Saudi Arabia is currently embroiled in an international spat that has seen it taking plenty of flak. Crown Prince Muhammad bin Salman (MBS) was in the eye of the storm particularly after the killing of a Saudi journalist in Istanbul that provoked worldwide reaction. The curious incident in Istanbul has done most harm to the reformist image of MBS and it will take time before he succeeds in repairing the damage done. MBS also had to face setbacks in his proposed investment conference in Saudi Arabia as he was expecting high level of investment coming his way.
Despite adverse international reaction MBS succeeded in obtaining investment deals worth $56 billion that though is less than expected but still are substantial. MBS faced the financial upset when his father the king postponed his proposal of selling a small stake of trillion-dollar Saudi state conglomerate Aramco that was predicted to bring in a high level of financial windfall. The king was of the opinion that this was not the right time to sell the stakes as the company is facing financial difficulty due to consistent fluctuation of price of oil in international market.
The conference was well-attended and Russia sent a
large delegation and its head appreciated the
efforts for reforms in the kingdom
The other setback MBS suffered was the withdrawal of a number of Western politicians and global business chiefs from Saudi Arabia’s premier investment event over the killing of the Saudi journalist. The US Treasury Secretary Steven Mnuchin and senior ministers from Britain and France pulled out of the event along with chief executives or chairmen of about a dozen big financial firms such as JP Morgan Chase and HSBC. IMF chief Christine Lagarde also declined to come to the conference after wobbling for a while.
Despite Saudi Arabia’s sovereign wealth fund investment in Uber, its CEO Dara Khosrowshahi also withdrew from the event by stating that his firm was awaiting the full facts on Khashoggi’s case before deciding whether that would affect Saudi involvement in the ride-hailing service. But all was not gloom for the investment conference as it was attended by many stake-holders who cited pragmatism as the main reason for keeping investment relations intact with Saudi Arabia.
Davos in the Desert saw hundreds of bankers and company executives join officials of the kingdom for the Future Investment Initiative. The conference, however, was a far cry from last year’s inaugural conference that drew global business elite but it still netted in substantial investment. MBS arrived at the conference late in the day after attending a meeting at which the king received members of Khashoggi’s family including his son Salah. The audience of 2,000 participants welcomed his entry and many still have faith in his reformist agenda.
The highlight of the conference was the participation of Saudi billionaire Prince Alwaleed bin Talal, who was among those detained who appeared at the forum beside MBS. The Saudi Energy Minister Khalid al-Falih assured the conference that the world’s top crude exporter was passing through a “crisis of a sort” but would power ahead with economic reforms. This frank expression of the situation was very encouraging as well as the reiteration of chief executive of Saudi Aramco that his government remained committed to a partial flotation of the oil giant but that the timing would depend on market conditions and other factors.
The conference was well-attended and Russia sent a large delegation and its head appreciated the efforts for reforms in the kingdom. Saudi Arabia signed 25 deals in the oil and gas industries and infrastructure sectors with firms such as Trafigura, Total, Hyundai, Norinco, Schlumberger, Halliburton and Baker Hughes. Saudi Aramco said it signed 15 memoranda of understanding worth $34 billion. Total Chief Executive Patrick Pouyann said that the French oil and gas producer would announce a retail network in the kingdom with Saudi Aramco.
The managing director of the kingdom’s sovereign wealth fund, the main backer of the event, said the country was becoming more transparent and that the Saudi Public Investment Fund continued to develop new industries under economic reforms launched by the crown prince. He mentioned that the fund has invested in 50 or 60 firms via SoftBank Group’s Vision Fund and would bring most of those businesses to the kingdom. PIF has committed to invest $45 billion in the Vision Fund.
The conference was attended by low-level executives of many Western banks and other companies who were conscious of the financial stakes involved in doing business with Saudi Arabia. The prospects of simply earning fees for arranging business deals of Saudi Arabia’s $250 billion wealth fund compelled many firms to attend it but in a lower capacity as their top people took the option to stay away. It was also very obvious that top executives of Asian firms were reluctant to stay away from the event with the result that Chinese and Japanese participation may prove helpful for Saudi Arabian attempts to garner investments.
Baqar Bilal Hussain is a social activist