Saudi Arabia will host a key investment summit on Tuesday, overshadowed by the killing of critic Jamal Khashoggi that has prompted a wave of policymakers and corporate giants to withdraw.
Just ahead of the three-day Future Investment Initiative (FII), dubbed “Davos in the desert”, the kingdom sought to defuse the crisis with an about-face admission on Saturday that the journalist died in its consulate in Istanbul.
But that has failed to stem an exodus from the summit, whose organisers have taken down a list of speakers from its website.
Dozens of executives — from bankers JP Morgan to carmaker Ford and ride-hailing app Uber — scrapped plans to attend.
Media powerhouses like Bloomberg, CNN and the Financial Times have also pulled out and on Saturday, Australia withdrew its representatives, saying it was “no longer appropriate” to attend, due to the Khashoggi affair.
On Saturday, organisers said more than 120 speakers and moderators will participate. Last Monday, they had listed more than 150 speakers.
The event seeks to project the historically insular kingdom as a lucrative business destination, in a bid to diversify its oil-reliant economy and set the stage for new ventures and multi-billion dollar contracts.
At last year's inaugural FII — a star-studded event at Riyadh's glittering Ritz-Carlton hotel — Crown Prince Mohammed bin Salman was lionised as a visionary as he wowed investors with talking robots and plans for a futuristic mega-city called NEOM.
Billed last year as an economic coming-out party for the conservative petro-state, the FII has now come to symbolise global outrage over the silencing of critics.
The prince, widely known as MBS, faces what the risk consultancy Eurasia Group calls “an acute public relations crisis”.
Khashoggi, who had criticised Prince Mohammed, was last seen walking into the Saudi consulate in Istanbul on October 2.
After weeks of vehement denials, the kingdom's assertion on Saturday that the journalist was killed in a “brawl and fist fight” inside the consulate — without revealing the whereabouts of his body -- was met with scepticism around the world.
“The Ubers and JP Morgans of the world have calculated that the cost of being currently associated with brand MBS is higher than the cost of losing out on taking a slice of Saudi Arabia's economy,” said Michael Stephens, a Middle East expert at the Royal United Services Institute.
Many Western firms have too much at stake to abandon the Arab world's biggest economy, and many are preparing to send lower-level executives to the summit.
Senior investment bankers from HSBC and Credit Suisse are planning to attend the conference even though their chief executives have cancelled their attendance, Bloomberg News reported.
Companies from China and Russia have shown little interest in withdrawing from the event, an organiser said.
Although several Western leaders like International Monetary Fund chief Christine Lagarde have pulled out, Prime Minister Imran Khan will attend the forum as Islamabad continues to seek funding to plug its deteriorating finances.
But a wider Western boycott of the conference suggests rising political risks in Saudi Arabia that could cast a shadow over foreign direct investment, which a UN body said plunged last year to a 14-year low.
“Despite talk of reform, FDI inflows into Saudi have stayed low and the (Khashoggi) scandal will only increase investor uncertainty,” said research firm Capital Economics.
For now, the kingdom's finances appear well cushioned by a recent spike in oil prices, now over $80 (70 euros) per barrel, which analysts say has reduced the urgency for outside funding.
“More speculative projects, like NEOM, will find it harder to attract investors, but 'meat and potatoes' diversification through heavy industry will probably continue unabated,” said Steffen Hertog, an associate professor at the London School of Economics.
'Business as usual?'
Khashoggi's killing fits a pattern of a recent crackdown on dissent in the kingdom, with Prince Mohammed, King Salman's son and the de facto ruler, arresting clerics, business high-fliers and women activists.
Further stoking investor anxiety, the kingdom is embroiled in an expensive war in Yemen and is leading an embargo against Qatar.
Riyadh has also engaged in diplomatic disputes with Germany and Canada that threatened business ties. “Cancellations at 'Davos in the Desert' by the likes of Goldman Sachs, JP Morgan and BlackRock go beyond reputational issues,” said Cinzia Bianco, a Middle East analyst at Gulf State Analytics.
“Big businesses are telling MBS 'enough with the adventurism, instability and uncertainty — our big foes.'”
But western companies abandoning Saudi are causing “irreparable damage” to their own business interests in the kingdom, said Ghanem Nuseibeh, founder of London-based risk consultancy Cornerstone Global Associates who has vigorously defended the kingdom's stand on Khashoggi.
“It will soon be business as usual,” he said.
Last week, pro-Saudi business figures on social media called for Gulf countries and allies of Riyadh to boycott companies that have pulled out of the FII.
But the apparent arm twisting has not stopped the outcry over Khashoggi.