DENIAL IN THE DESERT: SAUDI ARABIA’S INVESTMENT CONFERENCE

What a difference a year (and the murky murder of a journalist) makes. When Saudi Arabia hosted its first Future Investment Initiative last fall, it was a coming-out party for Crown Prince Mohammed bin Salman’s ambitious vision of economic and social reform. This year, the event (known to the WEF’s chagrin as “Davos in the Desert”) is overshadowed by ongoing furor about the killing of Jamal Khashoggi.  As a result, a number of participants have pulled out – but not all.


Here’s a look who’s going, not going, and on the fence – and why:

ATTENDING

Imran Khan: Pakistan’s prime minister desperately needs foreign financing to help solve mounting economic challenges at home, and Khan hopes Riyadh – which has always seen Pakistan as a strategic ally in South Asia  – will give him money with softer conditions than the IMF, with whom Pakistan is currently negotiating.

Chinese business leaders: Not exactly a paragon of the free press itself, China has stayed mostly quiet on the Khashoggi affair. But Beijing is also all business: China is Saudi Arabia’s largest trading partner, and the kingdom remains a good oil “hedge” for China as pressure on Iran ramps up. Furthermore, China is probably keen to profit from any downgrade in the kingdom’s relations with the West over the Khashoggi affair.

Russia’s investment chief and a 30-person delegation: No one loves to court jilted American allies in the Middle East more than Russia. Moscow has stayed out of the Khashoggi fray and is quietly hoping that the scandal does erode Washington’s ties to the kingdom, not least in the area of arms sales which Russia would love to make to Riyadh. Russia is also eager to take part, along with China, in the lucrative IPO of Saudi’s state-backed oil giant, Saudi Aramco.

NOT ATTENDING

US business leaders: Top US finance and tech CEOs are shunning the event because of the potential PR blowback. But will US firms actually stop taking tens of billions in investments from – or positions in – Saudi Arabia? The fact they’re still sending lower-level representatives suggests Prince Mohammed may be able to weather this storm yet.

Steve Mnuchin: Facing bipartisan pressure from Congress, the White House cancelled US Treasury Secretary Mnuchin’s attendance at the conference (he was to give the keynote.) But… yesterday Mnuchin nonetheless traveled to Riyadh and met with the crown prince to discuss other aspects of US-Saudi

cooperation.

MAYBE ATTENDING

Masayoshi Son: Perhaps no one has more to lose from the recent Saudi spiral than Masayoshi Son, the world’s biggest tech investor. The kingdom is the biggest backer of Son’s Vision Fund, which has heavy stakes in startups like Uber, WeWork, and Slack. A last-minute decision to back out could prove an early sign that the tech sector, which has had its share of politically-motivated problems of late, is truly starting to sour on Saudi.

 

Today, Brazil's President Jair Bolsonaro will visit the White House for the first time. Bolsonaro is a right-wing firebrand whose unlikely rise, disparaging views on minorities, shrewd use of social media, and combative relationship with the press have led some to call him a "Tropical Trump."

But how useful is that label? What's Bolsonaro after at the White House? And why has the Brazilian president recently asked the what a "golden shower" is?

To learn more, we sat down with Roberto Simon, a veteran Brazilian journalist who is now Senior Director of Policy at the Council of the Americas, and politics editor at Americas Quarterly the Council's (excellent) magazine on Latin America.

You can watch the whole interview by clicking here. But here are a few highlights to keep in mind ahead of today's meeting:

Bolsonaro's visit to the White House aims to accomplish a few things: First, to bolster his street credibility with his rightwing base at home, who admire Trump; second, to draw closer to Trump on a way to resolve the crisis in Venezuela, which has caused a politically volatile situation on the Brazilian border; and third, to secure closer military ties with Washington.

Like Trump, Bolsonaro was an outsider candidate with sharply anti-progressive views who defied the pundits by winning. But there are big differences too. For one thing, Bolsonaro counts on just a small party in a fractious legislature -- he has nothing like the Republican party support that Trump enjoys in the Senate. What's more, Trump-style anti-globalization rhetoric doesn't play nearly as well in a country where globalization has lifted tens of millions out of poverty. Here are some more thoughts from us on the differences between the two men.

And lastly, the context for that famous Bolsonaro's "golden shower" tweet is a raging culture war between the right and left in Brazil that threatens to overshadow key economic priorities like reforming the country's unsustainable pension system.

Again, full interview is here.

President Donald Trump has made no secret of his disdain for China, and Brazilian President Jair Bolsonaro has followed suit. But when it comes to revising their relationships with Beijing, Mr. Bolsonaro has to play a lot more carefully than Trump. After all, Brazil's economy depends a lot on Chinese trade and investment, and Brazilians' views of the Asian giant are, like those of their American counterparts, generally more favorable than their president's.

Yesterday, Russian President Vladimir Putin touched down in Crimea to celebrate five years since Moscow seized the peninsula from Ukraine. Later this week, Chinese President Xi Jinping will travel to Europe, where Italy is expected to sign on to Beijing's trillion-dollar Belt and Road global infrastructure plan.

Our thought bubble: Each of these visits speaks to a different way that the world order – once dominated, for better or for worse, by the Euro-Atlantic "west" – is now rapidly shifting.

Russia tearing things down: Back in 2014, President Putin justified the annexation of Crimea by rattling off 20 years worth of grievances with the West, finishing with this warning: "if you compress a spring to its limit, it will snap back hard." Russia in the years since has been in snapback mode – keen to defend what it sees Moscow's sphere of influence (Ukraine), force the US to reckon with Moscow as a global player again (Syria), and to accelerate the political fragmentation of the West along nationalist/populist lines (using its cyber capacity to exacerbate underlying social and political polarization in Europe and the US).

China building things up: But where Russia is concerned primarily with accelerating the decline of an old order, China is looking to create a new one of its own – building new China-run global financial structures, exporting Chinese technological standards and norms, particularly in the development of 5G, and broadening economic and trade relationships left to languish by a less trade-friendly US. Critics worry that Chinese loans will create debt traps, or that Chinese technology companies will muscle out Western competitors while creating national security liabilities. But dozens of countries are eager to tap into lavish Chinese financing for much-needed infrastructure, and to gain better access to that billion-strong export market.

The Belt and Road initiative, which already includes some 80 countries, is a centerpiece of President Xi Jinping's plan for China to "take center stage in the world." Until now, the that strategy has focused primarily on Africa, Asia, Latin America, and smaller countries on Europe's fringes – but if Italy signs on, it would be the first G7 country to join. That would mark a major new milestone in Beijing's global rise.

The big picture: US President Donald Trump has certainly upended long-standing assumptions about American support for a certain kind of global order. But that's only part of a much larger story in which a rising China and a rankled Russia are challenging and remaking the international landscape. In sum: it ain't all Trump.

WHAT WE ARE WATCHING

Unkillable Brexit? – Another wrench in the works for Brexit. The UK House of Commons speaker ruled late yesterday that Prime Minister Theresa May can't hold a third "meaningful vote" on her twice-defeated Brexit deal unless significant changes are made to it. Ms. Ma1y is traveling to Brussels later this week to see if she can win more time for negotiations, but even if she can, it's not clear she'd be able to get significant enough concessions from the EU to allow for another vote (let alone one that would go her way).And so the once-remote chances of a second referendum are growing by the day…

A President Stuck on a Train – To show he's a man of the people ahead of national elections in May, South Africa's President Cyril Ramaphosa boarded a commuter train to mingle with passengers. But thanks in part to the embattled national railway and the decrepit infrastructure on which it relies, a 30-mile journey scheduled to last 45 minutes took nearly four hours. "It is unacceptable," Ramaphosa warned as his long journey ended. Things will improve or "heads will roll." Train delays are a daily source of public fury in South Africa, where late workers sometimes lose their jobs, and this is a chance for Ramaphosa to build much-needed public credibility—if he can make things better.

WHAT THEY ARE IGNORING

We usually ignore things on your behalf, but this week we spotlight a few important things that others are notably tuning out.

Protesters vs Algerian Government Reshuffle – Protesters in Algeria are evidently unmoved by the government's decision to scrap ailing President Abdelaziz Bouteflika's candidacy for a fifth consecutive term. Last Friday, even after that concession was announced, the country saw the largest protests in memory. While Bouteflika's withdrawal from the election was the initial demand of the protesters, they now worry the government will simply reshuffle an opaque power structure dominated by the military without addressing big problems of corruption and lack of economic opportunity. And they are probably right.

Muslim Leaders vs Chinese Abuse of Muslims – The leaders of some of the largest majority-Muslim nations on earth have mostly said nothing about growing evidence that China's government is systematically repressing ethnic-Uighur Muslims in the Western province of Xinjiang. Recently in Beijing, Saudi Crown Prince Mohamed bin Salman said China has the "right" to do what it likes within its borders. President Joko Widodo of Indonesia, the world's largest majority Muslim nation, has also avoided criticizing China. Evidently, the need to court Chinese investment and support surpasses their concern for their coreligionists. The only major Muslim leader who has spoken out is Turkey's Recep Tayyip Erdogan, who is staking his own claim to regional power and leadership of the broader Muslim world.