Guests arriving at the Future Investment Initiative forum in Riyadh, Saudi Arabia. Photo / Tasneem Alsultan, The New York Times
World leaders and business executives converged upon the palatial Ritz-Carlton hotel on Tuesday, putting concerns about Saudi Arabia's role in the 2018 murder of a dissident journalist behind them and returning unabashedly to deal-making.
The brutal killing of Jamal Khashoggi, a Washington Post columnist, prompted many companies and executives to shun Saudi Arabia's annual investment conference last year. But the Riyadh event was again teeming with the global elite this week as the conference opened with a clear message: Saudi Arabia is open for business.
Throughout the day, attendees whispered to each other about the possibility of the biggest deal of all: that Crown Prince Mohammed bin Salman would emerge to announce that state-owned oil giant Saudi Aramco would move ahead with an initial public offering as soon as next week.
The three-day gathering began with a splash. Waving white robots greeted guests from 30 countries who streamed into a ballroom where break dancers clad in neon flashed across a stage. Organisers of the event, which is produced by Saudi Arabia's Public Investment Fund, said that 6,000 people registered to participate — double the attendance from 2017, according to the fund.
"It's always great to be in the kingdom," Larry Fink, the chief executive of BlackRock who backed out of last year's event, said during an opening panel discussion.
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Fink was joined by corporate titans such as Stephen A. Schwarzman, Blackstone's chief executive; Thomas J. Barrack Jr., founder of Colony Capital; Ray Dalio, founder of Bridgewater Associates; and Michael L. Corbat, head of Citigroup. None of the executives attended last year.
The Trump administration, which boycotted the event last year, was also well represented. In attendance was Jared Kushner, President Donald Trump's senior adviser and son-in-law; Rick Perry, the outgoing energy secretary; and Treasury Secretary Steven Mnuchin, who will speak Wednesday. Trump and Crown Prince Mohammed spoke by telephone ahead of the conference, according to the White House, which said the two leaders discussed the killing of Abu Bakr al-Baghdadi, the Islamic State leader, and the "continued strong partnership" between the two countries.
During a conversation moderated by Schwarzman on Tuesday, Kushner praised the work of Trump and talked up his reelection prospects.
"What we're finding is that the enthusiasm for the president right now at home is stronger than it's ever been," he said.
The larger crowd this year led to sold-out hotels and gridlock across Riyadh, as cars and coach buses descended on the gated compound of the Ritz. But it appeared that even those who skipped last year's conference never really left the kingdom.
"I have a lot of clients here in Saudi Arabia, and I am of a big belief, from a political perspective, that I don't get involved with other countries' politics," said Anthony Scaramucci, the founder of SkyBridge Capital and former White House communications director.
Scaramucci sent members of his team last year but did not personally attend because he was on a book tour.
"I recognized that a lot of people decided not to come, but my team elected to come because we have long-standing relationships with Saudi Arabia," Scaramucci said in an interview outside the Ritz's main ballroom.
Others that scorned Saudi Arabia last year reemerged. The chief executive of Virgin Hyperloop One, a futuristic transportation startup, closely associated with Richard Branson, the British entrepreneur, pulled out last year after Branson criticized the kingdom and suspended two projects he was working on there. This year, however, Virgin Hyperloop One was back and even installed a jumbotron-style display of the project outside the main conference hall.
The Los Angeles-based company, which aims to build transport systems in tubes with speeds up to 600 mph, sees Saudi Arabia as a potential major test site and backer, according to Josh Giegel, its co-founder and chief technology officer, who was on hand in front of a large screen — paid for by the Public Investment Fund — showing test vehicles.
Geigel said while last year was not the right time to come to Saudi Arabia, the country and the Persian Gulf were appealing because train transport infrastructure is only modestly developed, making big investments in new systems attractive.
"One of the things we find exciting is there is not much linear connectivity," Giegel said. Along with Branson's Virgin Group, DP World, a transport company based in the United Arab Emirates, is another major backer.
Many of the people attending the conference this year are venture capitalists and money managers, hoping to meet new clients and partners and tap sources of new cash. Over a lunch of Arab salads, shrimp and smoked salmon, a group of these financiers said they were mainly here to network.
But they also wanted to find out more about the status of Aramco and what led to SoftBank's bailout of WeWork, the office space company that SoftBank was already invested in through a fund that is largely backed by the Public Investment Fund of Saudi Arabia. Much of SoftBank's original capital in WeWork is from the SoftBank Vision Fund, which is largely backed by the Public Investment Fund of Saudi Arabia.
The Public Investment Fund, which is Saudi Arabia's sovereign wealth fund, took careful measures to avoid backlash this year, keeping the conference agenda off its website until the last minute so that speakers would not be made public and scared off.
Some of those who did reverse course and attend this year drew criticism for doing so.
The former World Bank president, Jim Yong Kim, withdrew from attending in 2018 but his successor, David Malpass, participated in a panel Tuesday. That struck some in the development world as a curious decision.
"I'm not sure what has changed since last year when the World Bank and the world community said we are not gong to be a party to corruption, harassment of dissidents and to extrajudicial killings," said Paul Cadario, a former World Bank senior manager and fellow at the University of Toronto's Munk School.
Some attendees defended the kingdom. Franck Petitgas, head of international operations at Morgan Stanley, suggested in an interview on the sidelines of the conference that the media was being tougher on Saudi Arabia than on other authoritarian countries like China, possibly because it was easy to focus criticism on a single figure, the crown prince.
Despite the spasm of backlash that Saudi Arabia faced last year as more gruesome details of Khashoggi's killing at the Saudi embassy in Turkey emerged, it does not appear to have had a lasting effect on Saudi Arabia's economy.
Tim Callen, the International Monetary Fund's mission chief to Saudi Arabia, said that data showed any boycotts had a negligible effect on the kingdom's growth or on foreign direct investment, which was already soft.
"The only thing that we could see in the data was there was clearly some initial selling of equities by foreign investors for a couple of weeks, but that fairly quickly reversed," Callen said.
Saudi Arabia is facing economic pressure from other sources, however, making this week's investment conference pivotal for the kingdom's development. This fall the economy was set back by an attack on its oil infrastructure in September that has been blamed on Iran. Since then, the International Monetary Fund lowered its projection for Saudi Arabia's 2019 economic growth from 1.9 per cent to a tepid 0.2 per cent, and Fitch downgraded the kingdom's credit rating, citing instability in the region and the possibility of future incidents.
Saudi Arabia has been pressing ahead with its plan to diversify its economy away from oil, focusing on tourism and entertainment to create more domestic jobs. This year the kingdom began allowing foreign tourists to easily get visas for the first time. And this month the World Bank said that Saudi Arabia move up 30 spots to 62 on its international business climate index.
Still, with global economic growth sputtering and geopolitical tension continuing to flare in the Middle East, the path forward for Saudi Arabia's economy is not certain.
"The only certainty that we have is death," Yasir Al-Rumayyan, governor of the Public Investment Fund and chairman of Aramco, said at the conference.
Written by: Alan Rappeport and Stanley Reed
Photographs by: Tasneem Alsultan
© 2019 THE NEW YORK TIMES
Volumes were lighter as investors are thinking more about the summer holidays.