A large section of the global business world has been impacted by the disappearance and death of Saudi journalist Jamal Khashoggi. This has resulted in uncertainties about planned investments in Saudi Arabia in various partnerships and in projects related to the in banking, transportation and technology sectors.
Ever since the disappearance of the Washington Post columnist and critic of the Saudi government, Khashoggi from the Saudi consulate in Turkey earlier this month, many business leaders have detached themselves from Saudi Arabia.
After denying any knowledge about the whereabouts of Khashoggi, the Saudi government has at last accepted that he died inside the consulate in a fist fight with more than a dozen Saudi officials.
“From Saudi Arabia, we expect transparency in terms of death and background. Those responsible must be held accountable. The information given at the consulates in Istanbul is insufficient,” said German Chancellor Angela Merkel in reaction to the Saudi Statement.
Here’s how the fallout has impacted business and markets.
A large number of American tech firms have the kingdom’s sovereign wealth fund as their key investor. Nearly half of the $93 billion SoftBank Vision Fund is funded by the Saudi fund. The Vision Fund in turn has made significant investments in US tech companies like WeWork, Slack and DoorDash.
Here is a possibility that Silicon Valley companies may reject funds from the Vision Fund because they don’t want “to become associated with what they might consider as blood money,” says Amir Anvarzadeh, a strategist at Asymmetric Advisors.
Uber CEO Dara Khosrowshahi announced his withdrawal from a very important business o conference in Saudi Arabia after the Khashoggi incident and said that he was “troubled by the reports to date about Jamal Khashoggi.” Saudi Arabia’s sovereign wealth fund is a big shareholder in Uber.
Khashoggi’s death can also impact the Saudi relationship with tech giants like Google, Amazon and Apple.
The reaction of the global business world on the Khashoggi incident can be gauged from the names that have withdrawn from bin Salman’s Future Investment Initiative conference. Apaprt from the ones already mentioned in the report, the those who pulled out include the names such as JPMorgan Chase CEO Jamie Dimon, Google Cloud CEO Diane Greene, Ford Executive Chairman Bill Ford, US Treasury Secretary Steve Mnuchin, IMF Managing Director Christine Lagarde and Goldman executive Dina Powell. The pullout has also been announced from Europe and names include HSBC CEO John Flint, Credit Suisse CEO Tidjane Thiam Standard Chartered (SCBFF) CEO Bill Winters and London Stock Exchange CEO David Schwimmer.
Another possible impact is the Vision 2030 plan of bin Salman which aims at transforming the Saudi economy through diversification and reduce its complete dependence on oil. The announced investment for the development of a tourist destination on the Red Sea, a part of the Vision 2030 plan, was suspended by Richard Branson.
“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,” Branson said in a statement on October 11.
Fears of US sanctions resulted in a 7 per cent drop in Riyadh’s main stock market index. This fall wiped out the index’s 2018 gains. There was also a 5 per cent drop in the Tadawul All Share Index.
(Adapted from Money.CNN.com)