Israel-Hamas war leaves Saudi Prince’s dream of new Mideast in tatters
At Saudi Arabia's flagship investment conference in October 2018, a defiant Prince Mohammed bin Salman took to the stage to promise that a new era was dawning for the Middle East.
“The new Europe is the Middle East,” the country's de facto ruler, commonly known as MBS, said to applause from the crowd. “The coming renaissance in the next 30 years will be in the Middle East.”
Five years later, as the world's top executives are expected to flock to Riyadh for the latest edition of the Future Investment Initiative — dubbed ‘Davos in the Desert' by many — fresh comparisons with Europe are being drawn.
But not for the reasons Prince Mohammed had in mind.
While Europe is dealing with the impacts of Russia's invasion of Ukraine, the war between Israel and Hamas is bringing the region's political fissures back to the forefront of everyone's mind.
That is complicating Prince Mohammed's efforts to focus the neighborhood on economic development rather than old feuds.
“The headlines are an unwelcome development for the kingdom given its focus to attract foreign investors and convince firms to expand their operations in Saudi Arabia,” said Ayham Kamel, head of Eurasia Group's Middle East and North Africa research team. “Riyadh must be feeling the geopolitical heat, but its economic transformation program still presents some interesting opportunities.”
Terminal users can click here for more coverage of the Israel-Hamas war.
The Saudi jamboree, held in the gilded halls of the Ritz Carlton complex in Riyadh, was launched in 2017 as one of the most high profile parts of an effort to sell the world on a new Middle East, with Saudi Arabia at its core.
Prince Mohammed was opening up the country, eager to bring in more foreign investment and tourists, while projecting soft power abroad through deals involving the powerful sovereign wealth fund he chairs.
MBS also resolved disputes with Qatar and Turkey, and was pushing for a resolution to the war in Yemen. He even normalized relations with arch-rival Iran in March, in a deal facilitated by Chinese President Xi Jinping.
Conference organizers insist that the show will go on, despite an escalation in fighting between Israel and Hamas, which is designated a terrorist group by the US and Europe, in the past week.
There have only been 10-20 cancellations as a result of the war, said Richard Attias, CEO of the FII Institute on Thursday, out of over 6,000 people planning to attend. Most were because of corporate travel policies changing, or travel insurance costs, he said.
At times like this, gatherings like FII are needed “to exchange ideas and conduct dialogue about direction in a tumultuous and uncertain world,” Attias said.
Those still expected to arrive in Riyadh by Tuesday are the titans of global finance — many of whom are familiar faces in the gilded ballrooms of the conference hall at the Ritz Carlton which hosts the Saudi gathering.
BlackRock Inc chairman and CEO Larry Fink will appear alongside Bridgewater Associates' Ray Dalio, JPMorgan CEO Jamie Dimon, and Citigroup CEO Jane Fraser, while other sessions will include the bosses of TotalEnergies, Petrobras, and FIFA President Gianni Infantino.
Also highlighted at the event will be some of MBS's most ambitious projects, including building a vast new city in the desert called Neom that is expected to cost over $500 billion and plans to turn stretches of the Red Sea coastline into eco-tourism resorts.
How investment flows and tourism travel to the kingdom are impacted by the prospect of the Israel-Hamas war remains unclear, but the threat of a wider conflict could slow Prince Mohammed's ambitions.
“Investors - particularly those new to the region — are likely to exercise some caution over the short term,” said Alice Gower, director of Geopolitics and Security at Azure Strategy. “However, the kingdom is eager to avoid escalation and will continue coordinating with regional capitals to that end,” she said, adding “the vision for a ‘new Europe' can only be seen as a long-term ambition.”