The Saudi crown prince’s plans to lure investors and transform his country’s economy face dire threats after the disappearance and possible killing of a dissident writer at a Saudi consulate in Turkey.
Since Turkish officials blamed Saudi Arabia for the Oct. 2 disappearance of journalist Jamal Khashoggi, foreign investors have begun re-examining their relationship with Crown Prince Mohammed bin Salman and their participation in his plans to overhaul his country’s economy.
Some say they worry the 33-year-old crown prince, the country’s day-to-day ruler, has put the kingdom’s stability at risk by allegedly targeting a writer with deep connections in Washington, Europe and the Middle East. The Saudi government has denied any involvement in Mr. Khashoggi’s disappearance.
Former U.S. Energy Secretary Ernest Moniz this week suspended his work on Saudi Arabia’s new futuristic city, Neom, citing “deep concerns” over Mr. Khashoggi. Dan Doctoroff, the founder of Sidewalk Labs,
urban innovation company, also said he wouldn’t work on Neom, shortly after a Saudi government announcement that he would be on its board.
A spokeswoman for the New York Times said Thursday that the paper would no longer be a media sponsor for the kingdom’s premier business conference, the Future Investment Initiative, on Oct. 23-25 in Riyadh, an event dubbed “Davos in the Desert.”
The conference was meant to renew optimism among foreign investors. Among the speakers are Blackstone Group LP Chief Executive Stephen Schwarzman, JPMorgan Chase Chief Executive James Dimon and
founder Masayoshi Son. Prince Mohammed promised in a Bloomberg interview that major business deals would be announced before and during the conference.
Media executive Arianna Huffington, who is an advisory board member for the conference, no longer plans to attend the conference, a spokeswoman for her said Thursday. ABB, the Swedish-Swiss technology company, said it was monitoring the fallout from Mr. Khashoggi’s disappearance before deciding whether to attend.
“There is no excuse to detain or harass journalists, and there should never be even a shred of suspicion that a country murdered a member of the press,” aid Seth Bannon, the founding partner of Silicon Valley-based venture capital fund Fifty Years. “That there is here speaks volumes.”
Mr. Bannon said he would still attend the conference and give a speech, saying he has met Prince Mohammed and is “inclined to give him the benefit of the doubt that he’s doing the best he can.”
Representatives for Saudi Arabia’s Public Investment Fund, the conference organizer, didn’t respond to requests for comment.
The Saudi government has repeatedly denied any role in Mr. Khashoggi’s disappearance. Saudi officials say Mr. Khashoggi, who is engaged to a Turkish woman, went to the Istanbul consulate, gathered some documents and left without incident. His fiancée, who accompanied him to the consulate and waited outside for him, has said he never emerged.
Turkish officials believe Saudi journalist Jamal Khashoggi was murdered in his country’s consulate — a claim Saudi officials refute. The WSJ’s Gerald F. Seib explains the implications behind Mr. Khashoggi’s alleged killing. Photo: Getty
Turkish officials say the Saudis sent a hit squad on a government-owned plane to Istanbul the day that Mr. Khashoggi went to the consulate. Turkish officials believe Mr. Khashoggi died in the consulate, though they have yet to detail their findings outside of leaks to the local media.
Western leaders, including President Trump, have asked the Saudis for answers about Mr. Khashoggi, a pressure campaign that has raised the specter of sanctions being placed on Riyadh.
It marks a moment for executives to choose whether they want to be associated with Prince Mohammed, said Karen Young, resident scholar at the American Enterprise Institute, the Washington think tank.
“For high-profile CEOs, this is not a good moment for photo ops,” she said.
Prince Mohammed rose from an obscure young prince to become Saudi Arabia’s day-to-day ruler with a plan to modernize his country’s society and foreign policy and diversify its oil-dependent economy. He has made popular moves, including allowing women to drive, opening the first cinemas in three decades and pumping up Saudis’ sense of national pride.
He promised to open up Saudi Arabia to foreign investment with ambitious plans to publicly list the state oil company, Saudi Aramco, invest billions in electric vehicles and solar power and build a $500-billion futuristic city that would turn Saudi Arabia into a 21st century innovation hub.
But investor sentiment was already mixed following a series of disruptive moves for businesses. The kingdom severed diplomatic ties with Canada, blockaded Qatar and launched an anticorruption campaign that rounded up Saudi businessmen and government officials in the Ritz-Carlton hotel last year. The Riyadh investor conference will be held at the same hotel. Local businesses were also put off by domestic measures like cuts to energy subsidies, a new value-added tax and restrictions on hiring foreign workers.
At the same time, the prince’s economic plans have faltered in some places. The Aramco IPO has been indefinitely delayed, and the kingdom is working to scale down its solar-power ambitions.
Mr. Khashoggi’s case represents a new level of risk for investors already wary of the country.
“This kind of behavior is a strong deterrent for private investors,” said Gilbert Achcar, professor of development studies and international relations at SOAS University of London.
Foreign-direct investment in Saudi Arabia plunged to a 14-year low last year, though it has recovered somewhat this year. The Saudis have worked to turn around sentiment among foreign investors, creating billions of dollars in new funds to launch partnerships with international companies.
Rising oil prices are providing a cushion for Prince Mohammed, giving the government extra cash to inject into the economy after two years of austerity measures when oil prices had crashed.
Prince Mohammed will likely engage in a charm offensive when potential investors come to Riyadh in less than 10 days, analysts said.
“These people are supposed to be buying your story and there comes a time when the story becomes unpalatable and they don’t want to be part it,” said David Butter, an associate fellow in the Middle East and North Africa program at Chatham House, a London think tank.
Some businesses are still planning to keep Saudi ties going strong.
Nicolas Sarkozy, the former French president and a board member of
privately met with Prince Mohammed in Riyadh on Thursday as part of a long-planned trip, people familiar with the matter said. Accor is in talks with the Saudi government about several hotel projects, and its chief executive, Sebastien Bazin, plans to attend the Saudi investment conference.
—Nicolas Parasie in Dubai and Benoit Faucon in London contributed to this article.