25 October 2022; MEMO: American bankers are said to have defied the White House to attend the Future Investment Initiative in Riyadh, which opens today. The Chief Executive of JPMorgan Chase, Jamie Dimon; Blackstone co-founder Stephen Schwarzman; and David Solomon, the head of Goldman Sachs, are among a host of western executives scheduled to speak at the annual event dubbed "Davos in the Desert".
A report by US broadcaster NBC fuelled speculation that the administration of President Joe Biden sought to dissuade US executives from attending the convention. A White House spokesperson denied the report but the denial has done little to suggest that there is no split between US bankers and the Biden administration over Saudi Arabia.
Relations between Washington and Riyadh took a major tumble two weeks ago when Biden warned the Gulf State that there would be "consequences" following its decision to cut oil production. Biden threatened to halt arms sales and Democrat members of Congress demanded a review of the relationship between the traditional allies.
According to the Financial Times, a US official said that the decision not to send a government delegation was owing to "scheduling issues" and was taken before OPEC+ announced its oil production cut. The event's organisers, however, are reported as saying that US officials were not invited. However, Jared Kushner, Donald Trump's son-in-law, and Steven Mnuchin, who was the former president's treasury secretary, will be there. Their attendance is likely to confirm the Democrat opinion that the oil production cut was designed to benefit Republicans in the mid-term elections.
The Future Investment Initiative in 2018 followed the killing of Saudi journalist Jamal Khashoggi in the Saudi Arabian Consulate in Istanbul. On that occasion, several banking executives boycotted the event because of the tension between Riyadh and Washington. No such misgivings exist this time, with bankers flocking to the Saudi capital.
Instead, executives are talking about a change in the balance of power. "The ambition of these guys [Saudi officials] is off the charts," one US banking executive is reported as saying by the FT. "The balance of power is shifting to the Middle East in private markets."
Unlike much of the rest of the world, Saudi Arabia's growth has not been hampered by the war in Ukraine. Instead, the rise in the price of oil has led to an economic boom in the kingdom. It is forecast to have one of the world's fastest growing economies this year, with its output predicted to expand by more than seven per cent.
Riyadh's economic stability has made Saudi Arabia a lucrative destination for western investors. "In a world where capital markets are shut and investment bank earnings are down, the Gulf warrants attention," a US bank executive is reported as saying.
