CEOs reject Saudi Arabia’s conference, but will they reject its money?

The disappearance of a journalist has developed into a global business reckoning for Saudi Arabia’s aging oil empire.

Faced with public backlash, CEOs of Uber, JPMorgan, Blackrock, and Blackstone have withdrawn from a conference in Saudi Arabia next week as the Kingdom addresses allegations it killed journalist Jamal Khashoggi.

CEOs reject Saudi Arabia’s conference, but will they reject its money?

But, while it’s easy to ditch a conference, it’s much harder to ditch Saudi Arabia’s checkbook — which bankrolls many of the world’s most powerful companies, funds, and projects.

The downfall of ‘Davos in the desert’

Saudi Crown Prince Mohammed bin Salman (MBS) organized the “Future Investment Initiative” conference to highlight his reformist economic agenda and recruit global partners.

Unfortunately, after the Saudi royal family was accused of Khashoggi’s murder, many of the business partners that MBS hoped to schmooze are now worried he’s a murderer.

Ugh, hate it when that happens… 

However, since Saudi Arabian oil money is invested so widely across the global economy, it would be nearly impossible for foreign partners to disentangle their businesses from Saudi Arabian cash if they wanted to.

Saudi petro dollars grease the wheels of the global economy

Saudi Arabia’s Public Investment Fund (PIF) began investing in foreign companies in 2015, pumping $3.5B into Uber and $40B to American infrastructure projects with partners General Electric and Lockheed Martin.

Saudi then contributed $45B to SoftBank’s Vision Fund, which invested in WeWork, Slack, Wag, GM Cruise and dozens of others (MBS has already committed $45B to SoftBank’s next Vision Fund).

Just last week, MBS recruited some of America’s biggest tech executives to the advisory board of his $500B future-city project, NEOM.

Now, investors need to decide if blood is thicker than oil

American business leaders are now under pressure from shareholders to distance themselves from MBS — whose PIF maintains a seat on Uber’s board. Meanwhile, shares of SoftBank, whose $93B Vision Fund is made up of more than $45B of Saudi funds, fell 8% yesterday after the fallout.

But, if the stakes are high for Saudi’s partners, they’re higher for the Kingdom itself. MBS plans to take Saudi Aramco public for $2T, but according to Bloomberg, the company’s value is just $1.3T — and will likely drop lower as global partners disappear.

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