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West boycott of Saudi event poses threat to economy

Dubai:A Western boycott of a major business conference in Riyadh next week suggests rising political risks in Saudi Arabia could harm its ambitions to attract foreign capital and diversify its economy away from oil.

Rather than whipping up interest in Saudi investment opportunities, the event risks becoming a public relations debacle because of the disappearance of Saudi dissident Jamal Khashoggi, company executives and analysts say.

Turkish officials have said Khashoggi was killed inside the Saudi consulate in Istanbul. Saudi Arabia denies this.

More than 24 top officials and executives from the US and Europe, including US Treasury Secretary Steven Mnuchin and the chief executives of JP Morgan Chase and HSBC, have cancelled plans to attend the Future Investment Initiative due to unease over the Khashoggi affair.

That may not prevent the event from proceeding — over 150 speakers from more than 140 organisations originally signed up, organisers said. But it deprives the conference of much of its star power. As Western companies fret over the risk to their reputations of doing deals and possible exposure to any sanctions imposed over the Khashoggi case, they are likely to put much new business in Saudi Arabia on hold for now.

The freeze may apply to both new Western contracts or investments in Saudi Arabia, and the Saudi government’s programme of buying corporate assets abroad through its $250 billion Public Investment Fund. Companies in China and Japan have shown little or no sign of withdrawing from the event, so US and European firms may lose out on business if they stay cool towards Riyadh for too long.

US President Donald Trump has said he wants to protect Washington’s security cooperation with Saudi Arabia. He raised the possibility that “rogue killers” murdered Khashoggi, a theory which could absolve Saudi leaders from responsibility.