By Maria Bartiromo
Saudi Prince Alwaleed bin Tal Alsaud, with a net worth estimated at almost $21 billion, is one of the world's richest men. But he is no passive prince, sitting back while the oil billions roll in. Alwaleed, 48, is an active investor, with stakes in Apple (AAPL ), Disney (DIS ), Citigroup (C ) (with some $10 billion invested), and others. On Mar. 17 he announced that he would float an initial public offering for 30% of his holding company, Kingdom Holdings. The Prince, who was in Riyadh and spoke with me by phone, is a savvy businessman and a close observer of Middle East politics.
Lets talk about one of your big holdings, Citigroup. Several of the company's largest holders have recently been net sellers. What does [CEO] Chuck Prince need to do?
I met with Sandy Weill and Chuck Prince a month ago at the George V Hotel in Paris, and we discussed the promise from Chuck that he will deliver good results. If I can quote him, he said: "Prince, we have put the big problems of Citi behind us, and we have to move our shares to above 50."
So how long a grace period are you giving Chuck Prince?
The grace period is over. You can quote me on that. Right now we are looking to the results in the next few weeks and....I have full confidence that [Citi] will deliver. This is the No. 1 company in the world. It has equity of $400 billion and assets of $1.4 trillion. So no more excuses.....Excuses are finished. Now we are at war. Citigroup has won the internal war by cleaning up all the Enron residuals, WorldCom (MCIP ), the European scandal. Now we have to win the external war...make good investments...and that should lift the price of the stock. That's it. I told him, as [Citi's] biggest shareholder, we have to win the external war. Thank you, Mr. Chuck Prince. Now, the Prince of Saudi Arabia tells the Prince of New York: Go to war, and I am backing you 100%.
Do you think the U.S. is taking a turn toward protectionism?
Let's not read too much into the Dubai Ports situation: Congress went into protectionist mode, but President Bush was willing to let the deal go through. If this is an isolated incident, then fine. But if the U.S. discourages foreign investment, then we can see an impact. Obviously the U.S. cannot afford to close its borders to debt and equity since foreigners are financing its debt. The reaction was not positive. Arab investors did not like the situation, and they are monitoring it very closely.
What kinds of investments may go elsewhere?
Already we are seeing a lot of money coming back to Saudi Arabia and being kept in the system. If the U.S. Administration and Congress keep vetoing foreign investment, obviously foreigners will go somewhere else. But I don't think it will happen. I hope we will see open deals.
You have asked the Saudi government to make some changes to enable investment there. Do you think it will happen?
The problem is that foreigners are not allowed to invest in the Saudi market, although they are allowed to invest in funds held by banks. Saudi Arabia has to begin selling parts of its holdings to the public...and not hold 70% of everything. They have to let foreigners invest in Saudi stocks. They have to continue to encourage the process of IPOs. And they have to expedite the process of teaching the public how to invest.
Let's talk about Iraq. What will be the impact of a civil war in Iraq?
In Iraq, what you are seeing is complete destabilization of the situation and the beginning of, God forbid, the seeds of a war between the Shiites and the Sunnis that could destabilize the whole region. Remember, you have Shiites all over the region: in Kuwait, Lebanon, Jordan.... So it's a very serious situation. Although we are not happy to have [U.S.] troops in Iraq now, it's too early for the U.S. to pull out.
What do you make of Hamas' victory in the Palestinian territories?
Honestly speaking, people look at it negatively, but I do not. I think that Hamas will come into the political system. [You could compare] Hamas to the IRA in Ireland.
Maria Bartiromo is the host of CNBC's Closing Bell