Business

Mnuchin to Decide by Friday Whether to Cancel on Saudi Conference

Posted October 15, 2018 7:55 p.m. EDT
Updated October 15, 2018 8:01 p.m. EDT

FILE -- Stephen Schwarzman, the chairman and chief executive of Blackstone, at the private equity firm's headquarters in New York, April 17, 2013. Schwarzman and the chief executive of BlackRock have canceled plans to attend an investment conference in Saudi Arabia in October 2018, people with direct knowledge of the matter said, 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 a prominent Saudi journalist. (Todd Heisler/The New York Times)

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

Several top Wall Street executives have pulled out of the meeting, but as of Monday, Mnuchin still planned to attend. President Donald Trump, speaking at an event in Georgia, said Mnuchin would make a final decision on whether to participate by Friday.

The Treasury secretary’s attendance at the investment conference is part of a weeklong, six-country 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 stem illicit financial activities in the Middle East. But Mnuchin is now wrestling with the ramifications of remaining in the Saudi government’s good stead amid questions about the fate of the journalist, Jamal Khashoggi.

Khashoggi has not been seen since he entered the Saudi Consulate in Istanbul on Oct. 2. The Turkish authorities have alleged that Khashoggi was killed and dismembered by Saudi operatives.

The Saudi government has denied any wrongdoing, saying Khashoggi left the consulate shortly after his arrival. However, a person familiar with Saudi plans said Monday that the kingdom was preparing an alternative explanation of the journalist’s fate, saying Khashoggi died in an interrogation gone wrong.

Mnuchin’s staff has been closely monitoring the situation and awaiting additional evidence about the fate of Khashoggi before making a final decision. However, the trip appeared more likely to move forward after Trump buttressed Saudi denials that it was responsible for 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.

Trump said Monday that a decision about Mnuchin’s attendance would be made by Friday.

“He’s going to make that decision,” Trump said. “We’ll see who’s going.”

Mnuchin’s top spokesman, Tony Sayegh, said in a Monday interview with the Fox Business Network that the Treasury delegation was visiting five other countries as part of a long-planned trip. He also pointed out that the secretary’s agenda in Saudi Arabia extends beyond the Future Investment Initiative conference and includes meetings related to blocking terrorist financing.

On Monday, the chief executives of the Blackstone Group and BlackRock canceled plans to attend the investment conference in Saudi Arabia next week, joining Jamie Dimon of JPMorgan Chase as the latest Wall Street titans to pull out after the disappearance and potential murder of Khashoggi. Diane Green, the chief executive of Google Cloud, also pulled out Monday, according to the company.

Mnuchin’s decision to attend in the middle of the investigation into the journalist’s disappearance is prompting criticism from lawmakers and former government officials. Sen. Marco Rubio, R-Fla., and Rep. Jim Banks, R-Ind., called on Mnuchin to cancel his trip. And last week a bipartisan group of senators triggered a human rights investigation into the episode that could result in sanctions against Saudi Arabia.

Sen. Ron Wyden, D-Ore., was among those arguing that Mnuchin should withdraw.

“Unless Trump cancels Secretary Mnuchin’s trip immediately, the United States is validating the likely murder of U.S. resident and journalist Jamal Khashoggi by the Saudi government,” he said.

As the top economic official from the United States, Mnuchin’s presence would send a significant signal about how America views human rights issues.

“It’s ridiculous, frankly,” said Paul H. O’Neill, who served as Treasury secretary under former President George W. Bush. He added that Mnuchin had little to gain from attending such a conference under the circumstances.

But the timing of the conference comes at a delicate moment of economic diplomacy, making a decision to pull out fraught.

The Treasury Department oversees the United States’ sanctions arsenal, and Mnuchin has been aggressively urging U.S. allies to step up pressure against Iran after Trump’s withdrawal from the 2015 Iran nuclear deal. Saudi Arabia has supported that decision, and its influence in the region is needed to help isolate Iran.

Oil is also an underlying factor. Prices have surged this year, and the prospect of higher fuel costs in the United States before the November midterm elections is problematic for Republicans. Relations between 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. This month, Trump raised eyebrows again when he suggested that Saudi Arabia should be spending more on defense.

“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 U.S. military support. For 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, 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, 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 Mnuchin traveling to Riyadh under the current circumstances.

“There’s a lot coming on right now,” Morgan Ortagus, a former deputy U.S. Treasury attaché in Saudi Arabia, referring to the oil and terrorist financing issues. “I think if he pulled out at this point it would be because the administration felt there was not enough truthfulness or cooperation on this.”

O’Neill said the fact that Mike Pompeo, the secretary of state, was making his own trip to Saudi Arabia could give 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,” 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 Mnuchin.

Elizabeth Rosenberg, a senior fellow at the Center for a New American Security, said more engagement was crucial during fraught diplomatic times. One option, she said, is for 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 J. Barrack Jr., the founder of Colony Capital, could 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 Rosenberg, 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,” Rosenberg said.