12 October 2018

Khashoggi Case: How Foreign Investment Will be Affected?

In my last post, I expressed my incredulity about Khashoggi murder being just a botched Saudi operation.

There were too many unprecedented elements including the massive media attention and unusually strong reactions from Western leaders, including, the US Congress and with some delay, and some equivocation, The Orange Man.

All of which is unheard of.

Now Sir Richard Branson suspended investment talks with Saudi Arabia over the Khashoggi assassination.
In a statement, Sir Richard said: "What has reportedly happened in Turkey around the disappearance of journalist Jamal Khashoggi, if proved true, would clearly change the ability of any of us in the West to do business with the Saudi Government.
Note the "any of us in the West to do business with the Saudi Government" bit.

It's not just him, it's any of us.

When MBS imprisoned, selectively tortured and extorted money from his relatives or when he abducted and made disappear three royal princes in the last three years or when he persisted in killing hundreds of thousands of Yemenis to teach Iran a lesson, did any of these incidents affected the ability of "any of us in the West doing business with the Saudi Government?"

They did not.

How likely is it for Sir Richard to give up a cool billion dollars and jeopardize future investment opportunities in the Kingdom because Saudis murdered one of their citizens?

Remember, nobody even pressured Virgin or questioned this transaction. Nobody knew.

He volunteered it himself.

Can you remember another such incident where people gave up Saudi money because Saudi government did something terribly wrong?

Ever?

Me neither.

There is only one plausible explanation.

There is an expectation that MBS will be pressured to go as a result of this scandal (or rather because of the surprisingly concerted and effective Western reaction to it) and when that happens, those who helped the process by standing up to him will be rewarded.

That's my take. Tell me what else makes more sense.

One more thing.

The Turkish government is toying with MBS.

There is a drip, drip information leaking they undertake everyday. This time, they announced that they have a recording of Jamal Khashoggi being tortured and killed.

Once again, they did not share it with the media. They simply asserted that they have the recording.

Without knowing what they have Saudis are unable to issue specific denials.

More importantly, since these audio and video recordings would have to come from inside the consulate (his smartwatch wouldn't have video), meaning from Turkish intelligence assets working there, why would they expose them over a story like this?

Would they burn their assets for a murdered foreign journalist? Of course not.

It is as if they want to see what they can get from MBS to make the whole thing go away.

Maybe the price is Mohammed Bin Salman giving up his dreams of becoming the king.

We live in interesting times as I say frequently.

You know what? Since I went out on a limb with a theory no one even contemplates, let me put forth this additional speculation.

I wouldn't be surprised if, at some point, we found out that Waleed Bin Talal was somehow associated with all this.

At least on the Western end of things.

Yeah, interesting and cynical times.
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UPDATE:

I changed the title after finding out that Jim Kim, the head of the World Bank has pulled out of the Future Investment Initiative conference that is going to take place on 23 October in Riyadh. For now IMF chief Christine Lagarde and US Treasury Secretary Steven Mnuchin are still participating but this could change.

In the next few days, if more businesspeople follow the example of Sir Richard then we could safely assume that MBS is outmaneuvered and cornered. I don't think he will give up his position but he will be much weakened for his enemies to take him on without fear.

By the way, UN Secretary General Antonio Guterres joined the chorus and called on the Saudis to come clean.

The pressure is mounting.
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UPDATE 2

A former British foreign secretary Sir Malcolm Rifkind, called for the removal of MBS and if that doesn't happen sanctions to punish Saudi Arabia.
“If the current crown prince remains in power for the indefinite future, then in the first instance the United Kingdom must work with the United States, France and other countries to see if there can be a combined response, a punishment of some kind, of sanctions of some kind."
Do you know who joined the "punish the Saudis" chorus a little later?
 In an interview with CBS News, Mr Trump said that, if true, the fact that a journalist was murdered was "terrible and disgusting".
"We're going to get to the bottom of it and there will be severe punishment," he said. "As of this moment, they deny it vehemently. Could it be them? Yes," he added.
As for the Davos of the Desert, the Guardian reports that, besides Sir Richard Branson, Viacom and Uber pulled out.

Moreover,
The Financial Times and CNN said they were pulling out as media sponsors, with all CNN’s anchors withdrawing from the event. Bloomberg also pulled out. 
The New York Times withdrew its sponsorship two days ago, prompting a string of withdrawals across the globe, including of Ariana Huffington, the LA Times owner, Dr Patrick Soon-Shiong, and the CNBC anchor Andrew Ross Sorkin.
When Saudi Arabia realizes that they can put all this behind them by simply removing the Crown Prince Mohammed Bin Salman will be in trouble.

Especially now that Trump is not firmly on his side.

And Jared has no reason to be nice to him as Qatar took care of his mortgage problem.

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