Speaker 1: Allegra Hi Hi, Dave. So we're in London, still thinking
Speaker 1: about the Middle East. But of course, alongside the terrible
Speaker 1: events in Israel and Gaza of the last week, Saudi Arabia,
Speaker 1: the region's biggest economy, is hosting their annual conference. The
Speaker 1: Future Investment Initiative, aims to be one of the most
Speaker 1: significant gatherings of economic finance leaders in the world in Riad.
Speaker 2: It's a really important event for the region, Dave. It's
Speaker 2: often referred to as Davos in the Desert and it's
Speaker 2: a high profile event that draws in CEOs and government
Speaker 2: leaders from across the globe. And we thought there'd be
Speaker 2: mass cancellations because of the events of the last two weeks,
Speaker 2: but it doesn't appear to have been the case.
Speaker 1: No, the lineup is looking at stellar as it has
Speaker 1: done in the past. I mean five years ago, the
Speaker 1: Saudi Crown Prince Mohammed bin Salmon talked about a new
Speaker 1: era dawning for the Middle East.
Speaker 3: So what to.
Speaker 1: There he is speaking at the FII the Future Investment
Speaker 1: Initiative in twenty eighteen. He said that the new Europe
Speaker 1: will be the Middle East and the next global renaissance
Speaker 1: for the next thirty years will be in that region.
Speaker 1: But of course the events of the last few weeks
Speaker 1: have reminded the world of the instability in that part
Speaker 1: of the world and the way that instability can spill
Speaker 1: out both for economies and politics all around the globe.
Speaker 2: Yep. And it's complicating the man we have all nicknamed MBS.
Speaker 2: It's complicating his efforts to focus the region on economic
Speaker 2: development rather than old feuds.
Speaker 1: Welcome to in the City, Bloomberg's podcast, connecting you to
Speaker 1: the conversations and the story is shaping the world of finance.
Speaker 1: I'm David Merritt in London with a Llegra Stratton and
Speaker 1: on the ground in Read is our co host Francine
Speaker 1: Laqua and Read Buwera chief Matthew Martin. This week we
Speaker 1: examine how the Sadi Prince's vision for a new Middle
Speaker 1: East could be overshadowed by the escalating conflict between Israel
Speaker 1: and Hamas. Here's some of the conversation they've been having.
Speaker 1: Sitting right in the middle of the conference in Riad.
Speaker 4: He wrote a very nice piece actually explaining why it's
Speaker 4: very complicated. First of all, to make sure that this
Speaker 4: is a success for the Crown Prince, but especially whilst
Speaker 4: free came to this events, but also the fact that
Speaker 4: things are not normalizing with other countries in the region
Speaker 4: just complicated the efforts of NBS.
Speaker 5: Yeah exactly.
Speaker 6: I mean, I think you know what we've seen over
Speaker 6: this is this is the seventh year that had this
Speaker 6: investment fallen here and over the course of that time,
Speaker 6: one of the big things that NBS.
Speaker 5: Has tried to do is he's tried to lower the
Speaker 5: temperature in the region.
Speaker 6: He's I mean, he started disputes with Katar, which he
Speaker 6: then quickly tried to resolve because he saw that this
Speaker 6: wasn't going the way that he wanted to. He's resolved
Speaker 6: the tensions with Iran as well. There was the invasion
Speaker 6: of Yemen, which he started and quickly realized wasn't going
Speaker 6: very well. He's trying to resolve that situation, and it's
Speaker 6: all part of this strategy of lower the temperature and
Speaker 6: get the focus to be on his primary goal, which
Speaker 6: is economic growth and economic diversification, with a view that
Speaker 6: the more prosperous Saudi Arabia and the region becomes, then
Speaker 6: these political feuds will melt into the distance. I mean,
Speaker 6: I think really what we've seen over the last couple
Speaker 6: of weeks with the renewed fighting in Israel or the
Speaker 6: war with Hamas is that this dream of putting prosperity
Speaker 6: ahead of political rights is a very difficult one to achieve,
Speaker 6: and there's still some deep fissures in the region, which
Speaker 6: means that trying to focus on prosperity ahead of people
Speaker 6: who have legitimate claims for political rights are going to
Speaker 6: be very very difficult challenge to try.
Speaker 5: And get to.
Speaker 3: So I think, talk to me a little bit about
Speaker 3: this conference.
Speaker 4: I don't know whether it's really symplomatic of how stability
Speaker 4: in the region go. So if there's not much stability,
Speaker 4: actually the big players don't come.
Speaker 3: If it feels like the region is dynamic and actually
Speaker 3: has quite a lot of money to spend.
Speaker 5: And they all show up, yeah exactly.
Speaker 6: I mean I think if I cast my mind back,
Speaker 6: I think you were here as well in twenty seventeen
Speaker 6: for the first one of these. You know, the crown
Speaker 6: prints wandered around the corridors. Afterwards, there was everybody gathering
Speaker 6: around him taking photos of him. He was sort of
Speaker 6: greeted like this rock star almost you know, he had
Speaker 6: this very reformist reputation.
Speaker 5: He was taking the country and the region on and
Speaker 5: moving it forward. Since then, of.
Speaker 6: Course, we've had the murder Jamalcasoji, when the Satuydia was
Speaker 6: abandoned by all the.
Speaker 5: CEOs of the big Western finance companies.
Speaker 6: We've had the relations with the US hitting a particularly
Speaker 6: low EBB under the Biden administration. I think, you know,
Speaker 6: now we're probably sort of back towards that sort of
Speaker 6: move that we had in twenty seventeen.
Speaker 5: The Saudi after after last year's high all prices, the
Speaker 5: saluar Adia's flushed with petro dollars.
Speaker 6: It's got a lot of money to spend a lot
Speaker 6: of things they wants to spend it on, both internationally
Speaker 6: and domestically. So I think, you know, the mood here
Speaker 6: is very, very positive, and as much as there is
Speaker 6: a lot of security concerns around the region, I think
Speaker 6: one of the things you hear from talking to people
Speaker 6: here that some of the people who are flying in
Speaker 6: is they're saying, you know, in read we feel safe
Speaker 6: on the streets than we do in New York or London.
Speaker 6: It's just the broader region where it has got these
Speaker 6: geopolitical fishes.
Speaker 5: Which are not being resolved.
Speaker 4: The wall Streec Titans did show a There's Jake Fraser
Speaker 4: City Group, Jenny Johnson of Templeton, There's the Solomon of
Speaker 4: Golden six, s Rubinstein, Jennie Diamond, those goes on.
Speaker 3: Larry think of black Rock. What are they here? Are
Speaker 3: they here to ask for funding or are they here
Speaker 3: to actually invest in the country.
Speaker 6: I think that's the big tension that you get here
Speaker 6: and over. I think in the beginning it was very
Speaker 6: much Saudi Arabia and the sovereign wealth f on the
Speaker 6: PIF calling friends and family and saying, you know, you've
Speaker 6: got billions of dollars of our money which you manage abroad.
Speaker 6: We want you to come and turn up our investment conference.
Speaker 6: It also has started to attract in all of these
Speaker 6: other foreign startups, you know, the venture capitalists.
Speaker 5: There is a lot of people are here.
Speaker 6: Because they want to suck money out of the country
Speaker 6: and that is their goal. The salaries are having a
Speaker 6: tough time turning that around because they want this that
Speaker 6: they want this promise to do two things. First of all,
Speaker 6: they wanted to put them on a global map and
Speaker 6: for people to talk about them in the same sort
Speaker 6: of way they talk about events in Davos or milk
Speaker 6: In and those sorts of things, but also they want
Speaker 6: to get people to come here and see what's going
Speaker 6: on and put money into the country and put money
Speaker 6: into this diversification agenda.
Speaker 5: And so far that's been the real struggle.
Speaker 6: It's been there's been a lot of money that's gone
Speaker 6: out that haven't been a huge amount of money that's
Speaker 6: come into the country so far.
Speaker 3: It was pretty incredible.
Speaker 4: Actually, on Monday, the day before the FII started, there
Speaker 4: were like three conferences going on the same time.
Speaker 3: It was pretty confusing, and they were focused on gaming.
Speaker 4: They were focusing on football, on sports.
Speaker 3: If there's two things that they want to.
Speaker 4: Make, you know, a priority of what is it tourism
Speaker 4: in the Kingdom or.
Speaker 3: Is it sports?
Speaker 6: I mean, I think there's dozens of things. I mean,
Speaker 6: it's too difficult to narrow it down. I think the
Speaker 6: thing which will the piece which is sort of going
Speaker 6: to move the needle, I think is going to be
Speaker 6: tourism because the Kingdom has gone from you know, just
Speaker 6: a few years ago it is almost impossible to get
Speaker 6: to as a foreign leisure traveler. Now they're open up
Speaker 6: with each passing month, it's getting easier and easier for
Speaker 6: foreign visitors to come here.
Speaker 5: That's set these huge targets.
Speaker 6: Of getting I think other a number I remember is
Speaker 6: seventy million foreign visitors by twenty thirty. So that's going
Speaker 6: to put it right at the top leagues and some
Speaker 6: of the most visited countries in the world.
Speaker 5: So there's a long way to go for that.
Speaker 6: If you achieve that, that brings lots and lots of
Speaker 6: foreign capital into the country, it creates lots and lots
Speaker 6: of jobs in the service industry.
Speaker 5: So that's a big one that they want to do.
Speaker 6: There's also, you know, I suppose a couple of other
Speaker 6: really strategic things they want to do. Is they want
Speaker 6: to shift this perception of them as being an oil exporter,
Speaker 6: and they want to say that no, we're not an
Speaker 6: oil exporter.
Speaker 5: We're an energy exporter.
Speaker 6: We're gonna make hydrogen here, we're gonna ship it abroad.
Speaker 6: We're gonna build solo projects, we're gonna build wind farms,
Speaker 6: we're gonna build hydrogen projects, and we're gonna link up
Speaker 6: the grids all around the region and into Europe through
Speaker 6: this this vast infrastructure scheme that Biden and the Saudis
Speaker 6: on a UE announced between India, the Middle East and Europe.
Speaker 6: So connecting all of these places together, for all of
Speaker 6: the energy that people made in Zaudi Arabia to be
Speaker 6: exported all around them.
Speaker 5: That that's the dream.
Speaker 6: But getting there is it's not a very easy thing
Speaker 6: to get to, and there's a long long way to
Speaker 6: go as yet.
Speaker 3: I think I'm.
Speaker 4: Surprised that actually, even if you're in the corridors of
Speaker 4: the FII, there's no real talk about the conflict and
Speaker 4: the war between Israel and Hamas. Is that because people
Speaker 4: are uneasy talking about it or they just don't know
Speaker 4: what happens next.
Speaker 6: There is elements of both of those, but certainly the
Speaker 6: sort of particularly the US and the Western contingent, where
Speaker 6: there's probably a bit more sympathy for the Israeli point
Speaker 6: of view and the Israeli position, so they are I
Speaker 6: think you can see this from some of the debates
Speaker 6: on stage when they ask direct questions about it. I
Speaker 6: think they don't quite know how to address it. And
Speaker 6: I'm sure we've seen that in the corporate earnings calls
Speaker 6: I announcements that have come out. Is that nobody quite
Speaker 6: knows what to say about this situation, and so they've
Speaker 6: tried to tread very very delicately around it. But certainly,
Speaker 6: I think on the sideline when you're having more informal
Speaker 6: conversation with the people, I mean, it's clearly the biggest
Speaker 6: being around right now.
Speaker 3: Is normalization after table or is it frozen?
Speaker 4: This was the normalization between for example, you know, the
Speaker 4: relationship between Saliarada and Israel.
Speaker 6: Yeah, well, I think you know, earlier on today we
Speaker 6: had Jamie Diamond say on the stage, you know, he
Speaker 6: he was pleading with the sal he's to keep this
Speaker 6: process going and saying that you know, this needs to
Speaker 6: if Saliu Area needs to push this, because this needs
Speaker 6: to happen for the region. I think at the moment,
Speaker 6: if you look at some of the surveys of the youth,
Speaker 6: ninety eight percent of the population work against normalization. That
Speaker 6: was even before the events of the past couple of weeks.
Speaker 6: So domestically politically, it's quite a tough sell right now.
Speaker 6: But I think there is also a recognition that you
Speaker 6: don't you need to resolve this conflict, and that's not
Speaker 6: going to happen by continuing to ignore each other and
Speaker 6: not establish diplomatic relations.
Speaker 4: Does Sadua Adia actually have a role, but we hear
Speaker 4: that guitars trying.
Speaker 3: To play a media role. What's the role of Sadurrabia.
Speaker 6: Savage is a difficult position because, as we were just saying,
Speaker 6: it doesn't have a diplomatic relationship with Israel, so it
Speaker 6: can't talk, so then it can't apply any diplomatic pressure
Speaker 6: to them.
Speaker 5: It has no relationship there.
Speaker 6: It also it's it's no big fan of Hamas either,
Speaker 6: so it can't talk to them, it can't away on them.
Speaker 6: Whereas Katar Katar hosts Hamas, it has some of the
Speaker 6: leadership and the spokesman there.
Speaker 5: It has that diplomatic relationship that can call on. So
Speaker 5: Saturday's a spot.
Speaker 6: You know. The Soundings are very proud of this role
Speaker 6: they have as the Costolian and the two most holy
Speaker 6: situl within Islam. So it has this sort of diplomatic
Speaker 6: weight within Islam that it can use, but it doesn't
Speaker 6: at the moment have those direct relationships with the main
Speaker 6: protagonists in this fight to be able to affect change.
Speaker 6: So what we're going to see more of, I think
Speaker 6: is the Saudis and some of the other regional powers
Speaker 6: talking to the US about how to take this situation forward,
Speaker 6: how to try and come to some sort of stabilization
Speaker 6: and limit fighting from going completely out of control.
Speaker 4: I think that this conference actually compares to Davos. I know,
Speaker 4: it's called Davis and Deserts. It's come a long way
Speaker 4: in terms of how it looks, how it feels.
Speaker 3: I guess there's still, you.
Speaker 4: Know, many years of experience in Davos in terms of
Speaker 4: bilaterals having rices to meeting that would make a difference.
Speaker 3: But I'm curious into what you think.
Speaker 6: I think I would say, as as a flippant remark
Speaker 6: to begin with that I think Davos is far better
Speaker 6: organized than this is.
Speaker 5: We're seven years in and it still feels like this
Speaker 5: is almost the first time that they've done this.
Speaker 6: But I think, you know, yes, yeah, but I think,
Speaker 6: you know, the convening power that they have managed to
Speaker 6: pull off in a pretty short period of time is
Speaker 6: quite remarkable. They have attracted all of these people here,
Speaker 6: and I think they consider this to be more of
Speaker 6: an investment conference rather than I think Davos has a
Speaker 6: much more of a sort of a geopolitical flavor to it,
Speaker 6: So I think that's where possibly some of the distinction goes.
Speaker 6: But you know, increasingly we're seeing more heads of state
Speaker 6: turning up here, particularly because to allude back to some
Speaker 6: of our earlier conversation, some of the heads of states
Speaker 6: coming here because they also want Sally money as well,
Speaker 6: and they want to see Savu Abia player role. So
Speaker 6: the geopot little conversation here is rising up the agenda
Speaker 6: a little bit.
Speaker 3: I think, Maggie margin thank you so much for doing Yes.
Speaker 5: So logoi was she were there?
Speaker 2: Well, certainly hotter than a typical divorce, But I mean
Speaker 2: it's extraordinary, isn't it to hear them saying that there's
Speaker 2: no real talk about what's happening in Israel and Gaza?
Speaker 2: I think was it Fran that said there's no real
Speaker 2: talk in any of the corridors about the conflict?
Speaker 1: Yeah, and you know, this event, which is trying to
Speaker 1: position Satura Arabia as a regional and global player, no
Speaker 1: one being able to really address the biggest question that
Speaker 1: not only the Regent's facing, but the world is at
Speaker 1: the moment, is how to resolve the conflict that has
Speaker 1: erupted in Israel and Gaza.
Speaker 2: Yeah. I mean, at some point though they will. The
Speaker 2: role of the Saudis as very deep pocketed is going
Speaker 2: to come back to the fore not just right now.
Speaker 2: We're in this period where it's about the role that
Speaker 2: the Saudis can play in the diplomacy and trying to
Speaker 2: get time. But eventually it feels a very long way off,
Speaker 2: but eventually they are going to be turned to for
Speaker 2: help with what you do, how you support Gaza and
Speaker 2: reconstruct it. It feels like very far away, but fundamentally
Speaker 2: those conversations that world leaders are having when they're saying
Speaker 2: to the Egyptians, can you please let Palestinians in and
Speaker 2: so on and so forth, and the Egyptians and are
Speaker 2: not wanting to Eventually, soon there's going to have to
Speaker 2: be a question about about what happens to Gaza. It
Speaker 2: doesn't feel like the most urgent question now, but it
Speaker 2: is going to be something that the Saudis is the
Speaker 2: extremely wealthy players in the region, will need to play
Speaker 2: a party.
Speaker 1: Right, and it says deep pockets I suppose that explain
Speaker 1: the convening power that Matthew was talking about. You know
Speaker 1: people that people are showing up right. There was a
Speaker 1: question a week ago like are people actually going to cancel.
Speaker 2: And in the end it was the all hands about
Speaker 2: ten or twelve, wasn't it, And there's still two hundred
Speaker 2: who went well. I thought it was really interesting how
Speaker 2: this kind of this tension between Matthew was talking about
Speaker 2: people want people are going and they want to suck
Speaker 2: money out of the country, but actually the Saudis want
Speaker 2: to bring money radio and I think that is that
Speaker 2: is that is attention. I mean, certainly when you think
Speaker 2: about the United Kingdom, the United Kingdom is very much
Speaker 2: in the market for investment of Saudi Arabian in all
Speaker 2: sorts of industries, including not least green industries. I suspect,
Speaker 2: you know, British carbon capture and storage at some point
Speaker 2: might be of interest to Saudis, sat to the Saudis.
Speaker 2: So it is interesting that tension between people turning up
Speaker 2: to devils in the desert and saying, you know, but
Speaker 2: what's their agenda? Their agenda is probably how much can
Speaker 2: we get them to invest in countries back home, rather
Speaker 2: than necessarily can we support the Saudis to create a
Speaker 2: tourism industry, for instance. And I thought also is interesting
Speaker 2: the Jamie Diamond pleading with the Saudis on the stage
Speaker 2: there to keep going with normalization, and it seemed from
Speaker 2: Matthew that sense that actually, I mean, what I would
Speaker 2: love to know is if it's pause, which it very
Speaker 2: much does seem to be right now, that normalization with
Speaker 2: Israel that the world had been hoping for three weeks
Speaker 2: ago really very very little time ago. If it's paused,
Speaker 2: how long are we talking? Are we talking? Are we
Speaker 2: talking months? Are we talking years? And if it's completely
Speaker 2: off the table, I mean, it's fascinating to hear the
Speaker 2: ninety eight percent of the popular where Saudi population are
Speaker 2: against organization.
Speaker 1: I means some people have suggested that one of the
Speaker 1: aims of her Masses attack was to scupper the chance
Speaker 1: of normalization between Israel and Saudi Arabia, and in that
Speaker 1: sense it's achieved. It's clearly at least for the timing.
Speaker 2: But for the Saudis if they are to create this sense.
Speaker 2: I mean, there was that quote, wasn't there in Read
Speaker 2: People People? I think people said to Matthew in read
Speaker 2: we feel safer than in New York or London, you know,
Speaker 2: you know both cities well, Dave, but not in the
Speaker 2: region more widely. And I think that is the fundamental
Speaker 2: question they will have to answer sometime soon, is you know,
Speaker 2: can you can you create this, this Saudi Arabia which
Speaker 2: is a tourist heaven and place where lots of international
Speaker 2: travelers want to go. There's extraordinary numbers about their ambitions
Speaker 2: for tourism into Saudi Arabia, how many people they want
Speaker 2: to be one of the world's top tourist destinations. But
Speaker 2: it seems is that feasible? Is that feasible? Is that
Speaker 2: feasible when you have not far away such such deep
Speaker 2: and a huge viol is that feasible? Potentially they will
Speaker 2: right now be trying to figure out the extent to
Speaker 2: which the two can co exist. And if the feeling
Speaker 2: is that actually it is denting their ambitions to make it,
Speaker 2: you know, this huge tourism and also life sciences and
Speaker 2: tech of the future economy pivoting away from oil, then
Speaker 2: then they will then have to help to get Palestine
Speaker 2: and the Gazans back on their feet. That's why it
Speaker 2: becomes I think that the whole of it is linked right.
Speaker 1: Because the soaur division of the future is not compatible
Speaker 1: with a region in flames and with an escalating or
Speaker 1: a worsening conflict between Israel and its neighbors. Thanks for
Speaker 1: listening to this week's in the City. We'll be back
Speaker 1: next week, but in the meantime, if you like our show,
Speaker 1: please head on over to wherever you listen to podcasts
Speaker 1: and rate, review and subscribe. It really does help people
Speaker 1: find the show. This episode was hosted by me, David Merritt,
Speaker 1: Francine Laquar, and a Legal Strats. It was produced by Somersadi,
Speaker 1: with additional editing by Blake Maples and special thanks to
Speaker 1: Matthew Martin, Victoria Cochrane, Ga Lamperti, and Sarah Halls.