Never say never, even when the subject is Saudi Arabia.
It is a wonderful irony that so much of a natural resource central to human progress occurs in a desert kingdom so fiercely reluctant to modernize.
Then again, it's not modernization itself that Saudi Arabia scorns. It's the encroachment of alien culture, especially from the non-Muslim West, that raises alarm in Riyadh.
Cultural and religious wariness hardly makes Saudi Arabia unique in the world, of course. Saudi traditionalism simply stands out for having been tested by 3 decades of catch-up nation-building and by inescapable oil-industry influences that are not just Western, not just American, but also-by gosh-heavily Texan.
Not so long ago, it was a sign of wisdom in the oil industry to aver that Saudi Arabia would never enlarge its embrace of foreign capital outside of specialty areas such as petrochemicals. Because of oil revenues it didn't need the money. And because of traditionalism it didn't want the threat of Westernization that came with it.
How things change! Saudi officials have been holding discussions with Western oil companies about participation in energy projects other than oil. And this month a new foreign-investment law took effect making it much easier than before for outsiders to conduct business in the kingdom.
Foreigners now can own 100% of the projects in which they are involved as well as the property required for projects and the housing needed for company personnel. They also become eligible for incentives available to Saudi companies, such as loans from the Saudi Industrial Development Fund.
The law makes other changes helpful to foreign companies, including a reduction in the corporate tax rate to 30% from 45% for profits exceeding 100,000 riyals/year and authority of licensed companies to handle sponsorships for their employees.
As part of the change, the Council of Ministers approved creation of a body called the General Investment Commission to promote foreign investment and issue investment licenses. Prince Abdullah bin Faisal bin Turki is the new council's governor, a ministerial position.
These are significant changes in Saudi Arabia. Naturally, they don't apply to oil investments.
So it still sounds wise to say that Saudi Arabia will never let foreigners invest in its oil projects. And it will sound wise right up until the time that the royal family changes its mind.
