Events in Turkey have dealt a blow to Saudi am­bi­tions

The Daily Telegraph - Business - - Business Comment - ROBIN PAGNAMENTA

It’s cer­tain to be a lav­ish af­fair. Pri­vate jets car­ry­ing some of the world’s most pow­er­ful men and women will be­gin land­ing in the Saudi cap­i­tal of Riyadh later this month for an ex­clu­sive event. As del­e­gates for the an­nual Fu­ture In­vest­ment Ini­tia­tive – the so-called Davos in the Desert – ar­rive for three days of talks about the fu­ture of the oil-rich desert king­dom, there will be plenty for them to talk about.

Their 33 year-old host, Crown Prince Mo­hammed bin Sal­man, has no short­age of am­bi­tion and will be serv­ing up his usual spiel. Lev­er­ag­ing the king­dom’s vast oil wealth, he wants to trans­form Saudi Ara­bia into a tech­nol­ogy pow­er­house and is sprin­kling hun­dreds of bil­lions of petrodol­lars into Vi­sion 2030, a pet project to build gi­ant smart cities in the desert, so­lar power plants stretch­ing to the hori­zon – as well as big-ticket in­vest­ments in Sil­i­con Val­ley and be­yond.

Mix­ing it up in Riyadh will be some of the global tech­nol­ogy in­dus­try’s great­est lu­mi­nar­ies – bil­lion­aire in­vestors such as Vinod Khosla, Masayoshi Son and Peter Thiel and ex­ec­u­tives like Dara Khos­row­shahi, the boss of Uber, and Diane Greene, the chief ex­ec­u­tive of Google Cloud.

But amid the al­co­hol-free hub­bub, the earnest talk of re­form and the sci-fi Saudi spin, the Crown Prince should ex­pect some awk­ward ques­tions.

It’s not merely his de­ci­sion to de­lay plans to float Saudi Aramco, the state oil pro­ducer – a key plank of Vi­sion 2030. The real talk­ing point among Western del­e­gates – in pri­vate, at least – is likely to be the dis­ap­pear­ance on Oct 2 of ex­iled Saudi jour­nal­ist Ja­mal Khashoggi af­ter a visit to the king­dom’s con­sulate in Is­tan­bul.

Saudi Ara­bia has de­nied claims he was mur­dered or kid­napped by a squad of 15 se­cu­rity agents who ar­rived by air from Riyadh the same day, as Turkey has al­leged. But the mys­tery is fu­elling ques­tions about the Crown Prince’s lead­er­ship – and whether his vi­sion for the king­dom is a cap­ti­vat­ing hi-tech dream or a night­mare of re­pres­sion and con­trol.

When they show up in Riyadh from Oct 23 to 25, will the likes of Richard Bran­son, Jamie Di­mon and Stephen Sch­warz­man take a stand? Prob­a­bly not, al­though a hand­ful may make their ex­cuses and not turn up. On one level, that should come as no sur­prise.

When faced with the glow­ing prospect of Saudi Ara­bia’s pri­vati­sa­tion drive and with dozens of po­ten­tially lu­cra­tive man­dates up for grabs, you’d ex­pect Wall Street’s Gor­don Gekko-types to park their morals at the door of Riyadh’s Ritz-Carl­ton Ho­tel.

Sil­i­con Val­ley, on the other hand, has tra­di­tion­ally seen these things rather dif­fer­ently. And for all of its ills and the youth­ful naivety of many of its lead­ing lights, it’s an in­dus­try that was un­de­ni­ably built on the free ex­change of ideas and in­for­ma­tion.

How that squares with the al­leged mur­der of a jour­nal­ist openly crit­i­cal of the Saudi regime is a ques­tion that should be stir­ring de­bate at the high­est level in the tech world as it is del­uged with Saudi cash.

To be fair on those pre­par­ing to travel, some of them prob­a­bly have lit­tle choice but to play along. When Soft­bank founder Masayoshi Son roped Mo­hammed bin Sal­man into the $100bn Soft­bank Vi­sion Fund two years ago, it was a gi­gan­tic coup.

At a stroke, he cre­ated eas­ily the world’s big­gest buy-out fund – and a piggy bank brim­ming with Saudi oil money. But the broader con­se­quences of that deal for the tech in­dus­try, where the money is be­ing spent, are still play­ing out.

With tens of bil­lions now flow­ing into the Vi­sion Fund’s cof­fers, Saudi cash is slosh­ing through the tech in­dus­try. Al­ready it has be­come so deeply in­grained in the sec­tor that com­pa­nies like Uber, Bri­tish chip maker Arm Hold­ings and elec­tric ve­hi­cle man­u­fac­tur­ers Tesla and Lu­cid are be­ing tightly bound to the prince’s wider ob­jec­tives and game plan.

They are un­likely to openly crit­i­cise a key share­holder with enor­mous sway to make or break busi­nesses. Oth­ers, how­ever, are not yet so com­pro­mised. Take Google, which has re­port­edly dis­cussed the creation of a joint ven­ture to build data cen­tres to help build the back­bone of a new tech in­dus­try in the king­dom.

In April, the prince took a month­long ex­tended va­ca­tion dur­ing which he dropped in on Google co-founder Sergey Brin and chief ex­ec­u­tive Sun­dar Pichai as well as Mi­crosoft founder Bill Gates and Ama­zon’s founder Jeff Be­zos. It would be en­cour­ag­ing to be­lieve Google’s par­ent Al­pha­bet is think­ing long and hard about its Saudi plans.

Mean­while, if MBS’s aim was to forge bet­ter re­la­tions with the US tech giants, the mys­tery over Mr Khashoggi may present an­other headache. Among other news­pa­pers, Khashoggi was an oc­ca­sional colum­nist for The Wash­ing­ton Post, a news­pa­per that Jeff Be­zos ac­quired in 2013.

Ei­ther way, if Saudi Ara­bia fails to con­vince out­siders the coun­try re­ally is open­ing up as MBS has promised, he may find the en­thu­si­asm for events like FII starts to cool.

At last year’s inau­gu­ral FII, he un­veiled plans for a 10,000 sq mile city called Neom, a $500bn (£379bn) project he de­scribed as “drone-friendly and a cen­tre for the de­vel­op­ment of ro­bot­ics” and “a place for dream­ers who want to cre­ate some­thing new in the world”.

As ter­rific as that may sound, it’s ques­tion­able how many dream­ers will want to live there if Saudi Ara­bia re­mains a place where au­to­crats ex­er­cise unchecked, ruth­less power – and jour­nal­ists dis­ap­pear for dis­mem­ber­ment by their se­cu­rity agents.

‘With tens of bil­lions now flow­ing into the Vi­sion Fund’s cof­fers, Saudi cash is slosh­ing through the tech in­dus­try’

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