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