Saudi Arabia's crown prince says his economic dream will survive

Crown Prince Mohammed bin Salman is pressing on with his ambitious plan to modernize Saudi Arabia's economy ...

Posted: Oct 25, 2018 11:18 AM
Updated: Oct 25, 2018 11:18 AM

Crown Prince Mohammed bin Salman is pressing on with his ambitious plan to modernize Saudi Arabia's economy despite a deep chill in relations with global business and investors over the killing of a critical journalist.

Bin Salman took the stage at an investor conference in Riyadh that has been overshadowed by the death of Jamal Khashoggi at the Saudi consulate in Istanbul. Many of the biggest names in business and finance pulled out of the conference after members of bin Salman's inner circle were blamed for the killing.

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Making his first public comments on the case during a debate about how to "transform the Arab world into a global economic powerhouse," bin Salman called the killing a "heinous crime" and promised justice for the perpetrators.

To loud applause, he rejected any suggestion that his program of reform would be derailed.

"There are no challenges that you can put in front of this great Saudi nation," he said. "Our projects are ongoing, our reforms are ongoing, our war on extremism is ongoing and our war on terror is ongoing."

He said the Saudi budget for 2019 would be the biggest ever, and unemployment was on track to fall to 7% by 2030.

Saudi Arabia says Khashoggi, a columnist for the Washington Post, was killed by rogue operatives during an interrogation gone wrong. Several US officials told CNN that any such operation could not have happened without bin Salman's direct knowledge.

The kingdom urgently needs to reverse a decline in foreign investment to diversify its economy and end its dependence on oil. Under his Vision 2030 plan, bin Salman wants to grow the private sector, boost tourism and reduce unemployment over the next decade.

The Future Investment Initiative conference, widely known as "Davos in the desert," was a way for the young prince to showcase his country as being "open for business" as it undergoes massive transformation to diversify the economy away from oil.

But the mood has been subdued this week in Riyadh despite Saudi Arabia announcing $50 billion worth of deals, mainly to develop its oil and chemicals industry.

SoftBank (SFTBF) founder Masayoshi Son, who has been give $45 billion of Saudi money to invest through his Vision Fund, pulled out of the event. Other top executives, including the CEOs of JPMorgan Chase (JPM), BlackRock (BLK), Uber and Siemens (SIEGY), also canceled plans to attend.

Saudi Arabia's energy minister said the kingdom's reputation had been "tarnished" by the murder of Khashoggi.

"We are undertaking a hit but we are standing strong and we are moving forward," Khalid Al Falih told CNN Business' Emerging Markets Editor John Defterios. "I am sure we will come out of this stronger."

Some companies have sent less senior executives despite their CEOs pulling out.

"We can't ignore Saudi Arabia," a senior executive for an international bank told CNN Business at the event.

Regional governments, including the United Arab Emirates, dispatched delegations to the event, and bin Salman shared the stage Wednesday with the crown prince of Bahrain and the prime minister of Lebanon.

"There is loyalty, but the loyalty is is well deserved," said Mahmood Alkooheji, CEO of Mumtalakat, Bahrain's sovereign wealth fund. "Our presence here in the forum is really to look at the investment opportunities."

As for international investors, he said they "need time."

Vision 2030 had caught the imagination of many international players, including billionaire Richard Branson, who jumped on opportunities for two tourism projects and was in talks for a $1 billion investment in his space company.

But Branson was one of the first to suspend his links with Saudi Arabia following Khashoggi's disappearance.

"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 earlier this month.

Last year, bin Salman used the conference to introduce a $500 billion futuristic mega-city sitting alongside some of the world's top executives, including Son. The young prince told the audience that the city, NEOM, would be a place for "dreamers."

The announcement received loud cheers and applause from the energized crowd.

But at least six of NEOM's 18 international advisers — including Silicon Valley stars such as Sam Altman — have backed out temporarily or permanently.

The prince will have to do a lot more persuading to encourage some former business partners to return. And if it turns out he really did know about the operation against Khashoggi, his dream may yet fade.

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