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PARIS – Saudi Arabia injects $ 20 billion into a new investment fund managed by Blackstone Group on Wall Street. The French oil giant Total has signed a nine billion dollar petrochemical deal with the kingdom. The British defense company BAE Systems is currently selling 48 Typhoon fighter jets in Riyadh for an estimated GBP 5 billion.
Perhaps the world's biggest companies could talk about distancing themselves from Saudi Arabia, while dissident journalist Jamal Khashoggi was murdered. But as US and European leaders pull out of a conference on Saudi investment next week to avoid controversy, many companies are so invested that it is unlikely that they break ties or hinder future agreements with the oil-rich kingdom.
Businesses are still assessing the situation, which has rapidly evolved as President Trump increasingly acknowledges that the Saudi government may have played a role in Khashoggi's death. But aside from sanctions against Saudi Arabia or a radical change in the policies of the United States, Britain or other governments aimed at reducing political or commercial ties, big companies will not be ready to leave their relations with Riyadh.
"Saudi Arabia still has enormous wealth and a powerful cachet," said Bruce O. Riedel, former ex-president of the Government of Chile. analyst and expert on Saudi Arabia at the Brookings Institution. "It will remain a crucial economic player and can not be ignored. The question is whether business as usual will continue.
Companies do not always specify how much money they have raised through Saudi relations. But a review of the kingdom's overall spending on the military, infrastructure, oil, chemicals, technology and even recreation shows just how important Riyadh is to being ignored.
Over the past decade, Saudi Arabia has won $ 138.9 billion worth of military contracts under the United States military sales rules, according to the United States. Congressional Research Service. American companies such as Lockheed Martin, Raytheon and Boeing, not to mention Mr. Trump, are salivating the recent Saudi promises to buy nearly $ 110 billion worth of weapons in the years to come. Much of this commitment has not been fulfilled yet.
Companies like BAE and Thales of France have also made considerable profits, with European defense companies exporting 57 billion euros worth of weapons to Riyadh between 2001 and 2015, according to the Stockholm International Peace Research Institute. .
And that's just spending on weapons. Saudi Arabia has also distributed billions of fees to US and European banks for their advice on commercial transactions. The kingdom has bought about 20 billion US dollars products last year, including Ford autos and Boeing jets. Riyadh has also signed a $ 15 billion contract with General Electric for goods and services in areas such as power generation, mining and health care. And the oil giants can not leave one of the world's largest producers.
US start-ups have benefited from this scale, with Saudi Arabia becoming their largest source of capital last year. The Saudi Public Investment Fund recently invested $ 1 billion in Lucid, a competitor of the Elon Musk Tesla automobile company, and $ 3.5 billion in Uber.
Crown Prince Mohammed bin Salman has announced a $ 45 billion contribution to Japan's SoftBank Vision fund for technology investments to help modernize Saudi Arabia's oil-dependent economy by 2030.
The kingdom has signed contracts for futuristic buildings, AMC cinemas and luxurious French hotels as part of a $ 500 billion project for Neom, a modern city that will come out of the desert by 2025. Riyadh is studying nuclear energy deals to help it do everything ahead of the day when oil wells will dry up.
Western banks have been preparing for the chance to advise the Saudis on their transactions. According to Dealogic data, the kingdom has generated commissions of about $ 1.1 billion for banks since 2010 as part of various transactions, including mergers and acquisitions and the conclusion of loans and advances. obligations.
The biggest career is Saudi Aramco, the largest oil producer in the world, preparing to enter the public stock markets in anticipation of a $ 100 billion raise. The initial public offering is stalled, but two advisors, JPMorgan Chase and Morgan Stanley, are still working for Saudi Aramco, which is negotiating to acquire a majority stake in a Saudi chemicals company known as Sabic, according to people informed about it. .
Saudi Arabia has also poured billions of dollars into private equity firms so that they can make deals. The kingdom is committed to providing up to $ 20 billion to a $ 40 billion infrastructure investment fund managed by Blackstone, whose first agreement was finalized this year.
Although Stephen A. Schwarzman, co-founder and CEO of Blackstone, left the conference on Monday, the company does not intend to break ties with the kingdom.
"We have relationships with them, their institutions, over the decades," Jonathan D. Gray, president of Blackstone, told analysts on Thursday. "We see ourselves as responsible managers of long-term and responsible capital."
Laurence D. Fink, Managing Director of BlackRock, went a step further by explaining to CNBC that when he retired from the conference, his company, the largest asset manager in the world, would not retreat, even if the government ordered the assassination of Mr. Khashoggi.
Some companies have not even tried to stand out from the Saudis in the midst of Khashoggi's fury. A spokeswoman for BAE said in a statement that she would send several senior officials to the Saudi conference.
Separating from the Saudis would be difficult for a defense subcontractor, like BAE, which has 6,000 employees in the kingdom. The company relies on Saudi Arabia for at least 15% of its turnover, coming from both the sale of equipment such as Typhoon and maintenance contracts.
These sales are based on the British government's ties with the Saudi government, which have become more critical for Britain as it prepares to leave the European Union. Prime Minister Theresa May unblocked the BAE contract during Prince Mohammed's visit to London in the spring. She wants to attract any potential Saudi Aramco stock market to the UK Stock Exchange.
The situation is also critical for France, which has long-standing ties with Saudi Arabia and is the third largest foreign investor after the United States and the United Arab Emirates. France has sold 11 billion euros worth of weapons to the kingdom over the past decade and has recently approved licenses for additional sales of up to 14.7 billion euros. This does not represent 4 billion euros of French exports to the kingdom last year, and oil and chemical contracts of more than 20 billion euros signed in the last two years.
After President Emmanuel Macron welcomed Prince Mohammed to the Elysee Palace in April with a kiss on the cheek, the countries created the French-Saudi Business Council. It is headed by Mohammed bin Laden, founder of Saudi group Binladin and father of Osama bin Laden, to explore other French investments.
Despite its flashy spending, Saudi Arabia needs foreign money more than ever. Foreign direct investment in the kingdom hit its lowest level in 14 years: $ 1.7 billion last year, compared to $ 7.4 billion in 2016 and $ 12 billion in 2012 due to lower investment by multinationals , according to the United Nations. The economy has only recently emerged from a recession in the first quarter of this year, a slowdown caused by low oil prices.
Prince Mohammed sought to counter a capital flight by sequestering members of the Saudi royal family in November at the opulent Ritz-Carlton hotel in Riyadh – the same setting for next week's rally.
Even though the conference has sparked consternation, businesses still seem to set the stage for deals.
Although Thales chief executive Patrice Caine withdrew from the conference, the French company sent a subordinate that the Saudis would respect, and a spokesman, Cedric Leurquin, said that Thales had not changed its position concerning investments in Saudi Arabia. Although Mr Leurquin does not disclose sales figures for Saudi Arabia, Thales employs 700 people in the kingdom. It provides military equipment, missiles, electronic warfare systems and even high-security surveillance systems for Mecca and other holy places.
A week after Khashoggi's disappearance, Total, one of the largest oil and chemical groups in the world, has announced the creation of a joint venture with Saudi Aramco for a refinery and petrochemical complex in Jubail. Total has not responded to requests for comments.
"This is a very serious subject where you can not win," said Joe Kaeser, general manager of the German industrial giant Siemens, this week as he was trying to decide on his participation in the conference. The company received last year a large order of five gas turbines in Saudi Arabia and owns a gas turbine plant in its eastern province.
"If we do not communicate with countries where people are missing, I can stay at home," Kaeser said.
