DAVOS: Saudi Arabia will pump the proceeds from last month’s listing of oil giant Saudi Aramco into the local economy over several years, including building up the domestic defence industry amid tensions with Iran, its finance minister said on Tuesday.

Mohammed al-Jadaan told Reuters there were "serious efforts" to reduce antagonism between Washington and Tehran after a top Iranian general was killed in a US airstrike and Iran retaliated with missile attacks against American bases in Iraq.

"If you look at history, we in this region have managed to weather through worse geopolitical situations, including actual, real wars," he said in an interview on the sidelines of the World Economic Forum.

“We in Saudi have to focus on the economy and reform [...] We firmly believe the disputes can only be resolved by dialogue.”

A string of attacks last year on tankers in Gulf waters and Saudi oil sites, including the world’s largest oil processing facility, pierced Saudi defences and threatened to derail a reform agenda aimed at diversifying the economy away from oil.

Riyadh and Washington blame the strikes on Iran, which denies involvement but has threatened to close the Strait of Hormuz shipping channel in retaliation for sanctions placed on its crude exports by Western powers.

The United States is sending additional military forces to Saudi Arabia, and France has deployed a radar system to bolster the kingdom’s air defences.

Even before the recent tensions, Riyadh had begun a drive to localise 50 per cent of military spending led by Saudi Arabian Military Industries, owned by the state Public Investment Fund (PIF).

With nearly $30 billion coming into PIF coffers from Aramco’s local share offering last month, new and existing local industries, including defence and technology, will get a boost in capital, Jadaan said.

Published in Dawn, January 22nd, 2020