Saudis reject threats as stocks plunge after Trump comments

Saudi Arabia warned yesterday it will respond to any “threats” against it as its stock market plunged following President Donald Trump’s warning of “severe punishment” over the disappearance of Washington Post contributor Jamal Khashoggi.

Trump made a point of visiting the kingdom on his first overseas trip as president and has touted arms sales to Saudi Arabia. But both the White House and the kingdom are under mounting pressure as concern grows over the fate of the veteran journalist, who hasn’t been seen since he entered the Saudi Consulate in Istanbul on Oct. 2.

Already, international business leaders are pulling out of the kingdom’s upcoming investment forum, a high-profile event known as “Davos in the Desert.”

“The kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures or repeating false accusations,” the statement published by the state-run Saudi Press Agency read. “The kingdom also affirms that if it receives any action, it will respond with greater action, and that the kingdom’s economy has an influential and vital role in the global economy.”

The statement from the world’s top oil exporter came after the Tadawul exchange in Riyadh dropped by 7 percent at one point during the week’s first day of trading, with 182 of its 186 listed stocks showing losses by the early afternoon. The market clawed back some of the losses, closing down 3.5 percent for the day.

Turkish officials say they fear Saudi agents killed and dismembered Khashoggi after he entered the consulate, saying they have audio and video recordings of it that they have not released. The kingdom has called the allegations “baseless,” but has offered no evidence the writer ever left the consulate.

Trump told CBS’ “60 Minutes” that the consequences of Saudi Arabia being involved would be “severe.” “There’s something really terrible and disgusting about that, if that was the case, so we’re going to have to see,” Trump said. “We’re going to get to the bottom of it and there will be severe punishment.” However, Trump in the same interview said: “As of this moment, they deny it and they deny it vehemently. Could it be them? Yes.”

Other stock exchanges in the Mideast saw far less volatility yesterday. U.S. markets have been rattled by rising interest rates, signs of a slowdown in the global economy and the U.S.-China trade dispute.

Saudi Crown Prince Mohammed bin Salman has aggressively pitched the kingdom as a destination for foreign investment. But Khashoggi’s disappearance, and suspicions he may have been targeted over his criticism of the crown prince, have led several business leaders and media outlets to back out of an upcoming high-profile investment conference in Riyadh.

Trump also said “we would be punishing ourselves” by canceling arms sales to Saudi Arabia, which his administration touted on his first overseas trip. The sale is a “tremendous order for our companies,” and if the kingdom doesn’t buy its weaponry from the United States, they will buy it from others, he said. Trump said he would meet with Khashoggi’s family.

American lawmakers in both parties have been more critical of Saudi Arabia, with several suggesting officials in the kingdom could be sanctioned if they were found to be involved in Khashoggi’s disappearance and alleged killing.

Khashoggi, who was considered close to the Saudi royal family, had become a critic of the current government and Prince Mohammed, the 33-year-old heir apparent who has shown little tolerance for criticism.

As a contributor to the Post, Khashoggi has written extensively about Saudi Arabia, including criticism of its war in Yemen, its recent diplomatic spat with Canada and its arrest of women’s rights activists after the lifting of a ban on women driving.

Those policies are all seen as initiatives of the crown prince, who has also presided over a roundup of activists and businessmen.

Trump has repeatedly criticized Saudi Arabia and King Salman over rising global oil prices. Benchmark Brent crude now trades above $80 a barrel and U.S. gasoline prices have risen ahead of the midterm elections.

Earlier this month, Trump suggested Saudi Arabia’s king “might not be there for two weeks” without U.S. military support. Jon Gambrell, Dubai, AP