Swiss firms attend Saudi forum despite Khashoggi death

United Arab Emirates Prime Minister Sheikh Mohammad bin Rashed, right, and Ibrahim al-Assaf, Saudi State Minister, at the opening of the Future Investment Initiative conference, in Riyadh, Saudi Arabia, on October 23, 2018 Keystone

Although many Swiss multinationals have pulled out their top brass from Saudi Arabia’s controversial Future Investment InitiativeExternal link summit, they haven’t boycotted the event entirely.

Saudi Arabia opened its “Davos-in-the-Desert” investment forum on Tuesday despite boycotts by high-profile Western political figures, international bankers and executives in the wake of the killing of US-based Saudi journalist, Jamal Khashoggi, at its consulate in Istanbul.

The investment initiative, held at the Ritz Carlton in Riyadh, is widely viewed as a critical test on whether Western governments and corporations will continue to do “business as usual” with the oil-rich kingdom.

In a clear reflection of the delicate situation and the financial clout of the Arab nation, a spokesman of Credit Suisse declined to comment on whether the Swiss bank formally maintained its status as a sponsor of the event.

Credit Suisse,External link which holds a licence from the Saudi Capital Markets Authority and has been trying to secure a full banking licence, also refused to comment on whether any of its executives were present.

“The only thing that we are confirming is that the CEO [Tidjane Thiam who was on the conference’s advisory board] will not attend,” spokesman Sebastian Kistner told swissinfo.ch. “We are not commenting on exposure in Saudi Arabia, our business strategy in the country and so on.”

Credit Suisse Saudi Arabia cast itself as ready for business in its 2017 reportExternal link. It touted the creation of fully-fledged onshore platform allowing its high network clientele to access local and international markets, while tapping into Credit Suisse expertise. It reportedly put $600 million of its balance sheet at the disposal of oil-rich potential clients for loans.

Rival bank UBSExternal link, the world’s largest wealth manager, never planned CEO-level representation at the conference but declined to comment on whether it had sent financiers. The bank managed CHF518 billion of assets from Europe, the Middle East and Africa, as of the end of June 2018. It has plans to double its workforce in Saudi Arabia in the coming years. 

In contrast, other major banks have snubbed the summit. Softbank CEO and Japanese business magnate Mayasoshi Son reportedly cancelled his speaking engagement External linkat the last minute, even though about $45 billion (CHF 45 billion) of the $90 billion Softbank Vision Fund comes from Saudi financing.

Summit overshadowed

The conference opened with a brief tribute to the slain journalist JExternal linkamal Khashoggi, a Washington Post External linkcontributor and ex-Saudi regime insider turned critic. After claiming that the journalist had left the consulate alive, Riyadh finally confirmed that the journalist was murdered in its diplomatic premises, the outcome of a “rogue operation”. On Tuesday, Turkish President Recep Tayyip Erdogan dismissed Saudi explanations, saying that Khashoggi’s death was part of a planned operation.

Few in the West have found the Saudi explanations credible or satisfactory but there has been no rush to take strong punitive measures. Swiss-based multinationals have been no exception. The decision by some companies to pull out their CEOs from the summit have been coupled by largely mild statements.

Swiss trader and mining company GlencoreExternal link withdrew its chairman Tony Hayward but rival commodities TrafiguraExternal link sent its top executive. At the summit, Trafigura CEO Jeremy Weir walked on stage to sign a much-touted “mega-deal” for the establishment of a copper and zinc plant in Raz Al-Kair. It was one of 25 deals with a value of over $50 billion signed on the first day of the event.

Boycotts and deals

ABB External linkChief Executive Ulrich Spiesshofer made the decision not to attend the investment conference in Saudi Arabia “in light of current circumstances”. And ABB Chairman Peter Voser decided to suspend his participation on the global advisory board of NEOM, a mega-city project. The composition of the board was only announced on October 9.

But ABB, a Swiss power transmission and automation company, had last year expressed confidence that it would benefit from the Gulf monarchy’s $500 billion NEOM projectExternal link. The company has three factories in Saudi Arabia. Not surprisingly, it sent representatives to the event.

“Saudi Arabia is an important market in the region,” a spokesman told swissinfo.ch, declining to give figures. “We have no current plans to alter or interrupt the support we are providing to our customers in Saudi Arabia.”

While the Swiss A-list at the summit was small, it remains to be seen whether Swiss multinationals and banks will change strategies in the kingdom.

Context makes it unlikely. The diplomatic, financial and commercial ties that bind Saudi Arabia and Switzerland are deep. The two nations earlier this year signed a double taxation agreement. Trade volume between the two countries is worth CHF2.5 billion ($2.5 billion) annually, according to the State Secretariat for Economic Affairs (SECO).

And Switzerland has taken centre stage in the Iran-Saudi conflict by representing the rival nations’ consular interests in each other’s capitals.

At home, Switzerland’s vulnerable tourism industry has already felt the consequences of turmoil in the Gulf states. The growth of Gulf tourism to Switzerland slowed to zero this summer. The blockade against Qatar by its Arab neighbours had a disruptive effect as several flights to Europe were cancelled. So did the placement of scores of Saudi royals under house arrest last year.

Swiss policymakers mull potential sanctions

The ministry of foreign affairs has asked the Saudi Arabian chargé d’affaires for a “quick and clear investigation” into what happened in Istanbul, as stated by State Secretary Pascale Baeriswyl.

Switzerland is waiting for the results of the investigation and will likely follow the lead of the international community regarding possible sanctions.

Should the United Nations Security Council adopt sanctions against Saudi Arabia, Switzerland is ready to implement them, the ministry said.

If sanctions were imposed at EU level – Switzerland is not part of the 27-member bloc – then Bern would consider applying them in turn.

The topic is expected to be discussed at the weekly Federal Council meeting on Wednesday.

The Federal Council’s decision in 2016 to authorise the sale of spare parts for anti-aircraft defence systems to Riyadh in spite of Saudi intervention in Yemen sparked an outcry.

As such, a possible embargo on the sale of arms to the Saudi regime would send a strong message.

Last year, Switzerland sold CHF4.8 million ($4.8 million) of war materiel to Saudi Arabia, which represents around 1% of total Swiss arms exports. In 2009 and 2010, the sales value exceeded CHF130 million.