Just two weeks ago, Saudi Arabia gathered the global business elite in Riyadh, promising a new age for the oil-rich kingdom as it sought to court overseas money and investment.
But late Saturday, the kingdom showed its old face of palace intrigue, with the arrests of four ministers and 11 princes, including Prince Alwaleed bin Talal, the billionaire who is one of the country’s most public investment figures.
International investors and business executives are now trying to interpret the power play.
To some, the arrests portend a quick consolidation of authority under the young, reformist Crown Prince Mohammed bin Salman, who wants to vault the country to modernity. In that way, the arrests are viewed as a sign that the crown prince will be able to push through his ambitious economic agenda, including selling off shares in the giant state oil company.
To others, the arrests point to the potential for political tumult that could lead to the collapse of his entire project. Overseas investors have been reluctant to plow money into a country where the rule of law is weak and the ruling family trumps all.
“It might have good consequences for stability maybe, or just the opposite,” said Dragan Vuckovic, president of Mediterranean International, an oil service company that does business across the Middle East and North Africa. “It’s questionable what is happening behind the scenes. It is a very secretive society.”
The arrests came at an awkward time for the kingdom.
Salman recently invited more than 3,500 investors, corporate chief executives, and leaders of nongovernmental organizations to Riyadh for a three-day conference intended to promote future business opportunities. Officials promised that the public offering of the state oil company, Saudi Aramco, would go forward and that the sovereign wealth fund would soon rank among the richest in the world with more than $400 billion in assets by 2020. They pledged to build a utopian megacity on a stretch of deserted land that would attract capital and talent from all over the world.
The conference attracted a slew of senior executives and officials, including Tony Blair, former prime minister of Britain and Christine Lagarde, managing director of the International Monetary Fund.
Some of the attendees spoke highly of Salman’s economic ambitions. The planned initial public offering of Aramco, they noted, could free government capital to spend on urban investment and job development. Cultural changes like granting women the right to drive could encourage Western companies to invest in or start operations in Saudi Arabia.
Despite the goodwill, few had backed the effort with time and money. And the weekend’s arrests could add to that reluctance. But they could also change some perceptions, if the crown prince can eventually show a broader commitment to shaking up an entrenched royal bureaucracy.
“I think this is going to slow things down, but if the gambit is successful it will help,” said Charif Souki, chairman of Tellurian, a liquefied natural gas company now attempting to make energy deals with Saudi Arabia. Speaking of Salman, he said, “Once he has consolidated power, he will do what he wants to do, which is to modernize the country and modernize Islam, which are all good things. But it might be very dangerous and it might not work.”
Even before the arrests, investors did not quite know what to make of the kingdom.
Saudi Arabia has unveiled a sweeping economic reconstruction called Vision 2030, intended to diversify the country’s employment beyond oil. The cornerstone of the economic effort is the proposed initial public offering of Saudi Aramco, which exchanges around the world have been vying to secure. In a tweet just hours before the arrests, President Donald Trump said he would appreciate it if the Saudi Aramco public offering took place on the New York Stock Exchange.