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Global Oil Crisis: Saudi Arabia acts to avoid blame for rise

Saudi Arabia acts to avoid blame for rise

By Andrew England in Jeddah

Published: June 23 2008 03:00 | Last updated: June 23 2008 03:00

King Abdullah, ruler of Saudi Arabia, opened the unusual oil meeting in Jeddah yesterday by describing rocketing fuel prices as unjustifiable, before laying out ways in which he thought the world could act.

He proposed that the World Bank lead an “energy initiative” for the poor and said his kingdom would allocate $500m (€320m, £253m) from its development fund to help developing countries obtain energy and to finance development. He also called on Opec to set up a parallel $1bn programme to its fund.

The image he sought to portray was obvious: Saudi Arabia – the world’s largest oil producer – was concerned about the impact of record oil prices and wanted to show the world it would act “responsibly”.

Soaring energy costs have prompted concerns about political and social instability in developed countries and fuelled high inflation in many nations. And the last thing Saudi Arabia wants is to be blamed.

A key factor behind the king’s decision to call for yesterday’s meeting was the frustration that Saudi Arabia has been feeling about what it describes as “finger-pointing” from the west.

“In this critical hour the world community must rise to the level of responsibility; co-operation should be the cornerstone of any efforts,” King Abdullah said. The delegates’ mission, he said, was to “rule out biased rumours and reach the real causes for the increase in price”.

Saudi officials have been at pains to say its increases in oil production fall into line with its role as a market stabiliser. But yesterday’s meeting and other recent initiatives also tie into the kingdom’s desire to boost its influence and role in regional and international affairs.

The Saudis are concerned by their image in the US and do not want oil to become an election issue that draws unwanted attention to them.

Saudi Arabia spends billions of dollars on aid and development programmes, mainly in Muslim countries. The amounts have been increasing with the unprecedented oil boom, which has buoyed the kingdom’s confidence and its desire to counter Iran’s growing influence in the Middle East.

“Now we are seeing all the problems and crises that are happening in the region and there’s one country that can attempt to do something, and we are trying to do it,” said a Saudi adviser.

Among its list of recent initiatives are plans for dialogue between Christians, Muslims and Jews, and to set up large agricultural pro-jects overseas to secure supplies of food. Each plan has a domestic element, but they are also seen as part of strategy to enhance the kingdom’s influence and shore up its Muslim allies.

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