MBS’ Multi-Billion Dollar ‘New Dubai’ Giveaway Is a Bust as Jamal Khashoggi’s Ghost Scares Investors

  • Oops!
    Something went wrong.
    Please try again later.
Tom Sykes
·7 min read
  • Oops!
    Something went wrong.
    Please try again later.
ALEXEY NIKOLSKY / Getty Images
ALEXEY NIKOLSKY / Getty Images

Mohammed bin Salman, the crown prince of Saudi Arabia known universally as MBS, is offering blue-chip multinational companies deals including a 50-year tax holiday to relocate to the capital Riyadh, as he seeks to rehabilitate himself as a pro-business modernizer after the disastrous reputational damage of the state-sanctioned murder of Jamal Khashoggi.

The drive to fill some of the 59 skyscrapers of Riyadh’s troubled King Abdullah Business Park with the HQs of prestigious IT and finance companies has, however, been largely unsuccessful.

How Trump Sided With Saudi Murderers Over Their Victim Jamal Khashoggi

Companies including Google and Siemens look set to maintain their regional hubs in the United Arab Emirates (UAE), despite being targeted under the initiative, code-named Program HQ, according to a report in London’s Financial Times. Program HQ is itself a part of MBS’s ten-year masterplan for weaning the country off oil revenues, Vision2030, which also includes building a vast $500 billion pleasure city to try and rival Dubai as a tourism hub.

Despite the failure to attract a star firm as yet, some big companies are increasing their presence in Saudi Arabia, opening or enlarging offices in the park.

For example, Google Cloud last month agreed with Saudi Aramco, the state oil company, to deliver cloud computing services infrastructure, which will lead to the tech company opening its first office in the kingdom. Alibaba and Western Union have also reportedly increased their footprint in the country and opened larger offices.

Influential Saudi officials have been tasked with the difficult job of delivering MBS’s wishes by luring firms from neighboring jurisdictions such as Dubai and Abu Dhabi. These UAE city-statelets are far more cosmopolitan and liberal than ultra-conservative Saudi Arabia, where alcohol is still completely banned, any semblance of Western social life is non-existent, and women are second-class citizens.

MBS’s answer to these social and gender restrictions, which are baked into Saudi Arabia’s Wahhabi-influenced culture, has been to start work on a $500 billion tourist and leisure city, named NEOM. NEOM will be 1,000 miles from Riyadh on the Red Sea, and otherwise-forbidden Western pleasures will be permitted there. The resort city will have a parallel legal system, presided over directly by MBS. While this is supposed to make foreigners feel safe, it may well have the opposite effect given his murderous reputation.

Justin Scheck, the co-author of Blood and Oil, the bestselling biography of Mohammed bin Salman, told The Daily Beast, “The biggest challenge MBS has in remaking the Saudi economy is getting foreign companies to invest in Saudi Arabia. Even pre-Khashoggi, the way the foreign business leaders wanted to do business with him was different to the way he wanted to business with them. They just wanted him to give them money. He wanted them to invest in Saudi Arabia. Despite all these enticements, it hasn’t happened.”

Scheck says there are corporate qualms about the country’s ethical standards, and that the Khashoggi affair has made it “harder than anticipated” to attract big companies. Even Uber, in which the Saudis own a 5.3 percent stake, has condemned the country and its leadership over the Khashoggi killing in 2018.

MBS has made only token gestures at transparency over the killing: Eight unidentified operatives were given prison terms of seven to 20 years for Khashoggi’s murder in a secret trial. MBS has not accepted responsibility for ordering the killing, even though the CIA and a U.N. investigation both concluded he was culpable. Saudi authorities have never said what happened to Khashoggi’s remains after his body was cut up with a bone saw in the country’s Turkish embassy.

A new film, Oscar-hyped documentary The Dissident, will make it even harder for Saudi Arabia to continue the whitewash. The film’s director, Bryan Fogel, gains access to the room where Khashoggi was killed and reports that his body was likely transported to the home of the Saudi consul and burned in a tandoori oven.

Scheck points out that even for those corporations prepared to shrug off the country’s ongoing and flagrant abuses of human rights, Saudi Arabia’s small population is a major factor in why many Western companies are not interested in taking up MBS’s investment invitations, regardless of how many tax breaks or special carve-outs from local laws he offers.

“The one thing he can’t fix is that as wealthy as the country is, it has a population about the size of Mexico City. So why would you want to go and build an auto factory there? The local market is just not big enough,” says Scheck.

Understanding this demographic destiny, MBS is now urgently trying to attract international headquarters to fill the gap and help Saudi Arabia become a normal tax-based economy rather than one financed by ever-depleting oil wealth.

For MBS, delivering this transition is now a deeply personal mission and one on which he has staked his reputation, so personnel departments of foreign companies are being reassured that their staff will be able to let their hair down at NEOM. While strategy documents leaked last year included plans for a huge artificial moon, glow-in-the-dark beaches, and flying drone-taxis, the reality so far is that the project is just another troubled Saudi building site, mired in allegations of corruption, death, and malpractice.

One expat living in Saudi Arabia told The Daily Beast that after the “Sheikhdown” in 2017, in which hundreds of prominent Saudis were detained in the Ritz-Carlton hotel, and in some cases beaten and tortured until they signed confessions of corruption and handed the government huge chunks of their fortunes, there was little appetite to criticize MBS: “A lot of people think NEOM is going to be an unmitigated disaster. It looks like a city as drawn by a toddler. But no-one is going to say that. MBS could throw you in prison just for disagreeing with him.”

Scheck says that such criticism simply prompts MBS to double down on his moonshot plans. “For MBS, his legitimacy as future monarch of the country is bound up in the success of Vision 2030. When people criticize things like NEOM, he just digs his heels in further.”

It seems likely that any small successes in luring tenants will be lavishly packaged as a regional triumph and unveiled during the annual investor conference of the Public Investment Fund, the sovereign wealth fund chaired by MBS, and scheduled to begin on January 27.

One executive told the FT he believed the kingdom hoped to use the conference to brandish agreements with companies that had provisionally agreed to make the switch from Dubai to Riyadh.

A Saudi government adviser briefed on the plans said, “It’s about attracting key international anchor tenants.”

Incentives on offer include a 50-year tax holiday, waiving quotas on the employment of Saudis, and guarantees of protection against future regulations.

Another source with close links to many senior Saudis who have been jailed by MBS or are currently languishing under house arrest told The Daily Beast, “Saudi royals are very used to getting their own way. The vast majority of people in jail or under arrest are not threats to him; he simply cannot tolerate the prospect that they might disagree.”

The source points to the recent jailing of Loujain al-Hathloul, 31, the activist who spearheaded the successful campaign to allow women to drive. In December it was announced she was being sentenced to five years in jail. Her rap sheet? “Calling for change.”

The source says, “It’s just not credible that big American companies are going to ally themselves with a regime like that. They might get some bottom feeders. But companies with a public shareholding in the cancel culture? They are going to run a mile.”

Read more at The Daily Beast.

Get our top stories in your inbox every day. Sign up now!

Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.