Recently, the European Union moved to block the proposed Alston-Siemens rail merger. This decision did not sit well with the French finance minister as he felt that it was not the right move, especially in the face of the ever-growing Chinese Industry.
While speaking to a CNBC reporter at the World Government Summit, which was held in Dubai on Sunday, the French Finance Minister, Bruno Le Maire said that Europe is facing massive competition from the rising Chinese industry. In addition to that, he wondered whether they were supposed to be merging or dividing European industries.
In the European Union resolution to block the proposed merger, they cited competition as the major determinant. The merger between the German and French company aimed to form a European rail giant, which was expected to generate staggering revenue estimated to be about 15 billion Euros. The suggested merger was to unite these companies separate transport services only, with Siemens tasked with the responsibility to control the resulting company.
Joe Kaeser, the current CEO of Siemens who was also at the World Government Summit, said that the legislation used by the E.U to block the merger was behindhand. He also praised the UAE’s way of conducting business, terming it as more pragmatic and effective. According to him, if the decision on the merger had been made in the Gulf country, it sure would have been different.
The German and French Governments had both thrown their support behind the expected merger, with a strong belief that it was a good counter to the Chinese completion. Bruno Le Maire said that the E.U’s decision on the merger was divisive; the proposed merger would have brought about more cooperation not only for Germany and France but also other European countries. He concluded that they would abide by the European Union verdict. However, they would make strong future recommendations for the law on competition to be changed to allow European firms to merge and be stronger.
Why some investors are becoming wary of investing in Saudi Arabia
Mr Naguib Sawiris, a prominent Egyptian billionaire, said that he had no intentions of investing in Saudi Arabia. In his statement, he said that he didn’t believe that there was a sound rule of law and injunction in Saudi Arabia. Besides that, he had concerns over the Saudi’s disregard for human rights. He was speaking to CNBC on Tuesday in Abu Dhabi during the MENA summit 2019 that had been organised by the Milken Organisation.
Jamal Khashoggi, a U.S based journalist of Saudi Arabia decent was murdered while visiting the Saudi Arabia consulate in Istanbul, Turkey. He was a vocal critic of Mohammed bin Salman, the current Saudi Crown Prince. His death has caused immense scrutiny in Saudi Arabia in recent times.
Riyadh moved to vehemently deny claims by Turkey officials that they were involved in the killing of Jamal Khashoggi. However, after more than a fortnight of constant denial that he had been murdered in their consulate, the Saudi Authorities finally caved in and admitted that indeed, Jamal lost his life in the hands of his kidnappers inside their consulate in Turkey. His death put the U.S and 17 Saudi officials at loggerheads, forcing the U.S to enforce economic sanctions against the 17 officials who included a former aide to the Saudi Arabia Crown Prince.
According to Sawiris, political stability goes hand in hand with economic stability and it is only fair to invest where you feel most comfortable. Saudi Arabia has experienced a significant drop in direct foreign investments. With its 2030 vision heavily reliant on diversification of their economy, the challenges seem to be insurmountable. Some of the major obstacles standing in the way of the realisation of Saudi vision 2030 are low oil prices, rising unemployment levels and a shortage of skilled labour.
The questionable tactics of the young Saudi Crown Prince are also contributing to their problems amidst international concerns. In 2017, Mohammed ordered the detention of hundreds of Saudi Royal business men, citing corruption-related issues. While at it, some of their major finances were confiscated. This has worried many investors, leading to Mark Mobius, a rising money markets investor, to discourage businessmen from investing their money in Saudi Arabia.
However, some investors like Michael Milken of the Milken Institute continue to be optimistic about investing in Saudi Arabia. According to him, Saudi women were recently allowed to drive while young and men and women were given leeway to interact during concerts, something he views as a positive change.