US executives are flocking to Saudi Davos in the desert
By Kate Kelly
The Biden administration’s message to corporate America was clear: Consider the reputation of the countries you do business with.
The remark came from the White House press secretary at a briefing last week, just as some top American executives were preparing to attend a major Saudi business conference, along with thousands of other investors, businesspeople and politicians.
The three-day gathering — the Future Investment Initiative, nicknamed Davos in the Desert — is set to open today. But U.S. government officials will be notably absent, weeks after an intense and public trading of accusations between the U.S. and Saudi governments over an Oct. 5 production cut by the oil cartel OPEC+, co-led by Saudi Arabia and Russia.
The cut — which benefits Russia financially — incensed U.S. officials whose constituents have been struggling with rising energy costs from Russia’s invasion of Ukraine. U.S. officials accused the Saudis of siding with Moscow in the war, and President Joe Biden warned the kingdom there would be “consequences.”
But those consequences have yet to be detailed, and the tensions do not appear to be deterring U.S. business leaders — some with substantial interests in Saudi Arabia — from attending the conference.
The CEOs of JPMorgan Chase, Goldman Sachs and Wells Fargo all plan to be there, as do influential investors like the Blackstone Group chief Stephen A. Schwarzman and the Bridgewater founder Ray Dalio. Jared Kushner and Steven Mnuchin, former Trump administration officials who received significant commitments from the main Saudi sovereign wealth fund to finance their investment firms, are also expected to go.
So are senior government officials from Singapore, Russia and Nigeria.
But the Treasury, Commerce and State Departments all said their top officials were not planning to attend; the White House declined to say whether they were sending anyone.
“This decision to cut production has been such a slap in the face of the U.S., and such an alignment with Putin, that I think it’s going to again generate bipartisan outrage,” Rep. Ro Khanna, D-Calif. and a sponsor of a bill that would temporarily ban U.S. arms sales to Saudi Arabia, said in a recent interview, referring to President Vladimir Putin of Russia.
Saudi officials have denied that the production cut represented an alignment with either side in the Ukraine conflict, saying they were safeguarding their own economic interests, as well as those of the group. They pointed out their ties to Ukraine, which include a recent $400 million aid package.
Another point of tension between the Biden administration and the Saudi leadership is the 2018 killing by Saudi agents of the Saudi-born dissident and journalist Jamal Khashoggi, a U.S. resident at the time of his death.
But ultimately, the Biden administration has done little so far to dissuade companies like JPMorgan and Blackstone, which have long-standing business relationships in Saudi Arabia, or smaller companies hoping to attract investments from deep-pocketed funders in the kingdom by attending this week’s forum.
The conference is not only the venue for a parade of business deals, but many investors recognize how important it is to the Saudis to show up in person and shake hands as the kingdom tries to transform itself into a global hub for business and tourism.
U.S. presidents have for decades maintained good relations with Saudi Arabia despite widespread accusations of human rights violations, and the country’s enormous oil wealth has kept U.S. and other Western businesses engaged.
The interest in this year’s conference only underscores how Saudi Arabia’s $620 billion sovereign wealth fund and increasingly open markets have become powerful sources of global influence. Tycoons and investors are happy to mingle with Crown Prince Mohammed bin Salman, the de facto Saudi leader, in light of the enormous opportunities he can offer. Many of them have ignored his escalating crackdown on domestic dissent or say their focus is on his efforts to open up the country’s economy and loosen social restrictions.
Those business relationships will probably remain intact barring drastic changes in U.S. policy like severing diplomatic ties or imposing sanctions on the Saudis, which analysts see as unlikely.
Last week, the White House press secretary, Karine Jean-Pierre, reminded U.S. companies to take into account “reputational concerns that can arise from public policy choices made by host countries” when making decisions about where to invest.
Still, Richard Attias, the organizer of the Saudi conference, made a point of telling reporters in the Saudi capital, Riyadh, last week that he had received so many requests from Americans to attend the event that his team had begun turning them down for lack of space.
At the same time, Biden’s plan for meting out the threatened consequences against Saudi Arabia has remained vague in the weeks since he delivered the warning.
Since the OPEC+ decision, Khanna and other Congress members have pushed for legislative changes to punish Saudi Arabia, including a blanket one-year ban on weapons and munitions sales and an initiative known as “NOPEC” that would allow the Justice Department to sue the cartel over alleged anti-competitive practices.
Negotiations that began during the Trump administration over allowing the kingdom to use U.S. technology to construct nuclear power plants are almost certain to face objections from some Congress members, who must approve any such agreement.
Some lawmakers have also called for a withdrawal of the U.S. forces from Saudi Arabia, where there are currently less than 3,000 troops.
But all of these measures carry downsides.
Saudi Arabia is the single largest importer of U.S. weapons, according to the Stockholm International Peace Research Institute, and the loss of that business could hurt U.S. manufacturers like Raytheon Technologies and Lockheed Martin, perhaps even spurring layoffs at a time when the economy is fragile.
Even if OPEC lost its current protected status under U.S. law, it is unclear how court judgments on foreign oil production would be enforced. And U.S. troops are in Saudi Arabia in part to safeguard American interests abroad, including providing a bulwark against any future Iranian aggression and to defend allies like Israel if needed.