When senior Saudi officials took the podium this week at the kingdom’s glitzy annual investment forum, there was barely a mention of the war unsettling the Middle East for more than a year now.
Instead, at the forum nicknamed “Davos of the Desert,” Gulf leaders sought to reassure the gathered foreign investors and policymakers that the conflicts in Gaza and Lebanon will not threaten business as usual with the region’s economic powerhouses.
While the Gulf has so far been spared direct involvement in the hostilities, there are fears that a further escalation could seriously impede the region’s plans to diversify its economies. The Gulf states worry that they cannot thrive in a region marked by persistent conflict, especially one that threatens to engulf Iran — the state backing many of the groups now fighting Israel.
Khalid Al-Falih, the Saudi investment minister, only obliquely referred to the war when he addressed the conference on Tuesday, mentioning human suffering and disruptions to shipping in the Red Sea. But “the tailwinds are much stronger than the headwinds,” he said of the Gulf’s economic prospects.
Saudi Arabia, under the leadership of Crown Prince Mohammed bin Salman, has set out in recent years to diversify its economy away from near-total reliance on oil, knowing that even its vast resources are finite. At the same time, the crown prince has loosened the country’s tight social and cultural strictures.
And a few years before the latest war broke out with the Oct. 7, 2023 Hamas attack on Israel, the United Arab Emirates normalized relations with Israel — a move that many observers saw as motivated, at least in part, by the desire to remove obstacles from the path toward economic development in the Gulf.
Saudi Arabia appeared to be on course to do the same in the period leading up to the outbreak of war, but the hostilities halted that progress, at least for now.
“Notwithstanding the regional war ensuing, the Gulf political elites, in particular in Saudi Arabia, need to project that they are open for business,” said Aziz Alghashian, director of research at the Observer Research Foundation Middle East, a think tank.
“Restructuring the economy is not a matter of preference or desire, but the Saudis are considering the restructuring of the economy as an existential matter,” he added. “They need to make sure regional turmoil does not hinder these economic ambitions.”
The Gulf nations realize that they cannot pursue their ambitious national development plans without the West, which in turn recognizes them, particularly Saudi Arabia, as vital partners, despite qualms about their human rights records. Two years after vowing to treat the kingdom as a “pariah” following the murder of the dissident journalist Jamal Khashoggi, President Biden paid a cordial visit there in 2022, a tacit concession that Saudi Arabia is too important to shun.
The 3-day Future Investment Initiative (FII) forum, the flagship Saudi economic conference now underway, draws thousands of businesspeople every year who appeal to Saudi investors for start-up capital, advisory work or other sources of funding and employment.
This year, David M. Solomon, the chief executive of Goldman Sachs, and Larry Fink, the chief executive of BlackRock, are among the featured speakers.
The attendees gathered at the lavish Ritz Carlton hotel in the Saudi capital, Riyadh, its grand marble lobby adorned with elaborate chandeliers. It is the same hotel that was converted, temporarily, into a 5-star prison in 2017 when more than 200 wealthy Saudis, including members of the royal family, were detained in what the government called an anti-corruption campaign.
The opening ceremony of the forum featured a spectacular light show and performances by opera singers flown in from South Africa.
The conference began on Tuesday with a keynote address from Yasir Al-Rumayyan, who oversees the $925 billion Saudi sovereign wealth fund. The next high-profile Saudi speaker was Prince Abdulaziz bin Salman, the kingdom’s energy minister. Neither mentioned the regional war nor the Israel-Palestinian conflict directly in their speeches.
Saudi Arabia, the de facto leader of the oil-producing countries of OPEC, is trying to manage the market at a difficult time when oil prices have fallen well below the figure needed to balance the government budget.
Some foreign investors in the past were hesitant to do business with Saudi Arabia because laws governing business did not align with international standards. But in August, the kingdom made efforts to address those qualms with legal reforms that put foreign and local investors on equal footing and with changes to labor laws to address dispute resolution procedures.
While Gulf states Saudi Arabia, the United Arab Emirates and Bahrain have all worked to improve relations with their longtime rival Iran, they still depend heavily on the United States for security and defense.
Bader Al-Saif, an assistant history professor at Kuwait University, said that the Gulf states have been forced to contend with their limited power and influence despite having shouldered diplomatic and humanitarian efforts regarding the war on Gaza. The tiny, energy-rich Gulf emirate of Qatar, in particular, has been a leading force in diplomacy to try to end the war.
“We know our limits,” Mr. Al-Saif said.
The region’s rulers, said Anna Jacobs, a senior Gulf analyst for the International Crisis Group, aim to present the Gulf to the world as “a bustling hub for business, tourism, technology, innovation, sports, fashion, you name it.”.
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