A large portion of the boldface names have pulled out of one week from now’s meeting in Riyadh following the vanishing, likely homicide, and revealed dissection of writer Jamal Khashoggi, a pundit of the Saudi routine. On Thursday, Treasury Secretary Steven Mnuchin said he would not visit.
Yet the exodus of top financial executives from what has been called “Davos in the Desert,” hardly represents an irreparable break by Wall Street with the kingdom. Indeed, numerous banks are still sending underlings who will undoubtedly relay the message that whatever the public statement of their chief executives, they still value Saudi Arabia as a client.
After all, financial institutions didn’t flinch when the crown prince consolidated his power by imprisoning his rivals in the Riyadh Ritz Carlton and forcing them to hand over substantial chunks of their wealth. Wall Street’s relationship could shift if more evidence of the nature of Khashoggi’s disappearance is released and if stronger ties between Crown Prince Mohammed bin Salman and the suspected killing emerge.
The real opportunity, banks seem to believe, lies in future deals as the kingdom ramps up its debt offerings, privatizes huge swaths of its economy, and builds new infrastructure. Some of these promises, however, have been made by Saudi Arabia in the past and have failed to be the transformative, and profit-generating, vehicles they hailed to be.
“If the audiotape that has been discussed by Turkish officials is actually released and it contains the type of information that the allegations say it contains, then it becomes a bigger public relations issue,” Helima Croft, RBC Capital Markets’ Global Head of Commodity Strategy tells Barron’s. The transformative, and profit-generating, vehicles they hailed to be. For instance, the crown prince has a plan to spend $500 million to build a city from scratch, NEOM, on the Red Sea. It’s a plan that sounds strikingly like the Economic Cities initiative unveiled by the country more than a decade ago that has largely been a failure.
Source: AXIOS Newsletter
