RIYADH: The war between Israel and Hamas could deal a heavy blow to the global economy, banking titans told a glitzy investment forum in Saudi Arabia on Tuesday.
The dour mood from some of the gathering’s most high-profile speakers underscored how the war threatens attempts by the world’s biggest oil exporter to diversify its economy away from fossil fuels.
Hamas stormed into Israel from the Gaza Strip on October 7 and killed at least 1,400 people, mostly civilians who were shot or burnt to death on the first day of the raid, according to Israeli officials.
The group also took 222 people hostage, among them elderly people and young children, according to the Israeli authorities’ latest count.
In response, more than 5,700 Palestinians, mainly civilians, have been killed across the Gaza Strip in Israeli bombardments, the Hamas-run health ministry said.
“What just happened recently in Israel and Gaza – at the end of the day you put all this together, I think the impact on economic development is even more serious,” World Bank President Ajay Banga told the Future Investment Initiative (FII), often referred to as “Davos in the Desert”, on Tuesday.
“I think we’re at a very dangerous juncture,” he added.
The raging war risks drawing in other countries, notably Lebanon, home to the Iran-backed Hezbollah group which has engaged in daily exchanges of fire with Israeli forces.
“If these things are not resolved, it probably means more global terrorism, which means more insecurity, which means more (of) society is going to be fearful, less hope,” said BlackRock CEO Larry Fink.
“And when there’s less hope we see contractions in our economies.”
More than 6,000 delegates are registered for the three-day event that will feature appearances by global banking chiefs and the presidents of South Korea, Kenya and Rwanda, organisers say.
Unstable neighbourhood
But Wall Street leaders indicated that lofty themes of innovation and economic transformation would be at least partly overshadowed by the shocking violence in Israel and Gaza.
“We’re sitting here with the backdrop, which I think we all acknowledge, of the aftermath of the terrorist attack in Israel and the events that have been unfolding since, and it’s desperately sad. So it’s hard not to be a little bit pessimistic,” Citi CEO Jane Fraser said.
The war stands in stark contrast to the vision of a more stable and prosperous Middle East championed by Saudi Arabia, which this year rebuilt ties with Iran and was in talks towards recognising Israel before the fighting broke out.
The conflict comes halfway through the Vision 2030 reform agenda championed by the kingdom’s de facto ruler, Crown Prince Mohammed bin Salman, which is intended to remake the oil-reliant Saudi economy.
“Saudi Arabia today is all about their internal transformation which demands a stable neighbourhood,” said Kristin Diwan of the Arab Gulf States Institute in Washington.
“It’s harder to get people to invest, to golf in Riyadh, or to sun along the Red Sea coast when the region is associated with war and terrorism.”
Riyadh has condemned violence against civilians in Gaza and affirmed its support for the Palestinian cause.
A source familiar with discussions on possible normalisation with Israel told AFP this month that the process had been paused.
Hopes for stability
Saudi officials have signalled they intend to forge ahead with their economic reform plans despite fears of wider regional turmoil.
In addition to FII, the capital this week is hosting its first fashion week and a boxing match between Tyson Fury and Francis Ngannou.
The FII opening ceremony featured a vocal performance by Britain’s Got Talent contestant Malakai Bayoh as a giant dove flashed on a screen behind him.
Some attendees struck a positive note despite grim headlines from the region.
The war “is in the minds of each and everyone”, Laurent Germain, CEO of construction engineering firm Egis Group, told AFP.
Hamas says at least 140 killed in Israel night strikes on Gaza
“But I guess in the economic world we’re optimistic people. We’re hoping for the comeback to stability as soon as possible.”
Atul Arya, chief energy strategist at S&P Global Commodity Insights, said the current geopolitical situation was “challenging” but that “economic development never stops”.
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