U.S. Executives Are Flocking to Saudi Davos in the Desert

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LONDON — 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 on Tuesday. 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 Plus, co-led by Saudi Arabia and Russia.

The cut — which benefits Russia financially — incensed American officials whose constituents have been struggling with rising energy costs from Russia’s invasion of Ukraine. United States officials accused the Saudis of siding with Moscow in the war, and President 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 American business leaders — some with substantial interests in Saudi Arabia — from attending the conference.

The chief executives 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,” Representative Ro Khanna, Democrat of California and a sponsor of a bill that would temporarily ban United States arms sales to Saudi Arabia, said in a recent interview, referring to President Vladimir V. 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 United States 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 longstanding 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.

American 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 American 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, Mr. Biden’s plan for meting out the threatened consequences against Saudi Arabia has remained vague in the weeks since he delivered the warning.

His selection for ambassador to Saudi Arabia, Michael Ratney, has been delayed by Senator Ron Wyden, Democrat of Oregon, over concerns that the kingdom has helped its citizens flee the United States after committing violent crimes.

Since the OPEC Plus decision, Mr. 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 anticompetitive 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 American 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 American 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 American 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.

Under the Trump administration, the United States forged a closer alliance with Saudi Arabia, which in 2017 hosted President Donald J. Trump’s first state visit. The two countries struck billions of dollars in deals, including Saudi purchases of sophisticated American weapons.

Mr. Kushner, Mr. Trump’s son-in-law and a onetime senior adviser on Gulf policy, came to rely on the Saudi crown prince as a collaborator on peace efforts in the region and at times helped shield him from criticism.

But Mr. Biden has struck a more bellicose tone.

He released U.S. intelligence reports showing that Prince Mohammed approved the killing of Mr. Khashoggi, and on the campaign trail in 2019, Mr. Biden called the kingdom a “pariah” nation.

Shortly after taking office, Mr. Biden also banned sales of offensive weapons to the kingdom in an effort to cut off aid for the Saudi-led war against the Iran-backed Houthi rebels in neighboring Yemen.

But Russia’s invasion of Ukraine, which prompted the United States and its allies to impose tough sanctions on Russia that crimped energy supplies to the West, changed the political calculus.

Now, with only weeks to go before contentious midterm elections on Nov. 8, Mr. Biden finds himself in a predicament.

Prince Mohammed “is making it very clear that he will act on whatever he perceives to be the best interests of Saudi Arabia,” said Kristian Coates Ulrichsen, a Middle East fellow at Rice University’s Baker Institute for Public Policy.

That leaves Mr. Biden in a difficult spot given that United States officials positioned his visit to the kingdom in July in terms of trying to get greater Saudi cooperation on energy policy. The president met with Prince Mohammed and exchanged a cordial fist-bump, seeking to repair relations in hopes of winning an agreement to ramp up oil production.

Saudi Arabia modestly increased production in July and August, helping lower prices at the gas pump. But the prospect of a global recession, which could depress international demand for oil and drive down prices, led the kingdom to rethink and try to lock in profits while it could, paving the way for the drastic production cut announced on Oct. 5.

Alan Rappeport, Ana Swanson and Michael Crowley contributed reporting from Washington.

Sumber: www.nytimes.com

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