According to a former senior diplomat in the Obama administration, the actions of the Saudi crown prince in the murder of journalist Jamal Khashoggi may have exposed the kingdom’s sovereign wealth fund to repercussions.
The government of Biden released a previously classified intelligence report on Friday in which Mohammed bin Salman of Saudi Arabia approved the plan to assassinate Khashoggi in 2018.
The Saudi sovereign wealth fund, known as the Public Investment Fund, is managed by MBS. It appears to have played a role in the purchase of the plane that took Khashoggi’s murderer to Turkey, where the murder took place.
“If so, it could become a target for US human rights sanctions,” said Joel Rubin, former deputy assistant secretary of state. That, in turn, could “cause an economic earthquake,” he said.
“If the United States determines that Khashoggi’s murder was a targeted human rights violation, the perpetrators and supporters of that murder could be sanctioned under the Magnitsky Act,” said Rubin.
The Global Magnitsky Human Rights Accountability Act gives the President the power to impose economic sanctions, freeze U.S. assets, and refuse entry to the U.S. for foreigners who have committed human rights abuses or corruption, while Americans are prohibited from doing business with him or her . Magnitsky Law was used against Russian President Vladimir Putin’s cronies. Putin called it “a purely political, unfriendly act.”
Shortly after the secret service report was published on Friday, Foreign Minister Antony Blinken announced that the US had banned 76 people from Saudi Arabia. He called it the “Khashoggi Ban”. Blinken added that the US will not tolerate anyone who threatens or assaults activists, dissidents and journalists on behalf of foreign governments. However, no direct action has been taken against MBS.
The Saudi government rejected the results of the US report.
SWFs are widespread in oil-rich countries. They provide a haven where countries can store considerable wealth and keep that money in a self-controlled suitcase.
Funds such as the MBS-led Public Investment Fund help protect countries from oil price shocks that affect their annual budgetary positions while also making the country resilient to external financial pressures. The Public Investment Fund has assets of more than $ 360 billion and is the eighth largest sovereign wealth fund in the world by total assets.
“The Saudi fund, almost five decades old, is massive and guarantees the kingdom long-term financial stability,” said Rubin. “But it can also be a target for abuse, mismanagement and corruption.”
In 2018, NBC News learned that the CIA concluded that MBS was commanding the hit squad who lured Khashoggi to the Saudi consulate in Istanbul, killed him and cut his body into pieces.
MBS is the heir to the Saudi crown. Rubin told CNBC that his domestic critics will see the public investment fund’s exposure to potential sanctions as another sign of his ruthlessness and willingness to both risk Saudi assets and put the country in international crosshairs for his personal agenda.
“The international private sector, which initially avoided Saudi Arabia after the assassination of Khashoggi, will see this as another setback for public relations work in engagements with Saudi Arabia,” said Rubin. “It could also open the fund to increased controls, lawsuits and legislative action against the fund’s activities from both overseas and Saudi Arabia.”
Michael O’Hanlon, a senior fellow at the Brookings Institute, told CNBC’s The News with Shepard Smith that President Joe Biden would not make Saudi Arabia a “pariah” as it would mean US economic and military ties to interrupt the Saudis.
Even so, Biden said in 2019, “We wanted to actually get them to pay the price and actually make them the pariah for who they are.”