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As leaders in international finance descended in Riyadh for Saudi Arabia’s flagship investment conference, the conversation veered from the future of the global economy to developments in artificial intelligence.
There was limited public discussions of the theme that has dominated the Middle East for more than two weeks — the devastating conflict between Israel and Hamas.
The message that the kingdom and Crown Prince Mohammed bin Salman hoped to send as it hosted it annual “Davos in the Desert” conference was clear: it remained open for investment and it was business as usual.
“The humanitarian situation [in Gaza] is very, very sad, but they [Saudi Arabia] don’t want to be diverted,” said one participant familiar with the government’s thinking.
As thousands of delegates, who paid $15,000 to attend the glitzy gathering, packed into the Ritz-Carlton hotel, drones filming the spectacle hummed under the Arabesque domes of the hotel’s conference centre.
“This is where the finance community gathers once a year, so if you’re in finance, you want to be here,” said George Osborne, a former UK chancellor of the exchequer and founding partner of investment firm 9Yards Capital.
But in panel talks by business leaders such as BlackRock’s Larry Fink and JPMorgan chief executive Jamie Dimon, the war between Israel and Hamas received only passing mention.
“It’s completely separate,” one senior banker said of the escalating conflict. “That’s one thing, and this is another.”
In a sign that the kingdom did not want the Israel-Hamas war to overshadow its annual showpiece event, government officials were avoiding interviews, said two people familiar with Riyadh’s thinking.
Yet despite the upbeat mood at Tuesday’s conference, the Israel-Hamas war is likely to have significant repercussions for Saudi Arabia as it pushes ahead with grand plans to develop the kingdom and diversify its economy.
Riyadh has already put on hold talks with the US and Israel for a three-way deal to normalise relations with the Jewish state in return for a US security pact.
If the Israel-Hamas war escalates into a broader regional conflict, it would trigger turmoil across the Middle East, drawing in Iranian-backed militants and reversing the regional stability the kingdom desperately needs to plough ahead with the myriad megaprojects it is spending tens of billions dollars on.
One of the biggest risks to Saudi Arabia would be a resumption of its conflict with Iran-aligned Houthi rebels fighting in Yemen’s civil war. The kingdom led an Arab coalition that intervened in 2015 to fight the rebels, but Prince Mohammed has sought to extricate the country from the war as he focuses on his domestic projects, and a truce has held for 18 months.
In March, Riyadh struck a deal to re-establish diplomatic relations with Tehran as it sought to de-escalate tensions with its arch rival.
But tensions have soared since Hamas’s deadly October 7 attack on Israel killed more than 1,400 people, according to Israeli officials. Israel responded by bombarding and laying siege to Gaza, the coastal strip controlled by Hamas. More than 5,700 people have killed in Gaza, local health authorities said.
Saudi Arabia has worked diplomatically as part of efforts to ensure the war does not spread, according to government statements. Prince Mohammed held a call this month with Iranian president Ebrahim Raisi, the first between the leaders of the two regional heavyweights in years.
On Tuesday Prince Mohammed spoke with US president Joe Biden, according to the White House. “The two leaders agreed on pursuing broader diplomatic efforts to maintain stability across the [Middle East] region and prevent the [Israel-Hamas] conflict from expanding,” the White House said in a statement.
But at the investment conference, concerns about the risk of regional conflict were left on the sidelines. Indeed, for the 6,000 delegates, the lure of Saudi Arabia’s financial muscle held sway over geopolitical turmoil.
Investment managers and technology bosses, who have come to view the oil-rich Middle East as one of the last remaining centres of steady financing, put aside personal politics in the pursuit of asset allocations for hedge funds and private equity deals.
One reason the delegates appeared sanguine was that many felt the war was merely the latest conflict to challenge the global economy.
Fink drew a parallel with the war in Ukraine that has hung over the global economy since Russia’s invasion early last year.
“In most of my travels in the last two weeks, the word ‘Ukraine’ was never uttered,” the BlackRock chief said during a panel discussion. “The situation in Gaza and Israel, we’re watching it . . . we’ve got to see what’s going on.”
Another person familiar with the government’s thinking said: “We’ve had wave upon wave of shocks which are crashing over the global economy. The Gaza war is terrible humanitarian crisis that needs addressing, but in the final analysis it’s another shock.”
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