Whereas the thousands of innocent citizen victims in the Yemen war fueled by Saudi Arabia and causing the world’s worst humanitarian crisis have so far only led to ineffective international condemnations, one journalist’s death was suddenly enough to provoke international backlash. The journalist’s disappearance was the last straw that broke the camel’s back in terms of globally galvanizing anti-Saudi sentiments. And most importantly, the U.S. is among Saudi Arabia’s newfound critics.
Jamal Khashoggi, a Saudi dissident Washington Post journalist, was a U.S. resident and critic of Saudi policy on the Yemen war. He was killed during a visit to the Saudi Arabian consulate in Istanbul. The news of his disappearance has shocked the international community. “There remains an urgent need for clarification of exactly what happened,” the U.K., France and Germany said in a joint statement. Moreover, Germany has called for a united European Union position on Khashoggi’s case. The disappearance could further mark a turning point in the relationship between the Saudi government and foreign business executives. SoftBank especially has a lot to lose. Saudi Arabia is the biggest investor in SoftBank’s $100 billion Vision Fund. As the Saudi association would risk SoftBank’s reputation, CEO Masayoshi Son has pulled out of Saudi Arabia’s “Davos in the Desert” (along with other prominent business executives who have already refused to attend).
In spite of the outcry about the killing, the U.S. has been trying to uphold the alliance with Saudi Arabia. U.S. President Trump’s reaction was that “Obviously there’s been deception, and there’s been lies,” as he said in an interview, adding that he would “love” if the Crown Prince “wasn’t responsible” for Khashoggi’s killing and that the incident should not disrupt U.S. arms sales to Saudi Arabia. However, the case shows the fragility of Saudi Arabia, which relies on one strong ally and has triggered open discussions in the U.S. about how the alliance with Saudi Arabia may have outlived its usefulness. Even Washington think tanks, among the most pro-Saudi institutions in the U.S., are sending back Saudi money.
Saudi Arabia is aware of this vulnerability. The Saudi Arabia Energy Minister said that Saudi Arabia has no intention of burdening Western consumers with a 1973-style oil embargo and will isolate oil from politics. Moreover, the Saudi Arabia’s foreign minister denied that the crown prince ordered Khashoggi’s killing and called the killing of Khsahoggi a “huge and grave mistake”. Nonetheless, the rosy image of Saudi Arabia’s young crown prince Mohammed bin Salman as a progressive reformer has been shattered and he is now facing scrutiny on the world stage. Foreigners have sold a net $1.07 billion in Saudi stocks in the week of Khashoggi’s disappearance, one of the biggest selloffs since the market opened to direct foreign buying in mid-2015. The killing has irreversibly damaged trust in the young leader Mohammed bin Salman, leading to a dire situation for his country.
RISKS MARKED ON THE RISK RADAR AS NUMBER 2: Tensions throughout the Middle East