Business luminaries may have begrudgingly shunned Saudi Crown Prince Mohammed’s “Davos in the desert” spectacle following the grisly murder of well-known dissident (and Washington Post columnist) Jamal Khashoggi, but when it came time for real Davos, “money talked”, so to speak.
Make no mistake, Prince Mohammed miscalculated when it came to believing (as he pretty clearly did) that the Khashoggi murder could be easily swept under the rug. His biggest mistake was probably underestimating Turkish President Recep Tayyip Erdogan, who seized on the killing to reclaim geopolitical momentum following a truly tumultuous summer for Turkish assets, which were beset with concerns about central bank independence and, ultimately, jitters tied to the diplomatic row sparked by the detention of Christian Pastor Andrew Brunson.
During October, Erdogan deftly wielded the evidence implicating Prince Mohammed in the killing of Khashoggi at the Kingdom’s Istanbul consulate to extract concessions from the Trump administration (e.g., the easing of sanctions, movement on the extradition of Fethullah Gulen and the withdrawal of US troops from Syria). Erdogan’s efforts to keep the Khashoggi story in the news turned the screws on Riyadh and would have likely catalyzed a wholesale rethink of the US-Saudi relationship were it not for Trump’s steadfast refusal to hold the Crown Prince responsible (as a reminder, Trump went so far as to basically suggest that the CIA was lying in its assessment).
Between Trump’s reluctance to ostracize or otherwise isolate the Crown Prince (which the administration pretty clearly feared might have led to a palace coup and which could have conceivably undermined Trump’s efforts to keep a lid on oil prices) and the business community’s penchant for putting money over all other considerations (recall Larry Fink’s absurd pseudo-defense of Prince Mohammed), Riyadh managed to move beyond the Khashoggi debacle.
The “forgive and forget” mentality was on full display in Davos this week. The Saudis of course sent a large delegation including Economy Minister Mohammad Al Tuwaijri, Finance Minister Mohammed Al-Jadaan, and Foreign Minister Ibrahim Al-Assaf who, you’ll recall, recently replaced Adel al-Jubeir, who was demoted in a humiliating move presumably tied to his ineptitude at shielding the Crown Prince from the ire of the international community in October.
Aramco’s Amin Nasser (who is about to test the waters for an inaugural international USD bond offering to finance the Sabic deal), summed up the mood in Davos as follows:
We don’t have any problem.
Right. The Saudis “don’t have a problem” despite having been caught red-handed kidnapping, asphyxiating and chopping up a dissident journalist with a literal bone saw, and the reason they “don’t have a problem” is because they do “have money” – and a lot of it at that. Here’s what Morgan Stanley’s James Gorman told Bloomberg in an interview earlier this week:
I don’t think Saudi Arabia is in the penalty box. [Khashoggi’s murder] was utterly unacceptable and the world including the Saudis want to understand exactly what happened. In the meantime, Saudi is a country of 32 million people. These folks deserve a shot.
Part of that is clearly absurd. If by “the Saudis” he means the government, then he’s just being obtuse. Riyadh knows exactly “what happened” to Khashoggi – the Crown Prince ordered him murdered and dismembered. And thanks to Erdogan’s police state, the world has the closest thing possible to multiple smoking guns (see our Khashoggi archive for everything you would ever want to read on the story).
But Gorman’s comments are indicative of what you can expect going forward. Nobody is willing to let the murder of a journalist get in the way of a long-term relationship with the Saudis, especially at a time when investment opportunities are myriad amid Prince Mohammed’s efforts to modernize the Kingdom.
Cue reports that he’s all set to present an infrastructure plan on Monday including projects totaling 200 billion riyals. But the headline number is actually $425 billion (that’s dollars), which is the amount the Kingdom is seeking by 2030 via the National Industrial Development and Logistics Program, one of the moving parts under the Vision 2030 umbrella.
Al-Falih made the announcement on Saturday. “The (NIDLP) program targets 1.6 trillion Saudi riyals”, he said at a press conference, adding that while that’s “quite ambitious”, the fact that it’s spread over a decade means the Crown Prince “has the time to do it.”
Yes, he’s got a lot of time and you know what they say: “where there’s a will, there’s a way” – just ask Salah Muhammad al-Tubaigy, who managed to do the impossible when it came to chopping a grown man up into small enough pieces to fit inside five suitcases.
Anyway, as Reuters details, “the program will seek to raise money from both domestic and foreign investors [and] will integrate the mining, industry and energy sectors, which Falih said were each vital to the kingdom’s plan to empower the private sector and make it the main driver for economic growth.”
If the relative ease with which Riyadh sold $7.5 billion of international bonds earlier this month is any indication, and if the reception the Saudis received in Davos does indeed “prove” that the world has forgotten about Khashoggi, Prince Mohammed will likely have little trouble attracting interest for his ambitious development projects.
After all, what’s a dismembered journalist among friends, right?