Saudi Arabia has many plans to lift its economy further. One of them is to use money it earned from Saudi Aramco's recent IPO and bolster its defense capabilities amid agitation with its neighbor, Iran.
Proceeds from Aramco's December stock listing, its finance minister said Tuesday, will be used to upgrade the Kingdom's local defense market over several years.
In a Reuters interview, Saudi Finance Minister Mohammed al-Jadaan disclosed serious efforts to ease animosities between Iran and the US have been made, following the assassination of Iran's top military commander in a US drone strike that prompted Tehran to respond with rocket attacks on American installations in Iraq.
The Kingdom has managed to weather worse geopolitical tensions including actual wars, Al-Jadaan said during the sidelines of the World Economic Forum in Davos, Switzerland.
Al-Jadaan pointed out that Saudi Arabia must now focus on improving the region's economy. "We believe the tensions can only be resolved by serious dialogue," the minister said.
A series of attacks on oil vessels in 2019 in the Gulf oceans and Saudi oil facilities, including the world's biggest oil processing plant, penetrated Saudi air defenses and threatened to distort a reform program intended to diversify Saudi's economy away from oil.
The Trump administration and Saudi Arabia accused Iran of orchestrating the attacks on Saudi oil sites, an accusation that Tehran dismissed and even threatened it will block the Strait of Hormuz in retaliation for US sanctions against its crude exports.
Immediately after the attack, the US sent additional combat forces to Saudi Arabia, and France deployed a high-tech radar equipment to strengthen the kingdom's air defenses.
Prior to the recent aggressions, Saudi Arabia had started a campaign to localize half of its military budget led by Saudi Arabian Military Industries, which is owned and controlled by the kingdom's Public Investment Fund.
Al-Jadaan said that with approximately $30 billion in funding sourced from Aramco's latest IPO and into the state's public cash reserves, new and current local industries, including defense and technology, will be get a big boost in capital.
Despite the Kingdom's plans to diversify, its economy -- the biggest in the Middle East -- depends largely on hydrocarbon profits. Saudi Arabia has struggled in recent months as a result of declining prices of oil in the world market.
Al-Jadaan said he anticipates a more stable oil price this year because of rising demand, lower production and easing trade frictions.
