DESERT MIRAGE
President Obama; and Neelie Kroes, NOEM board member
and former president of European Commission have only
suspended their ties with the kingdom whilst the investigation
continues into the Khashoggi murder, hundreds were still
attending the summit, representing the very companies whose
bosses decided it was no longer expedient for them to attend.
The fundamental reason for such a dilemma among the
nation-state and the investors is that they cannot aff ord to
sever relations with the largest economy in the Arab world
as it pursues diversifi cation to wean itself off oil income. The
investors pragmatically believe that there is a big future at
stake in the kingdom and Khashoggi’s overwhelming aff air
will eventually be resolved. In other words, if the accusation
against Saudi Arabia is proved false, the ability of the West to do
business with the country will clearly resume with full-eff ect.
As a result, despite the fallout of Khashoggi’s death, the
Saudis continued their usual business and managed to attract
prominent global executives from across the world. In fact,
Saudis oil giant Aramco bagged more than half of the 25
agreements, worth $34 billion with companies from around
the world including Halliburton. Deals worth another $16
billion were done in other sectors of the economy. iv
Looking Backward
Last year, Saudi Arabia held its fi rst FII summit in Riyadh
where Prince Salman announced the mammoth task of rapidly
transforming the country economy by returning to a more
“Moderate Islam.” He unravelled the Kingdom’s plan to have
privatization, localization of key sectors such as defence and
value-added industrial production and bold initiative to build
a resort city of Neom on the Red Sea – a project worth the US
$500billion. v The Summit was also an opportunity for Prince
Salman to move beyond the US and convince the investors
from China, Russia to invest in their country. While there were
many questions raised about the ability of Riyadh to execute
its ambitious plan during the conference, Prince Salman’s
implementation of bankruptcy law vi and the Financial Sector
Development program vii – both of which were designed to
create a better regulatory environment for foreign investors
did attract many high-profi le business hubs across the world.
Moreover, the signifi cant disinvestment and the negative
intra-company loans that occurred in 2017, contributed to
the downward trend in Foreign Direct Investment (FDI). The
country, traditionally, one of the largest recipients of FDI in
West Asia, saw its share of fl ows in the region decrease to
barely six percent. viii This triggered Saudi Arabia to open up
to the global market by allowing the non-resident foreign
investors at least ten percent of strategic stakes in their
companies as part of his economic reforms. ix
Over the year, MBS travelled across the West to personally
engage with all the business giants while also developing
Saudi Arabia’s relationship with key organisations like IMF,
World Bank etc. The US, one of the closet Saudi allies became
one of the largest investors in the country’s “2030 Vision”.
In fact, the second Saudi-US CEO forum held in March
2018, concluded with 36 Memorandums of Understanding
signed between both the countries, totalling $20 billion. The
Saudi Prince also met US global advisers on Giga projects
and bagged agreements related to a public investment fund
which includes entertainment, the fi rst sports and cultural
destination in the kingdom etc.
Crown Prince Mohammed bin Salman also turned towards
the UK for new trade and investment opportunities amid
Brexit row and have set out a broad ambition to strike nearly
$100 million in commercial deals over the next decade.
Both the countries have signed more than 18 economic
agreements worth more than £1.5 billion, covering education,
pharmaceuticals and banking. x Here, the most interesting
part was that, Theresa May defended Saudi Arabia in the
parliament about the alleged human rights abuse in Yemen
in order to benefi t from their growing economic ties. xi
Saudi Arabia’s economic reforms have also strengthened
its ties with New Zealand who agreed to contribute more on
sustainable cooperation in all fi elds from this year onwards. xii
As a result, within a year, MBS’s bold economic initiatives
have increased the FDI in the country (below table). xiii
12 • Extraordinary and Plenipotentiary Diplomatist • Vol 6 • Issue 10 • Oct-Nov 2018, Noida