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UPDATE 1-A hard sell? Saudi crown prince goes West to woo allies

Published 2018-03-06, 09:09 a/m
© Reuters.  UPDATE 1-A hard sell? Saudi crown prince goes West to woo allies
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* Foreign investors unnerved by November detentions

* London offers rare audience with the queen

* U.S., Britain hope to win Saudi Aramco public offering

* Trump talks could pave way to wider Gulf Arab summit

By Stephen Kalin and William James

RIYADH/LONDON, March 6 (Reuters) - Saudi Arabia's crown prince wants to persuade his British and U.S. allies that "shock" reforms have made his country a better place to invest and a more tolerant society on his first foreign tour as heir apparent.

But it could be a tough sell.

Prince Mohammed bin Salman, who starts talks in London on Wednesday, has won Western plaudits for seeking to reduce Saudi Arabia's reliance on oil, tackle chronic corruption and transform the deeply conservative, mainly Sunni Muslim kingdom.

But the severity and secrecy of an anti-corruption crackdownl ast November, after Prince Mohammed ousted an older cousin as crown prince in a palace coup last June, has unnerved some investors. London and New York are rivals to host the partial public listing of state oil firm Saudi Aramco, the enthusiasm of some Western business leaders -- even for such an important contract -- has been sapped by concerns about human rights and alack of limitations on executive power in Saudi Arabia.

"Investors are intrigued by MbS's (Prince Mohammed's) reform projects, and there will be a huge amount of interest in hearing his views, but uncertainty lingers," said Jane Kinninmont, a Middle East expert at Chatham House think tank.

Rachel Reeves, head of an influential business committee inBritish parliament, warned against risking London's reputationas a finance centre by watering down corporate governance rulesto secure the Aramco listing. This, she said, could "ultimatelydamage our attractiveness to foreign investment." Mohammed has defended last November's crackdown, inwhich dozens of top business leaders and princes were detained,as necessary to combat "the cancer of corruption".

Most detainees have now been released, and the authoritiessay they have arranged to seize more than $100 billion inassets. WITH THE QUEEN

The ambitious young prince, just 32, is sure to repeat hismessage at talks in Britain with Prime Minister Theresa May andwhen he meets President Donald Trump during a visit to theUnited States starting on March 19.

He will also have a rare audience with Queen Elizabeth anddinner with Prince Charles, the heir to the throne in Britain,after arriving from Egypt.

Any visit to the London Stock Exchange -- and later the NewYork Stock Exchange -- will be watched closely by investorsbecause of the potentially lucrative Aramco listing expectedlater this year.

London and New York have long been the frontrunners to hostthe international leg of the flotation, alongside a Riyadhlisting, but Hong Kong is emerging as an increasingly likelycompromise, according to two sources familiar with the matter. with faith leaders in Britain including the Archbishopof Canterbury, the senior bishop and principal leader of theChurch of England, offer Prince Mohammed an opportunity toproject a more tolerant image of Saudi Arabia, sources close tothe trip told Reuters.

Under the reforms closely associated with the crown prince,social restrictions have been loosened, such as bans on cinemasand women driving. He has promised to promote a more moderateform of Islam.

Business deals are possible with British defence group BAESystems and European weapons maker MBDA, and initial agreementscould be concluded on gas exploration, petrochemicals andindustry, according to British and Saudi sources. They gave nodetails of the potential deals.

Saudi Foreign Minister Adel al-Jubeir said on Monday thatBritain's planned exit from the European Union did not reduceits attractiveness as an investment destination, adding: Wethink that Britain is one of the great powers." foreign minister Boris Johnson lauded security tieswith "one of Britain's oldest friends in the region" in anewspaper article last week and praised Prince Mohammed'sreforms. rights groups and opposition lawmakers have criticisedLondon's support for the prince, particularly over the licensingof 4.6 billion pounds ($6.39 billion) worth of arms sales toSaudi Arabia since the start of the Yemen conflict.

Anti-war and human rights groups plan a protest outsideMay's Downing Street office on Wednesday.

"Theresa May should use this visit to announce the UK willno longer supply arms to Saudi Arabia while the devastatingSaudi-led bombing of Yemen continues and make clear Britain'sstrong opposition to widespread human and civil rights abuses inSaudi Arabia," opposition Labour party leader Jeremy Corbynsaid.

U.S. INVESTMENT TOUR

Prince Mohammed will hold talks with Trump before going toNew York, Boston, Houston and San Francisco for meetings withindustry leaders, as he seeks to shore up investments andpolitical support from Riyadh's closest Western ally.

Several dozen Saudi chief executives will join him intouting investment opportunities in the kingdom, particularly inthe areas of technology, entertainment and tourism, a Washingtonsource said.

Talks will also include a U.S. bid to build two nuclearreactors in Saudi Arabia and a civilian nuclear cooperationagreement needed for that to proceed, an industry source said.

Riyadh wants to diversify its energy supply mix, enabling itto export more crude oil rather than burning it to generateelectricity. But it has previously refused to sign up to anyagreement that would deprive it of the possibility of one dayenriching uranium. political agenda in Washington will feature a new pushto end the dispute between Arab allies of the United States thathas isolated Qatar over alleged ties to terrorism, a senior U.S.official has said.

The crown prince is also likely to reiterate to Washingtonand London the view of Saudi Arabia that its regional rival,Iran, should not be trusted over its nuclear programme.

Under a deal reached with major powers, Tehran agreed tocurbs on its nuclear programme in exchange for a lifting oneconomic sanctions.($1 = 0.7194 pounds)

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