JP Morgan and Ford join ranks of companies pulling out of Saudi conference as UK, Germany and France call for credible investigation

This article is more than 1 year old

This article is more than 1 year old

Saudi Arabia has said it will retaliate against any sanctions imposed over the disappearance of Jamal Khashoggi, as JP Morgan and Ford swelled the ranks of western companies pulling out of a high-profile conference in Riyadh next week.

The diplomatic standoff over the fate of Khashoggi, who has been missing since he entered the Saudi consulate in Istanbul on 2 October and is presumed to have been murdered, threatens Prince Mohammed bin Salman’s to reform efforts to reform the kingdom’s economy. The Riyadh stock market had its biggest fall in years on Sunday.

Donald Trump has threatened the US ally with “severe punishment” if Khashoggi, who has been critical of Bin Salman, has been killed.

The French, German and UK foreign secretaries ratcheted up the pressure by releasing a joint statement calling on the Saudi government to give a complete and detailed account of Khashoggi’s disappearance, adding that those found to be responsible must be held to account.

Riyadh vowed to hit back against any action. “The kingdom affirms its total rejection of any threats and attempts to undermine it, whether through economic sanctions, political pressure or repeating false accusations,” it said.

“The kingdom also affirms that if it is [targeted by] any action, it will respond with greater action.” The statement also pointed out that the oil-rich kingdom “plays an effective and vital role in the world economy”.

The country’s foreign ministry issued a series of tweets rejecting the accusations as “attempts to undermine” Saudi Arabia, writing in one post “demise is the outcome of these weak endeavors”.

Foreign Ministry 🇸🇦 (@KSAmofaEN) Steadfast & Glorious 🇸🇦

Demise is the outcome of these weak endeavors pic.twitter.com/WBb9yusaE6

The Saudi response came after the Tadawul exchange in Riyadh dropped by 7% at one point on Sunday, the week’s first day of trading in Saudi Arabia, with 182 of its 186 listed stocks showing losses by early afternoon. The market later pulled back some of the losses.

Business leaders as well as media companies including Bloomberg and CNN have pulled out of an investment conference next week in Riyadh, dubbed “Davos in the desert”.

Jamie Dimon, the powerful boss of JP Morgan, on Sunday became the latest to say he would not be attending. Ford chief executive Bill Ford also announced he would not be going. Neither gave a reason for the cancellations.

The belligerence of the Saudi statement is likely to anger US senators pressing for the Trump administration to take tough economic action against Riyadh, including sanctions.

It showed no sign of contrition or clarification of the promise last week to conduct an inquiry into Khashoggi’s disappearance. Instead, Riyadh condemned a “campaign of false allegations and falsehoods”. In what is likely to be a reference to Turkey, and possibly its Gulf rival Qatar, Saudi Arabia claimed some were “rushing and seeking to exploit rumours and accusations to achieve goals and agendas unrelated to the search for truth”.

Saudi Arabia’s vast oil reserves, said to be about 260bn barrels, give it enormous clout in the global economy. It has significant power to drive up prices, which would hurt every major developed economy.

Riyadh is the world’s second-biggest arms importer after India, and 61% of its imports come from the US, supporting thousands of jobs. Trump signed a $110bn (£84bn) defence agreement last year, which stands to benefit US employers such as Lockheed Martin, Boeing and General Electric.

Turki Aldhakhil, the general manager of Al Arabiya, the official Saudi news channel, claimed in an opinion piece that Riyadh was ready to implement 30 measures “without flinching” the moment US sanctions were imposed, including cuts to oil production that could lead to prices rising to $100 a barrel.

“The truth is that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh,” he wrote.

Aldhakhil warned the repercussions of US sanctions could include a military alliance between Saudi Arabia and Russia, and an end to intelligence sharing.

In the firmest joint language to appear from Europe since the crisis broke, the European foreign ministers said “light must be shed on Khashoggi’s disappearance”.

They said they shared the “grave concerns” expressed by the UN secretary general, António Guterres, and “are treating this incident with the utmost seriousness. There needs to be a credible investigation to establish the truth about what happened, and – if relevant – to identify those bearing responsibility for the disappearance of Jamal Khashoggi and ensure that they are held to account.”

The statement added: “We encourage joint Saudi-Turkish efforts in that regard, and expect the Saudi government to provide a complete and detailed response. We have conveyed this message directly to the Saudi authorities.”

Over the weekend, Turkey pressed the UK to use its influence to ensure Saudi Arabia abides by its commitment to launch a joint investigation into Khashoggi’s disappearance.

The Turkish foreign minister, Mevlüt Çavuşoğlu, is due to meet his British counterpart, Jeremy Hunt, in London on Monday afternoon. He complained that Saudi Arabia was not allowing Turkish investigators to enter the consulate.

Speaking on Sunday, Hunt said: “What they need to do is cooperate fully with the investigations … and to get to the bottom of this.

“If, as they say, this terrible murder didn’t happen then where is Jamal Khashoggi? If they have got nothing to hide then they will, and should, cooperate.”

The UK also suggested the international trade secretary, Liam Fox, may withdraw from the investment conference if it is shown the Saudi government was involved in the suspected murder.

The official UK position is that Fox’s diary for that week is yet to be finalised. Any British action is likely to be coordinated with the US.

Speaking at the weekend, Trump said – without being specific – there were “very powerful” things the west could do to hurt the Saudis, but stopping arms sales would in the end be America punishing itself.

“There’s something really terrible and disgusting about that [Khashoggi’s suspected murder], if that was the case, so we’re going to have to see. We’re going to get to the bottom of it and there will be severe punishment,” he said.

Democratic senators on the US foreign relations committee said classified intelligence briefings suggested Khashoggi had been murdered by the Saudis or rendered back to Saudi Arabia.