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Themes to Watch November 2018

Brunswick Geopolitical helps companies understand the complexities and risk in key markets around the world, enabling them to better anticipate, prepare for and react to significant geopolitical events that affect their businesses. Authored by Dominick Donald, former foreign affairs and defence editorial writer at The Times, our “Events to Watch” looks at some of emerging global themes over the coming months

Themes to watch

Khashoggi's shadow

Saudi Arabia's second Future Investment Initiative (or 'Davos in the Desert') closed on 25 October, with over $55 billion in investment deals done and Crown Prince Mohammed bin Salman (MBS) – Riyadh's de facto ruler and the architect of the FII – hailed for his visionary leadership. Yet last-minute absentees from the event included over 40 of the 150 confirmed speakers, all Western cabinet-level officials slated to attend, and C-suite executives from high-profile firms such as J.P. Morgan, BlackRock, and Thales. The cause of the boycott was the disappearance and murder of Saudi journalist Jamal Khashoggi, a US resident last seen entering the Saudi consulate in Istanbul on 2 October. Riyadh now admits Khashoggi's killing was a premeditated act by Saudi intelligence officers – a position only arrived at after its other explanations (ranging from 'he left the building unharmed' to 'he died in a fistfight') were contradicted by selective leaks from Turkish intelligence. However, it denies that MBS – a noted target of Khashoggi's journalism – played any role in the murder. The Western principals’ boycott of the FII suggests disbelief.

It is of course too early to be sure exactly what happened to Khashoggi, or who gave the order that he be killed; investigations continue. But it is not too early to sense a likely shift in Saudi Arabia's positioning. Before Khashoggi, the West had tended to welcome the domestic reforms MBS had set in train, but reserved judgement on the viability of his economic plans and foreign adventures and raised questions in private about his rumored impulsiveness. The egregiousness of Khashoggi's murder has confirmed those worries and is likely to lead to some disassociation from the Saudi regime. Put simply, close allies are supposed to behave better than this. Even if Western governments are inclined to treat the murder as an aberration, legislatures may decide otherwise. Crucially the US Congress seems determined on a bipartisan basis to take action against MBS and the Saudi leadership, despite President Trump's reluctance, with even Trump stalwart Senator Lindsey Graham calling the prince a ‘toxic… wrecking ball’ who has ‘gotta go’; it has already invoked the Magnitsky Act, which authorizes the imposition of sanctions against individual abusers of human rights, and which the White House cannot block. Saudi Arabia is not popular in Congress, and none of the arguments Riyadh or the White House might advance against sanctions will have much traction. Even the threat of retaliatory oil price hikes will be seen as blackmail, and thus be counterproductive. Should the Democrats take control of the House of Representatives in the mid-terms, there may be even less appetite for leniency. And if economic sanctions are imposed on senior Saudis, then ripples will be felt across all Western governments, as doing all manner of business with key individuals gets harder...

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