A new scandal is brewing around Saudi Arabia this week. The country has mostly been quiet, except for when OPEC meetings were concerned, but it made the headlines for a much darker reason recently: a Saudi journalist, Jamal Khashoggi, disappeared in Turkey and is presumed dead. Now many media and companies are pulling away from a conference hosted by the Saudi crown prince at the end of October. Let us look at the reasons for this animosity towards Saudi Arabia and what it entails.
First of all, Khashoggi is the most important person in this conversation. He is well-known in the international journalistic community as a contributor to the Washington Post. His views against the political regime in Saudi Arabia have long been public, so it is safe to say he is in opposition to the crown prince. In the past he had been invited several times to join different Saudi projects, but he rejected the invitations and remained living abroad, fearing for his safety if he returns to Saudi Arabia. As his criticism of the Saudi government became more and more serious and consistent, he stopped receiving invitations.
Prince Mohammed bin Salman, on the other hand, is a polarizing man: while he is lauded for his reforms and his desire to bring the Saudi economy out of its dependence on crude oil, he is also known for his harsh measures against the opposition, including famously arresting tens of aristocracy members and confining them in a prestigious hotel some time ago. He is a man who takes swift action against his political enemies.
Khashoggi disappeared when he visited the Saudi embassy in Turkey, supposedly to get a marriage certificate. The Turkish authorities claim that it is most likely that he was murdered inside of the consulate building. The United States have said that they have evidence of the Saudis planning on arresting Khashoggi. Turkey has reportedly shared audio and video evidence that something horrific went down in the Saudi consulate after Khashoggi entered it. Moreover, a group of about 15 Saudi men, some of whom with well-established connections to the Saudi government, came to Istanbul on the same day as the disappearance happened (October 2).
Prince Mohammed is organizing a conference to discuss his platform for reforming Saudi Arabia. The so-called “Davos in the desert” event previously had booked many media and other international partners. Since the incident with Khashoggi, the New York Times has pulled out from the conference, as has Viacom, as well as the Huffington Post founder. Similar reactions came from CNN, Bloomberg, The Economist, the Financial Times, CNBC, Fox, and more.
The CEO of Uber also stated he would no longer take part in the conference, even though Saudi Arabia is a major investor in Uber, i.e. he made the statements at a great risk to his company’s capital. British business mogul Richard Branson, while not tied to the conference directly, also stated he’s putting a stop on a couple of his projects in Saudi Arabia. Branson’s companies have a long history of doing business with Saudi Arabia, but he stated that until the situation is clarified and the government’s name is cleared with sufficient evidence, Western companies cannot safely do business with Saudi Arabia.
The world is still awaiting more details from the on-going investigations into the journalist’s disappearance. However, a worsening of global relations with Saudi Arabia would certainly have a huge impact on the financial markets, not in the least because the Saudis are the most powerful country in OPEC and are set to take over some of the supply gaps left over by Iran due to US sanctions.