Saudi Arabia warns against sanctions
October 15, 2018
Following a threat by US President Donald Trump on Sunday that Saudi Arabia would face "severe punishment" if it was found to have killed Jamal Khashoggi, the government in Riyadh vowed to hit back against any punitive measures.
"The kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures, or repeating false accusations," the Saudi state news agency said, adding that the country's status as an oil superpower would give it "an influential and vital role in the global economy."
Saudi-owned Al Arabiya television claimed on Sunday that the kingdom had readied "over 30 measures" it could implement.
Jamal Khashoggi, a Washington Post columnist who lived in self-imposed exile, is reported missing after he was last seen entering the Saudi consulate in Istanbul on October 2.
Turkish officials allege he was murdered. They also claim they are in possession of audio and video recordings that would show a Saudi security team detained Khashoggi before killing him and dismembering his body. Saudi officials say Khashoggi left the building unharmed.
Read more: Opinion: Will the Khashoggi case make Saudi Arabia a rogue state?
Mounting pressure
Following Riyadh's assertion it would retaliate, Britain, France and Germany released a joint statement saying they were treating Khashoggi's disappearance "with the utmost seriousness."
"There needs to be a credible investigation to establish the truth about what happened, and — if relevant — to identify those bearing responsibility for the disappearance of Jamal Khashoggi, and ensure that they are held to account," said the message, which was signed by the country's foreign ministers and "conveyed directly" to the Saudi authorities.
The Khashoggi affair has also cast a shadow over an annual investment summit in Saudi Arabia called the Future Investment Initiative (FII). The three-day event will be held next week and is also intended to showcase Prince Mohammed bin Salman's modernization plan for the desert kingdom.
However, more and more business leaders from abroad, including British billionaire Richard Branson and Uber CEO Dara Khosrowshahi, as well as media powerhouses like Bloomberg and CNN, have pulled out after Khashoggi's mysterious disappearance. On Sunday, JP Morgan CEO James Dimon and Ford chairman Bill Ford said they would also not attend.
Saudi stocks sell-off
But the most noticeable effect felt by Saudi businesses came after Donald Trump's warning on Sunday. The US president told CBS' 60 Minutes that the consequences of Saudi Arabia being involved in the likely murder of Khashoggi would be "severe."
"We're going to get to the bottom of it and there will be severe punishment," he said.
White House economic adviser Larry Kudlow later said that Riyadh should take Trump's warning seriously. "When the president warns, people should take him at his word. If Khashoggi was killed or harmed or whatever, bad outcome...he [Trump] will take action," Kudlow told Fox News.
Trump's warning caused Saudi stocks to tumble by around 7 percent at one point in trading on Sunday, wiping out all of their gains for 2018. The kingdom's Tadawul All-Shares Index later clawed back some losses to close down 3.5 percent.
Mohammed Zidan, market strategist at Thinkmarket in Dubai, said the drop in Saudi stocks was linked to the uncertainty surrounding the Khashoggi affair. "The withdrawal of top participants from the Riyadh investment conference has also negatively impacted traders' sentiment," he told the news agency AFP.
Oil markets also reacted strongly on Sunday, with North Sea Brent crude and US West Texas Intermediate both jumping 1.1 percent. Asked whether the US should be concerned about possible Saudi retaliation in the oil sector, Larry Kudlow said he was not worried. "The US is the dominant energy player. So, we are in pretty good shape in my opinion with our energy boom to cover any shortfalls," he noted.
uhe/aos (Reuters, dpa, AP)