remington as it is bankrupt and going cheap. The excellence of its weaponry, weaponry that have made it to the most elite parts of the global national defence forces is not just a matter for defence, hunters and others revere the weapon for its standard of excellence and it is not a bad place to start. You see, that is merely one path, in all this the setting of ‘one that will promote volatility‘, is not only not a given, I wonder where Seeking Alpha got the data in the first place to make that assumption. When we accept that there is an optional truth, there should be a look at the antagonising party, namely Iran as well, in that regard we see (at https://seekingalpha.com/instablog/776842-investorideas-com/5152941-cryptocorner-iran-developing-cryptocurrency-japan-s-sbi-launch-exchange-australia-cracks-icos), “Iran is progressing with its own crypto currency project despite having banned crypto trading in local banks according to a report at Reuters. Information and Communications Technology Minister Javad Azari-Jahromi said the ban from Iran’s state bank would not apply to development of a domestic crypto currency“, as well as “Equally, if not more importantly, investments by Russia’s oil and gas companies in the development of oil fields in Iran may exceed $50 billion, presidential aide Yuri Ushakov told reporters in early April” (at https://seekingalpha.com/article/4167229-effect-unilateral-u-s-sanctions-irans-crude-oil-production?page=3) and in finality we see “On Sunday, pro-Iranian Shiite rebels in Yemen launched a missile attack on Saudi Arabia targeting four cities. The Saudi air defense intercepted the missiles, however, one person died and two others were hurt by shrapnel. Saudi Colonel Turki al-Malki made it clear who Saudi Arabia thought was to blame: “This aggressive and random act by the Iran-backed Houthi group proves that the Iranian regime continues to support the armed Houthi group with qualitative capabilities…”“, which we get from the article (at https://seekingalpha.com/article/4159016-7-missiles-closer-iran-war-100-oil) called ‘7 Missiles Closer To Iran War And $100 Oil‘. So now we see two parts, we see Saudi Arabia accused of volatility and ion all this the aggressor Iran is not painted in any way in any of these mentioned articles merely defined as ‘Pro-Iranian rebels‘, the fact that those rebels cannot afford any missiles and for the most they lack the ballistic skills as well as deployment and knowledge of GOLIS firing solution systems, issues like deployment, missile calibration and beyond that there is setting the precision of the missile by making sure that the electronic settings are correctly tweaked and calibrated to interact with the information that the targeting hardware offers. All that requires skills, skills that the Yemeni do not have, but Seeking Alpha is all over that and, oh, actually they are not!

So in the $500 billion setting of growing the Saudi industry, one valid component is now the stuff of moral discussions and the setting of unproven volatility, can anyone explain why Seeking Alpha has released 7 articles in the last 24 hours on Iran, where one shows opposition between the Iranian judiciary and the President on ‘disrupt national unity‘ in the setting of ‘Rouhani opposing banning social media networks, as he attempts to open up the country to the outside world‘, there is not a moral dilemma here? Or perhaps it is not a setting for volatility whilst the growing of Iranian civil unrest is currently seen as a given. So how do we not see in more articles that for the speculative person investing into Iran is facing all kinds of risks from Iranian civil unrest?

Yet it is that setting that we can all easily check on how certain paths are played. We can see this in another way as well, when we see the French visit; we see “Macron had come to Washington in a bid to convince Trump to remain in the deal. He proposed “pillars” for adding to the existing deal, including extending it for the long term, limiting Iran’s ballistic missiles, and dealing with Iran’s involvement throughout the region“, whilst in the article regarding Crown Prince Mohammed bin Salman we see “Regardless of his charm, offensive MBS will continue his extreme ruthlessness, admittedly a de rigueur requirement in a tough country and even tougher neighborhood especially because his radical changes have created many internal enemies“, we also saw “Saudi crown prince Mohammad bin Salman (MBS) wrapped up his well-orchestrated and unprecedented “meet & greet”, “press the flesh” two-week April tour of the US with the icons and titans of three primary industries in his effort to diversify the Saudi economy as part of the ambitious Vision 2030 plan“, yet nowhere do we read an optional: “Success can only come from a vision, brought by a visionary. We are a nation with resources, with options and opportunities. We are more than the oil that is acquired from our soil, we can and will harness resources as well as investment opportunities to stimulate our economy and diversify our revenues. Our nation sitting central between Africa, Asia and Europe should have been more about growing that advantage and now we will, we have the foundation to grown in technology, in minerals and in services to be a global player, we must take that opportunity before it is lost to us forever. It’s not a fast path, and to do this properly we must grow over the next 12 years to be able to become that global powerhouse“. Well, there is one place where something like that can be read, it is the introduction (at http://vision2030.gov.sa/en/foreword), where we also see a lot more on the Islamic part on Saudi Arabia, which is perfectly valid. So when we go to http://vision2030.gov.sa/en/node/125 we see a massive amount of programs all set to push Vision 2030 forward and the interesting part in that is that there is not one mention of the words ‘defence’, ‘Army’, ‘Navy’ or ‘Air force’. Even as I am convinced that growing national defence is part of that, my wonder is that with all these options and opportunities, Seeking Alpha resorted to the Moral part of a defence structure that is nowhere near a central part of the Vision 2030 brief. We know that Saudi Arabia has the option to go full G5 from day one and the investment options there are massive opportunities not to pick up millions, but billions. Yet the issue becomes larger when we see that the writer Albert Goldson has plenty of experience and should be well aware of commodities (read: he is a bit of an expert according to sources), so when we set this against the view of Bengt Nordström, CEO of consultancy Northstream who gave us last year “growth in the industry has disguised not only the fact the telco industry is largely a commodity, but also that it has not been hugely innovative for a number of years“, that in light of the upcoming 5G, where ‘first in, soaring profits’ could surely be a given, none of that is shown, merely the fact that Saudi Arabia is allegedly about ‘volatility‘, so whose buttering the bread and who is that sandwich being made for?

Another part not shown was ‘Advancing pharmaceuticals and patient safety in Saudi Arabia: A 2030 vision initiative‘ (at https://www.sciencedirect.com/science/article/pii/S1319016417301780). Here we see “A recent conference in Riyadh, sponsored by King Saud University, sought to discuss these issues and develop specific policy recommendations for the Saudi 2030 Vision plan. This and other efforts will require more and more creative educational programs for physicians, pharmacists, hospitals, and patients, and, most importantly evolving regulations on quality standards and oversight by Saudi health authorities“, let’s not forget that we are in the beginning of all this, there is 12 years, which will go quickly I’ll grant you that, yet in all this the opportunity to grow Patent Law, Law firms, and set proper markers in place would be an essential step before such a level of patent bearing change comes. The option for Pharmaceutical investment was not shown in the article, or the mention of the issues shown at https://ncusar.org/programs/17-transcripts/2017-06-20-burton.pdf (attached). So, I am not opposing that there is optionally a need to grow the national defence industry, but is that set in the right light? In the light he gives the investors (which is his right to do), we see “However, for the moral implications mentioned with respect to the development of an indigenous defense industry, check your moral compass. From my perspective, it’s a financially profitable but morally bankrupt undertaking“, yet what morally bankrupt idea is there on growing the pharmaceutical and mobile network industry? they are highly profitable if it is achieved and there is moral question, my moral compass is setting on the field asking Albert Goldson, a member of the Association of Former Intelligence Officers (AFIO) and an Associate Member of the Foreign Policy Association (FPA) why he missed on those options. Also in the view of two dozen projects that are openly stated, why would he focus on a part that represents merely 10% and focus on those two dozen programs, where the investors would find the gems that the investors would want to find in a $500 billion layered cake called ‘Vision 2030‘. Oh, as for that military part, the attached Burton presentation ‘Opportunities in Saudi Arabia – Vision 2030 and Beyond‘ spends two slides on it and the most important part shown is “Vision 2030 calls for 50 percent of military equipment purchases from domestic suppliers instead of imports“, whilst also mentioning that the Kingdom of Saudi Arabia (KSA) “spent a total of over $63 billion on defense and security in 2016, including off-budget spending“, so when we see that, we see that for the smart investor there is an optional $30 billion a year available for those who might not have a moral issue working on a government set national defence program. That in light of Iran delivering missiles hardware and support to non-combatants, which are rebels at best, yet terrorists might be more apt when we consider “Nasrallah’s letter is proven evidence of Iran’s involvement in the Yemeni civil war, since it shows that Hezbollah, which is financed by Iran, is taking part in the fighting in Yemen” (source: Jerusalem Post). So where exactly does Seeking Alpha stand? Let’s be fair, they can be in any place they like as they are merely advisors towards their investors in all this, yet even with my high moral (or is that outspokenly oral) I would not turn away from a $32 billion market, especially if I had that level of cash. Oh, and whilst you consider on where morality needs to be, Boeing, Lockheed and Raytheon have already signed up, so the delay you took made that cake a hell of a lot smaller, but even if there is still $2 billion up for grabs, would you walk away? Let’s not forget that next month’s rent is due!

So in all this, I never stated or implied that Albert Goldson lied to anyone. Yet when we consider there is your side, my side and the truth, what did we see? You see, I get back to perception versus observation. Through perception he is focussed on the defence part, but why? The shifted setting towards Saudi Arabia will impact something else, but what else is impacted? That is the question, is it the Iranian setting (when considering the other articles), is it something else entirely, or is Albert Goldson focussed on something beyond all this? It is a speculation from my side, yet the absence of the Pharmaceutical and Mobile Industry absence implies just that, yet in equal measure I will state that this would merely be my perception, based on all my observations. That is part of the setting. In the realm of ‘there is your side, my side and the truth’, it becomes more and more about observation versus perception. In a case like this, when there is $500 billion on the table, is the perception the amount on the table, or the observation of whom else is at that table that matters. Is that merely an observation or does the perception become: where is MY opportunity? Because in the end that is what the investor cares about, and moreover, where and what size their slice of the cake becomes.

In addition, my observation will be that the changes mean that there are new players and some of the old players have been so well fed for such a long time, in this ‘parting might be such sweet sorrow’ (Romeo and Juliet Act 2, Scene 2), yet for the previous players it will be over their dead bodies, that tends to be the gist of it. The change needs to be observed because it shown also where the pressures of the players will be and that pressure can be seen as cost and risk. It is the wiser player that makes it through and gets the slice of the $500 billion layered cake; it is merely the question on the size of the slice and the perception of the profit it allegedly holds.

 

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