After Journalist Disappears, Companies Reconsider Saudi Investment
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There's no firm indication that the United States will act against Saudi Arabia for the suspected murder of a journalist, but the Saudis may already be paying a price. NPR's John Ydstie reports on what it means that businesses are backing away.
JOHN YDSTIE, BYLINE: In 2016, Crown Prince Mohammed bin Salman, Saudi Arabia's effective ruler, invited U.S. and global businesses to a conference. He unveiled a plan called Vision 2030. It called for a transition of the Saudi economy away from oil and toward a more diverse market-based model. And the crown prince invited the companies to participate. Jacob Kirkegaard of the Peterson Institute for International Economics says the Khashoggi affair is undermining the crown prince's vision.
JACOB KIRKEGAARD: Namely that the world's most advanced and competitive companies come and establish themselves in Saudi Arabia.
YDSTIE: That scenario is fading as the CEOs of large U.S. and global companies one after another announced they will not attend the second Vision 2030 conference scheduled for next week. Jamie Dimon, CEO of JPMorgan Chase, has said he won't attend. Again, Jacob Kirkegaard.
KIRKEGAARD: I think the fact that a CEO as prominent as, you know, JPMorgan's Jamie Dimon not going to the summit and saying so publicly and linking it to the Khashoggi disappearance means that many other CEOs will probably pull out.
YDSTIE: Two other prominent Wall Street CEOs - Larry Fink of BlackRock and Steve Schwarzman of the Blackstone Group - also say they won't be attending. According to The New York Times, the trio of CEOs tried but failed to get the Saudis to postpone the conference. The CEOs also reportedly failed to convince Treasury Secretary Steven Mnuchin to stay home. The Khashoggi allegations, along with previous behavior of the crown prince, are making companies nervous, says Kirkegaard. He says remember that back in 2017, the crown prince rounded up 400 Saudi princes and businesspeople, detained them at the Ritz Carlton in Riyadh on corruption charges and forced them to pay the government as much as $100 billion.
KIRKEGAARD: I mean, it basically sends the signal that the rule of law in Saudi Arabia is a myth. When you're trying to lure foreign investors into your country, that is about the worst signal you could possibly send them.
YDSTIE: But Karen E. Young, a resident scholar at the American Enterprise Institute, says U.S. companies who snubbed the Saudis will likely pay a price because the Saudis will take it personally.
KAREN E. YOUNG: The decision on the part of a U.S. corporate to walk away from this conference and to, in some ways, you know, turn its back on the Saudi government as a partner will not be forgotten by the Saudis.
YDSTIE: Young says it could be two decades before the Saudis will reengage with these companies. Young also says U.S. sanctions against the Saudis could be tricky. There's lots of Saudi money in U.S. tech, real estate and stock market, she says. And the Saudis own lots of U.S. government bonds, not to mention the country's key role in the oil markets. So the Saudis have ways to retaliate. John Ydstie, NPR News, Washington.
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