The government of Crown Prince Mohammed bin Salman has spent billions to counter selloffs in recent months
Saudi Arabia’s government has been spending billions of dollars to quietly prop up its stock market and counter selloffs that have followed repeated political crises in recent months.
According to a Wall Street Journal analysis of trading data and interviews with multiple people with direct knowledge of government intervention efforts, the Saudi government has placed huge buy orders, often in the closing minutes of negative trading days, to boost the market.
The Saudi stock market is a pillar of Crown Prince Mohammed bin Salman’s plan to revamp his country’s economy. Since he ascended to a top leadership position three years ago, the de facto Saudi ruler and his deputies have faced a series of foreign-relations predicaments—most recently the October murder of columnist Jamal Khashoggi—that prompted investors to dump Saudi stocks.
The Saudi stock exchange normally discloses how much stock the government buys. The recent purchases after political crises have been concealed from public view. That is because the government, rather than buying stock directly, has routed its money through asset managers at Saudi financial institutions who run funds that don’t need to reveal their clients, those people say.
.. It is a strategy the kingdom used last year after it launched an economic blockade of Qatar, following the arrest and torture of prominent Saudis, a corruption crackdown that some inside the government called a political purge, and after Prince Mohammed detained Lebanon’s prime minister, the Journal found.
Through the upheaval, Prince Mohammed’s government has been keen to show the world that Saudi Arabia remains safe for foreign investors. “We need to highlight to the world that Saudi investment is good,” said a Saudi government official.
.. China and other developing countries have been intervening for years in their stock markets. The Saudi efforts stand apart because they’re geared to attract foreign investors to a market with little foreign ownership. Foreigners only own about 4% of stock on the Saudi market, where all of the companies are Saudi-based and many have some government ownership.
.. Antoine van Agtmael, who coined the term “emerging market” almost 40 years ago, and who now works as an adviser for publisher FP Group, said government intervention makes the Saudi stock exchange “more of a fake market, and that kind of undermines the trust of investors in the long run.”
.. Having a healthy stock market is especially important because the Saudi stock exchange, known as the Tadawul, will be included next year in global emerging-market indexes. That inclusion will result in billions of dollars of foreign capital entering the exchange, which currently has a market capitalization of around $500 billion.
.. To prop up the market, the government has bought stocks via its sovereign Public Investment Fund, or PIF, say people familiar with the matter. PIF has been Prince Mohammed’s main investment instrument at home and abroad, taking a high-profile stake in Uber Technologies Inc. and investing billions of dollars with SoftBank Group Corp.
.. When local share prices falter, one of these people says, Mr. Rumayyan tells deputies to start buying. They use the messaging program WhatsApp to contact managers at institutions including state-controlled NCB Capital Co. who manage PIF funds, this person says.
In the hours before and after journalist Jamal Khashoggi was killed inside the Saudi Consulate in Istanbul, Saudi Crown Prince Mohammed bin Salman and a senior aide who allegedly oversaw the assassination exchanged multiple messages, according to people familiar with the matter.
.. The CIA included the existence of the messages in its classified assessment that Mohammed is likely to have ordered Khashoggi’s death, a view that agency officials have shared with members of Congress and the White House.
.. Mohammed exchanged the messages on Oct. 2 with Saud al-Qahtani, one of his closest aides and a fierce public supporter who has kept a blacklist of those he deems disloyal to the kingdom.
.. Citing portions of the CIA’s written assessment, the Wall Street Journal first reported on Saturday that Mohammed had sent at least 11 messages to Qahtani before and after the killing.
.. The CIA has rated its assessment that Mohammed was involved in the killing at “medium-to-high confidence,” and privately, officials have said it is inconceivable that the prince, who exercises total authority over the government, could not have known about such an audacious operation. The Post had previously described officials as saying that the CIA had high confidence in its assessment... “They are a relationship that has mattered for 70 years across Republican and Democrat administrations alike,” said Pompeo, who previously served as the CIA director. “It remains an important relationship, and we’re aiming to keep that relationship with the Kingdom of Saudi Arabia.”.. Secretary of Defense Jim Mattis said the question of holding the killers responsible and the strategic importance of the U.S.-Saudi relationship were separate issues.
“Accountability for the murder of Khashoggi stands alone. It is distinct from any other factor going on,” Mattis said in remarks at the Reagan National Defense Forum in California.
.. Qahtani has emerged as a key player in the killing and a compelling link to the prince. He shows up in another portion of the CIA’s assessment: An alleged member of the Saudi hit team that U.S. and Turkish officials said Qahtani oversaw, Maher Mutreb, called Qahtani from inside the consulate to inform him Khashoggi was dead, The Post has previously reported. Mutreb, a security official who was often at the crown prince’s side, is seen on security camera footage entering and leaving the consulate on the day Khashoggi was killed.
.. The U.S. intelligence community also has intercepts of communications before Khashoggi was killed that show Mohammed had ordered an operation to lure him back to Saudi Arabia. Friends of Khashoggi’s have said that Qahtani called the journalist and raised the potential of his working for the crown prince if he would end his self-imposed exile in Virginia and return to his native country.
.. Communications that the United States intercepted in July show that Mohammed had asked senior Saudi intelligence officials about the status of a plan to lure Khashoggi back to Saudi Arabia, according to one intelligence official.
.. President Trump, who also has been briefed on the CIA’s findings, has been equivocal in assigning blame to the crown prince, who works closely with the president’s son-in-law and senior adviser Jared Kushner on Middle East issues.
“Maybe he did or maybe he didn’t!” Trump said in a statement last month, adding that the true culprits might never be known. The president has said that the strategic relationship with Saudi Arabia and the benefit to the U.S. economy from Saudi arms purchases are too important to rupture over the killing of Khashoggi, which he has condemned.
.. But the latest revelation of intelligence connecting Mohammed and his aide Qahtani to the killing may increase pressure on the administration to take more punitive steps.
.. Last week, in a rebuke of Saudi Arabia and the administration’s handling of the Khashoggi case, a majority of the Senate voted to advance a measure to end U.S. military support to Saudi Arabia for its war in Yemen against Iranian-backed militants.
In his interview with FOX News, President Trump said there was “no reason” for him to hear a tape recording purported to be of the killing of Saudi activist Jamal Khashoggi inside the kingdom’s Istanbul consulate last month … “We have the tape, I don’t want to hear the tape, no reason for me to hear the tape,” Trump said on “FOX News Sunday.” When Chris Wallace asked why he did not want to hear the recording, Trump said: “Because it’s a suffering tape, it’s a terrible tape. I’ve been fully briefed on it. There’s no reason for me to hear it.”
On Saturday, Trump vowed that his administration would “be having a very full report over the next two days, probably Monday or Tuesday.” It was unclear whether the document would be made public. The Washington Post and other outlets have reported that the CIA had concluded that Saudi Crown Prince Mohammed bin Salman ordered Khashoggi’s death. A U.S. government official told Fox News on Saturday that no final assessment or conclusion relating to the crown prince’s involvement had been reached, nor had a so-called “smoking gun” been found.
Trump told “FOX News Sunday” that the crown prince, known informally as “MbS,” had told him “maybe five times” that he had no involvement in Khashoggi’s death. When Wallace asked what Trump would do if he determines that the crown prince has lied to him, Trump said: “Will anybody really know?”– Reported by Samuel Chamberlain (@SChamberlainFOX on Twitter)
New York Times video detailing killing of Jamal Khashoggi
What rulers crave most is deniability. But with the murder of the Saudi journalist Jamal Khashoggi by his own government, the poisoning of former Russian spies living in the United Kingdom, and whispers that the head of Interpol, Meng Hongwei, may have been executed in China, the curtain has been slipping more than usual of late. In Riyadh, Moscow, and even Beijing, the political class is scrambling to cover up its lethal ways.
Andrew Jackson, was a cold-blooded murderer, slaveowner, and ethnic cleanser of native Americans. For Harry Truman, the atomic bombing of Hiroshima spared him the likely high cost of invading Japan. But the second atomic bombing, of Nagasaki, was utterly indefensible and took place through sheer bureaucratic momentum: the bombing apparently occurred without Truman’s explicit order.
.. Since 1947, the deniability of presidential murder has been facilitated by the CIA, which has served as a secret army (and sometime death squad) for American presidents. The CIA has been a party to murders and mayhem in all parts of the world, with almost no oversight or accountability for its countless assassinations. It is possible, though not definitively proved, that the CIA even assassinated UN Secretary-General Dag Hammarskjöld.
.. Many mass killings by presidents have involved the conventional military. Lyndon Johnson escalated US military intervention in Vietnam on the pretext of a North Vietnamese attack in the Gulf of Tonkin that never happened. Richard Nixon went further: by carpet-bombing Vietnam, Cambodia, and Laos, he sought to instill in the Soviet Union the fear that he was an irrational leader capable of anything. (Nixon’s willingness to implement his “madman theory” is perhaps the self-fulfilling proof of his madness.) In the end, the Johnson-Nixon American war in Indochina cost millions of innocent lives. There was never a true accounting, and perhaps the opposite: plenty of precedents for later mass killings by US forces.
.. The mass killings in Iraq under George W. Bush are of course better known, because the US-led war there was made for TV. A supposedly civilized country engaged in “shock and awe” to overthrow another country’s government on utterly false pretenses. Hundreds of thousands of Iraqi civilians died as a result.
Barack Obama was widely attacked by the right for being too soft, yet he, too, notched up quite a death toll. His administration repeatedly approved drone attacks that killed not only terrorists, but also innocents and US citizens who opposed America’s bloody wars in Muslim countries. He signed the presidential finding authorizing the CIA to cooperate with Saudi Arabia in overthrowing the Syrian government. That “covert” operation (hardly discussed in the polite pages of the New York Times) led to an ongoing civil war that has resulted in hundreds of thousands of civilian deaths and millions displaced from their homes. He used NATO airstrikes to overthrow Libya’s Muammar el-Qaddafi, resulting in a failed state and ongoing violence.
.. Under Trump, the US has abetted Saudi Arabia’s mass murder (including of children) in Yemen by selling it bombs and advanced weapons with almost no awareness, oversight, or accountability by the Congress or the public. Murder committed out of view of the media is almost no longer murder at all.
When the curtain slips, as with the Khashoggi killing, we briefly see the world as it is. A Washington Post columnist is lured to a brutal death and dismembered by America’s close “ally.” The American-Israeli-Saudi big lie that Iran is at the center of global terrorism, a claim refuted by the data, is briefly threatened by the embarrassing disclosure of Khashoggi’s grisly end. Crown Prince Mohammed bin Salman, who ostensibly ordered the operation, is put in charge of the “investigation” of the case; the Saudis duly cashier a few senior officials; and Trump, a master of non-stop lies, parrots official Saudi tall tales about a rogue operation.
A few government and business leaders have postponed visits to Saudi Arabia. The list of announced withdrawals from a glitzy investment conference is a who’s who of America’s military-industrial complex: top Wall Street bankers, CEOs of major media companies, and senior officials of military contractors, such as Airbus’s defense chief.
.. Political scientists should test the following hypothesis: countries led by presidents (as in the US) and non-constitutional monarchs (as in Saudi Arabia), rather than by parliaments and prime ministers, are especially vulnerable to murderous politics. Parliaments provide no guarantees of restraint, but one-man rule in foreign policy, as in the US and Saudi Arabia, almost guarantees massive bloodletting.
President Trump last year heralded nearly $110 billion in potential deals during a trip to Saudi Arabia in May 2017. Many defense analysts said that figure includes existing commitments and contracts that could last as long as 30 years.
.. “We continue to believe that the death of Jamal Khashoggi will not lead to a major break in U.S. or European defense sales to Saudi Arabia,” said Byron Callan at Capital Alpha LLC. Mr. Callan estimated that Saudi Arabia accounts for about 5% of sales at the big U.S. defense companies.
.. Saudi Arabia is the world’s third-largest defense market after the U.S. and China and the biggest export destination for U.S. contractors, which made more than $3 billion in sales to the kingdom last year
.. The biggest signed deal is a $10 billion purchase agreed in 2014 of hundreds of armored vehicles by a Canadian subsidiary of General Dynamics, which is continuing to make shipments.
.. The kingdom’s wealth and longstanding tensions with Iran led it to plan to purchase best-in-class capabilities such as Lockheed’s Thaad missile-defense system.
.. Saudi Arabia has also bought precision bombs and missiles
.. Defense executives were among prominent attendees lined up for the Future Investment Initiative conference in capital Riyadh next week. A number of executives from finance and industry have pulled out of the conference.
And if there are no serious consequences this time as well, even now that his moniker is said to stand for “Mr. Bone Saw,” what will M.B.S. do next?
The truth is that for decades, we have enabled Saudi Arabian misconduct, including the extremist education and terrorist financing that contributed to the 9/11 attacks. We stood by as Saudi Arabia seeded fanatical madrasas in places like West Africa, Pakistan and Indonesia, gravely destabilizing poor parts of the world.
Franklin Roosevelt supposedly once described a Nicaraguan dictator as “a son of a bitch, but he’s our son of a bitch,” and that may be how some Americans see M.B.S. But M.B.S. duped Americans. He talks a good game but didn’t deliver on his promise to buy $110 billion in weapons, didn’t back the Trump peace plan for the Middle East and hasn’t managed to take the Saudi oil company Aramco public.
His plans keep backfiring. His war in Yemen created new opportunities there for Al Qaeda, his confrontation with Qatar benefited Iran, his kidnapping of Lebanon’s prime minister left Hezbollah stronger than ever, and the alleged Khashoggi kidnap-murder is a gift to Saudi rivals in Turkey and Iran.
In short, the mad prince is not only barbaric, he’s also unreliable and incompetent. He doesn’t advance our interests; he damages them. Indeed, one of my fears is that he will try to drag us into a war with Iran.
Yet even as Saudi officials lie low, Trump has become the kingdom’s puppet and apologist, suggesting that “rogue killers” might have been responsible for the apparent murder. He dispatched Secretary of State Mike Pompeo for an unctuous mission to thank King Salman for his commitment to a “thorough” and “transparent” investigation.
Trump acts as if the Saudis have leverage over us. In fact, the Saudis desperately need us and our spare parts for their American-made aircraft. The Saudis haven’t even been able to defeat a rebel militia in Yemen, so they depend on us for their security — yet we squander our leverage.