RIYADH — Since Saudi Arabia and Russia agreed to slash oil production this month, President Biden and other U.S. officials have been in an uproar. But among the American business leaders attending the kingdom’s annual investment conference this week, there was plenty of sympathy for the Saudi point of view.
The Oct. 5 decision by the OPEC Plus cartel to sharply reduce output initially sent energy prices higher, and the Biden administration accused the Saudi leadership of siding with Russia — which profited from the cut — in its war on Ukraine. The Saudi government clapped back publicly, saying it was trying to keep prices stable amid fears of a looming global recession and to conserve for an uncertain winter so supplies wouldn’t run short.
“The Saudis understand the oil market better than anybody else in the world,” John Quinn, chairman of the Los Angeles-based law firm Quinn Emanuel Urquhart & Sullivan, said in an interview at the conference in the Saudi capital, Riyadh. “I think you have to take them seriously on the merits when they say we sense a declining demand, we need a stable market.”
Mr. Quinn went on to say his own country’s position made far less sense: “What’s the U.S. argument? We asked you to do it and you didn’t do it?”
The corporate attitude toward Saudi Arabia is laced with self-interest: The conference, nicknamed Davos in the Desert, is a place where thousands of businesspeople gather annually to shake hands with powerful Saudi investors in hopes of winning start-up capital, advisory work or new employment.
The world’s largest crude exporter, Saudi Arabia is flush with funds, and many are willing to turn a blind eye to its less palatable side, whether that involves friendly foreign alliances with the likes of President Vladimir V. Putin of Russia or human rights violations.
During the three days of meetings and deal-making, overshadowed by the breakdown in the typically cordial relations between the United States and Saudi Arabia, guests snacked on oregano-flavored popcorn, sunk their feet into artificial grass, shared takes on the energy crisis and gushed over Saudi-funded megaprojects like the construction of a 100 mile-long linear city in the desert.
Mr. Quinn, like many of the executives at the conference, does business with Saudi Arabia. His firm represents professional golfers playing for the Saudi-backed LIV Golf tour in an antitrust suit they have filed against the PGA Tour.
He and other business leaders took pains to either defend the kingdom, criticize U.S. officials or both. Some echoed the rationale of conserving production capacity offered by the Saudi energy minister.
Others said the kingdom could hardly be expected to do the United States a favor after being snubbed repeatedly by Mr. Biden, who called Saudi Arabia a “pariah” on the campaign trail in 2019 and threatened to dole out “consequences” for this month’s production cut.
When asked last week whether it was appropriate for U.S. companies to do business in Saudi Arabia, the White House press secretary, Karine Jean-Pierre, noted the reputational risk of investing in countries that made bad policy choices.
But the conference crowd’s skepticism toward Mr. Biden’s tough stance on the kingdom underscores the degree to which, according to some American executives, his administration is out of step with the realpolitik of U.S.-Saudi relations, which plays out daily in the business world.
Former President Donald J. Trump is often criticized for his transactional approach to foreign allies. But his philosophy matched neatly with that of Saudi Arabia’s de facto leader, Crown Prince Mohammed bin Salman, who unveiled an ambitious economic diversification plan that hinged on international investment partnerships the year before Mr. Trump took office.
Now, that bilateral relationship is defined as much by executives like Jamie Dimon, JPMorgan Chase’s chief executive and Steven Mnuchin, the former Treasury secretary who is now a private investor with $1 billion in financing from the Saudi sovereign wealth fund — as it is by the White House or the State Department, which have not had an ambassador in Riyadh since Mr. Biden took office nearly two years ago.
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Helima Croft, an American commodity strategist at the Canadian bank RBC Capital Markets, said she saw a disconnect between how people looking at the markets and Washington viewed the production cut.
“I almost see two very different conversations,” she said.
The annual Saudi conference, formally known as the Future Investment Initiative, has become a magnet for business leaders, drawing more than 5,000 attendees this year alone. They have not been deterred by U.S. intelligence assessments showing Prince Mohammed likely approved the murder of the Saudi dissident journalist Jamal Khashoggi by Saudi agents in 2018, or by other controversies that have swirled around the authoritarian leaders of the country.
Despite the geopolitical tensions, a sense of bonhomie reigned at the gathering in a luxury Riyadh hotel compound. Along the gilded corridors of the conference center, U.S. executives mingled with cryptocurrency billionaires, California venture capitalists, Russian businesswomen, Chinese state news correspondents and Saudi royals.
The former U.S. energy secretary Rick Perry, now a director at a U.S. company that is working with Saudi Aramco, the national oil company, put his arm around an Australian mining executive in the lunch hall.
Eric Cantor, once the majority leader of the House of Representatives, chatted with his current boss, the investment banker Ken Moelis, near a crowded coffee stand sponsored by the Public Investment Fund — the Saudi sovereign wealth fund that oversees more than $600 billion and has invested abroad in companies like Uber. Mr. Moelis has done so much advisory work for the kingdom that he’s jokingly referred to in financial circles as “Ken of Arabia.”
Onstage in panel discussions and off, American executives raised concerns about U.S. leadership. Mr. Dimon, whose firm recently underwrote a Public Investment Fund bond offering, said that U.S. officials needed to move away from the “my way or the highway mentality” and “ugly American leadership.”
Jeff Schachter, who runs a hedge fund in Lakewood, N.J. and invests in the kingdom, called the lack of a U.S. ambassador to Saudi Arabia “one of the greatest signs of disrespect that Americans could show.”
Mr. Trump’s son-in-law, Jared Kushner, who was a senior adviser to the president on the Gulf region and now runs an investment firm with $2 billion in financing from the Public Investment Fund, was among those who attended.
“You’re going to see over the next decade a lot of progress and growth coming from this part of the world,” he said from the dais on Tuesday.
And as usual, there were deals to be made.
On Wednesday, Prince Mohammed announced that the Saudi sovereign wealth fund would establish five companies targeting up to $24 billion of investment in Bahrain, Iraq, Jordan, Oman and Sudan. The chief executive of Saudi Aramco, the national oil company, said the firm’s venture capital arm would launch a $1.5 billion fund investing in start-ups that address climate change.
To many, it appeared that Saudi Arabia — now more than six years into a dizzying overhaul led by Prince Mohammed to open the economy, loosen social restrictions and tighten political repression — was feeling increasingly emboldened.
“The overall message is, ‘Saudi first,’” said Kristin Diwan, senior resident scholar at the Arab Gulf States Institute in Washington. “They’re feeling confident,” she added.
“Saudi Arabia has changed profoundly in the past 10 years,” she said. “It’s in the midst of an assertive nationalism and their foreign policy reflects that.”
Like their American guests, Saudi officials and executives were unsparing in their critiques of Mr. Biden and his ire over the oil-production cuts. They argued that the White House’s assertions that they had promised output hikes in advance of the president’s visit to Jeddah in July were false.
The U.S. midterm elections on Nov. 8, in which gasoline prices have become a wedge issue, made them feel like a scapegoat for Mr. Biden and his fractured Democratic party, they said.
“Pointing the finger and saying it’s someone else who’s done this and gasoline prices came up because of them, that’s all political convenience,” said Sadad al-Husseini, a longtime oilman and former executive at Saudi Aramco.
The Saudi energy minister, Prince Abdulaziz bin Salman, pointed out that after all, he and his superiors had a country to run — and it was not the United States.
“I keep listening to, ‘Are you with us or against us?’” Prince Abdulaziz said onstage on Tuesday. “Is there any room for, ‘We are for Saudi Arabia and the people of Saudi Arabia?’”
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