The Saudi Arabian Monetary Agency, 1952–2016

APPENDIX:INSIDE SAMA SAMA has been fashioned by the vision of its eight governors. As one or the other of the authors has known personally every governor since the third, Anwar Ali (who took office only six years after SAMA was founded),1 we thought it would be interesting to set out some account of what each man brought to the job, our view of their major achievements and in particular what they were like as human beings. Anwar Ali (1958–74) was a roving spirit, born a British subject in colonial India and later becoming a Pakistani national before moving to the US. He arrived in Jeddah on a temporary assignment from the IMF and fell in love with the country. He effectively re-founded SAMA and championed its independence. As early as 1962, he explained in SAMA’s first Annual Report the mechanism by which the non-oil economy depended on oil income through the multiplier process. Ali established the system of financial supervision that endures to this day. He was a hard worker, and his only relaxation was playing the card game of bridge which requires a strong capacity for mental arithmetic and calculating odds. Ali died in office in 1974, as did his mentor, King Faysal, the following year. Ali relied on his secretary to translate Arabic documents into English, and SAMA’s Investment Deputyship still uses English as well as Arabic as an operational language. When Ali died of a heart attack while visiting Washington DC, the US Embassy in Jeddah sent Secretary of State Kissinger a fine epitaph: © The Author(s) 2017 301 A. Banafe, R. Macleod, The Saudi Arabian Monetary Agency, 1952–2016, Financial Institutions, Reforms, and Policies in Muslim Countries, DOI 10.1007/978-3-319-55218-7 302 APPENDIX: INSIDE SAMA [Anwar Ali’s] long tenure was based on two facts: his close personal relationship with King Faisal and his ability to balance pressures from the Saudi royal family in a period of massive growth of Saudi financial resources against the need to modernize the kingdom’s social and other services. He was a world-class financier, highly conserva- tive in his approach to placement of Saudi surpluses which were growing at an unprecedented rate when he died ...The US particu- larly and the Western world in general owe a great debt to Anwar Ali for his refusal to switch Saudi Arabian financial resources from one market to another for political or other reasons without due regard for monetary effects on other nations.2 Anwar Ali’s successor, the first Saudi to fill the top job, was Abdulaziz Al-Quraishi (1974–83). He was born in Al-Ahsa in the Eastern Province, where his father worked for the Ministry of Finance, and took an MBA in the US. Before he came to the central bank, he had a number of government roles (including that of minister of state) and gained a reputation as a problem solver. He ran the Saudi railroad system and Dammam port, and then was appointed President of the Civil Service Bureau. In person, he was a skilled manager of people and treated his staff in a friendly way. Al-Quraishi certainly had enough problems to solve. His time in office spanned both oil shocks and saw a huge rise in the size of the foreign exchange reserves. He implemented within a few weeks Ali’s plan to bring in a team of Western advisers and pushed ahead with buying US Treasuries direct, followed by similar deals with the Japanese and Germans. He also began investing in equities worldwide. Critically, in 1981, he extended the maturity of bond investments at a time when interest rates were at a post- war high and he diversified out of the dollar. These were bold and creative decisions that were to generate big profits in the decade that followed. His job went beyond dealing with crises and he was committed to empowering Saudis to take charge of their economy. He pushed hard for the Saudization policy that handed the management of the banks over to local investors. His personnel skills showed when he built a housing compound ahead of SAMA’s relocation to Riyadh, which meant that key staff became good neighbors and family friends as well as colleagues. SAMA’s culture today owes him a lot. Al-Quraishi stepped down in 1983 to join his family business, Al-Quraishi Brothers. Hamad Al-Sayari (1983–2009) hails from Dhurma, about fifty miles from Riyadh, and is SAMA’s longest-serving governor, spanning the reigns APPENDIX: INSIDE SAMA 303 of King Fahd and King Abdullah. He had a charming manner and a habit of listening carefully to what was being said, preferring to act cautiously and exert influence behind the scenes. He had an opinion about everything, but was a man of few words and when he spoke, he did so without affectation, simply and directly. At such moments, watching him as he twirled his reading glasses in his hand, his audience would recall that the fifth Governor had begun his career as a teacher. Al-Sayari took a master’s in economics from the University of Maryland. Before specializing in finance and economics, he gained a degree in Sharia. He shifted from a teaching job to work with the quasi- government organizations that invested public money. Following Al-Quraishi’s resignation in 1983, Al-Sayari moved up from Vice Governor to the top job, as Acting Governor until his appointment as SAMA Governor in September 1985. In the 1980s, oil had slumped in price, the government was running budget deficits and the foreign reserves were falling fast. Al-Sayari pegged the riyal firmly to the dollar – a peg that has endured for three decades – and handled the decline in assets adroitly. Undoubtedly the biggest crisis that Al-Sayari had to tackle during his term in office was the Iraqi invasion of Kuwait in 1990. It is testimony to the caliber of the fifth Governor that his swift and effective response to this regional catastrophe led to what was certainly SAMA’s outstanding inter- national achievement. After Al-Sayari had restored confidence in the wake of the original panic in Riyadh, he turned SAMA into an effective sub- stitute for the Central Bank of Kuwait (then in exile) by organizing his fellow governors in the Gulf to defend the Kuwaiti dinar exchange rate and provide whatever liquidity was needed. This violent episode was followed by the long grind of the 1990s when Al-Sayari was responsible for handling both a foreign assets rundown and fast-rising government debt. He stuck firmly to the principle that the bond market should be voluntary, insisting that SAMA should not coerce the banks into buying bonds. When oil prices finally began to turn, a new and more complex set of problems emerged for Al-Sayari – those stemming from Saudi Arabia’s growing involvement in the global financial system. The 9/11 terrorist attacks against US targets in 2001, the stock market crash in 2006, inflation and the start of the global financial crisis all occurred on his watch. He was also the first head of SAMA to grapple with the relatively new phenomenon of critical public opinion. Al-Sayari tried to manage the bubble in stocks by limiting consumer loans; but the market collapse triggered a blame game. 304 APPENDIX: INSIDE SAMA He found himself in a similar situation with inflation due to higher oil and food prices, but he stood firmly against popular demand to revalue the riyal and fought a long defensive battle which kept the peg in place. Managing matters is less challenging in affluent times, but in a difficult economic climate, decision makers’ skills are truly tested. Al-Sayari stood up to that test. By the end of his term, his skill at crisis management and his pragmatism in quietly transforming Saudi Arabia’s financial infrastruc- ture had made him an internationally respected figure – leading to him being awarded the title of central banker of the year for 2008 by The Banker magazine. Al-Sayari’s successor, Muhammad Al-Jasser (2009–11), a stickler for punctuality, had a commanding demeanor and was active and decisive in everything he did. A fast walker, his staff found difficulty in keeping up with the pace he set. In discussions, Al-Jasser was a sharp talker, who, while he relished dominating the debate, was nevertheless delighted when a good point was made by somebody else. He was stern but could be utterly charming when he chose and enjoyed the complete loyalty of those with whom he worked closely. Al-Jasser hails from the middle of the kingdom, Bureydah, a desert oasis 200 miles north of Riyadh. He and his successor Almubarak were the first governors to see as children how the oil wealth had helped to transform their country into a modern state. Al-Jasser’s early career was peripatetic. After completing his bachelors and master’s program in the USA, he worked at the Saudi Ministry of Finance (1981–83) and then went to the US to get a PhD in economics (1983–86). After only two years back at the finance ministry in Riyadh, he returned to Washington DC to become ultimately an executive director at the IMF. Finally, at 40, he returned permanently and became Vice Governor of SAMA (1995–2009). Al-Jasser’s other achievements in those years included working on the Gas Initiative (1997–98) and serving as a member of the Saudi negotiating team when the country entered the WTO.

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