More Wall Street Executives Pull Out of Saudi Conference, but Mnuchin Plans to Attend

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Steven Mnuchin, Treasury secretary, at the Future Investment Initiative conference in Riyadh, Saudi Arabia, in 2017.CreditCreditFaisal Al Nasser/Reuters

By Alan Rappeport

Oct. 15, 2018

WASHINGTON — The disappearance of a Saudi dissident journalist has put Steven Mnuchin, the United States Treasury secretary, in an increasingly awkward position as he prepares to attend an investment conference in Riyadh next week.

Several top Wall Street executives have pulled out of participating in the summit meeting, known as Davos in the Desert, but a Treasury official said on Monday that Mr. Mnuchin still planned to attend. Mr. Mnuchin’s participation there is part of a six-country, weeklong swing through the Middle East that is focused on combating terrorist financing.

The trip is crucial to retaining good relations with Saudi Arabia as both countries try to work together to combat illicit financial activities in the Middle East that help fund terrorism. But Mr. Mnuchin is now wrestling with the economic and national security benefits of remaining in the Saudi government’s good stead with the risks of attending amid questions about the fate of the journalist, Jamal Khashoggi.

Mr. Khashoggi has not been seen since he entered the Saudi Consulate in Istanbul on Oct. 2. The Turkish authorities have alleged that Mr. Khashoggi was killed and dismembered by Saudi operatives. The Saudi government has denied any wrongdoing, and says Mr. Khashoggi left the consulate shortly after his arrival.

Mr. Mnuchin’s staff has been closely monitoring the situation and awaiting additional evidence about the fate of Mr. Khashoggi before making a final decision. However, the trip appeared more likely to move forward after President Trump buttressed Saudi denials that it was responsible for Mr. Khashoggi’s disappearance, suggesting that “rogue killers” could be to blame, and as he dispatched his secretary of state to meet with King Salman of Saudi Arabia.

On Monday, the chief executives of the Blackstone Group and BlackRock canceled plans to attend an investment conference in Saudi Arabia next week, joining Jamie Dimon of JPMorgan Chase as the latest Wall Street titans to pull back in the wake of the disappearance, and potential murder of Mr. Khashoggi.

Mr. Mnuchin’s decision to attend is prompting criticism, including from lawmakers like Senator Marco Rubio, the Florida Republican, who say the Treasury secretary’s participation will convey to the world that America approves of Saudi Arabia’s actions. As the top economic official from the United States, Mr. Mnuchin’s presence would send a significant signal about how America views human rights issues.

But the timing of the conference comes at a delicate moment of economic diplomacy, making the decision even more fraught.

The Treasury Department oversees the United States’ sanctions arsenal and Mr. Mnuchin has been aggressively urging American allies to step up pressure against Iran after Mr. Trump’s withdrawal from an international agreement signed in 2015 to curb its nuclear program. Saudi Arabia has been supportive of that decision, and its influence in the region is needed to help isolate Iran.

Another important factor is oil. Prices have been spiking this year and the prospect of higher fuel costs in the United States ahead of the November midterm elections is problematic for Republicans. Relations between Mr. Trump and the Saudis, whom he courted lavishly last year, have been strained in recent months after the president publicly pressured Saudi Arabia to ramp up oil production. Earlier this month, Mr. Trump raised eyebrows again when he suggested that Saudi Arabia should be spending more on defense.

Mr. Mnuchin in Riyadh in 2017.CreditAlan Rappeport

“We protect Saudi Arabia,” he said at a rally in Mississippi, adding that he told King Salman that he would not last two weeks without American military support.

For Mr. Mnuchin, the tension comes on the anniversary of one of his signature policy projects: the Terrorist Financing Targeting Center, which was unveiled in Riyadh on his trip last year as a multinational effort to combat illicit financial activities in the Middle East.

On that trip, Mr. Mnuchin was feted by Saudi Arabia’s finance minister, Mohammed al-Jadaan and the governor of the Saudi Arabian Monetary Authority, Ahmed al-Kholifey, in a gilded conference room at the Ritz-Carlton on the sidelines of the Future Investment Initiative.

At the conference, where chocolate truffles and cardamom coffee flowed freely, Mr. Mnuchin hailed the partnership with the Saudi government and said he looked forward to returning annually to ensure the center’s success.

Former Treasury officials were divided on the wisdom of Mr. Mnuchin traveling to Riyadh under the current circumstances.

Paul O’Neill, who served as Treasury secretary under President George W. Bush, said that the fact that Mike Pompeo, the secretary of state, was making his own trip to Saudi Arabia could give Mr. Mnuchin a graceful opportunity to bow out. He suggested that the conference itself would offer the secretary little value, since he has easy access to business executives from around the world.

“If it turns out that it’s true that they caused a journalist to be assassinated, I can’t imagine the secretary of the Treasury would go,” Mr. O’Neill said. “He is kind of a token now, in that if he pulls out, it will strengthen what the president has said, in terms of being upset with them.”

But making the trip could also be an opportunity for Mr. Mnuchin.

Elizabeth Rosenberg, a senior fellow at the Center for a New American Security, said that more engagement is crucial during fraught diplomatic times. One option, she said, is for Mr. Mnuchin to skip the investment conference and just pay a visit to the terrorist finance center. Or the secretary, who was planning to participate in a moderated discussion with Thomas Barrack, the founder of Colony Capital, could opt to give a speech addressing human rights.

“I think the U.S. Treasury secretary can still engage and not crush the credibility of the U.S. position of being a tough interlocutor,” said Ms. Rosenberg, who is a former senior adviser to the department’s Terrorist Financing and Financial Crimes division.

However, she added, it would be a dire mistake to attend the conference and avoid the human rights issue.

“It would be particularly awkward if all these people had pulled out and then he had nothing further to say other than just a desire to participate,” Ms. Rosenberg said.