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Checks and Balances

October 15, 2018

If power rejects the limits placed upon it, what next?

 

From 23 to 25 October this year, Riyadh in Saudi Arabia will be the host city for the Future Investment Initiative. Billed as a “Davos in the Desert” this meeting is intended to bring together a global forum of industrialists, politicians, power brokers and futurologists. The meeting includes sessions hosted by the big multinational management consultancy firms. It includes discussions on population, urbanisation, globalisation, finance, trade, technology, the relationship between governments and business, and ethics. 

 

Supported by the Saudi Arabian government under its Vision 2030 program, the conference is in part at least intended to support the goals of that vision. For the shipping markets, that includes the relevant “third pillar” of “transforming our unique strategic location into a global hub connecting three continents, Asia, Europe and Africa. Our geographic position between key global waterways, makes the Kingdom of Saudi Arabia an epicenter of trade and the gateway to the world.”

 

The Vision 2030 program includes a commitment to “immediately adopt wide-ranging transparency and accountability reforms and, through the body set up to measure the performance of government agencies, hold them accountable for any shortcomings. We will be transparent and open about our failures as well as our successes and will welcome ideas on how to improve.”

 

It is then unfortunate that the disappearance of the Saudi Arabian journalist Jamal Khashoggi following his visit to the Saudi consulate in Istanbul threatens to undermine the success of the Future Investment Initiative while damaging confidence in the ideals and goals of the Vision 2030 program.  

 

Journalists face extrajudicial measures in many countries around the world, as do citizens from many other walks of life. Governments find it easiest to turn a blind eye to measures against refugees and stateless people such as those from Africa or the Middle East trying to enter Europe, or Latin American children separated from their parents at US border crossings. It is apparently harder to sweep under the carpet the disappearance of a Washington Post correspondent. 

 

Perhaps this is why this become such a major international incident. The US President threatens “severe punishment” to his essential regional ally while the usually quiescent Europeans expect a “full and detailed” explanation from the Saudi government. Perhaps another reason is that Saudi Arabia is, as the Vision 2030 program makes clear, a vital strategic actor on the global stage as one of the three biggest oil producing nations and host of the two holiest shrines in Islam. 

 

While an investigation into Mr Khashoggi’s fate is ongoing, the Saudi Government has reminded its critics that “the kingdom’s economy has an influential and vital role in the global economy.” You might interpret that as a nod to rising oil prices amid all the uncertainty. 

 

The Saudis have not, to their credit perhaps, invited those without sin to cast the first stone. The incident nonetheless adds to the growing evidence that personal and business freedoms are not as sacrosanct as the liberal West would like to think. When the head of Interpol and famous actresses can be sequestered by the Chinese state, when retired spies can be targeted overseas for assassinations that kill innocent passers-by, when the Filipino president promotes the killing of suspected drug addicts, when central bankers can be called “crazy” by their own Presidents and when a British foreign secretary can insult his natural voter base with a comment like ”**** business” one might begin to suspect that the limits constitutions and conventions place on government action are looking a bit shaky. 

 

The Take Away

 

 There are consequences for business and in particular for our business. Oil prices have risen as traders sense an additional risk premium due to increased regional tensions in the Middle East. Any hint that Saudi oil supplies could be disrupted has consequences in the global energy markets, including energy shipping freight markets. There is a wider sense though that our personal and corporate safety and integrity are less secure than they might be. This can only add to the cost of doing business while undermining the vital relationship between business and government.

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