Saudi Arabia hoping 'business as usual' strategy holds
Although some prominent figures stayed away from a major investment conference in Riyadh, the meeting went ahead with many global firms represented
Saudi Arabia is determined that the international outrage over the killing of Jamal Khashoggi in the kingdom's consulate in Istanbul shouldn't affect commercial and economic activity. For the time being at least, the Saudi leadership's strategy appears to be working. Some big names from politics and the world's business community were absent, but 'Davos in the desert', as it was dubbed, was by no means a wash-out.
For while governments around the world want and are insisting on further details of the killing of Khashoggi and who ordered it, they're also realistic enough to know that they can't simply walk away from such a lucrative source of investment and business. In particular, governments and companies with existing investments in Saudi Arabia-not least in the defence sector- will certainly not be thinking of withdrawing. President Trump has stressed the kingdom's crucial importance to the American economy as an arms purchaser and pointed out the danger of China or Russia stepping in if the US were to pull out.
On the other hand, the Khashoggi affair, and the manner in which an initial Saudi flat denial of involvement gradually turned to an admission that the journalist had been murdered, is bound to dent the kingdom's image.
One of the key objectives of Vision 2030 is to expand the role of the private sector in the kingdom's economy. For this to happen, the Saudi authorities need to attract massive overseas investment to boost manufacturing industries and other sectors. The coming months will show whether the Saudi boast of "business as usual" will survive whatever further revelations there might be about the Khashoggi killing. The US has imposed visa bans on 21 Saudis believed to have been involved in the affair and said more action is possible in light of what President Trump called "the worst cover-up in history".
Analyst Capital Economics, in a report this week, says "the threat of sanctions may exacerbate the pick-up in capital outflows witnessed over the past 18 months". The kingdom may have some sticky days ahead.
With a number of the targets in the interim 2020 National Transformation Programme already slipping, and some broader Vision-2030 goals looking over-ambitious, one outcome of the Khashoggi controversy-no matter what emerges in the coming days-is certain to be a further delay in the economic reform programme.