Published: September 9, 2002

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Date: September 9, 2002

Network: CNBC

Program: “Business Center with Ron Insana and Sue Herera”

The following is an unofficial transcript:

RON INSANA (voice over): Saudi Arabia’s Prince Alwaleed Bin Talal is one of the world’s wealthiest individuals, worth more than 10 billion dollars with much of that invested in U.S. companies like Citigroup, Disney and AOL. He is in fact the biggest overseas investor in American companies.

But Prince Alwaleed is also a complicated and rather controversial figure as well. He had a very public showdown Mayor Guiliani when he criticized America’s Mid-East policy.

And now with the situation only growing more troublesome in the Middle East, the Prince seems to be forever caught in the middle of an increasingly delicate situation. I sat down with him at the end of August while he was in the U.S. on vacation.

There is a public relations campaign being waged right now by the Saudi government. Millions of dollars have been spent on well-connected lobbying firms in an attempt to improve Saudi Arabia’s image among Americans…the Saudi royal family has gone so far as offering to donate a war emblem – the Kentucky derby winning horse – to 9/11 families as a gesture of solidarity.

The motivation for bridging the U.S.-Saudi gap is obvious…with 15 of the 19 September 11th hijackers being Saudi nationals and with the increasing likelihood of an attack against Iraq…the Saudis have a vested interest in maintaining positive relations with the United States.

There’s also a $300 billion lawsuit to consider. The suit, filed in mid-august by more than 300 9/11 families is against “various interests associated with the government of Saudi Arabia”.

To understand the prince’s role in Saudi-U.S. relations, it helps to look back to the fall of 2001 when prince Alwaleed presented Mayor Guiliani with a ten million dollar gift to the twin towers fund…the problem…it was a gift with political message attached…. Mayor Guiliani promptly returned the check.

And now with the likes of Senator John McCain looking not to an invasion of Iraq but to changes put forth in Egypt and Saudi Arabia…and with the release of a controversial study independently conducted by a rand corporation analyst that accuses Saudi Arabia of being “a backer of terrorism”…prince Alwaleed’s relationship with the U.S. will be, for the foreseeable future, rather complicated.

INSANA: Americans have some concerns about Saudi Arabia, I guess when 15 of the hijackers from September 11th were Saudis. They worry that maybe the Saudis say one thing and do another. How can you reassure the American people there is no financing of terrorist organizations whether it’s al-Qaida or others coming from Saudi money?

PRINCE ALWALEED BIN TALAL: A wound was established between Saudi Arabia and the United States. But its important right now for leadership to prevail and tell each of our people that life has to go on despite those 15 terrorists. And that you should not just generalize because you had these 15 terrorists from Saudi Arabia. They generalize and say that Saudi Arabia is anti-American. That is not correct at all.

INSANA: Now you’re a member of the royal family but you’re not a member of the government. Do you think the government will stand behind the weight of your words?

PRINCE ALWALEED: I myself stand behind my government, and if that wasn’t the position of my government I wouldn’t do it. That is the position of my government.

INSANA: What do you think right now is the biggest threat to the global economy?

PRINCE ALWALEED: Another terrorist act is definitely the biggest threat. This is the biggest threat the world is facing. It’s affecting many industries… it’s affecting the tourism industry… it’s affecting the hotel industry its affecting the airline industry… it’s affecting the consumers in general also.

INSANA (voice over): And it deeply affects the prince as well. His vast holdings in Disney, the Four Seasons, the Plaza hotel in New York, and Norwegian Cruise lines have all dipped since the attack.

But in an attempt, he says to show his continued confidence in Wall Street, the prince has reportedly pumped an additional $1 billion into the market…$400 million of that into AOL.

INSANA: Your highness, you and I last spoke publicly on Sept 17th of 2001, the day the Dow was down 700 points in the wake of September 11th. Obviously, even more has happened since, it’s been a difficult economic environment to the United States and elsewhere. What do you make of the environment in which we find ourselves now, economically both in the United States and around the world?

PRINCE ALWALEED: In the 1990’s clearly there was a bubble building up in the U.S., and I think we are paying the price right now of what took place. I’m personally happy about what is going on although it’s painful for many people. But I think in the long run it is healthy, what is going on right now.

INSANA: Where do you see value?

PRINCE ALWALEED: There is value in the world, there is value in the United States, especially after the correction or the major meltdown that took place in the last two to three months. I think Mr. Greenspan said there was irrational exuberance but I think there is irrational pessimism also.

INSANA: What do you like?

PRINCE ALWALEED: I like some companies.

INSANA: Which ones?

PRINCE ALWALEED: Well you know if I were to chose 1 company and frankly say it was the most undervalued stock in the whole world and this may sound to extreme… I would say Citigroup.

INSANA (voice over): Exactly what you’d expect to hear from Citigroup’s biggest individual investor. The prince currently owns more than 200 million shares of that stock.

INSANA: Do you find the U.S. market cheap? You have been in the past a value style investor who likes to buy things penny on the dollar. Is the market cheap?

PRINCE ALWALEED: I never talk about markets in general. I’m very much oriented toward company specific, you know? Many companies have been have hit so much badly in this mess that took place in the last 2-3 months. So, yes there is value in certain companies but in certain companies there is no value so they are still expensive.

INSANA: Let me ask you why you like the American market so much. You do seem to have an affinity for it. You studied here in college while you were here in the United States. You’re the single biggest overseas investor in U.S. markets. What is it that keeps bringing you back to the U.S. as a profit making opportunity?

PRINCE ALWALEED: Well look, America is a great country. America will be down many times but will never be out. I believe in their system. I believe in the transparency you have here. And I believe what is going on right now, the weeding out of those weak companies and those corrupt companies, and inevitably those solid companies will stay. The GE types, the Citigroup type companies, the Microsoft type companies is very healthy. I still believe in American companies and the American system of managing those corporations.

INSANA: Do you face conflicts at home with your affinity for the United States with what some people would interpret as a pro-western or pro-American stance?

PRINCE ALWALEED: No, not really because the perception you have here in the U.S. about Saudi Arabia is wrong. You know Saudis like America. You know Saudis like Americans very much so. And you know I am a very big investor in my country and the Middle East also. I feel no conflict whatsoever at all. No reason to feel any conflict at all. No reason to feel a conflict at all.

INSANA: Tell us what’s wrong with the American perception of Saudi Arabia. Right now over the past couple of weeks obviously there has been a great deal of discussion that the friendship between the United States and Saudi Arabia has weakened, that there are people who are questioning whether the two countries are allies or enemies. What’s wrong with the American perception right now?

PRINCE ALWALEED: Well since 9/11, a big wound has been established and we have to acknowledge that openly and publicly and there is no doubt about that. And the questions is how to handle that wound and how to heal it. Now, unfortunately after 9/11 the Media came and bombarded Saudi Arabia and things subsided later. Unfortunately, just two or three weeks ago, now we are in August, the campaign began again. The U.S. leadership, whether it is the President, or Mr. Cheney, or Mr. Rumsfeld or Mr. Powell-they all say publicly that Saudi Arabia is a solid and strong friend. And I’m asking how can a country be a friend to Saudi Arabia for 60 years and all of a sudden in a matter of days to change and become an enemy.

INSANA: Let me ask you about the wound. Some people felt that you opened the wound when you were dealing with Mayor Guiliani in N.Y. and you gave the $10 million check, and then also that America’s foreign policy with respect to Israel might be one of the reasons behind the attacks of Sept. 11th, and pointed out that Palestinians were being slaughtered by the Israelis. Some people felt that statement was out of line and could not possibly in any way justify what happened on Sept. 11th.

PRINCE ALWALEED: If you look at the relationship between Saudi Arabia and the Arab world with the U.S. on one side and Saudi Arabia on the other side, there is only one deep problem between us, and this is Palestine because the only hiccup the only problem really is the way you look at the Palestinians. I believe in the U.S. and maybe Saudi Arabia believes in the U.S. and I really wanted to give an advice and a recommendation as a friend to the United States. Unfortunately, it was not looked at very favorably.

INSANA: Let me ask you about one other perceptual issue in the United States with respect to other extremists, those in al-Qaida and how some Americans view the Saudi position on that. There are worries that some wealthy Saudis give money to al-Qaida to the Taliban, to Osama bin laden. And that again makes some Americans worry about the friendship with Saudi Arabia. You understand that?

PRINCE ALWALEED: Why would Saudi rich people give money to Al Qaida right now at least? No Saudi would shoot himself in the foot because bin Laden is not only after the U.S., he is after Saudis in Saudi Arabia too. So we would not do that.

INSANA: The United States has a leadership role at the moment as you say in stamping out terrorism. One of the objectives of the bush administration seems to be as well to stamp one of its biggest sponsors, Saddam Hussein. Should the United States attack Iraq and prevent Saddam Hussein from exporting terrorism beyond his own borders?

PRINCE ALWALEED: The position of my country is that no attack should take place against Saddam Hussein and more chances should be given to him. No, and no country in the world is backing the U.S. on this. Forget Saudi Arabia, forget the Arab World, forget Europe-even Britain. I would not like to have another Vietnam over there. I assure you Iraq is no Nicaragua and no Noriega in that you can get him very easy, and I would not like to have the U.S. in a quagmire over they’re at all.

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