Host Saudi Arabia warns of economic fallout from Gaza war at global economic summit

Host Saudi Arabia warns of economic fallout from Gaza war at global economic summit
Israel's war on Gaza is set to dominate talks at the World Economic Forum summit which kicked off in Saudi Arabia on Sunday.
4 min read
A host of Gaza mediators are attending the summit in Saudi Arabia [Getty]

Saudi Arabia on Sunday called for regional "stability", warning of the effects of Israel's ongoing war on Gaza on global economic sentiment at the start of a summit attended by a host of Gaza mediators.

US Secretary of State Antony Blinken, Palestinian leaders and high-ranking officials from other countries trying to broker a ceasefire between Israel and Hamas are on the guest list for the summit in Riyadh, capital of the world's biggest crude oil exporter.

The Gaza war along with conflicts in Ukraine and elsewhere put "a lot of pressure" on the economic "mood", Saudi Finance Minister Mohammed al-Jadaan said at one of the first panel discussions of the two-day World Economic Forum (WEF) special meeting.

"I think cool-headed countries and leaders and people need to prevail, and you need to make sure that you actually de-escalate," Jadaan said.

"The region needs stability."

"The world is today walking a tightrope right now, trying to balance security and prosperity," Saudi planning minister Faisal al-Ibrahim told a press conference on Saturday previewing the summit.

"We meet at a moment when one misjudgement or one miscalculation or one miscommunication will further exacerbate our challenges."

The war in Gaza, which has sent regional tensions soaring, was sparked by the Hamas-led attack in southern Israel on October 7 which resulted in the deaths of about 1,170 people, according to an AFP tally of Israeli official figures.

Israel estimates that 129 and out of more than 250 hostages seized by Palestinian groups during the attack are still being held in Gaza, including 34 the military says are dead.

Hamas says its attack came in retaliation to Israel's decades-long occupation of Palestinian territories and its continued aggression against the Palestinian people, including the blockade of Gaza.

Since then, Israel's unprecedented air and ground offensive has killed at least 34,388 people in Gaza, mostly women and children, according to the territory's health ministry. The bombardment and siege of Gaza has pushed the enclave to the brink of famine and has rendered it uninhabitable.


'New momentum' in hostage talks

WEF president Borge Brende told Saturday's press conference there was "some new momentum now in the talks around the hostages, and also for... a possible way out of the impasse we are faced with in Gaza".

However there will be no Israeli participation at the summit and Brende noted that formal mediation involving Qatar and Egypt was unfolding elsewhere.

"This is more an opportunity to have structured discussions" with "the key players", he said.

"There will be discussions, of course, on the ongoing humanitarian situation in Gaza" as well as on Iran, which backs Hamas and Lebanon's Shia armed group Hezbollah, he added.

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The US State Department said Blinken will "discuss ongoing efforts to achieve a ceasefire in Gaza that secures the release of hostages and how it is Hamas that is standing between the Palestinian people and a ceasefire".

Hamas said on Saturday it was studying the latest Israeli counter-proposal regarding a potential ceasefire in Gaza, a day after media reports said a delegation from mediator Egypt arrived in Israel in a bid to jump-start stalled negotiations.

From the outset Saudi Arabia has worked with other regional and global powers to try to contain the war in Gaza and avoid the type of conflagration that could derail its ambitious economic reform agenda known as Vision 2030.


Spotlight on Saudi

The kingdom also remains in talks about a landmark deal under which it would recognise Israel for the first time while strengthening its security partnership with the United States.

Crown Prince Mohammed bin Salman, Saudi Arabia's de facto ruler, spoke optimistically about the deal in an interview with Fox News in September, but analysts say the war has made it more difficult.

Meanwhile the conservative Gulf kingdom, home to the holiest shrines in Islam, is trying to open up to the world, luring business leaders and non-religious tourists.

Hosting international events such as the WEF meeting allows the kingdom to showcase social changes including the reintroduction of cinemas and the lifting of a ban on women driving.

"Eight years into Vision 2030, we have demonstrated our willingness to lead the way towards a model of transformative growth that is innovative, inclusive and sustainable. And we've seen some of the results," Ibrahim said on Saturday.

Yet questions persist about just how much of Vision 2030 will be achieved and when, with special scrutiny falling on signature projects such as NEOM, a planned futuristic megacity.

In December, Jadaan, the Saudi finance minister, said officials had decided to push the timeframe for some major projects past 2030, without specifying which ones, though he also noted that others would be accelerated.

Saudi Arabia is projecting budget deficits through 2026 and GDP growth was nearly flat last year after a series of oil production cuts.

Jadaan stressed on Sunday that non-oil GDP growth was "very healthy" at 4.4 percent and that "Vision 2030 is about, actually, the non-oil GDP".