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Mending Qatar Ties Won’t Calm Investors Troubled by Saudi Shocks
DOHA, QATAR - NOVEMBER 17: The Doha Skyline at sunrise on the fifth day of the 21st ANOC General Assembly at the Sheraton Grand Hotel on November 17, 2016 in Doha, Qatar. (Photo by Mark Runnacles/Getty Images for ANOC)

Mending Qatar Ties Won’t Calm Investors Troubled by Saudi Shocks

Investors stunned by Saudi Arabia’s unpredictable foreign policy under Crown Prince Mohammed bin Salman are unlikely to drop their guard even if the kingdom succumbs to U.S. pressure to resolve its conflict with neighboring Qatar and end the war the Yemen.

While both issues shocked the investor community when they first erupted, they have since been eclipsed by aggressive policies at home and abroad. Last month, investors put the prince’s tactics under the spotlight after the killing of Saudi critic Jamal Khashoggi at the consulate in Istanbul caused an international uproar, sending the kingdom’s credit risk rising by the most in the world.

“One thing is for certain: the price of Western support or tolerance for the Saudi regime became more expensive,” said Julian Rimmer, a trader at Investec Bank Plc in London. “Western governments are under pressure from within to hold the Saudis to account over the Khashoggi murder which is interpreted as emblematic of wider wrongdoing, most notably in Yemen.”

The 33-year-old prince — commonly known as MBS — had presented himself as a modernizer since his rise to power in 2015, winning praise for loosening restrictions on women and preparing the economy for a time after oil. His efforts have been undercut, however, by a domestic crackdown and aggressive foreign policy.

Last November, the government launched what it described as an anti-corruption purge, detaining dozens of billionaires, businessmen and princes at Riyadh’s Ritz-Carlton hotel. The Lebanese prime minister was widely believed to have been held against his will by Saudi Arabia the same month and forced to resign.