Saudi warns against sanctions

Saudi Arabia rejected threats to punish it over the disappearance of journalist Jamal Khashoggi in Istanbul, saying the kingdom would retaliate against any sanctions with tougher measures, the official state news agency said yesterday.

The comments came after US President Donald Trump threatened "severe punishment" for Riyadh if it turned out Khashoggi was killed in the Saudi consulate in Istanbul.

"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 official Saudi Press Agency quoted an unnamed government source as saying.

"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 source added without elaborating.

The threat caused the stock market of the world's biggest oil exporter to lose as much as $33 billion of its value yesterday in one of the first signs of the economic pain that Riyadh could suffer over the affair.

Khashoggi, a Washington Post contributor and US permanent resident whose writings have been critical of powerful Saudi Crown Prince Mohammed bin Salman, has been missing since entering the country's consulate in Istanbul on October 2.

Turkey believes Khashoggi was deliberately killed in the consulate and his body removed. Saudi Arabia insists Khashoggi left the building safely.

Turkey on Saturday stepped up pressure on Saudi Arabia by accusing the kingdom of failing to cooperate with a probe into the journalist's disappearance.

Foreign capital is key to Saudi Arabia's plans to diversify its economy beyond oil and cut a 12.9 percent jobless rate among its citizens.

But in response to Khashoggi's disappearance, media firms and some technology executives have pulled out of a major Riyadh investment conference scheduled for next week.

Yesterday, reports said US Treasury Secretary, Steve Mnuchin, and the UK's International Trade Secretary, Liam Fox, may not attend the "Davos in the Desert investment conference in Riyadh. The officials' possible boycott was confirmed to the BBC by 'diplomatic sources'.

Meanwhile, Trump on Saturday admitted that Things related Khashoggi were “not looking too good”.

"I think we would've known by now. That was our first hope, our first hope was that he was not killed, but maybe that's not looking too good... from what we're hearing," Trump told journalists at the White House.

Trump has not described what punishment Saudi Arabia might face. He has indicated Washington does not want to harm close defence ties, saying the United States would be punishing itself if it halted sales of military equipment to Riyadh.

But US senators have triggered a provision of the Global Magnitsky Human Rights Accountability Act requiring the president to determine whether a foreign person is responsible for a gross human rights violation. The act has in the past imposed visa bans and asset freezes on Russian officials.

Meanwhile, there is concern Khashoggi's disappearance could add to a sense that Saudi policy has become more unpredictable under the crown prince.

A Gulf banker said the Khashoggi case, combined with other events, had become a significant factor for some potential investors in Saudi Arabia.

"It's cumulative – the Yemen war, the dispute with Qatar, the tensions with Canada and Germany, the arrests of women activists. They add up to an impression of impulsive policy-making, and that worries investors," the banker said.