Saudi Arabia is not only expanding its international influence in football through its sovereign wealth fund. An expert criticizes that German foreign policy has not yet found a satisfactory answer to the question of how to deal with the country.
It’s just another small piece of the puzzle of a big plan, full of prominent guests: At the end of October, Saudi Crown Prince Mohammed bin Salman announced that his country would host the “E-Sports World Cup” from 2024. Football star Cristiano Ronaldo and FIFA boss Gianni Infantino were also at the “New Global Sports Conference”, where Salman announced that the tournament would offer the highest prize money in the history of e-sports. It is not yet known how much the prize money will be, but it is likely to be large sums. The “Riyadh Masters” took place in the Saudi Arabian capital Riyadh in 2022, with around fifteen million US dollars to be won. Saudi Arabia’s Savvy Games Group, owned by the state-run Public Investment Fund (PIF), said it would invest around $38 billion to make Saudi Arabia a hub for “global gaming” by 2030.
There is hardly an important area in Saudi Arabia where the PIF is not represented. In the oil company Aramco, ninety percent of which is owned by the state, the fund doubled its shareholding in April last year to eight percent. The PIF has a majority stake of 64 percent in Saudi Telecom. The PIF subsidiary Saudi Arabian Military Industries is driving forward the development of its own defense industry. At the same time, Saudi Arabia wants to expand the mining, logistics and energy sectors, for example by investing billions in natural gas.
In its annual report last July, the fund reported assets under management of $776 billion. By 2030, the PIF is expected to become the largest fund in the world with financial deposits totaling two trillion US dollars. No other sovereign wealth fund invested more than the PIF in 2023.
Consolidation of power by the crown prince and diversification
The sovereign wealth fund’s investments range from electric vehicles to gaming portals and concert organizers – worldwide. The PIF holds large shares in Facebook, Disney, the aircraft manufacturer Boeing and Bank of America. In September it was announced that Saudi Telecom (STC) had acquired 9.9 percent of the shares of Spanish Telefonica for 2.1 billion euros. The Saudis’ billion-dollar entry called the Spanish government into action: Spain must ensure that the decisions of a company that handles sensitive data continue to be made in the country, wrote Labor Minister Yolanda Díaz on the short message service X. The PIF was in Germany In 2023 one of the most influential financiers in the sale of the Düsseldorf transmission tower operator Vantage Towers, which disappeared from the MDax.
With these investments, Saudi Arabia wants to become an important player in new economic areas and thus create new alliances. “Saudi Arabia is trying to exert greater global influence through the PIF,” says Middle East expert Sebastian Sons, who wrote a book about “The New Rulers in the Gulf and Their Striving for Global Influence.” This is about the crown prince consolidating his political power and economic diversification in order to make the economy more independent of oil. Sons warns that the kingdom is becoming increasingly important economically, so that the risk of being exploited for Saudi interests is increasing. “This should be approached with the necessary caution, but without ruling out cooperation in advance. There needs to be a discussion in Germany about what an interest- and values-oriented foreign policy should look like when dealing with Saudi Arabia. So far there has been no satisfactory answer,” said Sons .
Sport serves political legitimacy
In Saudi Arabia’s pursuit of influence, it is not just immediate influence that is important. The country is also trying to polish its image. To this end, the country is pursuing an aggressive strategy, particularly in the area of sports. Four football clubs, 75 percent of which belong to the sovereign wealth fund, are buying world stars such as Cristiano Ronaldo, Karim Benzema, Sadio Mané and Neymar, who play in the desert state’s league. “You can try to legitimize many, many political things through football,” commented Christian Streich, coach of the Bundesliga club SC Freiburg, on these transfers. Through football you can get people to the point where things are questioned less. “Football is highly political – anyone who says otherwise hasn’t looked,” said Streich.
At the beginning of October, Saudi Arabia also announced that it would apply for the 2034 World Cup – there are no competitors, the acceptance is considered certain. The country had already secured the hosting of the FIFA Club World Cup in 2023 and the Asian Cup in 2027. In addition to a Formula 1 race, there is its own golf series, and the Asian Winter Games are even scheduled to take place in Saudi Arabia in 2029. In addition, the country developed into the center of the boxing world. All of these events are intended to finally leave Qatar behind, which has achieved great success in the international sports business in recent years.
“A power-political dimension that cannot be ignored”
The sovereign wealth fund PIF, founded in 1971, has long been one of several investment instruments used by the Saudi rulers. The turning point came in 2015. At that time, King Abdullah died and his half-brother Salman ibn Abd al-Aziz was named king. He appointed his son Muhammad bin Salman as defense minister. Although the king is head of state, his son was appointed crown prince in 2017 and has already effectively taken over the leadership of the country. From then on, Salman, known as MBS for short, was given control of the fund by decree, which until then had been subordinate to the Ministry of Finance. That’s why experts call the fund a “one man investment vehicle”.
“MBS is the architect of all investments, he sets the guidelines,” says Middle East expert Sebastian Sons. The PIF serves “as a figurehead for a Saudi nationalist economic policy.” The aim is to demonstrate to its own population that Saudi Arabia is not only able to spend a lot of money, but also to invest in the right sectors in order to advance projects in the country. In one study The Berlin Foundation for Science and Politics warns: “Economic cooperation with the Kingdom involving the PIF or companies controlled by it has a power-political dimension that cannot be ignored.” Because the sovereign wealth fund gives the Crown Prince direct access to the state’s considerable financial resources. In this way he could bind groups that were important in terms of power strategy.
At the same time, Saudi Arabia is trying to create an attractive external image: women and men are now allowed to go to the cinema together, there are more visas for tourists, and dress codes have been relaxed. All of this is part of the “Vision 2030” presented in 2017, which was designed by the consulting firm McKinsey and the Boston Consulting Group. With this reform program, the country plans to transform its economy and become more independent from oil, which accounts for a large part of government revenue.
The world has no interest in human rights violations
With “Vision 2030” the fund’s goals were also redefined. Since then, he has no longer only acted as a lender, but also as an active investor. He presents himself on one website with elaborate videos. You can see women in the office, laughing children, businessmen, green landscapes. Anyone who clicks through the page will get the picture of an equal society. The fact that their royal highnesses have people they dislike imprisoned is not what we are talking about here. The reality, however, is that Saudi courts impose up to 45 years in prison for statements critical of the government. Legally, a woman in Saudi Arabia must still “obey” her husband and can only refuse sex for “legitimate reasons.”
The international community has little interest in addressing such issues or even more serious human rights violations. This became particularly clear in the Jamal Khashoggi case. The Saudi dissident entered his country’s consulate in Istanbul in October 2018 – and was never seen alive again. His body was dismembered and apparently burned on site. US intelligence agencies accuse Muhammad bin Salman of being responsible for the assassination. This temporarily led to the heir to the throne being isolated internationally. He, in turn, said in an interview in 2019 that he knew nothing about the murder plans – but he still took full responsibility because the crime was committed by members of the Saudi government. The interview took place four weeks before the “Future Investment Initiative” – an international investor conference in Riyadh.
UN rapporteur Agnès Callamard has made it clear in an investigative report that she considers the trial in which five Saudis were sentenced to long prison sentences in Riyadh to be a farce. She recommended personal sanctions against Salman, but the prince was spared. The US judiciary also protected the prince after Khashoggi’s girlfriend filed a lawsuit in a US court against him and other people whom she accused of being involved in the killing of her partner. In 2022, a US court dismissed the lawsuit, following a recommendation by President Joe Biden’s administration to grant Salman immunity in the proceedings. During the presidential election campaign four years ago, Biden called for the government in Riyadh to be prosecuted for the murder. Faced with the energy crisis caused by Russia’s war against Ukraine, he changed course. The Turkish public prosecutor’s office also dropped a case and the files were handed over to the Gulf Monarchy. At the same time, Saudi Arabia and Turkey agreed to new cooperation on political, economic and military levels. The Crown Prince’s consolidation of power is already working.